The Modern U.S. Federal Reserve: To What Extent is Transparency Counterproductive and Politicizing?

This thesis examines the extent to which institutional transparency is counterproductive and potentially politicizing within the U.S. Federal Reserve system. It exemplifies a Venn diagram intersection of political and economic theory – and given the meaningful change in behavior at the Fed – to some extent organizational theory as well. This political economy orientation may be illustrated by providing a historical context – and then addressing the relevant catalysts for change: legislative action, financial crises, and the increase in social media technology. In terms of a “broader view,” these changes have occurred against a backdrop of significant changes in the application of Keynesian theories. As a result, this thesis defines modern transparency at the Federal Reserve, including its benefits and potential drawbacks, by connecting the changes in policies and procedures over the last quarter century - and by showing the impact of the evolution of modern New Keynesian interventionist programs within this new environment. The conclusions shown the New Keynesian coincidental contributions to modern interventionalist policies. But the benefits that come from improved transparency have opened the door to unintended consequences – and the main takeaway is the potential for political bias among bankers and the time inconsistencies that come from short-term modifications to otherwise long-term problems. The “secrets of the temple” are no longer secrets…but Greider would agree that the concentration of power and political influence remains the same.