Another PR stunt. Not sure why I go to these

[Dari]

I went to hear Bill Dudley, the Chairman of the New York Fed, speak last night. He was defensive of the Federal Reserve's actions the past two years (big surprise) and said the public had the right to be angry at bankers making record profits after we bailed them out (the tone of his new PR campaign). Not surprisingly, some fell for it and felt his pain rolleyes. I almost felt like bringing up my topic of having the Feds forego focusing on full employment but I knew that wasn't the place for it. In fact, I think the Fed, Treasury, and banks like things the way they are. Think about it: When banks behave badly, the Fed and Treasury bail them out. The Fed then keeps inflation artificially low for a long time. What do the banks do with that spread? They buy Government bonds, of course, giving Uncle Sam money he doesn't deserve. While the downsides are obvious and extremely dangerous, all three are very happy. The joke is on the public.

 

[First]

While the downsides are obvious and extremely dangerous,

The downsides are what exactly? Just curious where you're going with this.

 

[Dari]

The downsides are what exactly? Just curious where you're going with this.

What's happening now. Businesses are not getting the credit they need. Instead, banks are buying bonds. Crowding out effect. Also, should the government ever have the balls to let one or more of these banks fail, they could ask for their money back, which would force the government to find the necessary funds. If it just prints it, trust will fly out the window. Hence, it looks like the banks have the government by the balls and they can squeeze anytime they please.

 

[drebo]

the public had the right to be angry at bankers making record profits

I'm sure he didn't elaborate on the fact that the Fed was directly responsible for the record profits the banks made on paper.

Our credit markets should not be determined by an organization over which voters have no control or even oversight.

This is bad bad bad. The Fed needs to go.

 

[Dari]

I'm sure he didn't elaborate on the fact that the Fed was directly responsible for the record profits the banks made on paper.

Our credit markets should not be determined by an organization over which voters have no control or even oversight.

This is bad bad bad. The Fed needs to go.

He alluded to your latter point by criticizing the Paul bill which would give the GAO oversight over the Federal Reserve.