Federal Reserve

[Helvidius]

What do you think of the Federal Reserve? Has it served America well? Should the United States abolish, audit, or do anything to change the way the Fed operates? If you wish to replace the Fed, what would you replace it with?

 

[GarrettGilman]

a national debting system only works with nationalistic and socialist societies, and feudalist monarchies. the assumption is that everyone in that society is willing to bear the burden together. where this does not work is a republic, where governments are localized and loosely cooperating in a federal sense. too many interests and ways of life mean that few will truly agree on what we as a country are willing accomplish and bear with the universal debt. many in our country seek to benefit from this borrowed money through welfare, but at this point there are more people working for and dependent on a debt-raised government than people productively working to feed the system.

I would return to a precious metal/resource based economy. this will force the states to make with what they have, inspire much innovation and return the basic functions of our government to the forefront. the ability to borrow 'too much' is always exploited and many are willing to become dependent on the seemingly endless, inflatted finances. this fact has been shown many times throughout history, and was a large factor in our forefather's war for independence.

 

[imagep]

What do you think of the Federal Reserve? Has it served America well? Should the United States abolish, audit, or do anything to change the way the Fed operates? If you wish to replace the Fed, what would you replace it with?

Although it's policies have not been perfect, it has seemed to reduce both the frequency and severity of recessions. This was discussed a while back and some impressive data was produced to indicate that overall, the Fed is a good thing.

 

[Helvidius]

Although it's policies have not been perfect, it has seemed to reduce both the frequency and severity of recessions. This was discussed a while back and some impressive data was produced to indicate that overall, the Fed is a good thing.

Eh, I'm not sure about that. Recessions are a natural part of a boom and bust cycle, but we have had a national bank for a significant part of this country's history. The Fed has devalued the dollar over 95% since its inception. I really think a weak dollar has been a significant factor in a number of the problems the US faces today. Also, the Great Depression was the result of Fed policy, or lack thereof.

 

[GarrettGilman]

the terms 'recession' and 'inflattion' are inextricable with the national debt system. before the concept emerged in the late renaissance, the concept of economic depression was associated with famine, collapsed industry and prolonged warfare. sure, there are a lot of dollars now, but compared to the power of the dollar 100 years ago ($20 bought an ounce of gold, the value of which never fluctuates) we are broke. very broke.

 

[cpwill]

get rid of the "employment" mandate and restrict them to limiting inflation.

 

[xpiher]

get rid of it. controlling the money supply is too much power and makes boom and bust cycles worse by over inflating the money supply

 

[oldreliable67]

Alex Pollack of AEI has an interesting post today at the AEI blog titled "The Federal Reserve’s Real Mandates." He proposed the three real mandates as follows:

One:

The first function is made clear by the 1913 Federal Reserve Act itself, which begins: “An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency.”

Two:

...central banks solve the coordination problems of the banking business by becoming the independent manager of the banking club. In this country, the club is now being expanded to include non-bank financial companies, making the Fed the manager of an even bigger financial club.

Three:

...most basic of all, is financing the government...This became evident very early in the history of the Fed, when America needed to finance its plunge into the First World War...

Pollack sums it up this way:

So the fundamental reality is the “triple mandate,” which indeed makes a lot of sense from the government’s point of view. It allows us to understand why the Fed, while not doing so well at stable prices or maximum employment, has nonetheless gone on to ever greater power and status in the course of its first century.

Thoughts on Pollacks view?