Originally posted by: BansheeX
Congress cannot pass powers explicitly granted to it by the constitution onto someone else. It's not legal. No more legal than if they gave that power to you or me, or if a police officer handed you his gun and said "here, direct traffic for me." Second of all, congress is full of naivety. Very few politicians know anything about economics, thus your reassurance that they are capable of "overseeing" this institution and some of its newfangled powers is, once again, socialist idealism at its finest. But this is becoming a recurring theme in all of your posts. Last of all, the federal reserve has never been audited, and attempts from people like Ron Paul just to get some basic transparency into their meetings and decision making processes have been met with great resistance.
The courts have found that in many cases Congress can delegate its powers to other entities provided that Congress has sufficient oversight and control over that entity and that actions taken are answerable to Congress. The original bill creating the Fed has been amended more than 200 times. Congress constantly calls the Fed to testify. If regulations change they are enacted by Congress or are approved by Congress. If Fed policy disagrees with Congress, Congress has said so and several times the Fed has altered policy. Congress gets an annual audited financial statement every year, with an update, and testimony. Congress still has many powers outside the Fed to reign in the Fed, sometimes to disasterous results (See Carter Admin). Congress still has the ability to amend or even repeal the FRA.
As such, Congress has not yielded its power, which is the key premise in the delegation of power. The founding fathers feared that unchecked delegation, without oversight, would lead to problems. However, we can clearly see that there is significant oversight.
Just some small evidence of how stupid and useless some of these "mandates" are when they able to fudge with the semantics... Bernanke claims that his job is to promote price stability, not to deal with the value of the dollar (sort of his excuse for not having to answer questions about moral hazard and deliberate devaluation). But this is stupid, because prices see the most volatility from foolish creation of new money. Somehow, the definition of inflation has been changed by Keynesians to mean "rising prices" when the Austrians correctly see it as "rising prices as a result of increases in the money supply." I mean, according to Keynesians, you could say that computers are suffering from massive deflation and we need to do something about it quick! They fail to see the disparity between rising prices due to supply/demand and rising prices as a result of monetary phenomena (inflation), thus they fail to see one as normal and the other as more-or-less destructive because they jumble the two together under a simple, broad definition.
You're assuming two things.
a. That price inflation is worse than economic ruin if liquidity is not allowed into the system.
b. That prices will raise significantly due to the liquidity provided.
If we analyze historical actions, a. is completely false. It has been proven several times that when a country is in a liquidity crisis the best action to take is to ease the crisis, lest the banking system fail and the economy contract significantly. Any study of the Great Depression knows this. Had Congress, the Fed, the President, and bankers not advocated keeping a strong currency, precluding a liquidity injection, it is doubtful we would have even had a GD. Thus you utterly fail at proving that inflation is worse, since we know it isn't.
Second, the inflation introduced into the system by the added liquidity will only cause inflation provided that demand is going down and the market cannot absorb the currency. The market has shown, thus far, that it has sufficient capacity for the added liquidity and that inflationary pressures, while existent, are not overwhelmingly concerning. Jan and Feb inflation numbers are still relatively low.
Much of the inflation in the system is due to oil and food. Oil shouldn't be as high as it is and is mainly due to speculation in the market (8bn in oil contracts for hedging exists within a 240bn derivatives market, driving the price up about $20/bl). Food is being driven by ethanol, added input into fuel, and speculation in agriculture futures.
Those two exogenous circumstances, beyond the control of the Fed and monetary policy, cannot be blamed on the Fed or monetary policy.
This is where you people constantly fail. You fail to understand the market and claim to be intelligent. You're a fricking babe in the woods to people like me and I can disprove your youtube bullshit day in and day out.
