There is a carefully researched article appearing in the Huffington Post that says yes.

The Federal Reserve’s Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a “visiting scholarship.” A Fed spokeswoman says that exact figures for the number of economists contracted with weren’t available. But, she says, the Federal Reserve spent $389.2 million in 2008 on “monetary and economic policy,” money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

All of the facts in this article are true.  Any academic economist sees first-hand the role the Fed has in supporting research in the area of monetary economics.  And it is easy to see how this article could lead an outsider to its conclusions.

Paul Krugman, in Sunday’s New York Times magazine, did his own autopsy of economics, asking “How Did Economists Get It So Wrong?” Krugman concludes that “[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system.”

So who seduced them?

The Fed did it.

I am not a macroeconomist and apart from an occasional free lunch I have never been the beneficiary of Fed research funding, so I easily could be out of the loop on this conspiracy but for what it is worth I don’t see any evidence of it.  All of the facts are true, but the conclusion follows from them only if you want it to.

I am sure it would be easy to compile a large list of papers funded by Fed research money that are critical of Fed monetary policy.

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