The sneakernet of the Federal Reserve

(Just a picture I took with my phone)

You might have heard of a study of a giant data dump of taxi rides in New York City. It was just released a few days ago, and it's not pretty:

NYC taxi ride data suggest cozy relationship between big banks and the Fed

Fresh from the University of Chicago, an analysis of more than 500 million taxi rides shows a disturbing pattern of people taking rides from the biggest banks in New York to Federal Reserve Bank of New York to gather news of the Federal Open Market Committee meetings at the Fed. From the article:

The data show a striking increase in rides from the commercial banks to the New York Fed almost immediately after the midnight lifting of the communications blackout. Tight restrictions on Federal Reserve staff communications are in force until midnight the day after an FOMC announcement, and rides to the New York Fed are elevated between 1 and 4 a.m. thereafter. The timing and location suggest that information pertinent to the conduct of monetary policy is being shared. The Fed might, for example, seek information on bond market conditions or provide clarification about the announcement.

Isn't it interesting how the people closest to the Federal Reserve Bank feel such a strong need for the privacy of face to face meetings to gather information on the most important decisions made in one of the greatest halls of power?

Why don't they use Telegram Chat? How about Facebook Chat? Or even Hangouts? They could even write their own super-encrypted insider chat program by hiring the best of the best developers off Wall Street or Silicon Valley, but they didn't. They ride in cabs in the dead of night to get the information they need for the next big deal straight from the Fed.

The data in this study shows how people at the worlds biggest and most powerful banks really feel about the security of their computers and their phones. I guess they're really worried about surveillance in the surveillance state they created through their own influence in public policy.

Worse, these are the most privileged, most advantaged people in the world. They could pretty much have anything they wanted if they asked for it. But here they are, scurrying to and fro in the night to gather what is about as close as you can get to insider information without breaking the law.

Yeah, they're going by the letter of the law, not the spirit of the law. I'm sure they talk a good game about free markets and capitalism. But judging by the way they beat a trail to get that fresh scoop of news, free markets are great, as long as they're the first to market.

In contrast, monetary policy in cryptocurrency is out in the open for all to see. The code that runs the mining rigs for proof of work coins and the witness rigs for proof of stake coins is open source. In fact, for many coins, the source code for the programming, the rules that determine how the coins are "minted" or transferred in a transaction, that code can be found on Github. For those who don't know, Github is a great place for people to share code and collaborate on coding projects.

Most cryptocurrencies also have democratic governance systems that permit open deliberations on coin creation and transaction processing, you know, like "monetary policy" at the Fed. And since the code is open source, anyone can re-use the code to create their own coin and offer it to the public. Of course, creating a cryptocurrency that actually has value as a currency is an entirely different matter. But I think it is fair to say that the most successful cryptocurrencies also have the most transparent governance. Everything is above board with currencies like Bitcoin, Bitcoin Cash, Ethereum, and EOS.

You simply won't find that kind of transparency with the Fed or the banks that feed off of that prized information disseminated by the Fed. I can remember the days when former Fed Chairman Alan Greenspan used to wipe billions off stock market equity just by dropping a comma. I think those days are gone now.

Who knows how long the taxi river has been going on with the FOMC meetings? But I'd bet that this relationship between the big banks and the Fed has been around for decades, if not since the inception of the Fed.

Here is the kicker. These people are supposed to be the best and the brightest in the banking industry, but they still need that helping hand, first dibs on the golden info. These are the same people who bet against Main Street while the housing bubble got big. These are the same people who could shape public policy at will to favor their industry, and still tanked the economy. These are the biggest banks are that had access to the best information possible, and still found themselves bankrupt on September 30th, 2008.

Good thing those banking elves didn't take selfies and post them on Facebook while they were meeting with the Fed. We wouldn't want to put the Fed in an unfavorable light now, would we?