Narayana Kocherlakota, 9th Federal Reserve District President, gave a speech, posted here, which I originally commented on here. He’s speaking to an audience of Upper Peninsula business people, and he treats them with respect. Narayana uses the opportunity to explain Fed policy to his audience, to teach them some economics, and to say something to the wider community (us) by posting the speech on the Minneapolis Fed website. The speech is quite comprehensive, touching on all the current monetary policy issues and, as it should, it brings to bear all the relevant macroeconomics we know to address the issues. Some of this theory is sophisticated, but Narayana does a good job of bringing this down to a level where a lay audience should be able to get most of it. We have Irving Fisher, search and matching theory of unemployment, New Public Finance, etc., all rolled into a coherent whole. We have come a long way. William McChesney Martin could not have pulled this off, and neither could Alan Greenspan.
Now I think the Invisible Hand got things right when she/he/it made Narayana Kocherlakota, Jim Bullard, and Jeff Lacker (for example) Fed Presidents, and sent Paul Krugman, Brad DeLong, and Mark Thoma off to the blogosphere. Brad wouldn’t get far with Cargo Cults at the FOMC meeting (The Chairman: Thanks for sharing, President DeLong. Now on to more important matters. Who used up all the paper towels in the 3rd Floor wc, causing me to wipe my hands on my pants?). I’m done with the Kocherlakota speech. If you have more questions about it, please ask Narayana for help.