Obama Fed Board Nominee Peter Diamond Discovers His Nobel Prize In Economics Is Worthless, Pulls Nomination In Disgust

Tyler Durden's picture

In a move that is sure to send the infamous Fed "economist" (Ph.D., never forget) Kartik Athreya over the edge, Obama's nominee for the Fed Board, after unsuccessfully trying to enter the one circle that is just less exclusive than the Goldman partnership ranks for over a year, has decided to pen an Op-Ed in the NYT titled "When a Nobel Prize Isn't Enough", and disgusted with the fact that his utterly worthless Nobel prize in something or another can't even buy him one seat with those who decide the price of money, has pulled his nomination in utter disgust. "Last October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be? " How indeed: could it be that, gasp, Nobel awards are merely a honorary award in groupthink, presented to anyone who perpetuates the status quo with little regard for actual merit-based contribution (one needs only recall Obama's Peace prize just as the President is contemplating opening up a 4th, or is that 5th, war front?). Most importantly: nobody tell Krugman his one validation of his life's work, has just been downgraded to junk.

When a Nobel Prize Isn’t Enough


Lexington, Mass.

LAST October, I won the Nobel Prize in economics for my work on
unemployment and the labor market. But I am unqualified to serve on the
board of the Federal Reserve — at least according to the Republican
senators who have blocked my nomination. How can this be?

The easy answer is to point to shortcomings in our confirmation process
and to partisan polarization in Washington. The more troubling answer,
though, points to a fundamental misunderstanding: a failure to recognize
that analysis of unemployment is crucial to conducting monetary policy.

In April 2010, President Obama nominated me to be one of the seven
governors of the Fed. He renominated me in September, and again in
January, after Senate Republicans blocked a floor vote on my
confirmation. When the Senate Banking Committee took up my nomination in
July and again in November,  three Republican senators voted for me
each time. But the third time around, the Republicans on the committee
voted in lockstep against my appointment, making it extremely unlikely
that the opposition to a full Senate vote can be overcome. It is time
for me to withdraw, as I plan to inform the White House.

The leading opponent to my appointment, Richard C. Shelby of Alabama, the ranking Republican on the committee, has questioned the relevance of my expertise.
“Does Dr. Diamond have any experience in conducting monetary policy?
No,” he said in March. “His academic work has been on pensions and labor
market theory.”

But understanding the labor market — and the process by which workers
and jobs come together and separate — is critical to devising an
effective monetary policy. The financial crisis has led to continuing
high unemployment. The Fed has to properly assess the nature of that
unemployment to be able to lower it as much as possible while avoiding
inflation. If much of the unemployment is related to the business cycle —
caused by a lack of adequate demand — the Fed can act to reduce it
without touching off inflation. If instead the unemployment is primarily
structural — caused by mismatches between the skills that companies
need and the skills that workers have — aggressive Fed action to reduce
it could be misguided.

In my Nobel acceptance speech in December, I discussed in detail the
patterns of hiring in the American economy, and concluded that
structural unemployment and issues of mismatch were not important in the
slow recovery we have been experiencing, and thus not a reason to stop
an accommodative monetary policy — a policy of keeping short-term
interest rates exceptionally low and buying Treasury securities to keep
long-term rates down. Analysis of the labor market is in fact central to
monetary policy.

Senator Shelby also questioned my qualifications, asking: “Does Dr.
Diamond have any experience in crisis management? No.” In addition to
setting monetary policy in light of a proper understanding of
unemployment, the Fed is responsible for avoiding banking crises, not
just trying to mop up afterward.

Among the issues being debated now is how much we should increase
capital requirements for banks. Selecting the proper size of the
increase requires a balance between reducing the risk of a future crisis
and ensuring the effective functioning of financial firms in ordinary
times. My experience analyzing the properties of capital markets and how
economic risks are and should be shared is directly relevant for
designing policies to reduce the risk of future banking crises.

Instead of going to the Fed, however, I will go about my congenial
professional existence as a professor at M.I.T., where I have taught and
researched since 1966, and I will take advantage of some of the many
opportunities that come to a Nobel laureate. So don’t worry about me.

But we should all worry about how distorted the confirmation process has
become, and how little understanding of monetary policy there is among
some of those responsible for its Congressional oversight. We need to
preserve the independence of the Fed from efforts to politicize monetary
policy and to limit the Fed’s ability to regulate financial firms.

Concern about the (seemingly low) current risk of future inflation
should not erase concern about the large costs of continuing high
unemployment. Concern about the distant risk of a genuine inability to
handle our national debt should not erase concern about the risk to the
economy from too much short-run fiscal tightening.

To the public, the Washington debate is often about more versus less —
in both spending and regulation. There is too little public awareness of
the real consequences of some of these decisions. In reality, we need
more spending on some programs and less spending on others, and we need
more good regulations and fewer bad ones.

Analytical expertise is needed to accomplish this, to make government more effective and efficient.
analytical thinking should not be drowned out by mistaken,
ideologically driven views that more is always better or less is always
I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

Peter A. Diamond is a professor of economics at the Massachusetts Institute of Technology.

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jkruffin's picture

What politician or economist, other than the morons already around Obama, want to put their name on a depression?  I don't care how many economics degrees you have, when the PTB force you to lie to people, there is no way I want any part of that.  I wouldn't let these idiots put my head on the chopping block when this ponzi collapses in epic style.

Really, who would take this job? Only someone wishing to live in fantasy land...

trav7777's picture

he doesn't believe he's lying...he believes the bullshit.

This is what I keep saying about economists.  They are in a fishbowl and won't acknowledge that there is anything outside of the tank.

As for this guy, hmm...with a surname like Diamond, anyone want to take a stab at whether he represents any "diversity" to the Fed board?

G-R-U-N-T's picture

"Analytical expertise is needed to accomplish this, to make government more effective and efficient."

LOL, as if this would ever happen. Ie: The climate change looting the living shit out of the  masses fraud. Analytics at it's best...

66Sexy's picture

This schmuck isnt qualified to clean up the shit on monday morning.. let alone lick my balls...


LowProfile's picture

True, but he's a white guy http://www.usatoday.com/money/economy/2011-06-06-peter-diamond-fed_n.htm

Too bad Travis.  Perhaps one day you'll wake up.

trav7777's picture

jfc you are stupid.

His ethnicity represents NO diversity from the Fed board.

And, no he isn't a "white guy."

What was it you said about waking up, dipshit?

Monedas's picture

He looks kind of white ? Oh, you mean he's a Joooooooooo ? Monedas 2011 Unofficial Spokesman for the Jooooooish Peeple !

HoofHearted's picture

The guy who played Screech was Dustin Diamond. Is this Screech's dad???

jmc8888's picture

Nobel Peace prizes are awards for the 'useful idiots' that believe TPTB bullshit, (said bullshit) created by former Nobel Peace Prize award winners in order to win THEIR awards.

When Cassius Clay learned his olympic medal meant shit (i.e. segragation/racism still applied to him), he threw it into a river or some body of water.

Could this idiot do the same with his Nobel?

Only if he is capable of breaking with groupthink.


SRV - ES339's picture


What a bullshit angle to a story (good chance to lament anything Nobel though... very insightful)!

How about commenting on the group (of children) you helped send to Washington (throw the bums out) blocking any and all nominations regardless of qualification... yes, doing the peoples work again. But then, we wouldn't get the peasantry going like the good old tried and true Nobel (Obama) bashing would we... more "red meat" for the Tea Party crowd please!

A.W.E.S.O.M.-O 4000's picture

Ha! I wouldn't accept a Nobel Prize in Economics if you paid me!


(Please don't tell the Nobel Prize committee I said that)

lolmao500's picture

And most Obamabots think that Krugman is god himself. Mwahahahaha.

GetZeeGold's picture


nobody tell Krugman his one validation of his life's work, has just been downgraded to junk.





shortus cynicus's picture

Krugman shares will rebound, it is long-term, for live investment.

We probably get a small fall back in dark ages of PM based money, but ongoing intelligence decrease of humanity is in a secular trend, so they will win in a long term.


StychoKiller's picture

I have it on good authority that it only costs $5 to dig a Nobel prize out of the ground...

Dolemite's picture

Precious metals to present good buying oppurtunity after a near term correction?

Gold and silver showing signs of weakness, and oil is confirming.


g's picture

what a whiner this economist is. He is probably over at krugman's house crying .

Monedas's picture

Troll patrol ! We meet again ?

williambanzai7's picture

Shut the whole fucking quagmire down...a PhD in how workers and jobs come together. What a pile of useless horseshit. All of them, put them on a barge and sink it.

bronzie's picture

so many PhD's that should never be awarded ...

economics is a pseudo-science to begin with - what does it mean to hold a PhD in a pseudo-science?  are PhDs in economics and PhDs in astrology equally valuable degrees?

psychology of religion? really? a PhD? WTF?

PhDs are just part of the higher-education circle-jerk and the Nobel Prize gives the holder entry into a more exclusive circle of jerkers

DarkAgeAhead's picture

Agreed.  Many PhD's are just a form of intellectual hazing, to conform individuals to a group.  Not much different than law school or a bar exam...etc.

Beyond intellectual hazing, these just create an illusion of intellectual superiority and a fiction for universities to monopolize billions in research funding.

That said, I'm considering one myself.



ElvisDog's picture

I do not have a PhD, but almost all of the people I work with have them. A singular quality among them is they are really smart but get nothing done. Typically, I'm brought in to take charge of projects that are being run by a PhD. The project is way behind schedule and about to get its funding pulled.

bronzie's picture

I'm in month 4 of a new job led by guess what - a PhD

this guy is the most challenging person I have ever worked for - he's smart enough to navigate the political environment at work without actually doing any work

not doing any work includes not giving any meaningful / actionable direction to the people who report to him for direction

the PhD was hired because 'PhD' looks good on proposals when the company is bidding for new work - evidently there are still people in the world that think 'PhD' means something of value ...

yes, this is a DoD project - our tax dollars hard at work ...

trav7777's picture

these economists are part of a clan that has a long and distinguished history of self-deception.  They seem to like to hand out prizes to each other reminding themselves how indispensible they all are to the world.

That a prize in economics could have the same standing as one in physics is a joke.  Nobel in numerology should be next, then perhaps psychiatry, another dismal science from the same clan

Hansel's picture

The prize in economics is not a Nobel prize.  The prize is called the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" and was never mentioned in his will. From the Nobel Prize website

In 1968, Sveriges Riksbank (Sweden's central bank) established the Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize. The Prize is based on a donation received by the Foundation in 1968 from Sveriges Riksbank on the occasion of the Bank's 300th anniversary.

A central bank bribed its way to the right to abuse Nobel's name. Economics was never mentioned in Nobel's will.


The Profit Prophet's picture

How apropos.....they created false prestige for themselves by manipulating the Nobel market.

T.E.I.N. everyone!

Dixie Normous's picture

This nugget of info should be a disclaimer on any article where the term "Nobel Prize in Economics" is used.

It's a fucking bullshit "award" and was given to an asshat like Krugman, for example, as a political statement only.

Broder_Tuck's picture

Here in Sweden nobody cares about the "nobel prize" in ecumentics or whatever. Its a bullshit award for bullshit people, a fake award that is like pissing on the grave of Alfred Nobel. And imagine that people still cares about it... surreal.

Chicken_Little's picture

Remember the Judge Bork nomination to the Supreme Court. He was a solid believer that the constitution was not a "living and breathing document". If someone of good moral character gets rejected by the elites, then to me that rejection is worth 100 nobel awards and 20 PHD's.

ibjamming's picture

PhD in religion is the biggest joke.  Let's have a PhD in "The Lord of the Rings" too!  They're both fantasy.  If they'd just change it to a PhD in "Mind Control" instead of "Religion", then I could agree it has a use.

bronzie's picture

religion IS mind control so it's really just semantics, isn't it?

SoNH80's picture

Microeconomics is an enormously useful business efficiency tool.  "Mainstream" MACROeconomics is slowly being revealed for the bullshit scam that it is.  The "South Park" boys hit the nail on the head when they showed the Treasury honchos using a decapitated chicken to choose their next policy move.....

kridkrid's picture

Great episode.  Iconoclastically delicious.  When the truth tellers are Rolling Stone Magazine and South Park... the end may very well be near.

Cathartes Aura's picture

*meh* in the past such social critics included Firesign Theatre, Monty Python crew, Spike Milligan, Village Voice, LA Weekly, Detroit Free Press, George Carlin, Richard Pryor. . . I could go on, of course - but the bottom line is there's always a group on the periphery pointing fingers at those who believe themselves the center of the universe, and usually the same percentage of cynically aware folk to acknowledge the finger pointer's "truths."

Central Bankster's picture

There are plenty of economists who have correctly predicted the inflationary effects of the stimulus, the lack of jobs it would create, and the lingering systemic risk.  Maybe you need to open your eyes a bit and realize not everyone is a "bought and paid for" Keynesian.

Bob's picture

Maybe--sometimes we certainly go overboard on both the "Keynesian" and eCONomist memes, imo.  It appears to me that in this case the "Keynesian" Fed and the RepubliCon congressional coven is taking no chances on a substantive and sustained dialogue about employment developing in their own house. 

That would be extremely dangerous to their program and goals.

Not to suggest, of course, that the DIMocrats are using this nomination as anything more than their usual feckless charade of giving a shit about the common man.

citta vritti's picture

And not to forget, Hayek shared one in 1974 for contributions to Austrian School economics (von Mises having died in 1973), to balance out, so Rothbard speculates, the grant to Gunnar Myrdal. http://mises.org/daily/4082 

Here’s the marvelous Hayek-Keynes smack-down, part 2: http://www.youtube.com/watch?v=GTQnarzmTOc

Chicken_Little's picture

The ones in power are bought and paid for. Most of the good ones go elsewhere and are disregarded by the MSM as being incompetent. An example of where the good ones are is mises.org in Auburn, Alabama.

laomei's picture

There's absolutely nothing wrong with how Keynesian theory works.  The problem is in who is appempting to implement it and how they are going about that process.

If you take that money and dump it into make work projects which also greatly improve the nation (infrastructure), then you see a nice artificial boost in the short term and due to increased efficiency due to the investment it is all entirely worth it in the long term.  How much do you still rely on the old public works projects from the 30s? (hint: it's a lot).  


It worked out pretty damned good in China, we never really got hit by a "recession" here at all.  In the US however, all the money just got thrown at the banks, finance and rich in hopes of creating jobs... which of course it didn't.  Could have taken that same money and actually invested it in projects that would benefit America.... but that would be crazy socialism I guess.

oogs66's picture

economics is not a hard science...it has enough math that it pretends to be, but in reality economics has more in common with psychology and english than chemistry of physics



bronzie's picture

"in reality economics has more in common with psychology"

absolute truth

we don't have an 'economy' - we have billions of human beings interacting with one another throughout the course of their lives

it is too hard (impossible?) to model the interactions of human beings so economists develop economic models as a substitute

these models work at least 70 or 80% of the time which is enough to get the economists their PhD's, Nobel Prizes, 7-figure incomes in govt and on Wall Street, etc

when the models break down the economists always point to extinuating circumstances - it's not that their model is wrong, it's that 'this time is different because ...' or 'nobody could have forseen ...'

ie, the economic models are BS, the PhDs (both the degrees and the individuals) are BS, all of the rationalizations and justifications offered by the PhDs when their models fail is BS - am I successfully communicating the idea that granting PhDs in economics is BS?



g's picture

Agreed WB7. Perhaps you can do something graphically ;)

greenbear's picture

It's a bit difficult to bring workers and jobs together when the productive sectors of the US economy are dead and gone.  Obviously this concept is not in this egghead's narrow area of expertise.  Sometimes I welcome what's coming.  Let it all burn.    

Oh regional Indian's picture

Too funny. We have own World Bank President, Nobel Prize winning dude, Amratya Sen here in India. He is another student of Poverty. Funny how all these students of poverty have never been or lived poor. Ever. PhD needs to be abolished. That kind of vertical specialization stratifies and calcifies, obvious in the very edifices they have helped build.




TopOnePercent's picture

Amen, TD.


And it would also be nice to make academic types accountable for bad theory enactments ie such as globalization being good for US economics.


Academics need to understand the insular tenured must publish something world is not a qualifier.

The position requires a nonacademic real productive mind with real world experience.


Good riddance.


There are quite enough Obamas in office already that the real world players are already having to overcome.