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The Question Isn't Whether the Fed Should Be Stripped of Its Mandate to Maximize Employment ... The Question Is Whether the Fed Has Too Much Power
The Fed says that unemployment will remain high for years.
Some Republican congressmen are trying to take away the goal of ensuring full employment from the Fed. See this and this.
Conservatives
argue that the relationship between inflation and unemployment - as
represented in the Phillips Curve - is false, and therefore the
rationale behind the dual mandate makes no sense. See this, this and this.
Liberals like economist James, Galbraith, congressmen Jerry Nadler and Alan Grayson and Senator Bernie Sanders are defending the Fed's mandate to maximize employment.
But I think that all of their arguments pro or anti the Fed's dual mandate are missing the point.
Specifically, the Fed's dual mandate was created more than 30 years ago, in 1978.
The
Fed has had this full employment mandate all throughout this economic
crisis. But it is indisputable that the Fed's actions have been increasing unemployment. See this and this. Indeed, John Williams puts the current real unemployment rate at around 23%.
The Fed had the mandate in 2007, 2008, 2009 and 2010 ... but it acted to save the big banks instead of the American worker.
And yet the Fed has been given more and more power - even though it has been increasing unemployment ... and even though the American people already thought the Fed had too much power. See this, this and this.
So
the problem isn't the Fed's dual mandate ... the problem is that the
Fed has too much power. And the Fed has wielded that power to save its shareholders (the big banks), at the expense of Main Street and the real economy.
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http://www.washingtonpost.com/wp-dyn/content/article/2010/11/24/AR201011...
I guess it was a accident.
The taller the ladder, the greater the fall...
I'd offered this hypothesis before- what if the Fed is being set up to be the black hole of US financial default? If the Fed goes what happens to US debt? Could it all get wiped out with the collapse/abolition of the Fed? If that's the design, then perhaps there are a few more things that are yet to be tossed into the black hole before it's nuked...
While I'm no fan of the Fed, I'd like to hear from others what would replace it? Would we not encounter the case where the govt takes on the duties and then is able to more readily politicize all monetary issues? I'm seeing trouble written all over this as well...
This question is analogous to an East German in 1985 asking "But if we eliminate the Stasi, what will replace it?" Hopefully, NOTHING! Or to be more precise, THE MARKET!
Haven't we learned too many times already that central economic planning does NOT work?
Yeah, but... power abhors a vacuum.
It's not like I want the govt to control this (I'm a fucking anarchist, like I want any of this?), it's just that I've seen this movie played out a zillion times. People get up in arms and then there's "reform," with the reform mutating something bad into something worse. As long as corporations (esp banks) buy the votes this ain't going to change. Another sucker play, kill campaign finance reform in the name of "free speech," what a fucking load of crap... now it's all legal to buy and sell our "representatives!"
once you have a systemic mandate, private fiat money, all sorts of other
mandates creep in so the mandate becomes all consuming.
the fed will see to financing the buying of politicians, justices,
defense, law public service, cotton candy, bonuses for wall street,
the banking industry, insurance, real estate, wall street bonuses,
popcorn, bonuses, office supplies, and bonuses for wall street.
not to forget food stamps, tents for tent cities and wall street bonuses.
so the austerity is unavoidable as public services for the poor are
not affordable nor health care for the elderly or young without proper
bonuses for wall street to ignite the virtuous cycle into action, resulting
in higher unemployment and bigger bonuses, for wall street.
ponzi money system never was going to bring man gracefully into
the new century.
it may take a prophet to articulate the final judgment of mankind
but it doesn't reguire that kind of insight to judge the doomed nature
of a mathematically impossible debt based fiat money system subject
to special interest manipulation with prefered status.
bailouts, that is a blatant lie. stealing is the right word. it is the
basis of the system.
keyword: stealing with blinders! they will get their bonuses and run!
but...
http://www.youtube.com/watch?v=4oD63-EJW5Y
.
they have no power.
The fed should be abolished. It's a failed attempt at economic central planning. I thought we learned that central planning doesn't work with the failure of the soviet union.
Please, someone tell me something that the fed have ever done that was beneficial to our nation.
The Fed pre-dates the Soviet Union.
The Fed is made up of crooks who are lying to the American public. Employment is not there concern ... it's to shovel as much money to their member banks who are insolvent. I would not have any of the Federal Reserve governors run a lemonaide stand for me. We all know this is going to end in a disaster as the debt monetization goes eventually out of control with hyper inflation.
Republicans will never ban abortion and Democrats will never end war.
If either touches the FED, it will be an ABA proposal, like the employment mandate problem. It's ABA supported. Just more security that the ABA will ALWAYS get private interest off public debt. The Lincoln Greenback terrifies them. At least a handful of powerful countries have a proven labor note or Greenback experiment within the last 200 years that proved valuable and productive to their nations. The ABA is on the guard that no national reason can be used to hijack the tool/FED for any PUBLIC PURPOSE.
That's why I tell people that QE2 is a danger to the ABA. No matter how much people hate the FED, this is the first time they've used a big tool a public purpose. They're buying TREASURIES, not bank-assets! The ABA's knickers are in a bunch. That's a half-step away from issuing Greenbacks. They know it. All it takes is an absolute necessity like Lincoln faced to suspend the FED altogether or use it as a public instead of private tool.
That's why you see the dual mandate legislation. It's pre-emptive. If they control congress and the day comes, with the new law, Congress and the Supreme Court will be able to kill a pseudo-Greenback experiment. They're not stupid. This is not happenstance. They're preparing to cut the "public purpose" cord between the FED and the USA, allow the FED to float, just like WTO and NAFTA floated capital and disconnected it from American labor public purpose. This is three decades in the works, step by step, very logical. It's uncanny and clever.
At the end of all this, the New York Stock Exchange will DISCONNECTED from the economy of the U.S. That's they're goal. It's virtually a must. Then, the market will be able to GO UP no matter what's happening at home. Think: a rich family living in Peru. They go up with the NYSE and bonds, not Peru! (mostly)
Capital is the least patriotic movement of all. It wants to be free! That's why it love-bangs the American flag and triagulates both parties.
P.S. A Greenback (not a gold standard) is the ONLY thing that locks capital to the public purpose of the nation. We have tons of leverage over them. We control the markets, energy and the sea lanes with our military. That's the deal. Everyone knows the deal. They want to change the deal. They want that taxpayer subsidy for FREE and they also want to take the private reserve notes away from the United States and do with it what is in their interest. The Greenback or a Greenback-like monetary system is the only thing that glues American's hegemony to the American benefit. The U.S. has all the THEORETICAL leverage we need over corporate interests. That's why they're buying the government up in a rush. They're not stupid. They see what we COULD do.
Well said sir....+1776
There is an illusion in which the Fed is seen as the central bank for the United States. Congress, POTUS, etc have meaning as your representatives, you are their boss. The Fed is subject to your power. There is another illusion in which the Fed is one of the agents responsible for the collection of debts owed by the United States due to its bankruptcy (1932, 1789, whatever). In this picture, the same folks are part of a charade (that they might not understand) in which they hold no power and only perpetuate the former illusion in order to maintain control over a population of debt slaves. Here the Fed is ex-US (as are many structures of the receivership) and is not subject to your power.
Personally I think the later illusion explains a lot more of the world and the way things work to me than the former.
Question your fundamental understandings and accept that new and old may present useful perspectives. :)
We have no control over the Fed until we undo the 1913 law. Coin our own money per the Constitution. watch the money masters and tell me I'm wrong.
http://video.google.com/videoplay?docid=-515319560256183936#docid=7757684583209015812
Just End the Fed. We can do without them. aloha.
I second that!
"Bernanke, when did you stop beating your wife??"
Seriously guys, this fake pretense and outrage about a central bank decreasing interest rates is seriously funny as it shows so much ignorance. Do you realize that this has been done for the last 80 years or so, a couple of times per year, in every major economy on the planet? Where was your outrage when Greenspan reduced interest rates during the Bush years?