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The economic shorthand of hawks and doves

A Red-tailed Hawk soars through the sky.

Janet Yellen's hearing before a Senate committee will have plenty of talk of economic policy, and maybe some talk of birds, as well.

The current Fed chairman, Ben Bernanke, is a dove. His predecessor, Alan Greenspan, was dove-ish. But Paul Volcker? He was a hawk when he led the Fed from 1979 to 1987.

To find out the difference between hawks and doves, I went in search of a really rare bird: Donald Marron, an economist and a birdwatcher, who said the hawk and dove dichotomy has been around for decades.

“Doves are the bird of peace, and hawks have talons and are, you know, the violent ones,” Marron explains.

In monetary policy, hawks have a laser-like focus on inflation. Keeping that under control is one of the Fed’s two mandates. And doves? They’re concerned with the other mandate.

“The dove, being a little bit softer, might be more concerned about what is going on in labor markets, the rate of growth, and the unemployment rate,” says Paul Wachtel, a professor of economics at NYU’s Stern School of Business.

Doves are not happy, because unemployment is at 7.3 percent. And hawks? As Wachtel puts it, “there aren’t too many hawks out there nowadays.”

That’s because inflation right now is really low.

“The concern of a hawk today would be more that the Fed’s easy monetary policy is distorting asset markets,” says Phillip Swagel, a public policy professor at the University of Maryland.

The Fed has been buying bonds to push interest rates down, and that is something that makes hawks skittish.

David Blanchflower teaches economics at Dartmouth, and he says a good Fed policymaker – whether a hawk or a dove – keeps an open mind.

“When the economy gets back to normal, and when we start to see a rise in inflation eventually, then the focus will have to move away from the employment part of the mandate to the inflation part of the mandate.”

Janet Yellen could be considered a good example of this. Called a hawk in the nineties, now she is considered a dove.

Blanchflower says the bird analogies don’t stop here. He was called an “uber dove” when he was on the Bank of England’s monetary policy committee.

“People there actually classified a third type, which were people who sat on the fence in the middle, and were called pigeons.”

The bird calls linked above and used in the broadcast version of this report came from the Macaulay Library at The Cornell Lab of Ornithology.

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.
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At least we’re leaving off the argument in favor of a Fed policy of continual QE (purchases of government securities) “until the unemployment level reaches 6%,” which strikes me as incredibly presumptuous. With this sort of reasoning, Keynesian economic stimulus, via monetary policy, is employed in pursuit of the supply-side idea that pumping money into the banking system is going to “trickle down” to businesses and eventually create jobs. Fed purchases of bonds (and other financial instruments—such as all the crap on account at Fannie and Freddie), drives down interest rates, which have no further to go in this economic environment (liquidity trap) where deflation could be a concern in the absence of QE. Paul Krugman qualifies his support (for QE) by suggesting that we should supplement monetary stimulus with greater fiscal stimulus, such as rehiring teachers, previous laid off in the public sector as public concern shifted (no accident) from economic stimulus to public debt. Alternatively, David Stockman berates all this monetary stimulus as a creature of crony capitalism, in that it’s doing nothing more than feeding the greed of Wall Street financiers who have been bailed out at taxpayer expense and are now actively returning to bubble creation (some with a mandate [my take]). I agree with both of them. What we need is Keynesian fiscal stimulus of the direct public investment kind—as in wholly owned public industries; and austerity in the financial markets—as in ending the financialization of America with a policy of zero return for investors if this ever happens again, as it surely will. No one is talking about that, though, because that would mean a united congress committed to a return to a progressive tax base and a country governed by the people, for the people. Once again, we’re stuck with debates that are limited to whatever select Keynesian or monetarist policies favor investment banking, high finance, and corporate America at the expense of wage-earners, taxpayers, consumers, and small businesses.

Thanks for listening, Steve. Thanks also for taking the time to comment. You misquoted me, however. I said, "The Fed has been buying bonds to push interest rates down."

Sorry for the misquote, David. I kept the quote in my head while going from the room where the radio is playing to another room where the computer is located to type my comment. I mangled the quote enroute.

But the essence of my comment stands. The Fed is fighting an economy stalled in a liquidity trap, with interest rates effectively at zero (what economists call the lower bound). The Fed is doing all it can to RAISE interest rates, not "to push interest rates down." In fact, in the downward direction, interest rates have nowhere to go. Only if the Fed can raise interest rates high enough to escape this liquidity trap will it be able to effectively use the levers of monetary policy. Raising interest rates, not lowering them, is the Fed's current goal and it's not succeeding.

The Fed is NOT "buying bonds to keep inflation down."

Exactly the opposite. The Fed is trying to breathe a little inflation into the economy, but it can't even hit its own inflation target.

Come on guys, get the macroeconomics right.

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