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Per BoingBoing: http://www.wilmott.com/blogs/eman/index.cfm/2009/12/29/Trading-Places

Headlined, "I had a fantasy in which the Fed and the TSA (Transportation Security Administration) switched roles."

It's short, so go read it. Then come back.

Ah, The Fed is charged with the security of the Financial System, where the TSA is charged with the security of people moving around. Different goals. The Fed's goal is to ensure that a) money keeps moving around, and b) does so in a minimally fraudulent way. The TSA's goal is to ensure that 1) people don't die, and 2) they have the option to move around if they want to.

The TSA would really prefer is if people just stayed put, as it would make their job a lot easier.

The Fed would really prefer if money keeps moving around, because without it doing that we end up with things like negative growth.

I'd call these diametrically opposed goals. One needs to keep things moving around, the other would rather they didn't at all.

So if a terrorist bombs a flight, the TSA moves to restrict that activity by making things (hopefully) more inconvenient for future would-be bombers (and everyone else). If a bank fails the Fed steps in to ensure that depositors get their money back, and takes steps to ensure people don't think the entire system is at fault in order to maintain confidence.

It all depends on your definition of security. "Bad things don't happen," is rather nebulous, you see, so you need more focused definitions. "People don't die using this service," is one the TSA subscribes to. "Ensuring business as usual continues," is one the Fed subscribes to. People die from financial crisis all the time (suicide in the face of mounting debts, retirement incoming coming in w-a-y under projection forcing skimped health-care, loss of a job forcing a person to live on the streets), and yet this isn't really on the Fed's radar. At the same time, the TSA is not at all afraid to change 'continues as usual'; witness their dictum banning in-flight communications.

And yet both do take in to account confidence in their respective systems. For the Fed, confidence is of paramount importance, for without confidence there is no lending, and without lending, there is no wealth creation. The TSA also takes in to account confidence, as their political existence is dependent upon it. For the Fed, even a little loss of confidence is a very bad thing. For the TSA, a little loss of confidence is a small price to pay to prevent future tragedy, and they can afford to wait until confidence is rebuilt due to lack of tragedy.

But it still doesn't help make flying any less of a pain in the neck.

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