By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Cross posted from New Deal 2.0
The FOMC is far more secretive than most government agencies, and after reading the transcripts of its meetings, it’s not hard to see why.
The people that really run the world are not elected, but sit on the Federal Open Market Committee of the Federal Reserve (FOMC). This is the crew of Fed insiders — mostly regional reserve bank presidents hired by banks as well as finance-friendly Fed governors appointed by the president — who set monetary policy. They are the ones who decide whether interest rates go up or down and whether to heat or cool the economy.
You can actually read the deliberations of their meetings, but only for those that took place five years ago or more. Unlike most federal agencies, their meetings are kept secret for at least five years.
Still, it’s interesting what you can find in the records that are public. This is from 2005, when Dallas Fed President Richard Fisher was echoing complaints of American CEOs that we simply didn’t have the port capacity to take as many imports from China as they wanted (emphasis mine):
Everyone I’ve talked to continues to try to figure out ways to exploit globalization. Each of them, from the IT [information technology] guys to the big box retailers to the specialty chemical firms to the service firms, wants to have offshore supply. One of the CEOs said, “We have a long way to go in exploiting China.” We’ve heard that forever. And one of my favorites was the comment, “China, India, and Indonesia can make Italian ceramics better than Italians can now or could 200 years ago.” [Laughter]
The problem that I’m beginning to hear seeping into the conversation, Mr. Chairman, has to do with U.S. infrastructure. If you read the New York Times article two days ago about Shanghai’s new deep water port, you have to realize that those facilities are being built to ship goods out of China, not so much to ship goods into China. And consider this, as reported by one of the shippers I spoke with: 50 percent of all the ships on order for construction are container ships. Capacity expanding container business is increasing at 15 percent or more per annum to carry cargo from Shanghai and other parts of the world to the United States.
Now, this is good news on the disinflationary front. As the CEO of Northern Navigation, one of the larger shippers told me, “Transportation by ship will essentially be free when these numbers are realized in the marketplace. The bad news is stateside. We don’t have the capacity to absorb it. Long Beach and the Northwest harbors are constrained. Work rules, according to our interlocutors, are very slow to adjust. But there are ways to beat the bottlenecks, and I just want to mention two. UPS reports that they have gone from 6 to 18—and now for next year 21—flights from China. WalMart just built a four million square foot warehouse in the Houston port, in order to shift part of the burden from Long Beach. But it is evident that the enemy is us as far as exploiting globalization, and I think that’s a long-term problem that we might want to take note of over time.
It really is clear what is driving the elites. Disinflation is a wonky term meaning reducing the rate at which costs go up. And in this context, when he thinks no one is paying attention, Fisher is clear about whose ox will be gored, and who is driving the conversations.
So while some port workers might not like the tactics of the Occupiers and might think the structural critiques by the occupiers about the banking system are a bit abstract, perhaps the link is more direct than they assume. It is, after all, the President of the Dallas Federal Reserve who is bragging about his region’s work to undermine West Coast port worker bargaining leverage. Otherwise, his CEO friends might not be able to exploit China fast enough.