-14 votes

Why Thoughtful People Will Support The Fed

Get your downvotes out, Bill3 is back with some unwelcome observations.

The budget drama and shutdown hysteria continue to illustrate why, despite everything, serious people will have grave reservations about removing the Fed's status as a separate and independent agency of the government, with an apolitical mandate, an extended term structure and time horizon, and a close relationship with the top echelons of the private sector (finance, banking) and academia.

When people see all this hysterical behavior, theatrics and political irrationality being played out in a public spectacle by the political parties, the Fed actually look like the good guys and the adults. They are above it, not worried by it, and remain committed to business as usual, and people are not worried about either their bank accounts or the money supply being impacted by this show.

Nor is anyone really worried about default, the full faith and credit of the treasury market, or its liquidity or the liquidity of the banking system. Certainly not people active in the markets or finance or the top tiers of business.

Despite their corruption, despite their cozy relationship with powerful banks, despite business cycles and bailouts, people do not and will not want their bank accounts and their money to be controlled by these two ridiculous political parties.

Nor do they trust that market to provide an equal level of monetary stability, in the absence of the Fed umbrella of bailouts, FDIC, regulation, and unlimited liquidity. They may be wrong, but convincing people to give up imperfect stability for the possibility of better imperfect stability, and the risk of major instability, is a hard sell.

Nor would they want to turn over monetary policy to ideological true believers committed to a particular theory.

They want practical, business minded people, even a little bit corrupt and greasy, running the monetary ship with a government safety net. That means the bankers and academics that make up the present monetary authority.

As bad as that is. At least over these other alternatives. Because the Fed, despite everything, will in fact keep the trains running on time, figuratively speaking, regardless of the rest of Washington's antics and political bipolar disorder.

It will be hard to convince people who have something to lose, and who actually desire stability, to prefer those other alternatives to the present business as usual. The Devil you know...

The problem with the whole self regulating market for money and banking is that you are selling academic theory against perceived empirical data. The idea of a perfect stable market that never existed except on paper, against the perception of a historical reality where markets did not in fact provide that kind of stability. Even if the theory is correct, even if the data is misleading, the problem is the theory can't be tested.

When empirical data is marshaled against it the advocate of the theory is forced to retreat into the claim that "it's never been tried." Again, very tough sell for practical people.

There are good ideas out there for improving monetary policy, including free market and free banking ideas. But they won't come out of this political system of disorder. They likely won't come at all, but if they do it will be internally adopted policies of central bankers and Fed academics through discourse with academic critics.

It will not come from political demagogues, and it will not come from crank ideologies that don't participate in the actual academic discourse.

Okay, we can go back to waiting for the imminent collapse now.

Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Why thoughtful people will support BILL3 -

I had to down-vote this because it's so true it makes me sick. I just pray to God all the other down-votes came from the same reaction.

that ofcourse is assuming in

that ofcourse is assuming in the meantime our govrnments wont do something so monumentally stupid, AND, the people find out about it

other then that, cant find much fault with those thoughts, as bleak as they are.......we just want good to honest wholesome change, real change, not make beleive change, not the same as usual, same old same old.....is that so much to ask........yes.....still hope for it though

Fed= debt=slavery

free market money = economic freedom

doesnt really matter to me how stable/not stable money is as long as enslaving me with forced debt is not a part of the solution.

Its funny to me that free market advocates are labeled as utopians. It is those that think they can regulate, predict, and control the markets who are utopians. Free market advocates KNOW there will be shortcomings, and one must do your best to protect yourself. Its not like stability will never ever happen until we have full government control and substitution of real money for paper debt.

I'd rather have a bottle in front o' me than a frontal lobotomy

I appreciate the comparison of the Fed to Il Duce

but it may be based on a myth.

And there is no shortage of witnesses to testify that even the tourist trains were often late. A Belgian foreign minister wrote: 'The time is no more when Italian trains run to time. We always were kept waiting for more than a quarter of an hour at the level-crossings because the trains were never there at the times they should have been passing.' The British journalist Elizabeth Wiskemann, likewise, dismissed 'the myth about the punctual trains'. 'I travelled in a number that were late,' she wrote.

The notion that the trains were running on time was none the less vigorously put about by the Fascist propaganda machine. 'Official press agents and official philosophers . . . explained to the world that the running of trains was the symbol of the restoration of law and order,' wrote Seldes. It helped that foreign correspondents in Rome were very carefully controlled and that the reporting of all railway accidents or delays was banned.


While I agree that a private

While I agree that a private Fed *might* be a better alternative than a public one, both options are evil and neither is sufficiently "lesser" to be tolerated. I also believe you are grossly underestimating how radicalized US politics has become. Radical monetary theories are on the table as the Feds own policies have become radical.

Ventura 2012




Is this a troll post?

"When people see all this hysterical behavior, theatrics and political irrationality being played out in a public spectacle by the political parties, the Fed actually look like the good guys and the adults. They are above it," -The politicians act like babies because they have been sucking the Feds teet for money for decades now and are acting like addicted babies. Your context is way off. You are looking at a crisis rather than looking at what caused the crisis and judging people on how they act after they have brought on the crisis.

"people do not and will not want their bank accounts and their money to be controlled by these two ridiculous political parties." - Ben Bernanke has said many times monetary policy can not change what fiscal policy should be doing, yet he continually prints money to accommodate for bad fiscal policy, so the Fed is catering to the whims of the two parties, to the tune of $82B each month, Please get some context before you post your nonsense on this website.

"Nor would they want to turn over monetary policy to ideological true believers committed to a particular theory." - How about Bernanke blindly following Keynesian ideology? and Greenspan before him...

"The problem with the whole self regulating market for money and banking is that you are selling academic theory against perceived empirical data." - 'Free' market data is available from the pre 1913 era of the US' history (I put the 'free' in quotes because I don't define slave labor earnings for companies in the south to be free market), so I'm not sure where you get the idea that this is theory vs empirical data. The empirical data is that the stability of the country was very strong during the first 150 years of our history. We had no great depressions or bubbles that sweepingly affected people on a national basis as economics was decentralized. And the centralization of power in the 1900s produced not only some of the worst economic depressions ever, but also the killing of people on a global scale in the tens of millions. The only powerful economic swings pre 1913 were part of big gov't producing big wars, such as civil war, which destroyed our currency.

What is your context?

Money is "an exchange based on confidence".

It doesn't matter if it's red, blue, green, gold or silver. Without confidence there is no exchange.

"A vote for the lesser of two evils is a vote to keep things the same", Buckminster Fuller..
A choice for liberty is always a choice for liberty.

I can't believe I have to

I can't believe I have to play the optimist again. It's so against my nature. But you take pessimism to a new level.

You assume that things will stay as they are, but that is likely only when there is stability and the financial/monetary world is far from stable. The FED has blown out their balance sheet to a size not imagined possible just a few years ago. As a result, we have highly inflated asset prices.

Bonds and practically all financial assets are bubbleiicious. House prices are inflating, again. While we don't have much CPI inflation (and thus little wage inflation) we have a very unstable situation where the rich (those with financial assets) are getting richer while the poor schleps without are getting poorer. That's politically unstable.

So we have both bubbles in financial markers AND rising political instability.

I not going to pretend to know what is going to happen, but if/when the bubbles burst there are gonna be some angry folk looking for answers and IF they come to understand that the source of the instability is the centrally planned monetary system, there WILL be changes. Not that the FED will be abolished, but it may be limited in some meaningful ways.

Alternatively, if the wealth disparity continues much longer we very well could see populist revolt, which too could result in meaningful changes to the monetary system.

While I can't predict the time, cause or manner of the changes, I do think it's more likely that we will see some sort of changes to the monetary system before too long. I just hope the change is in the right direction.

I must be willing to give up what I am in order to become what I will be. Albert Einstein


Thoughtful people < Moral people

All of the academic theory

All of the academic theory gets thrown out the window when the FED is able to print trillions of dollars out of thin air and call it money.

People are now conditioned enough to think that a piece of paper is worth more than silver or an ounce of gold.

That's an amazing accomplishment in itself.

"Money," is what people think it is. Ever since the 20th century, money has become less physical, and more psychological.

What people think matters most. Most people on the planet still think the dollar has value. If you and I did not think a dollar had value, then why did you pay your bill today in dollars? Why did you use a credit card? It's all mental, not physical anymore.

When the market crashed in 2008, the Federal Reserve stepped in and bailed out businesses, banks included, all over the world.

The Federal Reserve saturated the world market with debt instruments called dollars in the form of loans with interest. Everybody wanted them, still do. How many countries are now on the FED's hook?

A one world currency? The "Uno?" It's already here, and it's called the dollar. Has been that way for about a century now and I don't see any other currency on earth ever surpassing it to be frank and honest.

What's going to replace the dollar?

There is no substitute. If anyone thinks the Euro is a better substitute, then why was half of Europe bailed out with US dollars?

"The dollar collapse," my ass. The dollar will only collapse when people no longer think $100 bills are valuable and I don't see that coming any time soon.

Suck on that, Peter Schiff.

Never be afraid to ask simple questions.

Just because something helps

Just because something helps maintain the status quo and current style of living in US, doesn't mean it is right and moral. What the Fed does is totally immoral and a fraud.

Ron Paul and Peter Schiff were able to predict the sub-prime mortgage crisis (maybe not the actual date), because their understanding of economics was/is fundamentally correct amidst the random keynesian noise.

>> "The dollar collapse," my ass. The dollar will only collapse when people no longer think $100 bills are valuable and I don't see that coming any time soon.

Is that a valid statement? The dollar collapse simply didn't happen in 2008 because the Fed stepped in to bail-out the insolvent banks all over the world, and has been bailing-out the insolvent US and EU governments for a long time.
And in-order for your statement to be true, the US military has been terrorizing the entire world to maintain the Petro-Dollar system. It is not that people assume or imagine that USD is still valuable. The reality is that USD is indeed valuable by the sheer fact that OPEC can sell oil only for USD and that US can influence that price of oil.
The only way anyone in US or elsewhere can justify the existince of The Fed and the current USD based money system is if they accept what the US military does in normal. That brown people all over the world can be killed for maintaining the Petro-Dollar and that most-other people of the world should bear the brunt of the USD inflation.

It is no wonder that Americans are hated by many people around the world, because of their supposedly 'unanimous' support to the American military adventures. This is why Ron Paul's message is the best and the most appealing even to those outside US - End the Fed and reduce defense spending by $1 trillion in the first year. Any person trying to justify the Fed or the military in any fashion would not have the support of Ron Paul and most libertarians.

What is right and moral has

What is right and moral has nothing to do with politics.

Sad, but true.

Never be afraid to ask simple questions.

Why this resignation? Didn't

Why this resignation?

Didn't Ron Paul serve as a congressman and politician for 4 decades and be in the moral right? Just because most politicians have become corrupted by the power that has been granted to them and have come down to play compromises, doesn't mean that what is right and moral doesn't matter.

Don't we want our next generation of politicians adhere to the law of the land and put their constituents interests about their own? Don't we want the judiciary to play its expected role as check to legislative power and as an objective interpreter of the constitution?

Isn't the fight to achieve the above, a worthy fight and that there could no second-guessing and resignation to the status quo?

Wow. One detail you seem to


One detail you seem to be forgetting; If we hadn't had an endless supply of funny money fresh out of the fed printing press and the fractional reserve banking system that resulted, we wouldn't have a massive, out of control government run by two psychotic political parties. What kind of @#$%ing idiot gives a bunch of asshole politicians (whose reelection depends on how much free stuff they give to idiot sheep) a money printing press!? Further, what kind of idiot doesn't understand the root of this problem?

Nearly everything that is wrong with our world today is a DIRECT result of central banking.

You want to end the insanity and reign in our government back to its constitutional roots? End the Fed. Period.


Soooo well put I couldn't add a thing thanks