Ben Bernanke: ?I don?t think people want Congress making monetary policy.?

[GrGr]

Very revealing interview why PRIVATE money interests running the US economy don't want things to change...

Of course Bernanke don't want Congress to oversee his and the other Fed bankers actions... What on earth would they have to gain on that?

 

[nageov3t]

TBH, I'm not sure I want Congress making me a sandwich much less making important decisions.

 

[GrGr]

Originally posted by: loki8481
TBH, I'm not sure I want Congress making me a sandwich much less making important decisions.

So much for the will of the people (the Grass in Bernanke's Elephant analogy in the article...)

 

[First]

Huh? Congress doesn't make monetary decisions, they make fiscal ones. Like tax cuts, and budget spending. They should have no control over the Fed beyond auditing their activities for conflict of interest and corruption. But it's not like they can't (and already do) delegate that power to the SEC and FBI. Bernanke's point was quite well-rooted in precedent.

 

[bamacre]

Ben wants the Fed to have it's secrecy, errr, independence.

That said, hell no, no one should want Congress managing monetary policy. That would make matters even worse. But the bill he's referring to does no such thing. It does audit, or bring to light, their decisions a year after they are made.

 

[Craig234]

I suspect the basics of the situation are the following, and that it might even be a rare topic upon which many who don't usuaally agree can agree:

Whether we're talking about monetary policy, or defense spending, or other similar issues where money and politics collide, the issue is similar.

It's that Democracy has something of a flaw in where the majority are going to make a bad choice.

To digress for a moment, we see the same issues globally - where rainforests are destroyed and endangered specieis wiped out for local profit, where centuries-old communities who live at beaches and fish are threatened by wealthy developers who can buy government support who want to develop tourist spots over them, with a nation that will vote for the income over the rights of the few who liver there.

Back to our nation, when we have 40 Senators vote for a jobs welfare program called the F-22 that's opposed by Obama, Cheney, the Pentagon, and McCain, because it directs some tax dollars to their states, it's an indication about how little the national interest is served when it meets democracy and the people want the cash.

Monetary policy has some of the same - people can vote for a bad policy for similar reasons, ones that lead to things like inflation.

We have decades where Congress controlled monetary policy, not too well.

So the diea of the Congress delagating the policy to indepenant experts makes some sense.

Of course, we want Congress, as the Democratic representative of the people, to be able to oversee and change the system if it's broken, not let the group overrule the public when the public is right - just make it hard enough to not let the public easily force the independant group to follow political greed.

But what if the 'independant group' the Congress delegates to isn't so independant - the Fed has very close links with the big banks, who have grown more and more powerful.

The public doesn't want the group to be corrupt in serving big banks' interests over the public, either.

This is the challenge for the democracy - something that has such power over money as monetary policy, how can you find 'independant experts', really? You can have the Congress corrupted, you can have the finance industry corrupted, these 'experts' don't grow on treest unrelated to some powerful interests.

With military spending we haven't even gotten as sophistiacted a plan as the Fed - just the occassional ad hoc 'commission' to try to cut through some corruption. Instead, the 'military-industrial-Congressional' complex is full speed ahead, with the profts and revolving doors and lobbyists.

What does seem to work well, perhaps surprisingly, is the GAO - somehow credible and non-partisan in a very partisan governmental issue. Perhaps there's something there.

It'll run into ideology, against people screaming against 'government bureacracy' and somehow viewing the banks' role in the Fed as protecting it from the evil government.

 

[MovingTarget]

Bernanke is spot-on here. Congress controls fiscal policy, while another entity controls monetary policy. We'd really be going down the tubes if Congress controlled both of those. It really does belong in independent hands as it is now. Barring that, we'd end up having to create something akin to a modern day Bank of the United States to replace it. We already went through that noise...

 

[Vic]

US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

 

[LunarRay]

The Fed's actions are the quickest way to affect the economy. Congress takes eons to make a fiscal policy change that can affect the economy.
I think it is all about 'time is of the essence'... who ever controls Monetary Policy must be able to do so quickly.

 

[miketheidiot]

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

 

[Beanie46]

Originally posted by: Vic
US Constitution, Article II, Section 5.

Uummm......Vic, there is no Section 5 in Article II of the U.S. Constitution. Perhaps you were thinking of the Canadian Constitution or maybe the Magna Carta?


Look for yourself:

http://www.house.gov/house/Con...tion/Constitution.html



In fact, Article II of the Constitution revolves around the President, how he gets elected, his oath of office, succession of the office if he/she is incapacitated, dies, etc., impeachment, etc. Nothing in Article II about any fiscal or monetary policy anything.

http://www.law.cornell.edu/con...itution.articleii.html

Methinks someone needs to reread the Constitution before splashing his ignorance all over the forums.

 

[GrGr]

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

 

[rchiu]

Originally posted by: GrGr

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

Heh, well yeah too bad that all the rich people is running the bank, the financial system and the wall st. and not your average Joe. And too bad that the bank, the financial system and the wall st. runs the lifeline to all those businesses that employ you, and every average joe out there. And in order to make sure you and average joe are not out of a job, Bernanke have to make sure the big elephant don't get killed first.

Maybe if you come out with a system where average joe runs everything important, bernake will be bailing out average joe first.

 

[miniMUNCH]

Originally posted by: GrGr

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

This.

 

[brxndxn]

Originally posted by: rchiu

Originally posted by: GrGr

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

Heh, well yeah too bad that all the rich people is running the bank, the financial system and the wall st. and not your average Joe. And too bad that the bank, the financial system and the wall st. runs the lifeline to all those businesses that employ you, and every average joe out there. And in order to make sure you and average joe are not out of a job, Bernanke have to make sure the big elephant don't get killed first.

Maybe if you come out with a system where average joe runs everything important, bernake will be bailing out average joe first.

If the elite few weren't chopping so much off the top, the average joe would have the kind of money to start his own business.

Face it.. the Fed controls if the market goes up or down when it raises and lowers interest rates and guidance. The Fed controls foreign policy when it makes secret deals between other central banks. The Fed controls the value of our savings because it is in direct control over the value of the dollar - and it has a history of reducing that value. Because of the Fed, there is no 'safe place' to put your money.. so people are frantically trying to invest (hurray for the economy) - but it promotes a risky style of investing by leveraging that is not good long term for the American people.

All of the bubbles were caused by the Fed putting too much money into the supply.

And, the Fed is not directly supporting the American people. It pays a 6% dividend to its shareholders - which are member banks - private banks.

Every time the Fed creates new money, existing value is diluted.. It is always worth the most to the first to get it.. And under current policy, the first to get new money is always the biggest banks..

 

[LegendKiller]

Originally posted by: brxndxn

Originally posted by: rchiu

Originally posted by: GrGr

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

Heh, well yeah too bad that all the rich people is running the bank, the financial system and the wall st. and not your average Joe. And too bad that the bank, the financial system and the wall st. runs the lifeline to all those businesses that employ you, and every average joe out there. And in order to make sure you and average joe are not out of a job, Bernanke have to make sure the big elephant don't get killed first.

Maybe if you come out with a system where average joe runs everything important, bernake will be bailing out average joe first.

If the elite few weren't chopping so much off the top, the average joe would have the kind of money to start his own business.

Face it.. the Fed controls if the market goes up or down when it raises and lowers interest rates and guidance. The Fed controls foreign policy when it makes secret deals between other central banks. The Fed controls the value of our savings because it is in direct control over the value of the dollar - and it has a history of reducing that value. Because of the Fed, there is no 'safe place' to put your money.. so people are frantically trying to invest (hurray for the economy) - but it promotes a risky style of investing by leveraging that is not good long term for the American people.

All of the bubbles were caused by the Fed putting too much money into the supply.

And, the Fed is not directly supporting the American people. It pays a 6% dividend to its shareholders - which are member banks - private banks.

Every time the Fed creates new money, existing value is diluted.. It is always worth the most to the first to get it.. And under current policy, the first to get new money is always the biggest banks..

1. The Fed alters the overnight rate, not long-term rates, as we have seen, long-term rates are set by the market. "Savings" are only affected if you keep your money in the bank, which is a stupid idea.

2. Who are the "elite"? Do regular people not invest in the banks through pension funds, 401k, and mutual funds? Do they not get the benefit of a relatively smoothly operating system which funds their companies where they work? Isn't that the key to the system, whereby people have confidence that somebody will lend as a last resort if the whole system crumbles, just to make sure people are employed?

Yes, this is only a system for "elites". Get over your populist bullshit.

3. The 6% is what is paid on reserves and their initial investment in the Fed. The Fed is nothing more than a bank capitalized by banks. As an investor in the bank, do you want your bank giving another bank money and NOT getting compensated for it?

The divs paid are not outrageous, usery, or ridiculous, and are, overall, a very small part of the Fed's liabilities or equity.

 

[blackangst1]

Originally posted by: Evan
Huh? Congress doesn't make monetary decisions, they make fiscal ones. Like tax cuts, and budget spending. They should have no control over the Fed beyond auditing their activities for conflict of interest and corruption. But it's not like they can't (and already do) delegate that power to the SEC and FBI. Bernanke's point was quite well-rooted in precedent.

This

 

[brxndxn]

Originally posted by: LegendKiller

Originally posted by: brxndxn

Originally posted by: rchiu

Originally posted by: GrGr

Originally posted by: miketheidiot

Originally posted by: Vic
US Constitution, Article II, Section 5.

The posters supporting Bernanke in this are opposing the democratic control of the money supply in favor of its control in the hands of an elite few.

yes, we are. do you support democratic control of money supply? I can't think of a good reason too. System is current roughly fine.

Only problem with this line of thinking is that Bernanke is NOT independent. He very much represents private interests. He is employed by the big elephants and for the big elephants and the people (the grass) in Ben's analogy, get throd and dumped upon...

Heh, well yeah too bad that all the rich people is running the bank, the financial system and the wall st. and not your average Joe. And too bad that the bank, the financial system and the wall st. runs the lifeline to all those businesses that employ you, and every average joe out there. And in order to make sure you and average joe are not out of a job, Bernanke have to make sure the big elephant don't get killed first.

Maybe if you come out with a system where average joe runs everything important, bernake will be bailing out average joe first.

If the elite few weren't chopping so much off the top, the average joe would have the kind of money to start his own business.

Face it.. the Fed controls if the market goes up or down when it raises and lowers interest rates and guidance. The Fed controls foreign policy when it makes secret deals between other central banks. The Fed controls the value of our savings because it is in direct control over the value of the dollar - and it has a history of reducing that value. Because of the Fed, there is no 'safe place' to put your money.. so people are frantically trying to invest (hurray for the economy) - but it promotes a risky style of investing by leveraging that is not good long term for the American people.

All of the bubbles were caused by the Fed putting too much money into the supply.

And, the Fed is not directly supporting the American people. It pays a 6% dividend to its shareholders - which are member banks - private banks.

Every time the Fed creates new money, existing value is diluted.. It is always worth the most to the first to get it.. And under current policy, the first to get new money is always the biggest banks..

1. The Fed alters the overnight rate, not long-term rates, as we have seen, long-term rates are set by the market. "Savings" are only affected if you keep your money in the bank, which is a stupid idea.

2. Who are the "elite"? Do regular people not invest in the banks through pension funds, 401k, and mutual funds? Do they not get the benefit of a relatively smoothly operating system which funds their companies where they work? Isn't that the key to the system, whereby people have confidence that somebody will lend as a last resort if the whole system crumbles, just to make sure people are employed?

Yes, this is only a system for "elites". Get over your populist bullshit.

3. The 6% is what is paid on reserves and their initial investment in the Fed. The Fed is nothing more than a bank capitalized by banks. As an investor in the bank, do you want your bank giving another bank money and NOT getting compensated for it?

The divs paid are not outrageous, usery, or ridiculous, and are, overall, a very small part of the Fed's liabilities or equity.

1.. The Fed certainly set more than just the overnight rate in the past year. They agreed to loan money for 'toxic' collateral. They partook in bailouts for select financial companies while allowing others to fail. Also, the whole point of savings is that once you save it, it is YOURS. Instead, because of the Fed, our savings are losing value to a point where it makes no sense having any savings in the traditional sense.. Because of the Fed, it's an effort just to preserve the value of your savings.

Besides.. EVERYTHING is determined by the overnight rate and required capital - which is set by the Fed.. in secret.. The market should get to decide where the rates go.. Instead, the Fed can all-of-a-sudden raise or lower rates.. and not even on their 'usual' days.. With overnight rates, the Fed controls Wall Street.

As for 'relatively smoothly', I would disagree.. Our dollar is at a big questionable X in terms of its perceived value, our financial system is and was on the brink of collapse, our home prices tripled and were cut in half within 3 years, there have been numerous bubbles since the creation of the Fed, and the people that made the most money were the lucky ones that took the most ridiculous risk.. Exciting? Certainly.. Smooth? Certainly not.

Because of the Fed, our entire economy is based on short-term gain with blatant disregard for long-term consequences. A big company needs instant profit? Fire people.. Ignore the fact it takes years of effort to build a good team. You say the Fed promotes employment? I say the Fed just got done destroying our job market..

2.. The elite.. I would say are anyone that makes the decisions, gets to partake in 'special circumstance' decisions, gets the information before everyone else does, or gets information no one else does.. For example.. Paulson, Geithner, Goldmann Sachs, Bank of America, Warren Buffet (would you believe he didn't know AIG was going to get bailed out before he made his $5billion purchase). The Fed meets behind closed doors. Everyone behind those closed doors has the know of what almost certainly WILL happen in the markets.. before everyone else. Populist bullshit? NO. Otherwise local banks would be getting bailed out like the big boys.

3. The Fed is not 'capitalized' by banks - it is capitalized by the American People. And, only elites get to own the Fed.. Where's my guaranteed 6% dividend on investment? Ya, there's some companies in the DOW that give a ~6% dividend (Verizon).. but unlike the Fed, companies in the DOW can fail and a big one did recently..

 

[rchiu]

Originally posted by: brxndxn

1.. The Fed certainly set more than just the overnight rate in the past year. They agreed to loan money for 'toxic' collateral. They partook in bailouts for select financial companies while allowing others to fail. Also, the whole point of savings is that once you save it, it is YOURS. Instead, because of the Fed, our savings are losing value to a point where it makes no sense having any savings in the traditional sense.. Because of the Fed, it's an effort just to preserve the value of your savings.

Besides.. EVERYTHING is determined by the overnight rate and required capital - which is set by the Fed.. in secret.. The market should get to decide where the rates go.. Instead, the Fed can all-of-a-sudden raise or lower rates.. and not even on their 'usual' days.. With overnight rates, the Fed controls Wall Street.

As for 'relatively smoothly', I would disagree.. Our dollar is at a big questionable X in terms of its perceived value, our financial system is and was on the brink of collapse, our home prices tripled and were cut in half within 3 years, there have been numerous bubbles since the creation of the Fed, and the people that made the most money were the lucky ones that took the most ridiculous risk.. Exciting? Certainly.. Smooth? Certainly not.

Because of the Fed, our entire economy is based on short-term gain with blatant disregard for long-term consequences. A big company needs instant profit? Fire people.. Ignore the fact it takes years of effort to build a good team. You say the Fed promotes employment? I say the Fed just got done destroying our job market..

2.. The elite.. I would say are anyone that makes the decisions, gets to partake in 'special circumstance' decisions, gets the information before everyone else does, or gets information no one else does.. For example.. Paulson, Geithner, Goldmann Sachs, Bank of America, Warren Buffet (would you believe he didn't know AIG was going to get bailed out before he made his $5billion purchase). The Fed meets behind closed doors. Everyone behind those closed doors has the know of what almost certainly WILL happen in the markets.. before everyone else. Populist bullshit? NO. Otherwise local banks would be getting bailed out like the big boys.

3. The Fed is not 'capitalized' by banks - it is capitalized by the American People. And, only elites get to own the Fed.. Where's my guaranteed 6% dividend on investment? Ya, there's some companies in the DOW that give a ~6% dividend (Verizon).. but unlike the Fed, companies in the DOW can fail and a big one did recently..

You know what's worse than a system with flaws? Those who criticize but cannot come up with $hit to solve the problem.

Everything you complained about is part of the problem with free market. Dollar being questionable is due to mass debt hold by both government and the American people. Home price tripling and cut in half is caused by people and banks' greed, as well as lack of regulation within the market. All these bubble, if you take some economy or bussiness lesson, you would know it's natural part of business/economy cycle.

Fed didn't caused the problem, it's there to alleviate the problem caused by the greed of people and the overall market. And all the smart people with years experience managing countries, economy see the need for such function, that's why every single countries with sizable economy has a national bank/reserve system just like the Fed in the US.

As far as your elite knowing info before other do, there will always be people who knows more. You think Obama don't know what's gonna happen with everything? Congressman/Senators? Why single out people associated with Fed? That's how system works, and there is SEC that tracks people with previliged info taking advantage of those info financially. That's your check and balance right there. As far as bailiout local banks, like I said if you have a system where local banks make more impacts than the big boys, I am sure Fed will bail out local banks first.

Your last point, go look up what's the cost of capital for most business and you'd see that 6% is reasonable for banks to put their capital in Fed. They don't get to decide how much money to put in Fed and they cannot put all their money in Fed to earn that dividend. And those banks don't get to make any decision because they put money in the Fed. The reason Fed wants bank involvement is because Fed need to know the pulse of market to make the right decision. If you want Fed to make decisions that's irrelavent to the market or might even damage the market, by all means, kick all the bank out of the Fed.

Criticize something to try and make it better is good. Criticize something without knowing why things are done that way, and without understanding the real cause of the problem just make you look foolish.

 

[Wreckem]

Originally posted by: GrGr
Very revealing interview why PRIVATE money interests running the US economy don't want things to change...

Of course Bernanke don't want Congress to oversee his and the other Fed bankers actions... What on earth would they have to gain on that?

Considering Congress has passed FIVE HUGE bills with MASSIVE impact over the past decade without reading the bills, and tried to go for six.

Congressional oversight is a joke when those doing the oversight need oversight themselves. And more oversight than elections.

 

[bamacre]

http://www.youtube.com/watch?v=n0NYBTkE1yQ

Currently, the law reads as...

http://www.law.cornell.edu/usc..._00000714----000-.html

Audits of the Federal Reserve Board and Federal reserve banks may not include?
(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)?(3) of this subsection.

HR1207 removes these limitations.

 

[Vic]

Originally posted by: Beanie46

Originally posted by: Vic
US Constitution, Article II, Section 5.

Uummm......Vic, there is no Section 5 in Article II of the U.S. Constitution. Perhaps you were thinking of the Canadian Constitution or maybe the Magna Carta?


Look for yourself:

http://www.house.gov/house/Con...tion/Constitution.html



In fact, Article II of the Constitution revolves around the President, how he gets elected, his oath of office, succession of the office if he/she is incapacitated, dies, etc., impeachment, etc. Nothing in Article II about any fiscal or monetary policy anything.

http://www.law.cornell.edu/con...itution.articleii.html

Methinks someone needs to reread the Constitution before splashing his ignorance all over the forums.

Umm... or more likely it was a simple typo caused by a quick post from memory as Article I Section 5 is correct with regards to this discussion, while you wouldn't have ever known jack without google.

Methinks you should STFU. :roll: <^>

 

[Vic]

Originally posted by: Wreckem

Originally posted by: GrGr
Very revealing interview why PRIVATE money interests running the US economy don't want things to change...

Of course Bernanke don't want Congress to oversee his and the other Fed bankers actions... What on earth would they have to gain on that?

Considering Congress has passed FIVE HUGE bills with MASSIVE impact over the past decade without reading the bills, and tried to go for six.

Congressional oversight is a joke when those doing the oversight need oversight themselves. And more oversight than elections.

You're right, democracy doesn't work and we should bring back the king. :roll:

 

[brxndxn]

Originally posted by: rchiu

Originally posted by: brxndxn

1.. The Fed certainly set more than just the overnight rate in the past year. They agreed to loan money for 'toxic' collateral. They partook in bailouts for select financial companies while allowing others to fail. Also, the whole point of savings is that once you save it, it is YOURS. Instead, because of the Fed, our savings are losing value to a point where it makes no sense having any savings in the traditional sense.. Because of the Fed, it's an effort just to preserve the value of your savings.

Besides.. EVERYTHING is determined by the overnight rate and required capital - which is set by the Fed.. in secret.. The market should get to decide where the rates go.. Instead, the Fed can all-of-a-sudden raise or lower rates.. and not even on their 'usual' days.. With overnight rates, the Fed controls Wall Street.

As for 'relatively smoothly', I would disagree.. Our dollar is at a big questionable X in terms of its perceived value, our financial system is and was on the brink of collapse, our home prices tripled and were cut in half within 3 years, there have been numerous bubbles since the creation of the Fed, and the people that made the most money were the lucky ones that took the most ridiculous risk.. Exciting? Certainly.. Smooth? Certainly not.

Because of the Fed, our entire economy is based on short-term gain with blatant disregard for long-term consequences. A big company needs instant profit? Fire people.. Ignore the fact it takes years of effort to build a good team. You say the Fed promotes employment? I say the Fed just got done destroying our job market..

2.. The elite.. I would say are anyone that makes the decisions, gets to partake in 'special circumstance' decisions, gets the information before everyone else does, or gets information no one else does.. For example.. Paulson, Geithner, Goldmann Sachs, Bank of America, Warren Buffet (would you believe he didn't know AIG was going to get bailed out before he made his $5billion purchase). The Fed meets behind closed doors. Everyone behind those closed doors has the know of what almost certainly WILL happen in the markets.. before everyone else. Populist bullshit? NO. Otherwise local banks would be getting bailed out like the big boys.

3. The Fed is not 'capitalized' by banks - it is capitalized by the American People. And, only elites get to own the Fed.. Where's my guaranteed 6% dividend on investment? Ya, there's some companies in the DOW that give a ~6% dividend (Verizon).. but unlike the Fed, companies in the DOW can fail and a big one did recently..

You know what's worse than a system with flaws? Those who criticize but cannot come up with $hit to solve the problem.

Everything you complained about is part of the problem with free market. Dollar being questionable is due to mass debt hold by both government and the American people. Home price tripling and cut in half is caused by people and banks' greed, as well as lack of regulation within the market. All these bubble, if you take some economy or bussiness lesson, you would know it's natural part of business/economy cycle.

Fed didn't caused the problem, it's there to alleviate the problem caused by the greed of people and the overall market. And all the smart people with years experience managing countries, economy see the need for such function, that's why every single countries with sizable economy has a national bank/reserve system just like the Fed in the US.

As far as your elite knowing info before other do, there will always be people who knows more. You think Obama don't know what's gonna happen with everything? Congressman/Senators? Why single out people associated with Fed? That's how system works, and there is SEC that tracks people with previliged info taking advantage of those info financially. That's your check and balance right there. As far as bailiout local banks, like I said if you have a system where local banks make more impacts than the big boys, I am sure Fed will bail out local banks first.

Your last point, go look up what's the cost of capital for most business and you'd see that 6% is reasonable for banks to put their capital in Fed. They don't get to decide how much money to put in Fed and they cannot put all their money in Fed to earn that dividend. And those banks don't get to make any decision because they put money in the Fed. The reason Fed wants bank involvement is because Fed need to know the pulse of market to make the right decision. If you want Fed to make decisions that's irrelavent to the market or might even damage the market, by all means, kick all the bank out of the Fed.

Criticize something to try and make it better is good. Criticize something without knowing why things are done that way, and without understanding the real cause of the problem just make you look foolish.

Okay.. now that you admitted there are flaws with the system, I am completely willing to offer solutions!

First of all, the dollar being questionned is NOT because of mass debt.. It is because the Fed just creates it out of thin air - even when the market indicates almost certain inflation. The dollar is at an all time low.. and the Fed has the interest rate at near all time lows.. There is too much 'easy money' for the dollar to keep its value.. Get rid of the Fed, and get rid of easy money.

If there was no Fed, there would be no infinite source of borrowing for the US government.. The debt levels could never be as large as they are now because as soon as the government tried to spend more money than the market allowed, the market would place a limit on the borrowing since the market would stop buying US bonds. Further, having the Fed results in a limit to the sovereignty of the US government.

Also, greed is a positive driver in a NORMAL free market system - one in which any bank, any company, or any government entity is allowed to fail. In a system with 'artifical floors' where bailouts are decided by politics and who knows who, the normal limitations of greed are surpassed to take risks so great based on the idea that 'someone' could bail them out if they screwed up. So I say get rid of the idea of 'too big to fail' and place limits on who can merge with who.. Right now, the Fed is an artificial safety net..

Further, I would argue that the current government/Fed-controlled financial system is stifling the free market. If the Fed were to be abolished and a truly non-fiat currency established (controlled by Congress), the market would soar.. because the true investors would know that the fundamentals actually meant something once again.

If the vast reserves of dollars that companies and governments hold were exercised, the true value of the dollar would disappear.. If all of a sudden China decided to try to spend $1trillion, the dollar would instantly lose value.

My solution.. the government issues money.. the money is backed by government holdings.. and ONLY the US government can issue new money.

Criticize something without knowing why things are done that way, and without understanding the real cause of the problem just make you look foolish.

Why would you say the Fed exists? Why was it created? Who wanted it? Who lobbied for it?

 

[rchiu]

Originally posted by: brxndxn

Okay.. now that you admitted there are flaws with the system, I am completely willing to offer solutions!

First of all, the dollar being questionned is NOT because of mass debt.. It is because the Fed just creates it out of thin air - even when the market indicates almost certain inflation. The dollar is at an all time low.. and the Fed has the interest rate at near all time lows.. There is too much 'easy money' for the dollar to keep its value.. Get rid of the Fed, and get rid of easy money.

If there was no Fed, there would be no infinite source of borrowing for the US government.. The debt levels could never be as large as they are now because as soon as the government tried to spend more money than the market allowed, the market would place a limit on the borrowing since the market would stop buying US bonds. Further, having the Fed results in a limit to the sovereignty of the US government.

Also, greed is a positive driver in a NORMAL free market system - one in which any bank, any company, or any government entity is allowed to fail. In a system with 'artifical floors' where bailouts are decided by politics and who knows who, the normal limitations of greed are surpassed to take risks so great based on the idea that 'someone' could bail them out if they screwed up. So I say get rid of the idea of 'too big to fail' and place limits on who can merge with who.. Right now, the Fed is an artificial safety net..

Further, I would argue that the current government/Fed-controlled financial system is stifling the free market. If the Fed were to be abolished and a truly non-fiat currency established (controlled by Congress), the market would soar.. because the true investors would know that the fundamentals actually meant something once again.

If the vast reserves of dollars that companies and governments hold were exercised, the true value of the dollar would disappear.. If all of a sudden China decided to try to spend $1trillion, the dollar would instantly lose value.

My solution.. the government issues money.. the money is backed by government holdings.. and ONLY the US government can issue new money.

Criticize something without knowing why things are done that way, and without understanding the real cause of the problem just make you look foolish.

Why would you say the Fed exists? Why was it created? Who wanted it? Who lobbied for it?

The same debates have happened too many times to count already and I am too lazy to point out the fundamental mistakes in your post and educate you on how economy, money supply and other basic stuff works. You people won't listen to anything practitioners or people with actual background and education say anyway.

My only advise is, don't go around telling people "My solution.. the government issues money.. the money is backed by government holdings.. and ONLY the US government can issue new money." When Fed is part of the government system doing exactly what you are saying already. The only reason it's a separate branch from the other branches of the government is so that they have the independence to implement monetary policy for the good of the economy, not the good of politics and politicians.

I suggest you read up on Federal Reserve Act by Woodrow Wilson, and the history of Fed. to understand how it exists, why was it created, who wanted it and who lobbied for it.

Here is a faq in case you are really interested in facts, and not some moron spewing idiocy in some blog.