# Should the Federal Reserve's Board of Governors be elected? **URL:** \ **Category:** Great Debates\ **Created:** [February 17, 2005, 3:13am UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469 "2005-02-17T03:13:03Z")\ **Posts on this page:** 7\ **Page:** 2
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 18, 2005, 10:48pm UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/21 "2005-02-18T22:48:01Z")
> [@Martin Hyde](#): > > Realistically we don’t consider it a problem if we have 5% unemployment. Five percent is more or less the natural rate (structural + frictional unemployment) and only a perfection in technology that 1) rapidly reeducates workers to be able and ready for new jobs and 2) effortlessly brings together all employers and matches them with the best employees for the job nationwide will get the unemployment rate much lower. Cite? That is, for 5% being a “natural” unemployment rate. According to this site – [http://en.wikipedia.org/wiki/Natural\_rate\_of\_unemployment](http://en.wikipedia.org/wiki/Natural_rate_of_unemployment) – there is “no theoretical basis for predicting the NAIRU” (Non-Accelerating Inflation Rate of Unemployment). ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 18, 2005, 10:50pm UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/22 "2005-02-18T22:50:58Z")
> [@John Mace](#): > > Friedman, as you probably know, was a [monetarist.](http://en.wikipedia.org/wiki/Monetarism) > > > [@](#): > > > > The result was summarized in Friedman’s historical analysis of monetary policy: Monetary History of the United States 1867-1960, which attributed inflation to excess money supply generated by a central bank. It attributes deflationary spirals to the reverse effect: failure of a central bank to support M1 during a liquidity crunch. > > > > Friedman originally proposed a fixed monetary rule, where the money supply would be calculated by known macroeconomic and financial factors, targetting a specific level or range of inflation. There would be no leeway for the Fed, and business could anticipate all monetary policy decisions. So Friedman had some mathematical formula that would produce the “right” prime interest rate based on the existing money supply? Would that make interest rates higher than they are now, or lower? ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [February 18, 2005, 11:15pm UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/23 "2005-02-18T23:15:36Z")
It’s pretty elementary stuff. Natural unemployment is said to be unemployment reflected by job shopping and imperfect information. Or, unemployment caused by people who 1) have jobs out there but are looking for better offers, or 2) have jobs out there but cannot find them because of a lack of information on the employers offering the jobs. Check out Robert J. Gordon’s “Macroeconomics” for an elementary textbook explanation for the concept. Aside from that use google and look at any educational or organizational websites you find, most of them are fairly accurate. There _is_ no way to know the exact natural unemployment rate, but we can go on BLS surveys to get an idea of how many people are unemployed because of frictional and structural unemployment. So we can get an idea of the natural unemployment rate. As it is, the natural rate is not set in stone, but changes based on the composition of the labor force and other factors. It’s been estimated at around 5% for years though. Also don’t quote wikipedia at me, it’s about as worthless a source as you might want to use. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [February 18, 2005, 11:18pm UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/24 "2005-02-18T23:18:34Z")
Also NAIRU to which Wikipedia was referring isn’t quite the same as the “natural rate” of unemployment. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 19, 2005, 2:41am UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/25 "2005-02-19T02:41:30Z")
> [@Martin Hyde](#): > > Also don’t quote wikipedia at me, it’s about as worthless a source as you might want to use. Well, it is and it isn’t. See this GQ thread: [http://boards.straightdope.com/sdmb/showthread.php?t=298205](http://boards.straightdope.com/sdmb/showthread.php?t=298205) > [@Martin Hyde](#): > > Also NAIRU to which Wikipedia was referring isn’t quite the same as the “natural rate” of unemployment. The difference being? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 19, 2005, 11:16pm UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/26 "2005-02-19T23:16:35Z")
> [@Well](#): > > true, it sucks not having money, but I wouldn’t want to devalue my brother’s life savings just because i’m too lazy to get a job. :dubious: A nonsequitur. An “overheated” economy sometimes means a better job market and makes it easier for the unemployed can find work. That does nothing, of course, for those who are too lazy to work – but that’s a completely different problem. ---
**Author:** ![Well](https://avatars.discourse-cdn.com/v4/letter/w/df788c/32.png) [@Well](https://boards.straightdope.com/u/Well)\ **Post date:** [February 20, 2005, 8:55am UTC](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469/27 "2005-02-20T08:55:53Z")
> [@BrainGlutton](#): > > :dubious: A nonsequitur. An “overheated” economy sometimes means a better job market and makes it easier for the unemployed can find work. That does nothing, of course, for those who are too lazy to work – but that’s a completely different problem. non sequitur my ass. 🆒 Anyone can work in this country. You may not get the job you want or the pay that fits your desired prosperity level, but we got 3 million illegal alliens “working jobs that American’s don’t want”. That more than makes up for the unemplyment we have in this country. You said a sound dollar doesn’t matter to someone not earning a dollar. That’s their problem. You don’t go dicking around with the value of my assests just so a few people can find a job “easier”. The US economic policy is sound. We havn’t had a major crash in almost 100 years. [Previous page](https://boards.straightdope.com/t/should-the-federal-reserves-board-of-governors-be-elected/290469.md?page=1)