Federal Reserve

[RooseveltTruman]

As some of you may know, Rep. Ron Paul's bill to audit the fed has been given the go-ahead to be debated in committee by its chairman, Rep. Barney Frank, who backs the idea (http://www.npr.org/blogs/money/2009/09/barney_frank_backs_ron_pauls_i.html).

The Federal Reserve has been at the center of a lot of debate (and a lot of criticism), particularly in the blogosphere, and even more specifically, by libertarians and many who subscribe to the New World Order conspiracy theories. While I don't specifically subscribe to some of their reasons, I do think it's time we started holding the Fed more accountable than we have.

Which leads me to my question, which is intentionally broad: what do YOU guys think of the fed? Would you go as far as to ban it, the way Ron Paul advocates? Do you support its audit? Should it be drastically overhauled? How drastically? Etc etc...basically, whatever pops into your mind re: the Fed, spill it. Because for whatever reason, outside of a few notable folks--Frank, Dennis Kucinich, Alan Grayson, Paul, etc--few people on either side or either party seem to mention the Fed (or taking on the Fed) very often.

[thunder rising]

1. taking on the Fed must be like taking on the IRS. You better have a clean house.

aLl uR mOnies THay beLong to uS

[Odin2005]

2. It's crap it's origins are, as you said, in Libertarian conspiracy theories.

Libertarians are religious adherents to the Gold Standard. Anti-Semitic BS involving fear of European Jewish bankers play a part too. It's sad that liberals have fallen for the nonsense.

Just increase the amount of transparency.

[SDuderstadt]

5. Great post...

Odin.

[Odin2005]

6. Thank you!

So sick of the Libertarian BS being spewed as fact.

[SDuderstadt]

40. Of all the nonsense that gets propagated...

perhaps the most egregious is the notion that the Federal Reserve is somehow controlled by the large banks. Anyone claiming this has no idea what they are talking about because, of the Board of Governors, the only one who has actually been a banker is Elizabeth Duke and, of her total experience, with the exception of stints at Wachovia and SouthTrust, all of her experience was with small local banks. Other Governors like Warsh, Bernanke and Kohn have legal and academic backgrounds.

Don't schools have civics classes anymore?

[Odin2005]

41. School civics classes are a joke.

I. probably being the naive literal-minded kid I was, did take Civics seriously and is probably why the cynicism and conspiracy ticks me off so much. Why mindlessly overthrow something that is not inherently bad but is just dysfunctional for various reasons?

[midnight]

11. I believe that is the whole reason for the audit- create transparency.

[armyowalgreens]

13. Paul wants to abolish the Fed.

[truedelphi]

3. Ron Paul stands in very good company. Marcy Kaptur, Congresswoman from

Ohio, Maxine Waters, Dennis Kucinich, Cummings, and other Dems are sick of the way the Fed and its interwoven relationship with the Congressional leaders in both houses steals Main Street's dollars for the sake of Wall Street.

We are right now, the United States of Goldman Sachs.

And until something changes, and changes quick, The Fed and the four Big Players in the banking world have the power. They have morepower than even PResident Obama.

They laugh at and ignore Obama as he was too naive to get into office and cuirb their power.

Great video that describes all of this at Bill Moyers' Journal:

http://www.pbs.org/moyers/journal/10092009/profile.html

(For those of you who didn't catch the show tonight.)

[SDuderstadt]

4. Anyone who says we should ban the Federal Reserve has...

no idea what it does or how it does it.

Secondly, it is simply not true the Fed has not been audited .

http://www.geocities.com/CapitolHill/Senate/3616/FedReserveFacts.html

I am not saying that the Fed should be above scrutiny and there is clearly room and need for reform of the Feds to increase transparency, however, I am frankly startled by the large amount of RW anti-Fed nonsense that is permeating liberal circles (I'm not talking about this OP).

For whatever it's worth, I would highly recommend that people refrain from drawing conclusions about the Fed without first reading this piece debunking Federal Reserve myths. Too many people have read, "The Creature from Jekyll Island" or watched "Money as Debt" and don't realize they have been duped by RW libertarian ant-Fed propaganda.

http://www.geocities.com/CapitolHill/Senate/3616/FedReserveFacts.html

[RooseveltTruman]

9. Just a question...

Were/are the results of the audits you mention ever made public? I think that's key.

By the way (just to avoid any flaming), I don't intend that question in a snarky way, or in a "gotcha" way (as our moosehunting friend Sarah might say). I ask it out of honest curiosity and ignorance because my knowledge of the Federal Reserve (while certainly decent) is not of the breadth or depth that I'd like it to be.

[SDuderstadt]

24. That's why I made it clear that I was not referring to your OP as...

some of the RW stuff.

I believe the audits would be public record and know of no reason why they would not be, They are certainly available to Congress. I'm getting ready for a pretty intense business trip. so I don't have time right now, but I'm fairly certain you can find them, probably through the Fed website.

[midnight]

12. .Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"

This is not about Ron Pauls political leanings...... And for pete sake this is not about fed propaganda. Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?" Are you not a bit curious were one trillion dollars went? http://www.youtube.com/watch?v=mXmNpdYpfnk

[SDuderstadt]

26. Yeah, I am curious...

but the demonization of the Fed from certain quarters of DU is troubling, especially when it comes from people who don't know what it does or how it does it.

[Greyhound]

18. LOL!

:rofl:

[sendero]

21. Uh..

.... you SHOULD know that the "audit" being proposed is to find out what the Fed did with the billions and billions of TARP and other special assistance money, and what kind of assets they acquired for that money.

The "audit" refered to in the linked article doesn't do that at all.

By allowing this bubble to happen, the Fed failed in its PRIMARY MISSION, which is the stability of the money supply.

I'm not a proponent of abolishing the Fed, but I'm vehemently against giving the idiots any more power and there should be a lot more transparency in their actions.

[anonymous171]

35. The Fed is anti-democratic. That's why I do not like it

It reeks of that elitist progressive mindset (thanks Wilson) that says that the "rabble" cannot manage their own bank.

[SDuderstadt]

39. That's interesting....

the Board of Governors of the Federal reserve is nominated by the President (chosen by the people) and confirmed by the Senate (chosen by the people). 6 of the 9 directors of the regional federal reserve banks are chosen from the community at large.

You do realize that we live in a representative republic, which is a form of indirect democracy, right? Last I checked, I don't get to vote on how the traffic lights where I live are timed. Maybe you should study the concept of checks and balances.

[Odin2005]

44. Too much political (as opposed to technocratic) control over economic regulation is a recipe for....

...disaster. There is a reason there is a connection throughout history between populist regimes and currency devaluation. Economic illiterates try to vote themselves money.

[anonymous171]

45. Technocrats are all about profit maximization. Politicians are generally more about the People

I know who I want running the banking system.

[SDuderstadt]

46. Do you know what happens with the "profit" the Federal Reserve "makes"?

Hint: it gets rebated back to the Federal Treasury.

Do you even know what the Fed does and how it works?

Simple question: if the GOP regains control of the Congress and/or the WH, do you really want them determining monetary policy?

[hansberrym]

52. What happened to the profits the bankers earned that Fed policies enabled during the

boom? How will the costs of the bust, the bailouts, be spread?


Banking profits are private, while losses are socialized. The Fed is an enabler in this process. It doesn't have to be but it is.

[Odin2005]

47. That just means you have to hire the right technocrats.

Get the ones that desire to serve society, get the scholarly academics (Like Bernake, who made a career out of studying the Great Depression). There are plenty of them out there.

[Truth2Tell]

7. Nationalize it.

Don't abolish it.

[Selatius]

8. The problem with the Federal Reserve is simple: It has been thoroughly nazified.

Remove the corporatists who run the Fed who are willfully lax on purpose in deference to their friends in the financial services sector who get more money by screwing over ordinary, hard-working Americans.

The Fed needs to be put through a program of denazification the same way post-war Germany was.

[midnight]

10. Audit this private corporation.

This bank is not connected to the federal govt., and it should not be operating under a cloak of secrecy, while depleating the American taxpayers of their hard earned money...... Why is it that we have only a few who stand up for the rule of this country by a constution that has been trampled on by this corporation..... Just Why? Federal Reserve and IRS = private corporations!http://www.youtube.com/watch?v=VVzkceT521A&feature=related

[SDuderstadt]

25. The Federal Reserve is...

an independent federal agency. Take a civics class. You're confusing the Feferal Reserve itself with the regional Federal Reserve banks.

[Trillo]

14. It is dishonest that the U.S. Consitution gives the power to 'coin money'

to Congress, but the power to 'create money' is now given to bankers. I've asked myself how an honest system can ever come forth from such a deceptive parsing of words.

page 121 of the following book seems a short summary, just the one page, 5 paragraphs:
http://books.google.com/books?id=6Tc29qnfjtgC&lpg=PP1&vq=p121&pg=PT137#v=snippet&q=Prior%20to%201913&f=false

Edited to add, I meant to look up a word in that excerpt: "allodial".
http://www.google.com/search?hl=en&lr=&safe=off&oi=spell&resnum=0&ct=result&cd=1&ved=0CAQQBSgA&q=define%3Aallodial&spell=1

inalienable; owned freely and is clear of any encumbrances such as liens or mortgages
en.wiktionary.org/wiki/allodial

Inalienable? Just where have we all read that word before? bestowed by their creator with certain inalienable rights...

Oh my. Far, far down the rabbit hole.

[AdHocSolver]

15. The Fed was the chief enabler of the stock market Ponzi schemes and the real estate fiasco.

The Fed is nothing more than a cartel of private banks which manipulated the interest rates and the money supply to pull off the biggest theft in history. Its chief implementer of these schemes was Greenspan. Bernanke is continuing this ripoff.

Audit it, regulate it, or abolish it and replace it with a true national bank beholden to the people. Do nothing, and the thievery will continue until the economy collapses totally.

[struggle4progress]

16. The Fed has been thoroughly discredited as an institution by Greenspan's tenure: we were

always told the smart guys who understood stuff would be in charge -- but the upshot of the Greenspan years was simply that the Fed chairman had a quasi-religious belief that everything would fix itself and he didn't really have to do anything except make some minor moves (to reassure people he knew what he was doing) and utter some cryptic blather (to avoid any substantive disclosure or discussion of his do-nothing ideology)

I wouldn't trust anything from Ron Paul on monetary policy, since he's likely to share Greenspan's ideology

It's a really good idea to have a bit of a firewall between monetary policy and raw political forces, but the Fed -- or whatever might replace it -- ought to represent sectors of society beyond the corporate elite

[AllentownJake]

17. End the Fed

Replace it with something that it is harder for banks and securities dealers to influence.

[Greyhound]

19. I think Henry Ford (that radical left-wing loony) said it best when he said,

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

[Celebration]

20. First audit the Fed

Then increase the transparency--

Yes we need to know who the actual owners are, and how and to whom the dividends are distributed. We need to see the money

After this, can it survive? We'll see.

[SDuderstadt]

28. We need to know who the actual owners are?

Do you honestly believe the ownership of any of the regional Federal Reserve banks is a secret?

[Taitertots]

22. The Federal Reserve is the definition of insanity

Give control of our monetary policy to bankers with no oversight and call it the federal reserve.

The reason was to make sure we had stable currency. In less than a hundred years we have had two financial catastrophes.

They call it the federal reserve, but it is not a federal agency. Most people have no idea they are not responsible to the government. Our central bank is controlled by our private banks.

They gave them a fortune in assets for manipulating the money supply. Now they won't account for where it all went.

[SDuderstadt]

30. With all due respect...

you have no idea what you're talking about.

For starters, the Federal Reserve IS a Federal agancy. It's what's called an independent federal agency, like the EPA.

I'm pretty sure you don't know the difference between the Federal Reserve and the regional Federal Reserve Banks. Maybe you should learn.

[Taitertots]

31. I know more than you think

You can call me billy dee, and it doesn't make it so. Calling it an independent federal agency is just something to keep the fools from wondering why our monetary policy is being decided by banksters instead of the federal government. Do you have any sound criticism of what I have said other than to quibble about whether it is an independent federal agency or not.


I'm sure YOU are the one I should listen to as opposed to my economics professors. I'll give you the benefit of the doubt and assume you have a college degree in economics or finance. If you do I'll gladly discuss this with you in depth.

[SDuderstadt]

32. Here's some of your absolute nonsense:

They call it the federal reserve, but it is not a federal agency.

Absolutely dead wrong.


http://www.usa.gov/Agencies/Federal/Independent.shtml

Go down to the "F" category. If that's not enough, try this:

http://en.wikipedia.org/wiki/List_of_United_States_federal_agencies

Do you even know what an independent federal agency is?

Most people have no idea they are not responsible to the government. Our central bank is controlled by our private banks.

Really? Is that why the board of governors is nominated by the President and must be confirmed by the Senate? Could you explain how the Federal Reserve is "controlled by our private banks"? Isn't it kinda the other way around?

Did your "economics professors" refer to bankers as "banksters"? For the record, my undergraduate degree was in Comparative Political Systems with a minor in econ and, also for the record, I seriously doubt that you ever studied economics. If you did, you wasted your money.

What can you tell us about the operation of the F.O.M.C.? Do you know what the Taylor rule is? Do you know what "L.I.B.O.R." stands for? Do you know what "F.R.I.C.P." stands for?

No one is saying that the Fed should be above scrutiny. No one is saying that it shouldn't be reformed to provide greater transparency. But, that will have to come from people far more knowledgeable about what the Fed does and how it does it.

[Taitertots]

33. I'm an economics student at the University of Michigan

I'm posting this from UofM. I'll have an economics degree and a Math degree this time next year. I already have more than enough econ credits to get a minor.


It is called a independent federal agency, isn't that like a giant midget. They are independently funded and operate independently. Congress and the president have no say in what happens at the Open market committee. 5 of the people there are regional presidents selected by the boards of directors for the regional reserve branches. So 5 of the people there are directly selected by the owners of the major banks without federal oversight.

How much oversight could there be almost half the people making open market committee decisions are directly appointed by the people who run the major banks. All the people who enact the policies decided in the open market committee are directly appointed by the people who run the banks.

[SDuderstadt]

34. Jesus, dude...

Where do you get this misinformation?

First of all, thanks for finally admitting that the Federal Reserve is an independent federal agency, even as you seek to minimize the importance of that.

Congress and the president have no say in what happens at the Open market committee

It's designed that way on purpose, dude, to insulate the FOMC from political pressure. I think that's a good idea, don't you? If you don't, maybe you should ask one of your econ professors why that's important.

How much oversight could there be almost half the people making open market committee decisions are directly appointed by the people who run the major banks.

Here you reveal that you don't have the foggiest notion how the board of directors of the regional federal reserve banks are chosen. Each regional federal reserve bank has 9 directors, 3 of whom represent the member banks and the other six are chosen from the local community. Where you get this notion that the regional federal reserve banks are controlled by the large banks is absolute nonsense.

The FOMC is comprised of all 7 members of the Board of Governers, ALL of whom are appointed by the President and confirmed by the Senate. The other 5 members of the FOMC are the President of the Federal Reserve Bank of New York and four of the Presidents of the other Regional Federal Reserve Banks, which rotate each year.

Since 5 is only about 42% of 12, could you please explain how large banks control the FOMC?

Maybe it's not too late for you to take some poli sci classes. You should pay close attention to the concept of checks and balances, dude.

[Odin2005]

43. The far-leftist delusion that such things should be decided by politicians is moronic.

It's pure ideology with no hard math or economics or data backing it up.

[AdHocSolver]

48. The Fed is an "independent federal agency" is as informative as a muskrat is a four-legged animal.

When I was studying economics, we were told to send a request to the Federal Reserve for a packet of information explaining how the Federal Reserve worked. Little was actually explained in class. The information about the Fed that you have posted is essentially the propaganda I received from the Fed when I was in college.

The only significant information to understand about the Fed is that, by manipulating the interest rates and the money supply, it was a key player in the Ponzi schemes and boom-bust cycles in the stock market and the real estate markets that enabled the biggest theft in history.

With no effective regulation and oversight, the thievery will continue until the U.S. economy collapses.

A person does not need to know the organization chart of the Willy Sutton gang to understand that they robbed banks.

FYI, I have a B.A. in economics, with minors in political science and history.

[SDuderstadt]

49. Well, then...

you wasted your money on your degree, dude. Too bad they didn't have classes on honing conspiracy theory nonsense, although it looks like you did okay without them. For whatever it's worth, I highly doubt that you have a B.A. in economics, but your professors didn't explain much about the Federal Reserve.

I'd love to hear what you think the Fed does and how it does it.

[AdHocSolver]

53. Dude, you must have gotten your degree in ad hominem attacks.

A wise man once said, "Don't listen to what they say. Just look at what they do."

One doesn't need a degree in economics to recognize a Ponzi scheme and how the Fed manipulated the interest rates and the money supply to promote it.

:-)

[SDuderstadt]

55. Well, then...

you're lucky. You don't need to actually know what you're talking about...just sprinkle in "Ponzi scheme" without having to explain precisely how it's a "Ponzi scheme". Nice racket.

For the record, I have a hard time believing someone with a B/A. in Economics knows so little about how it actually works. Sorry, dude.

[Taitertots]

50. Checks and balances?

What checks and balances?
Maybe you need to retake some classes if you think the Fed is a good example of checks and balances. What checks on the FOMC are there? What checks are there on the actions of the board of directors?

Learn to read
"How much oversight could there be, almost half the people making open market committee decisions are directly appointed by the people who run the major banks."
5 out of 12 is 42% therefore ALMOST HALF the people are DIRECTLY APPOINTED by bankers.

The board of directors 3 are major bankers selected by bankers, 3 are directly appointed by bankers, and three are selected by the governors. The majority of board of directors members are directly selected by the people who run the banks. The actions of the regional banks are dictated by the banks.

Many of my professors think there are benefits to a non-government non-democratic central bank. I disagree with them. Monetary policy should not be controlled by people with a vested interest in the process (bankers). It should be controlled by public servants with clear oversight and run for the greater good of all Americans not just bankers. You know checks and balances.

"Insulate from political pressures" as you call it, I say "Remove the will of the people". How can bankers controlling our monetary policy with no oversight be a good thing? Political pressure is a good thing when bankers are doing stuff the is against the interest of the people. When they are unwilling or unable to prevent financial collapse after financial collapse, pressuring them to act in the interest of the public is a good thing.

[SDuderstadt]

56. Dude...

your math isn't very good. What is the composition of the boards of the regional Federal Reserve Banks? Hint: there are nine members, only three of which represent the member banks. How in the world do you think 1/3 of the board controls it? Again, you don't know what you're talking about.

[nemo137]

54. Before the Fed, we had 7 financial crises.

Panics of 1819, 1837, 1857, 1873, 1893, 1901, and 1907. Having two in a hundred years looks pretty good.

[Statistical]

23. The Fed needs to be indipendent. Period.

Central banks managed by the govt have a horrible track record. Cripling inflation, massive devaluation of currency, more financial crisis.

Over the years as the results of rampant inflation MORE banks have become MORE independent not less.

Politicians are easily corruptible (look at the inability to pass meaningful HCR due to insurance company corruption). Giving them control either directly or indirectly over money supply and hoping they won't use it for political purposes is utter folly.

[Trillo]

27. Any BLS inflation data is based upon downward-skewed inflation calculations

Shadow Stats as applied to U.S. inflation:

...if you
were to peel back changes that were made in the CPI going back to the
Carter years, you’d see that the CPI would now be 3.5%-4% higher. The
difference that it makes is significant: if the same CPI were used today
as was used when Jimmy Carter was President, Social Security checks
would be 70% higher.

http://www.shadowstats.com/pdf/779-626538446.pdf

So move that U.S. dot upward 3.75 y-axis lines, then reconsider what the chart says.

Just for kicks and giggles, I took Hannah Bell's OP data, and added a 4th column based upon Shadow Stats inflation calculator.

According to that calculation, minimum wage should be $14.76 in 2007. A Harvard education should cost half of what it did in 2007.

Anyway, the point is that anything based upon current inflation statistics from the BLS is bogus, because they're using the math that they've been told to use.

[RB TexLa]

29. The stupidity of having the government auditing the Fed is simply amazing

It really is unbelievable that anyone would think this is an idea even worthy of writing down on paper, let alone considering.

[anonymous171]

36. The Fed needs to be fully democratic, not more privatized. nt

[BeHereNow]

37. EXACTLY what Marcy Kaptur said on Bill Moyers!

Great show- a kind DUer posted a link to it today for
those of us who missed it.

BHN

[Odin2005]

42. LOL, I think you totally missed to the point of his post.

Political control over the central bank is a recipe for economic disaster.

[hansberrym]

51. "Political control over the central bank is a recipe for economic disaster."

I agree.


In your opinion has there been too little political pressure on the Fed or too much in say the last 5 years?

What caused the Fed to maintain easy money policy while the housing bubble inflated?

What is causing the Fed to maintain an easy money policy even now?

Why has the Fed bailed out the banks that caused the problems? The Fed acted against the public mood and in the interests of the largest banks, so one can hardly argue that popular will is to blame here, more likely the Fed's actions were driven at least in part by a desire to protect their own.

I am not a utopian. No system run by humans will be perfect, But as I see it the Fed has not been performing its essential function(promote stable money and stable/maintainable growth) but instead is acting in accord with more narrow interests and so adding to the boom/bust cycles rather than smoothing them out. The Fed has not prevented the various economic disasters that have happened since its creation, it is simply not working as advertised.

No, I don't have a clue how to fix or replace it. I ask these questions to those who are defending the Fed by dismissing legitmate concerns rather than offering valid explanations for the Fed's actions. I'd even settle for a few half baked excuses at this point, instead all I read is smug putdown's from those whose educations ought afford the ability to do better.

[BeHereNow]

38. Welcome to DU RT!

BHN:hi: