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Monday, November 23, 2009

City of Ramsey government. Openness and responsiveness is refreshing and praiseworthy even if you disagree with decisions the decision makers reach.

This link, the mayor's blog [the predecessor did not even list an email address on the city's webpage]:

http://mayorramsey.blogspot.com/2009/10/hard-numbers.html

I asked some questions there, in part playing the Devil's advocate, and am happy with answers being added in the post comments.

The entire bonding and reserves question is more complex than the thread in comments there indicates.

In economic hard times, stimulus concerns suggest that government can act counter-cyclically. With a credit crunch and unemployment effects being reported in the press so generally that no link is needed, a municipal government that lessens its budget and spends down reserves acts prudently, and reserves can be replenished later, in better times - as they were built up in the past.

At the federal level it is not a question of reserves management, but deficit management; where, for example, deficits arising during the Reagan presidency were paid down during the Clinton presidency, and where now, because of the economy, the record deficits from the Bush years can be carried longer to not further stress the current credit-pinched situation.

Either way, Keynes advocated government counter-cycle policy to smooth business cycle impacts on world economies. Having counter-cycle policies, and auditing the central bank's meanderings to see if its policies have been sound, are both requisite behaviors of good government. I await the success of the Audit the Fed movement, and if it reaches to auditing of FDIC and how community bank cut-overs are handled, the greater degree of sunshine will lead to greater public trust and better policy.