Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Sprott's Thoughts

Sprott's Thoughts     

Danielle DiMartino Booth is Fed Up with Central Banks  

By Albert Lu, President & CEO, Sprott US Media

 

Earlier this month, Fed Chair Janet Yellen visited Capitol Hill to deliver her semiannual testimony on monetary policy before Congress. Representative Huizenga of Michigan used the opportunity to ask Ms. Yellen if she thought less banking regulation would have led to a faster economic recovery. Her response? “No, I don’t generally agree with that.”

Former Fed Chair Ben Bernanke dismissed the notion of a housing bubble in 2005 when he told CNBC that “we’ve never seen a decline in house prices on a nationwide basis.” Mr. Bernanke compounded this error in 2007 when he testified before the Joint Economic Committee that the impact on the broader economy and financial markets of the problems in the subprime market seemed “likely to be contained.”

Alan Greenspan, Ben Bernanke’s predecessor, explained to a Jackson Hole audience in 2002 that an asset bubble is difficult to identify until after the fact--that is, “when its bursting confirmed its existence.”

Is it a surprise that the leaders of arguably the most powerful institution in the world are so detached from reality?

Not if you’re Danielle DiMartino Booth. The former Dallas Morning News columnist and Wall Street veteran who spent nine years at the Dallas Federal Reserve as an adviser to Richard Fisher understands the Fed and its inhabitants all too well.

In her bestselling book, Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America, Ms. DiMartino Booth describes how tunnel vision, arrogance, liberal dogma, and abuse of power contribute to a toxic culture and disastrous policy.

I spoke with her recently on The Power & Market Report (transcript below).

 

Transcript (edited for readability)

Albert:  My guest today is Danielle DiMartino Booth. She’s the founder of Money Strong, LLC, and the author of a brand-new book, Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America. She’s a former columnist at The Dallas Morning News and is very well-known for the role she played as an adviser to the Federal Reserve Bank of Dallas. Danielle, thank you very much for joining me on The Power & Market Report. How are you?

Danielle:  Great today. How are you, Albert?

Albert: I’m excellent. And congratulations on the book. It’s doing extremely well already in Amazon Bestseller. So congratulations on that.

Danielle: Thank you. I’m really gratified and humbled by how well the book has been received. It’s very exciting.

Albert: Your book has accompanied me everywhere I go for the last couple of days. And when my son—I have a 3-year-old son. He saw me carrying the book. He looked at the cover and you have a picture of the Eccles Building on there, just got a nice shot of this cover. He says, “Daddy, is that your office?” And I said, “No, no. I don’t work at the Federal Reserve” and I’m going to tell my wife “if something ever happens to me, make sure my children know that I never worked there.”

But you did and you had very noble intentions. And it’s a very unusual story because you’re not a Ph.D. economist. I like to say you have marketable skills. You worked in fixed income. You’re a great writer. You had a very successful column. Can you talk about the story of how you transitioned from that career into the adviser role at the Fed and why you did it? 

Danielle: Well—so it helps to back up a little bit and understand that after 9/11 and I did work in the fixed income market and it had a profound effect on me and I ended up moving to Dallas to be with the man I would marry. And when I left Wall Street, I signed a noncompete and agreed to leave the industry for a little while which is how I ended up going from Wall Street to a newspaper in the first place. And leaving Wall Street as CDOs and subprime mortgages were starting to be hatched really gave me a perspective on (a) the fact that I was happy because there was no more compliance in my life, but (b) how dangerous the situation was brewing in the subprime market and that’s what caused me to write some very critical things about housing and about Fed policy feeding it and about Alan Greenspan, and that is what put me on the radar screen of Richard Fisher.

So, when he came calling, being that he also was not a Ph.D. in Economics, he was like me. We’re finance-oriented people who started on Wall Street. That’s when he came calling and ended up having me become kind of his market intelligence person. Before every FOMC meeting, I would come up to New York City and I would ask around the trading desk and what-have-you, you know, “what’s going on, tell me.” And it was akin to the role of the priest because people were delighted to tell me exactly what was happening in the market. I would report back to Richard Fisher and off he would go to the FOMC meetings armed to the teeth.

Albert: Now the way you describe it in the book though, it doesn’t sound like it, the position, started as a glamorous role. They didn’t come in and say, “Be Richard Fisher’s right-hand man,” and you weren’t parking the cars but you weren’t exactly in the inner circle either.

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