Abolishing the Fed: Good Idea or Bad Idea?

[Pythagorean]

1) good idea or 2) bad idea?

if 1), how quickly/slowly should it be done?
if 2), do you think reform is needed?

 

[russ_watters]

What problems do you see? What would happen in its place? Can't evaluate without an explanation of the alternative.

 

[Pythagorean]

It's not me, it's a typical libertarian line of discussion:

http://www.abolishthefederalreserve.org/

I have no idea what the alternative is or how legitimate the claims are; I'm hoping more educated people can give insights on this topic. It's a very old topic.

 

[SixNein]

It's not me, it's a typical libertarian line of discussion:

http://www.abolishthefederalreserve.org/

I have no idea what the alternative is or how legitimate the claims are; I'm hoping more educated people can give insights on this topic. It's a very old topic.

In a basic nutshell, it comes from people who reject mainstream economics for the Austrian nonsense that Ron Paul spews. They labor under the delusion that gold is some kind of urber solution. And the fed is some kind of evil monster sent by the devil himself. It's all nonsense.

From your link

They manipulate interest rates to create "boom-bust" cycles which always work out to the advantage of the hidden elite "insiders". . .
as they know exactly when our economy will boom . . . and when it will bust.

Like the wall street collapse? lol

or my favorite

The Fed will profit even more with each financial bailout our government tries.

Kind of a catch-22 when one realizes that profits from the fed are to
1. fund itself
2. remaining amount is deposited into the US Treasury.

The fed is best defined as a independent government institution with both public and private components. In general, when someone gets that wrong, they are wrong on everything.

 

[Pythagorean]

so 2), do you think reform is needed? Do you think Bernanke was on the take, or that there is (non-conspiracy type) corruption in general in the Fed?

 

[SixNein]

so 2), do you think reform is needed? Do you think Bernanke was on the take, or that there is (non-conspiracy type) corruption in general in the Fed?

The fed may deserve some criticism for being so willing to intervene at low ends but not during bubbles. Of course, this was mostly a Greenspan policy. I would hope the fed has learned a lesson here. Greenspan himself testified in congress in (2008?) that he was wrong.

Overall, the idea of congress meddling in the fed with this climate would make me very very nervous. Bernanke, for his part, has done a fairly good job. But there is only so much the fed can do. Our real problem right now is our legislator. One almost has to stand in awe at the nearly 70% of legislation being effected by a filibuster. In fact, congress is so bad that they have been injecting a large amount of uncertainty in our market for several years. Just this last year, we were fighting over the default. Now, a year later, we are fighting over a fiscal cliff. People in congress are talking about delaying it for yet another 6 months so that it can continue to hang over our economy. It's madness. And there is nothing the fed can do about such major dysfunction. The president is pretty much ruling out of the executive order right now in a effort to bypass congress. It's essentially an executive branch reaction to what is one of the most hostile and dysfunctional congresses in US history.

 

[Pythagorean]

sorry, what are low ends?

 

[SixNein]

sorry, what are low ends?

If the economy was running under capacity, Greenspan would jump in. If it was running over capacity, he wouldn't intervene.

IE: the economic trough's and peaks that dip or exceed our potential GDP.Here is a quote from Greenspan:

"We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs and price stability."

http://www.investopedia.com/articles/economics/08/federal-reserve-intervention.asp#ixzz2BQELBYfm

 

[SixNein]

On a side note, the fed does run into problems with creating hazards by building up expectations that it can be counted on as a hedge against risk. We also run that risk with bailouts. And the legislator doesn't seem to care that much about the risk.

At any rate, we need a new legislator instead of a new fed. And I'd love to see those tea party loonies exit congress to crawl back under from whatever rock they came from. What happened to the sensible republicans from decades back?

 

[russ_watters]

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