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	<title>Cato @ Liberty &#187; San Francisco</title>
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	<description>Cato Institute Blog</description>
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		<item>
		<title>Surveillance, San Francisco-Style</title>
		<link>http://www.cato-at-liberty.org/surveillance-san-francisco-style/</link>
		<comments>http://www.cato-at-liberty.org/surveillance-san-francisco-style/#comments</comments>
		<pubDate>Wed, 06 Apr 2011 23:42:28 +0000</pubDate>
		<dc:creator>Jim Harper</dc:creator>
				<category><![CDATA[Law and Civil Liberties]]></category>
		<category><![CDATA[Telecom, Internet & Information Policy]]></category>
		<category><![CDATA[First Amendment]]></category>
		<category><![CDATA[privacy]]></category>
		<category><![CDATA[San Francisco]]></category>
		<category><![CDATA[San Francisco Entertainment Commission]]></category>
		<category><![CDATA[surveillance]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=29784</guid>
		<description><![CDATA[<p>By Jim Harper</p>San Francisco&#8217;s Entertainment Commission will soon be considering a jaw-dropping attack on privacy and free assembly. Here are some of the rules the Commission may adopt for any gathering of people expected to reach 100 or more: 3. All occupants of the premises shall be ID Scanned (including patrons, promoters, and performers, etc.). ID scanning [...]<p><a href="http://www.cato-at-liberty.org/surveillance-san-francisco-style/">Surveillance, San Francisco-Style</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Jim Harper</p><p>San Francisco&#8217;s <a href="http://www.sfgov2.org/index.aspx?page=335">Entertainment Commission</a> will soon be considering a jaw-dropping attack on privacy and free assembly. Here are some of the <a href="http://www.sfgov2.org/index.aspx?page=2535">rules the Commission may adopt</a> for any gathering of people expected to reach 100 or more:</p>
<blockquote><p>3. All occupants of the premises shall be ID Scanned (including patrons, promoters, and performers, etc.). ID scanning data shall be maintained on a data storage system for no less than 15 days and shall be made available to local law enforcement upon request.</p>
<p>4. High visibility cameras shall be located at each entrance and exit point of the premises. Said cameras shall maintain a recorded data base for no less than fifteen (15 days) and made available to local law enforcement upon request.</p></blockquote>
<p>Would you recognize a police state if you lived in one? How about a police city? The First Amendment right to peaceably assemble takes a big step back when your identity data and appearance are captured for law enforcement to use at whim simply because you showed up. (ht: <a href="http://www.privacyactivism.org/">PrivacyActivism.org</a>)</p>
<p><a href="http://www.cato-at-liberty.org/surveillance-san-francisco-style/">Surveillance, San Francisco-Style</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>Consumer Group Sues McDonald&#8217;s Over Happy Meals</title>
		<link>http://www.cato-at-liberty.org/consumer-group-sues-mcdonalds-over-happy-meals/</link>
		<comments>http://www.cato-at-liberty.org/consumer-group-sues-mcdonalds-over-happy-meals/#comments</comments>
		<pubDate>Thu, 16 Dec 2010 21:17:44 +0000</pubDate>
		<dc:creator>Walter Olson</dc:creator>
				<category><![CDATA[Law and Civil Liberties]]></category>
		<category><![CDATA[Regulatory Studies]]></category>
		<category><![CDATA[children's health]]></category>
		<category><![CDATA[Committee on Children's Television Inc. v. General Foods Corp.]]></category>
		<category><![CDATA[CSPI]]></category>
		<category><![CDATA[mcdonalds]]></category>
		<category><![CDATA[Monet Parham]]></category>
		<category><![CDATA[San Francisco]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=24991</guid>
		<description><![CDATA[<p>By Walter Olson</p>The Center for Science in the Public Interest (CSPI), which has long agitated for wider government intervention in food and nutritional matters, has filed a lawsuit charging that McDonald&#8217;s is violating California consumer laws by marketing Happy Meals with toys. It wants to force the burger chain either to drop the toy, or to replace [...]<p><a href="http://www.cato-at-liberty.org/consumer-group-sues-mcdonalds-over-happy-meals/">Consumer Group Sues McDonald&#8217;s Over Happy Meals</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Walter Olson</p><p>The Center for Science in the Public Interest (CSPI), which has long agitated for wider government intervention in food and nutritional matters, <a href="http://www.reuters.com/article/idUSTRE6BE4N920101215">has filed a lawsuit</a> charging that McDonald&#8217;s is violating California consumer laws by marketing Happy Meals with toys. It wants to force the burger chain either to drop the toy, or to replace the meals&#8217; food components with something more whole-grain-and-vegetable-y. The <em>New York Daily News</em> invited me to have my say on the controversy, <a href="http://www.nydailynews.com/opinions/2010/12/15/2010-12-15_mcdonalds_suit_over_happy_meal_toys_by_california_mom_monet_parham_new_low_in_re.html">and I did</a>. I pointed out that the lawsuit seemed to be aimed at an end run around the reality of individual choice: </p>
<blockquote><p>No one forced [named plaintiff Monet] Parham to take her daughters to McDonald’s, buy them that particular menu item, and sit by as they ate every last French fry in the bag (if they did).</p>
<p>No, she’s suing because when she said no, her kids became disagreeable and “pouted” &#8212; for which she wants class action status. If she gets it, McDonald’s isn’t the only company that should worry. Other kids pout because parents won’t get them 800-piece Lego sets, Madame Alexander dolls and Disney World vacations. Are those companies going to be liable too?</p>
<p>The center’s [CSPI's] longtime shtick is to complain that businesses like McDonald’s, rather than our own choices, are to blame for rising obesity. So let’s take Happy Meals as an example. When you buy one, you get a string of choices. Milk or soda? (Is that really a hard choice for a parent worried about nutrition?) You can swap out the fattening French fries for “apple dippers” with caramel sauce and plenty of kid appeal. But your choices do not end there. If you think the scoop of fries is too big for a kid serving, you can tell the kid to share it with the grownup on hand, namely you. (You’re the grownup. You make the rules.) You can even, shocking as this sounds, toss the surplus French fries into the disposal bin.</p>
<p>&#8230;[I]t’s unlikely that even California courts will approve this suit. But in the mean time, the Center for Science in the Public Interest will fatten off the publicity, unattractively.</p></blockquote>
<p>You can read the whole thing <a href="http://www.nydailynews.com/opinions/2010/12/15/2010-12-15_mcdonalds_suit_over_happy_meal_toys_by_california_mom_monet_parham_new_low_in_re.html">here</a>. As I&#8217;ve noted <a href="http://overlawyered.com/?s=happy+meals">at my website Overlawyered</a>, the case is one element in a wider campaign that includes newly enacted bans on Happy Meals in San Francisco and nearby Marin County.  In June, California blogger Bruce Nye <a href="http://www.calbizlit.com/cal_biz_lit/2010/06/happy-meals-too-much-happiness.html">predicted</a> that CSPI would try to build on a 1983 California Supreme Court precedent, <em>Committee on Children&#8217;s Television, Inc. v. General Foods Corp.</em>, that invites suits over advertising to kids that is purportedly &#8220;predatory,&#8221; but that they&#8217;d run into trouble proving (as the law has required since California voters passed Prop 64 in 2004) that its client, Ms. Parham, is &#8220;a person who has suffered injury in fact and has lost money or property&#8221; owing to the advertising. Even under California law, having to say &#8220;no&#8221; to one&#8217;s kids is not a legal injury.</p>
<p><a href="http://www.cato-at-liberty.org/consumer-group-sues-mcdonalds-over-happy-meals/">Consumer Group Sues McDonald&#8217;s Over Happy Meals</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>More about the Calorie Police</title>
		<link>http://www.cato-at-liberty.org/more-about-the-calorie-police/</link>
		<comments>http://www.cato-at-liberty.org/more-about-the-calorie-police/#comments</comments>
		<pubDate>Wed, 14 Jul 2010 15:19:01 +0000</pubDate>
		<dc:creator>Jason Kuznicki</dc:creator>
				<category><![CDATA[Health Care]]></category>
		<category><![CDATA[Coca-Cola]]></category>
		<category><![CDATA[los angeles times]]></category>
		<category><![CDATA[obesity]]></category>
		<category><![CDATA[paternalism]]></category>
		<category><![CDATA[San Francisco]]></category>
		<category><![CDATA[sugar]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=17737</guid>
		<description><![CDATA[<p>By Jason Kuznicki</p>It&#8217;s nice to get quoted in the Los Angeles Times, even if the author obviously didn&#8217;t understand what I was getting at. I&#8217;ll try to clear up the confusion here. Karen Caplan writes: Does Kuznicki (or anyone else) really think that the goal of a healthy diet is simply to minimize the total number of [...]<p><a href="http://www.cato-at-liberty.org/more-about-the-calorie-police/">More about the Calorie Police</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Jason Kuznicki</p><p>It&#8217;s nice to get quoted in the <em>Los Angeles Times</em>, even if the author obviously didn&#8217;t understand what I was getting at.  I&#8217;ll try to clear up the confusion here.</p>
<p><a href="http://articles.latimes.com/2010/jul/13/news/la-heb-cokeban-20100713">Karen Caplan writes</a>:</p>
<blockquote><p>Does Kuznicki (or anyone else) really think that the goal of a healthy diet is simply to minimize the total number of calories consumed? (Perhaps these are the same folks who swear by Taco Bell&#8217;s Drive-Thru Diet.)</p>
<p>A 12-ounce serving of whole milk contains 12 grams of protein, along with 45% of the calcium and 36% of the vitamin D you need each day. The same amount of soy milk also has 12 grams of protein and 14% of the daily recommended intake of iron.</p>
<p>Care to guess how many vitamins and minerals are in a can of Coke?</p></blockquote>
<p>I certainly don&#8217;t think that a healthy diet means only reducing one&#8217;s calorie intake.  I do, however, believe that the <em>stated goal of the policy</em> was not to improve overall health, but to reduce obesity.  And for that, which one do you pick?</p>
<p>a) consume fewer calories</p>
<p>or</p>
<p>b) get more calcium and vitamin D.</p>
<p>Does anyone seriously suggest that (b) is the right choice?  Is this what passes for nutritional advice at the <em>Los Angeles Times</em>?  Eat whatever you want, and as long as you take your vitamins, you won&#8217;t get fat?</p>
<p>The policy we&#8217;re talking about <em>was not intended</em> to make sure that people get all their vitamins and minerals.  It was intended to curb obesity.  And for that purpose it will do essentially nothing, <a href="http://www.cato-at-liberty.org/2010/07/07/the-calorie-police/">as I noted, I still think correctly, in the original post</a>.</p>
<p><a href="http://www.cato-at-liberty.org/more-about-the-calorie-police/">More about the Calorie Police</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>New York State Should Cut Property Taxes</title>
		<link>http://www.cato-at-liberty.org/new-york-state-should-cut-property-taxes/</link>
		<comments>http://www.cato-at-liberty.org/new-york-state-should-cut-property-taxes/#comments</comments>
		<pubDate>Wed, 16 Jun 2010 17:24:18 +0000</pubDate>
		<dc:creator>Steve H. Hanke</dc:creator>
				<category><![CDATA[General]]></category>
		<category><![CDATA[Tax and Budget Policy]]></category>
		<category><![CDATA[budget]]></category>
		<category><![CDATA[government]]></category>
		<category><![CDATA[growth]]></category>
		<category><![CDATA[investment]]></category>
		<category><![CDATA[Massachusetts]]></category>
		<category><![CDATA[new york city]]></category>
		<category><![CDATA[New York Times]]></category>
		<category><![CDATA[property taxes]]></category>
		<category><![CDATA[recession]]></category>
		<category><![CDATA[revenues]]></category>
		<category><![CDATA[San Francisco]]></category>
		<category><![CDATA[state budget]]></category>
		<category><![CDATA[tax rate]]></category>
		<category><![CDATA[urban renewal]]></category>
		<category><![CDATA[Wall Street Journal]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=16418</guid>
		<description><![CDATA[<p>By Steve H. Hanke</p>The New York Times editorialists are at it again.  June 12th&#8217;s lead editorial, &#8220;The Latest Work Dodge: A Shutdown,&#8221; frets over the specter of the New York state government being shut down because Albany&#8217;s legislators can&#8217;t agree on a budget.  Well, the Times must have breathed a collective sigh of relief late Monday (June 14th).  That&#8217;s [...]<p><a href="http://www.cato-at-liberty.org/new-york-state-should-cut-property-taxes/">New York State Should Cut Property Taxes</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Steve H. Hanke</p><p>The <em>New York Times</em> editorialists are at it again.  June 12th&#8217;s lead editorial, &#8220;<a href="http://www.nytimes.com/2010/06/12/opinion/12sat1.html?src=mv" target="_blank">The Latest Work Dodge: A Shutdown</a>,&#8221; frets over the specter of the New York state government being shut down because Albany&#8217;s legislators can&#8217;t agree on a budget.  Well, the <em>Times</em> must have breathed a collective sigh of relief late Monday (June 14th).  That&#8217;s when the State Senate passed Governor Paterson&#8217;s 11th temporary budget extender, which allowed state offices to hang out &#8220;open for business&#8221; signs on Tuesday.</p>
<p>But, the <em>Times</em> wants a final state budget and claims that more taxing and borrowing and maybe some cuts in school aid will do the trick.  One item that the <em>Times</em> wants off the table in Albany is property taxes.  According to the <em>Times</em>, Democratic state senators outside New York City should stop pushing for restrictions on the rate of growth of property taxes.  I agree.  Instead, the legislators should start pushing for sharp cuts in New York&#8217;s oppressive property taxes.  When <a href="http://www.taxfoundation.org/taxdata/show/1888.html" target="_blank">every U.S. county is ranked</a> according to its average property-tax bill, as a percent of home values, 14 of the highest 15 are in New York state.</p>
<p>As Prof. Steve Walters and I concluded in &#8220;<a href="http://online.wsj.com/article/SB122852270789884347.html?KEYWORDS=hanke+walters" target="_blank">A Property Tax Cut Could Help Save Buffalo</a>&#8221; (<em>Wall Street Journal</em>, December 6, 2008),  New York should follow California and Massachusetts and cut property taxes.  Voters capped property taxes in California at 1% of market value with Proposition 13 in 1978. That forced San Francisco to cut its rate by 57% overnight and brought forth a tidal wave of investment, even amidst a recession. By 1982, inflation-adjusted city revenues were two-thirds higher than they had been before Prop. 13. Massachusetts voters passed Prop 2 ½ in 1980, forcing Boston&#8217;s property tax rate down by an estimated 75% within two years. Massive reinvestment, repopulation and urban renewal followed.</p>
<p><a href="http://www.cato-at-liberty.org/new-york-state-should-cut-property-taxes/">New York State Should Cut Property Taxes</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>Thursday Links</title>
		<link>http://www.cato-at-liberty.org/thursday-links-7/</link>
		<comments>http://www.cato-at-liberty.org/thursday-links-7/#comments</comments>
		<pubDate>Thu, 22 Oct 2009 21:26:16 +0000</pubDate>
		<dc:creator>Chris Moody</dc:creator>
				<category><![CDATA[Cato Publications]]></category>
		<category><![CDATA[General]]></category>
		<category><![CDATA[Afghanistan]]></category>
		<category><![CDATA[conservatives]]></category>
		<category><![CDATA[energy policy]]></category>
		<category><![CDATA[Financial]]></category>
		<category><![CDATA[Financial Fiasco]]></category>
		<category><![CDATA[Heritage]]></category>
		<category><![CDATA[Patriot Act]]></category>
		<category><![CDATA[San Francisco]]></category>
		<category><![CDATA[Vietnam]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=9767</guid>
		<description><![CDATA[<p>By Chris Moody</p>A few things to consider before comparing Vietnam to Afghanistan. Cato v. Heritage on the Patriot Act. When it comes to energy policy, most conservatives toss free-market ideas aside. When your only choice is to &#8220;be a good victim&#8221;: Man shoots two people to death in San Francisco while police stand by. Podcast: &#8220;Could the [...]<p><a href="http://www.cato-at-liberty.org/thursday-links-7/">Thursday Links</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Chris Moody</p><ul>
<li><a href="http://bit.ly/22Qe9L">A few things to consider</a> before comparing Vietnam to Afghanistan.</li>
</ul>
<ul>
<li><a href="http://bit.ly/4cqxSC">Cato v. Heritage on the Patriot Act</a>.</li>
</ul>
<ul>
<li>When it comes to energy policy, most conservatives <a href="http://bit.ly/TCbwL">toss free-market ideas aside. </a></li>
</ul>
<ul>
<li>When your only choice is to &#8220;be a good victim&#8221;: Man <a href="http://bit.ly/3HAUIz">shoots two people to death</a> in San Francisco while police stand by.</li>
</ul>
<ul>
<li>Podcast: &#8220;<a href="http://bit.ly/31BhXE">Could the Fed Have Foreseen Our Financial Fiasco?</a>&#8220;</li>
</ul>
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<p><a href="http://www.cato-at-liberty.org/thursday-links-7/">Thursday Links</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>Not So Free Love in San Francisco</title>
		<link>http://www.cato-at-liberty.org/not-so-free-love-in-san-francisco/</link>
		<comments>http://www.cato-at-liberty.org/not-so-free-love-in-san-francisco/#comments</comments>
		<pubDate>Mon, 15 Jun 2009 12:56:17 +0000</pubDate>
		<dc:creator>Doug Bandow</dc:creator>
				<category><![CDATA[Energy and Environment]]></category>
		<category><![CDATA[Government and Politics]]></category>
		<category><![CDATA[compost bin]]></category>
		<category><![CDATA[composting system]]></category>
		<category><![CDATA[environment]]></category>
		<category><![CDATA[food scraps]]></category>
		<category><![CDATA[households]]></category>
		<category><![CDATA[integrated waste management]]></category>
		<category><![CDATA[landfills]]></category>
		<category><![CDATA[methane gas]]></category>
		<category><![CDATA[recyclables]]></category>
		<category><![CDATA[robert reed]]></category>
		<category><![CDATA[San Francisco]]></category>
		<category><![CDATA[sunset scavenger co]]></category>
		<category><![CDATA[trash bins]]></category>
		<category><![CDATA[trash collectors]]></category>
		<category><![CDATA[waste collectors]]></category>
		<category><![CDATA[waste management board]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=7682</guid>
		<description><![CDATA[<p>By Doug Bandow</p>Yet again the city of San Francisco is demonstrating its &#8220;love&#8221; for humanity.  By threatening to fine them for getting their garbage wrong. Reports MSNBC: Trash collectors in San Francisco will soon be doing more than just gathering garbage: They&#8217;ll be keeping an eye out for people who toss food scraps out with their rubbish. San [...]<p><a href="http://www.cato-at-liberty.org/not-so-free-love-in-san-francisco/">Not So Free Love in San Francisco</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Doug Bandow</p><p>Yet again the city of San Francisco is demonstrating its &#8220;love&#8221; for humanity.  By threatening to fine them for getting their garbage wrong.</p>
<p><a href="http://www.msnbc.msn.com/id/31265662">Reports MSNBC</a>:</p>
<blockquote><p>Trash collectors in San Francisco will soon be doing more than just gathering garbage: They&#8217;ll be keeping an eye out for people who toss food scraps out with their rubbish.</p>
<p>San Francisco this week passed a mandatory composting law that is believed to be the strictest such ordinance in the nation. Residents will be required to have three color-coded trash bins, including one for recycling, one for trash and a new one for compost — everything from banana peels to coffee grounds.</p>
<p>The law makes San Francisco the leader yet again in environmentally friendly measures, following up on other green initiatives such as banning plastic bags at supermarkets.</p>
<p>Food scraps sent to a landfill decompose fast and turn into methane gas, a potent greenhouse gas. Under the new system, collected scraps will be turned into compost that helps area farms and vineyards flourish. The city eventually wants to eliminate waste at landfills by 2020.</p>
<p>Chris Peck, the state&#8217;s Integrated Waste Management Board spokesman, said he wasn&#8217;t aware of an ordinance as tough as San Francisco&#8217;s. Many cities, including Pittsburgh and San Diego, require residents to recycle yard waste but not food scraps. Seattle requires households to put scraps in the compost bin or have a composting system, but those who don&#8217;t comply aren&#8217;t fined.</p>
<p>&#8220;The city has been progressive, and they&#8217;ve been leaders and it appears that they&#8217;re stepping out of the pack again,&#8221; he said.</p>
<p>San Francisco officials said they aren&#8217;t looking to punish violators harshly.</p>
<p>Waste collectors will not pick through anyone&#8217;s garbage, said Robert Reed, a spokesman for Sunset Scavenger Co., which handles the city&#8217;s recyclables. If the wrong kind of materials are noticed while a bin is being emptied, workers will leave what Reed called &#8220;a love note,&#8221; to let customers know they are not with the program.</p>
<p>&#8220;We&#8217;re not going to lock you up in jail if you don&#8217;t compost,&#8221; said Nathan Ballard, a spokesman for Mayor Gavin Newsom who proposed the measure that passed Tuesday. &#8220;We&#8217;re going to make it as easy as possible for San Franciscans to learn how to compost.&#8221;</p>
<p>A moratorium on imposing fines will end in 2010, after which repeat offenders like individuals and small businesses generating less than a cubic yard of refuse a week face fines of up to $100.</p>
<p>Businesses that don&#8217;t provide the proper containers face a $500 fine.</p></blockquote>
<p>Most everyone wants to be loved.  But this sort of government &#8220;love&#8221; we can all do without!</p>
<p><a href="http://www.cato-at-liberty.org/not-so-free-love-in-san-francisco/">Not So Free Love in San Francisco</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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		<title>The Fed Is Now Scared</title>
		<link>http://www.cato-at-liberty.org/the-fed-is-now-scared/</link>
		<comments>http://www.cato-at-liberty.org/the-fed-is-now-scared/#comments</comments>
		<pubDate>Fri, 27 Mar 2009 12:46:57 +0000</pubDate>
		<dc:creator>Gerald P. O'Driscoll</dc:creator>
				<category><![CDATA[Finance, Banking & Monetary Policy]]></category>
		<category><![CDATA[Anna J. Schwartz]]></category>
		<category><![CDATA[fed policy]]></category>
		<category><![CDATA[financial institutions]]></category>
		<category><![CDATA[illiquid assets]]></category>
		<category><![CDATA[janet yellen]]></category>
		<category><![CDATA[monetary policy]]></category>
		<category><![CDATA[San Francisco]]></category>

		<guid isPermaLink="false">http://www.cato-at-liberty.org/?p=6488</guid>
		<description><![CDATA[<p>By Gerald P. O'Driscoll</p>Bloomberg News (March 25, 2009) reported a speech by San Francisco Fed president Janet Yellen in which she called for authority for the central bank to issue its own debt. The request must have most people perplexed, especially since her rationale was delivered in Fed-speak. “Issuing such debt would reduce the volume of reserves in [...]<p><a href="http://www.cato-at-liberty.org/the-fed-is-now-scared/">The Fed Is Now Scared</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
]]></description>
			<content:encoded><![CDATA[<p>By Gerald P. O'Driscoll</p><p>Bloomberg News (March 25, 2009) <a href="http://www.bloomberg.com/apps/news?pid=20601087&amp;sid=av.e3zrzj_FI&amp;refer=home">reported a speech</a> by San Francisco Fed president Janet Yellen in which she called for authority for the central bank to issue its own debt. The request must have most people perplexed, especially since her rationale was delivered in Fed-speak. “Issuing such debt would reduce the volume of reserves in the financial system and push up the funds rate without shrinking the total size of our balance sheet,” Yellen said.</p>
<p>Actually, Yellen, who is also an economist, is addressing a very serious issue. It is one that critics of current Fed policy have been raising for some time.</p>
<p>The Fed is loading up its balance sheet with illiquid assets, including many dubious assets taken in as collateral for loans of money and Treasury securities to financial institutions. In the process, the Fed has an ever diminishing supply of highly liquid (and safe) Treasury securities on its own balance sheet.</p>
<p>Critics like economic historian Anna J. Schwartz and former Fed attorney Walker F. Todd have pointed out that the Fed will have a technical problem if it wants to start sopping up all the liquidity it has created. In a 2008 paper in <em>International Finance</em>, Schwartz and Todd wrote that “it is fair to ask what the Fed intends to do if it decided that it would tighten monetary policy by raising interest rates.” Without a sufficient supply of highly liquid assets to sell in the markets, the Fed would need to dispose of its illiquid assets at losses. That would possibly drive up interest rates more than desired.</p>
<p>Yellen’s call for the power to issue Fed debt signals a number of things. First, the Fed, contrary to recent happy talk from other officials, is worried about inflation. Second, its critics are correct that the Fed has painted itself into a corner by taking illiquid assets onto its balance sheet. Third, the Fed wants to hold those dubious assets to maturity (hence Yellen’s point about not “shrinking the total size of our balance sheet”).</p>
<p>Yellen’s trial balloon drew a “no comment” from the Fed’s Washington headquarters. The issue will not go away.</p>
<p><a href="http://www.cato-at-liberty.org/the-fed-is-now-scared/">The Fed Is Now Scared</a> is a post from <a href="http://www.cato-at-liberty.org">Cato @ Liberty - Cato Institute Blog</a></p>
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