Ability of the fed to control the economy

I need some help with this article. I need a two to three paragraph explanation in real people terms and please explain what the article is saying about the ability of the fed to control the economy.

Article:

No committee of federal employees sets the price of soybeans, autos or equities. Why should we have one trying to set the price of money?

Alan Greenspan is a knight commander of the British Empire and Ben S. Bernanke is a distinguished scholar, but each draws a government paycheck. So when reading about the deliberations of the Federal Open Market Committee, the Fed's policymaking arm, I mentally substitute the words "government workers" for the loftier term "central bankers." Government workers are only human.

Central bankers are susceptible to believing themselves to be somehow more than human. To listen to Greenspan, Bernanke and the other ten members of the FOMC, you'd suppose they had advance copies of the 2005 editions of the Wall Street Journal. They dream up an interest rate--the federal funds rate, now 1%--and impose that rate on the worldwide dollar economy. But what do government workers know about interest rates?

Stephen S. Roach, ace economist at Morgan Stanley, was once a government worker himself. A staff member of the Federal Reserve Board, he toiled alongside none other than Donald Kohn, a bright young economist who rose through the ranks to his present eminence as a Fed governor. Roach has publicly been lobbying the Fed to lift its 1% rate; Kohn has paid him the high compliment of disputing him (though not, of course, naming him).

Much separates these two thoughtful men, but one idea unites them. They agree that the Fed should set the rate (they disagree only on where to set it, and why). I urge them to reconsider. No committee of federal employees sets the price of soybeans, automobiles or equities. There is a vast futures market devoted to the price of credit. Why should a government committee set short-term interest rates?

If it were up to me, the Fed would have no such authority. As it is, the Fed is rapidly losing authority. For all intents and purposes, U.S. monetary policy is being outsourced to Asia. The situation in brief: We Americans import more than we export; we discharge these debts in dollars; the dollars wind up in the hands of America's creditors, notably Japan and China; the Japanese and Chinese invest the dollars in short-dated Treasury and agency securities. In the past 12 months, until early April, foreign central banks collectively bought $277 billion to the Fed's $30 billion; in all, the foreigners hold $1.2 trillion of Treasury and agency securities to the Fed's $674 billion. The Fed sets the rate, but the foreigners more and more en-force the policy. Their massive buying of short-term dollar instruments is what holds down money market rates at the current ultralow level.

The foreigners buy not only because they want to but also because they feel they have to. They live in dread of a steep dollar decline, an event that would make their exports uncompetitive. So they buy dollars to suppress the appreciation in their own currencies. A truth worth pondering is that exchange rates and interest rates are heavily influenced, if not controlled, by government workers the world over.

Roach believes the 1% funds rate is dangerously low. It incites speculation, he says, and perpetuates a half-dozen grotesque economic imbalances, including an alltime low savings rate and a record-high current-account deficit. "By urging investors to ignore the classic perils of macro imbalances," he writes, "America's central bank is, in effect, reinforcing the conviction of market participants that it is prepared to let the economy and the markets run. Such a message effectively condones further froth in the financial markets, running the risk of new asset bubbles and postbubble shakeouts that an ammunition-short Fed will be unable to counter."

To which Kohn replies that it's hard to outguess the market. Economists are not very good at this, he points out, and "neither is anyone else, including Wall Street analysts." Interest rates are indeed at "unsustainable levels." They will sooner or later have to go up, but later more likely than sooner.

"As was the case in the late 1990s," Roach rejoins, "America's monetary authorities are, in effect, assuming the inappropriate role as cheerleaders. "[T]his smacks of recklessness that can only end in tears."

Kohn is right that markets are fairly efficient. Roach is right that markets when manipulated by government workers become less efficient. For those who seek shelter from government-imposed interest rates and exchange rates, I continue to favor gold and silver. Neither asset produces income or cash flow, and each, for that reason, must be regarded as a speculation. But there are speculations and there are speculations. The proposition that our monetary masters will badly miscalculate is, I believe, about as sure a thing as life affords.