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Saturday, April 12, 2008

The Fed Called "As Federal as Federal Express"

One's local community-access cable TV channel broadcast the show about the US banking industry again on Thursday night and the show made the point that the Federal Reserve Act of 1913 was drafted by a group of ten bankers who met in secret at Jekyll Island off the coast of Georgia, traveling to the site under assumed names. Their bill was passed by Congress and signed into law by Woodrow Wilson who, near the end of his term in office, went on the record with his misgivings and regrets for having allowed the creation of the Fed. The show went on to say that "The Federal Reserve System is about as federal as Federal Express."

The uncertainty as to whether "private aspects" or "public purposes" guide the Fed is unacceptable. Regulation of interest rates and the money supply should be in the hands of an institution that is wholly and explicitly dedicated to serving the public good. There should be
no possibility that private interests rather than public guide the Fed's decision-making. The economy is created by the labors of the public. It is self-evident that the public interest should determine regulation of interest rates and the money supply--not a cabal of bankers working in secrecy and accountable to no one in their day to day operations.


Anonymous said...

You've got a reasonable point here, but it's not like gov't run central banks haven't been tried. The US Fed has been pretty good in comparison to gov't run institutions.
Do you think George W. Bush is going to manage an institution better than Jamie Dimon or Sandy Weill? It's a tough call between greed and incompetence, but I think we are better off with greed.

Richard McNally said...

LOL on the choice between incompetence and greed. I wouldn't want Bush Jr. to run my dog-pound. You say the Fed has been "pretty good." But how do we know for sure? This uncertainty as to whether "public purposes" or "private aspects" (it couldn't quite manage to state what parallel grammatical construction calls for here which is "private purposes" because it would be so outrageous to say that, a true red flag) predominate in its operations is unacceptable. It should be explicitly run 100 percent in the public interest because it is public's labor that creates the economy.