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Federal Reserve Folklore

The opinions expressed by columnists are their own and do not necessarily represent the views of

The familiar expression of “the fox guarding the henhouse” could very well be the title of an historic Grimm Brothers fairytale — or not.  But the apparent selection of the new Federal Reserve Chairman seems to be bringing the tale to life.  It goes something like this:


King Warren of the Buffett boldly proclaims the death of the kingdom, if the Black Prince Derivative were allowed to run amuck.  Suddenly, from the court, comes a voice of one Lord Larry of the Summers, “Sire, me thinks you don’t understand the true motives of the Black Prince Derivative, he should be allowed to run free and unfettered as he brings great wealth to a few in the kingdom, at the expense of many.”  Lord Larry then added, “But that is why we are inside, and they are outside.”  After adjusting his hearing aid, the sire responded, “But to many he brings ruin and misfortune.”  The sire then thought for a moment, “But that is why they are outside, and we are inside.”  Lord Larry reminded the king of his dealings with the Black Prince, and then the king said, “We will let the Black Prince Derivative run free, let it be so.”  Thereafter, from the court, came another voice, Lord William of the Tatro, who proclaimed, “Sire, perhaps Lord Larry has personal motives about feeling the way he does about the Black Prince.”  Lord William went on to say, “I seem to recall the leverage of the Kingdom of Long-Term Capital Management at 55-to-1, greatly approved by Lord Larry until the Kingdom of LTCM was no more.  Rumors abound about the destruction of the Kingdom of the Crimson Harvard; Lord Larry continues to say that particular episode was about a vegetable, a beet.”  Lord William then presumed, “Sire, it seems that Lord Larry has a very close relationship with the Street of Walls, which as the sire knows, has unleashed its one-eyed monster, the Trader of High Frequency, on all the kingdoms of the land.”  


King Warren subsequently raised his hand and declared, “Be still, Lord William of the Tatro,” as he ordered the guards to seize Lord William and take him to the dungeon.  

Standing directly behind the king were his two trusty advisors, ex-Chancellor William of the Clinton, and the sultan from the foreign land, Barack Hussein Obama.  “Well done,” they both said to the king.  “Now it’s time to elevate Lord Larry to the highest office in the land,” the former chancellor and the sultan announced.  And the king readily agreed.  At that point, Lord Larry of the Summers smiled joyfully as he instantly knew that the Black Prince Derivative would run amuck and live forever, with happiness reigning on all — at least for those on the inside.  

What’s the moral of the story?  Beware when the fox guards the henhouse.   


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