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Economists: End Or Drastically Downsize the Fed
Economics Professor and monetary expert Randall Wray told me thatwe should end the regional Federal Reserve banks, as they have such terrible conflicts of interest, strip out all regulatory power from the Fed (since it doesn’t believe ine regulation, anyway), and implement monetary policy with a very small staff. He is not opposed to moving operations over to Treasury and/or the FDIC.
Professor of economics Steve Keen told me that he would pretty much limit the Fed to being a clearing house between different banks. In other words, in his view, the Fed could be stripped of all of it’s regulatory, monetary and emergency bailout powers.
Economics professor Michael Hudson told me:
Before 1913 all the Fed’s operations were conducted quite well by the Treasury. (David McKinley’s book for the 1907 described this quite well a century ago.) the Fed’s aim was to Decentralize policy. The way things turned out, Wall Street leaders were given veto power. The role of Tim Geithner — in giving billions away in cash-for-trash trades the DAY before he was designed new Treasury Secretary (from his NY Fed position) tells it all.
But would the Treasury be different? The key is to put it back in the public interest, not Wall Street. Easier said than done.
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[Congressman Dennis Kucinich's bill to nationalize the Fed, and his call on protesters to demand nationalization of the Fed] drastic, but it is the only way to check the fact that commercial banks create debt money recklessly, and now “casino capitalism” gambles that are bound to fail.
If we could implement the 100% reserve proposal and administer it correctly, I’m all for it. The government would NOT create credit for gambling, or ensure it.
PhD Economist Marc Faber said that protesters should Occupy the Federal Reserve.
Famed economist Milton Friedman wanted to end the Fed:
This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System… and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities…
Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank…
To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers.
Austrian-school economists such as Murray Rothbard want to abolish the Fed:
Given this dismal monetary and banking situation, given a 39:1 pyramiding of checkable deposits and currency on top of gold, given a Fed unchecked and out of control, given a world of fiat moneys, how can we possibly return to a sound noninflationary market money? The objectives, after the discussion in this work, should be clear: (a) to return to a gold standard, a commodity standard unhampered by government intervention; (b) to abolish the Federal Reserve System and return to a system of free and competitive banking; (c) to separate the government from money; and (d) either to enforce 100 percent reserve banking on the commercial banks, or at least to arrive at a system where any bank, at the slightest hint of nonpayment of its demand liabilities, is forced quickly into bankruptcy and liquidation. While the outlawing of fractional reserve as fraud would be preferable if it could be enforced, the problems of enforcement, especially where banks can continually innovate in forms of credit, make free banking an attractive alternative.
I noted Tuesday:
The New York Sun reported that a … Nobel economist may have implied that the Fed should be abolished:
Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics … cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”
Nobel prize-winning economist Joseph Stiglitz strongly dislikes the Fed:
Joseph Stiglitz – former head economist at the World Bank and a nobel-prize winner – said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is “corrupt” and undermines democracy.
Stiglitz said:
If we [i.e. the World Bank] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure.
Stiglitz pointed out that – if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system – “it would have been a big signal that something is wrong.”
Stiglitz stressed that the Fed banks have clear conflicts of interest, since the banks are largely governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing:
So, these are the guys who appointed the guy who bailed them out … Is that a conflict of interest?
They would say, ‘no conflict of interest, we were just doing our job. But you have to look at the conflicts of interest”…
The reason you talk about governance is because in a democracy you want people to have confidence … This is a structure that will undermine confidence in a democracy.
Indeed, as I noted Sunday:
Given that the 12 Federal Reserve banks are private – see this, this, this and this- the giant banks have a huge amount of influence on what the Fed does. Indeed, the money-center banks in New York control the New York Fed, the most powerful Fed bank. Indeed, Jamie Dimon – the head of JP Morgan Chase – is a Director of the New York Fed.
Former Fed officials agree. For example, the former Vice President of Dallas Federal Reserve said that the failure of the government to provide more information about the bailout signals corruption. As ABC writes:
Gerald O’Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the government to provide more information about its rescue spending could signal corruption.
“Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.
In fact, many high-level economists have blasted the Fed for bungling virtually everything it does.
And while – admittedly – many mainstream Keynesian economists may be hesitant to question the Fed’s existence because the Fed is a big part of the printing press on which Keynesianism relies (and the Fed has essentially bought the economics profession), the same arguments which Keynesians have made against the “too big to fail” banks apply to the Fed as well.
For example, Nobel prize winning economist Paul Krugman wants the big banks to be broken up because their very size warps the political system:
My view is that I’d love to see those financial giants broken up, if only for political reasons: it’s bad to have banks so big they can often write laws.
Former chief IMF economist Simon Johnson says much the same thing.
The Federal Reserve is an enormously powerful institution, which doles out tens of trillions of dollars – many to foreign banks and governments (and see this and this) – without democratic input of any nature whatsoever. While Fed apologists say that the bank’s “independence” must be preserved, the fact that the Fed has sent trillions overseas shows the Fed is somewhat independent of American interests.
And the fact that the Fed funneled trillions to the biggest banks – instead of main street or public works projects – runs counter to the wishes of most people and of Keynes’ actual prescriptions. (Keynesians speak of “saltwater” and “freshwater” schools of thought, depending on whether economists think money can be pumped anywhere and it will stimulate the economy, or it should be pumped in specific places. But the Fed hasn’t done either, but has instead given huge sums to the big banks, and then encouraged them to park the money). See this and this.
Liberal Keynesians should oppose such a gigantic concentration of power – shielded from accountability to the people – on basic principles.
Indeed, both liberals and conservatives should despise something which runs so counter to the “separation of powers” envisioned in the Constitution.
Note: The American people want the Fed ended or at least reined in as well. See this, this and this.
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G. Edward Griffin is my HERO!!!
He gets it on a global scale.....and every single person here should be watching and reading him!
I follow and recommend John Hussman (hussman.com) who has clearly detailed illegal acts by the FED under Bernake, whom he states should be tried for crimes.
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http://ex-skf.blogspot.com/2011/10/fukushima-i-nuke-plant-infrared-photo...
Time to Crush, Crumble & Crunch! Where's Godzira?
Ron Paul 4 president!
He is a great guy, but working inside the GOP is another thing.
He will not be able to do whatever he wants( end the FED and go back to gold standard) even he becomes a president.
There must be another peoples party to vote for, who never gets funds from Wall street cartel. The system must change, its all rigged game.
Perhaps, but he can raise some serious unshirted hell from the Oval Orifice until the rest of the people and some additional political support catches up with him. They don't call it a bully pulpit fer nothing. He will have to do it from the Republican Party side cuz the Democrats are not even seriously talking about free enterprise, Constitution, liberty, etc. The Republicans have talked the talk and Ron Paul will see if they can be made to walk the walk. He isn't one to walk away from challenging phonys and they have been getting away with it for far too long.
fwiw dept:
been out there awhile but worth repeating - the ny fed controlls 93% of the dirty dozen
ref: http://www.bigeye.com/griffin.htm
thankyou gw
Economists, Ron Paul and other Don Quixotes, KNOW that they cannot end or limit the FED since it is not a government agency.
What they CAN do, Paul and the "economists", is begin the assault on CONgress to reinstate Glass-Steagall, a must do if the Ibanks are to be stopped in their tracks.
Why is no one asking them why they are trying the impossible when the do-able is being intentionally ignored??
We all know how it got sandbagged by the Republican triumvirate of Gramm, Leach and Bliley, and was not Vetoed by Bill Cliinton who could have at least put a roadblock up and then kept pushing to keep the Ibankers from ruining the entire financial galaxy for everyone but themselves.
So, Mr. Washington Why are you trying to deal with the impossible and NOT pushing for Glass-
Steagall to be reinstated?
HUH???
I've written for years that Glass-Steagall - repealed under Clinton - should be reinstated. gs and Fed are 2 piecesof one puzzle.
and who lead the charge to repeal glass steagall? in the house, dick armey and in the senate , phil gramm , whose wife also sat on the board of directors for enron...............so now dickie armey is in the tea party. isn't that nice........people have short memories....
You are right. The Republicans controlled the house back then.
I remember the push coming from Citibank's desire to buy Travelers Group. Who was the head of those two companies bacj then?
If the Republicans pushed for the repeal of Glass-Steagal and so did the Democrats what does that imply?
Hint: Take a look at campaign donations from Wall Street. They go to both sides in a big way.
The one who puts pen to paper to enact any bill into law...our last line of defense...is the president.
Robert Rubin had the presidents ear. The president was Bill Clinton. It was called Rubinomics.
Ahhh, memories ;-)
Clinton didn't rock the boat of Reaganomics, its front line beneficiaries, the Squid and Sandy Weil, were paying for his party's oligarchs, its congressional elected. Glass-Steagall repeal had one MAIN beneficiary in its head lights : Citi-Travelers merger. It started the NEXT mad stampede, ending in the dot.com bubble, all part of deregulated Reaganomics and with benediction of Greenspan's Zirp. Ask John Reed :
Ex-Citigroup chief Reed: Citibank-Travelers merger was a mistake - Oct. 28, 2010
Ex-Citigroup chief says bankers behaving 'wildly'
http://money.cnn.com/2010/10/27/news/companies/john_reed_citigroup.fortu...
Systemic Fail.
They most certainly are not and I can't understand why you continue to contaminate the waters by lumping them together?
If the banks were prevented in the early 90s from investing deposits in the kinds of risk they then did, we wouldn't be in this mess, REGARDLESS of the FED's existence.
They are not two pieces of the same puzzle, they are two different situations and should be treated as such.
I'm wondering why you persist on doing something that can't be done? Glass-Steagal has a much greater chance of being reinstated BECAUSE IT WAS ALREADY done once before.
And why again isn't Paul jumping on it? And every other politician that claims to want to keep his or her job?
A national program to get the voters informed and deluge the CONgress with threats of losing their seats if they don't would stand a much greater chance than trying to end an agency that is extra-governmental.
THEN we can deal with the FED.
When the the Federal Reserve is pushing banks to make loans to people who can't pay them back then they are at the core of the problewm. Take a look at this : Revisiting the Community Reinvestment Act and pay particular attention to the sponsors (all of which have heavy lobbying efforts on K street). While reading think to yourself "compromise" between the banks and the Fed. What would YOU want in return for thess demands.
http://www.frbsf.org/cdinvestments/conferences/0902_2/index.html
You're another one who wishes to scale mountains without mask.
Re-instating Glass-Steagal is DOABLE! Ending the FED is impossible, You who want the impossible are either part of the distractionary force, or comletely ignorant, or pollyanna Idealists who will fizzle out when the opposition to ending the FED drowns your out.
And Ron Paul could repair his do-nothing tenure (and stop with the proposals, bills he authored and the rhetoric he spouts and NEVER getting anything done) by staying on this until he has enough votes to get it passed.
This could be his redemption from irrelevance.
I don't care if the FED pushes loans. If the banks were by law unable to do it, then the FED's stance would be irrelevant.
Reinstate Glass Steagall NOW!
Say enough about GS and TPTB will declare all problems solved when it's reinstituted. GS is chicken scratch, legislatively speaking. If RP wins it'll be done the first week, he'll have a strong mandate. Either that or we truly are powerless slaves who will toil until they exterminate us. Until you end the Fed, re-installing GS would just prop up the corrupt fiat system. Ending the fed is both a necessary and sufficient condition for economic revival. The same cannot be said for GS, as necessary as it is, in time.
So the fed is an extra-governmental agency and we're stuck with it? Bollocks. Is that the same as every other extra-governmental agency, ushered into our lives in the dark of night in some sweaty office building in DC? Can't end them? The same power that created them can't end them. Wow, they really do have our number. Do you suppose that will be their response, when congress votes to end them and the president signs? 'You can't'?
The fact that it is extra-governmental and yet still reaches so deeply into every life on earth is MORE reason to target it, not less.
And yes, without GS being eliminated (see any power there that could be used in the fed fight?) we'd be limping along a little less lamely, but that only draws things out, making the end worse. Ending GS helpted bring us face to face with the system of exploitation.
There sure are a lot of stupid people or closet FED lovers here.
The fact that Glass Steagal existed at one time was an impossible wall for the Ibanks to climb over to do the damage they did when it was torn down, AND STILL DO!
If you all cannot see that Glass Steagall was our bulwark against the fraudulent MBSs that were packaged, leveraged 1000 times, and resulted in the mess we have today, then you are either closet plutocrats, or a part of the propaganda that is diverting attention to the merits of Glass-steagall because you know how effective it was.
And can be again.
Limping along a little less lamely??????????????????? That is total bullshit, traitor.
GW, Greenie on ya. - Ned
+3
George Washington,
Doesn't the FED 100 charter end next year anyway? So, it's a bit late to try and end or downsize it? 100 years too late...
There is also Section 31 of the Federal Reserve Act:
The right to amend, alter, or repeal this Act is hereby expressly reserved.
Now, the interesting thing about Section 31 is that is has been omitted from the U.S. Code, but it was never actually amended or deleted from the Act itself, thus it is still enforceable through Congress.
AWESOME! Let's do it!
You have piqued my interest. Do you have specific info. such as actual content of Section 31. I would love to see all info. you have. Me and the FED have no love lost. Milestones
Hey! Thanks for the reply. Thats it!! Good grief. The Fed has been VOID is its inception under Marbury v Madison 1803. I'll have to repost a little thing on the Fed some time ago here shortly (amended,shortened version) Again, thanks for the heads up. Milestones
Actually, Section 31 states exactly what I quoted, no more, no less.
Congratulations. You are about the only one other than Anony, who sees this smoke screen for what it is: A diversion tactic, which apparently Mr. Washington is either an accomplice at perpetrating or naive.
there were only two us banks with charters, and both were in the early 19th century - the last one almost got jackson killed, but he shot first
then came lincoln who didn't like the high interest rates post cw reconstruction
unfortunately he was killed
1913 made the federal reserve banking system an independent bank, and yes your correct indeed a century long charter due for expiration 12/31/2012
these guys thought of everything ten years prior to implementation
ps. the new conspiracy theory over on 'opensecrets.com' has the fed bowing out gracefully and using gold as a reserve currency [1933 deja`vu redux] confiscating all gold - ridiculous huh,... ?
Ref: "correct indeed a century long charter due for expiration 12/31/2012"
Link???
Oh, come now, Lincoln actually instituted a system that was the seed-bed for the Federal Reserve System and the modern IRS. Lincoln, with the help of Chase, instituted a bond system in an attempt to support the fiat Greenback, many made fortunes through the system of patronage that Lincoln began, especially the sale of government bonds, it was a mercantilist system of government, much like the one we have today, we can, in many ways thank Lincoln for the mess we are in today. He destroyed the Republic of Free, Sovereign and Independent States and translated it into a centralized monstrosity that we face today.
If you look at the amount of debt accumulated during that period it was enormous and despite the facade that Lincoln was against the high interest rates the banks were going to charge for his illegal war machine, the bankers loved the new Greenback system and were highly rewarded through it. Lincoln was a friend of the bankers and lauded the idea of a Centralized Banking. He favored the ideals of Henry Clay, with all it entailed, including internal improvements, a centralized bank and a fiat currency.
It is strange that you mention Jackson and Lincoln, as though they were on the same side in the battle against the Bank of the United States, they were not, just the opposite. While in the Illinois Legislature, Lincoln gave a speech on January 11, 1837 where he gave his full support to the Bank and blasted its opponents. He even crossed party lines in support for the Bank of Illinois. Even after the Panic of 1837, Lincoln still supported the Bank and the Bankers.
Unfortunately, for this country, Lincoln’s policies lived on after him.
…and, for your information, Lincoln didn’t live to see post CW Reconstruction, which, along with the Lincoln Adminstration, was a complete disaster.
lincoln's debt was paid off in a few short years with those bonds issued, though he paid the ultimate price
granted the north was industrial based and had its share of high stake financiers , but lincoln's only interest was, and forever was, to keep the country united, period
jackson too, had but one agenda - moving the new america down the road of progress, and not have the banks rape the country along the way - much different than lincoln's situation i would say
war takes the normal out of character as desperation unhinges sanity, and for that reason 'shit happen's' - this subtle morphing is applicable to washington's atrophy after the independence war, where all his want was to tillage his fertile soil he had fought so long and hard for, [it was a landowner,... his dream] thus politically savvy, handing[?] his unacknowledged fiscal responsibilities over to hamilton,... a trusted confidant in so many ways
summary: during wartime, rules and logic don't coexist - preservation of the union as a whole, is priority #1 - lincoln had served his purpose to the country as a true hero and for that the foreign oligarch killed him, period
ps. lincon's son todd was present at three presidents assassination - his fathers - garfield - mc'kinley
ps2. i suppose grant is high on your list as a qualified great president
+ !000. Exactly. Lincoln could be, if the truth were allowed to be taught in the indoctrination of the children and the ongoing reverence towards his legacy, revealed as one of our 'greatest' Tyrants.
His "aw shucks" manner belies an egomainiac who had be responsible for over 2 million casualties in the War between the States. Some Leader. My pet gerbil could would have been a greater leader than he ever was.
For my money, the bullet came 4 years too late.
Andrew Napolitano has written a great book in which he says that Lincoln was the most unconcsitutional president EVER!!!
I am starting to wonder if, along with banishing the FED, we should also ban every history textbook written since 1900!
When I woke up and started educating myself with original documents, declassified government records, and important historic quotes, I realized that almost EVERYTHING I was taught in school was propaganda and falsehoods!
So I am back at the 6th grade level, I feel, and will continue my own true pursuit of historical veracity!
And at that, you are now better informed than 99.99%.
My plumber told me he thinks the Fed is BS'ing Americans. He also said he thinks Timmy is not entirely honest when he proclaims "a strong dollar."
He reads more then I thought. On the other hand it makes sense...he used to be a Brain Surgeon before HMO's drove him out of business. So he's no Dummy.
And the fact that the Fed funneled 10's of trillions($30 - $50 Trillion) to the biggest banks
I have $15+ Trillion accounted for to the penny.
https://docs.google.com/spreadsheet/ccc?key=0Aq7CIo3B6RWfdGxuRk1mdkR5NGdwbVh1Y3czeFRySlE&hl=en#gid=0 <--- to the penny.
http://www.bloomberg.com/news/2011-03-31/federal-reserve-releases-discount-window-loan-records-under-court-order.html
http://goo.gl/9gnub Matt Taibbi talking about the tip of the $15 Trillion Dollar Iceberg! http://goo.gl/bJwOs / http://goo.gl/TMl74 https://twitter.com/#!/JWnFL/statuses/59258452932952064
Ending the fed doesn't solve anything. A new one will just take it's place eventually. There is a need for a institution like it, sadly.
What should be done is to neuter the fed.
Ironically, the longer the Fed and the rest of the central banks prop up the system, the more likely it will be that they find themselves in the crosshairs, and the less likely they are to get their global currency, partly gold-backed or not. Don't be surprised to wake up one morning to a defacto new international currency. If the present system unwinds completely on their watch, they are in a position to lose a lot more.
As to necessity, that will of course be the argument: the world is too complicated to function without a central bank. The fact is that the basic movement of money for productive purposes is similar to what it's always been; the central banks have enabled the complexity by distorting investment decisions. Because the government probably owns little gold, an alternative to a move to a gold standard is to open the mint to gold and silver, and end the FRN monopoly on tender. The good money will eventually chase out the bad, organically rather than abruptly, so that the system has a chance to adjust.
We need a central bank BUT it should not be a private bank with the same owners as other central banks. We the people give the central bank the power/credibility to coin money. I believe it is in the constitution that COngree has the power to coin money NOT a private bank. And no one person (Bernake/Greenspan) should have control of the productive worth of all the people of this country.
There's needs to be complete transparency!
"The good money will eventually chase out the bad"
Epic WRONG - Bad money chases good money out of circulation - Gresham's law. It's why there are NO 90% coins in general circulation today. Been that way since 1964; 1965 coins began the silver/copper 'sandwitch' coinage debasement, in violation of the coinage act.
I actually took a $1 Silver Certificate to a Bank and filled out a Treasury form asking for the silver, and about 2 months later received a small envelope with about a half-ounce of silver in grain - granular form, delivered by a government agent in 1963, when the Post Office worked for $5 an hour and a new Pontiac cost under $3 Grand.
In order for good money to chase out the bad natural market forces need to exist.
Bailing out banks, ignoring bankruptcy laws, changing accounting methods (mark to fantasy), changing contracts without the consent of both party's, are all ways to prevent the natural market forces to cleanse the system. It also happens to be a way forcorrupt individuals to pick winners and losers.
I like you instantly just because of your fantastic story. But I think you're wrong about this.
It depends on the legal treatment of the monies. It works in reverse when the shit currency is not supported by the government, it eventually loses all of its value. http://en.wikipedia.org/wiki/Gresham%27s_law. Forcing fiat to be accepted at the same value as commodity money drives the latter underground. With open tender laws, money is just like any other product, the good and useful survives and the garbage loses favor.
The Fed and the central banking system is corrupt to its core. And should be ended. But replaced by what? Actually adhere to the Constitution?
"Section 8 - Powers of Congress
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
Sounds like a good idea. Congress is supposed to represent the people. But do you really want to give the power to "coin Money, regulate the Value thereof" to Barney Frank?
Thwow Bawney Fwank out with the FED and F&F all at the same time!
Decentralize banking and let currencies compete!
We need a money that has a reputable hallmark. A standard that other money can be gauged against. 99.99 fine.
Very true, MF. I have this instinct a new one would take its place immediately. And it would be in a far worse form than the central bank we have now. It would be totally dependent on the gomt and thus far more likely to hyperinflate. While the corpse of the Fed is still warm, there would be legislation in Congress signed, sealed and delivered to create another central bank directly under the control of the Treasury department. It would be designed to serve exactly the same set of interests as the Fed which preceded it. Plausible and pressing reasons for the passage of the creating law would be put forth accompanied by a massive PR blitz directed at the sheeple. The vampires who rule us will not release their grip so easily.
That would be true IF fractional reserve lending and demonopolizing currency weren't also instituted.
I'm not saying it's impossible to abolish the Fed without another one being set up in its place. What I'm saying is that that is where the great danger lies in calling to End the Fed.
Depends on your perspective. End the Fed's cartel monopoly on what is called money. 12 private banks have "won" the right to create the nations money. The have a patent on what is money. How? Why? when we know that a monopoly skewers honesty in transactions? Give me a money that I know you can't renege on. Give me a money that maintains its purchasing power over time. Give me a money that I can save that doesn't have to chase a yeild to do that. Give me a money that can't be taxed. Give me an exchangeable money that is universally recognised so that I can spend it beyond my borders.
Don't tread on me.