patrick.net

Randy H Said:

Abolish the Fed

I hope that is a joke. I’m trying to imagine a global economy without Central Banks, or a global economy in which one country unilaterally dissolves its Central Bank.

*shiver*

HARM Replied:

Explain to me in plain English exactly HOW the Fed’s mission has anything to do with “helping” the public (non bankers) and how they’ve actually succeeded in that role, and perhaps I’ll consider retracting that statement.

Federal Reserve System from Wikipedia
Roles and responsibilities
The main tasks of the Federal Reserve are to:

–Supervise and regulate banks
Not doing so well on that score lately from my POV.

–Implement monetary policy by open market operations, setting the discount rate, and setting the reserve ratio
Yes, they’ve done a “mah-velous” job of flooding capital markets with unlimited liquidity, blowing asset bubbles and destroying the value of the USD –kudos to them!

–Maintain a strong payments system
No argument here –creditors/lenders of all kinds have enjoyed limitless cash-flow under the Fed. Debtors on the other hand…

–Control the amount of currency that is made and destroyed on a day to day basis (in conjunction with the Mint and Bureau of Engraving and Printing)
Kind of depends on what you mean by “control”, doesn’t it? If you mean “set the money-creation spigot permanently to ‘ON’ and flood asset/capital markets until you have one speculative bubble after another”, then they’ve done a bang-up job!

In short, I believe the Fed has failed miserably at serving the public’s interests (assuming that it ever really had anything to do with this –I doubt it) and has only succeeded in making the business cycle even more volatile/extreme than it already was. Let’s not forget that the 1930s Great Depression, 1970s Stagflation and several severe recessions occurred on the Fed’s watch (founded in 1913), as has the consistent destruction of the purchasing power of the USD, in the interests of fake nominal “growth” through inflation.

The Treasury handles the production of paper money and coinage just fine. What exactly do we (the public) need a Federal Reserve System for?

Discuss, enjoy...
HARM