Bernanke and the American people

pcvix · Nov 19, 2009

Do the American people want the Fed to provide near-zero-interest-rate financing to certain institutions so that they can make humungous profits without benefitting the real economy?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVoHrJp0jQ98&pos=5

Bernanke said in July that the Paul audit bill could result in lawmakers issuing subpoenas over potential decisions to raise interest rates. âI donât think the American people want Congress running monetary policy,â he said.

nazzdack · Nov 19, 2009

Quote from pcvix:
I donât think the American people want Congress running monetary policy.....

1) Has the FED really done a good job of running monetary policy? Would Congress be any worse?
2) Congress is under the delusion that monetary policy is something that can be "legislated/controlled".

Scataphagos · Nov 19, 2009

Quote from nazzdack:

1) Has the FED really done a good job of running monetary policy? Would Congress be any worse?
2) Congress is under the delusion that monetary policy is something that can be "legislated/controlled".

While the Fed is theoretically "independent", they've been little more than White House/Congress lackeys since Volker. That's right... GreenScam and BS Bernanke are ASS KISSERS!

sprstpd · Nov 19, 2009

They should replace the Fed with an interest rate formula. It would do a better job than Fed's abysmal performance.

Ivanovich · Nov 19, 2009

Quote from sprstpd:

They should replace the Fed with an interest rate formula. It would do a better job than Fed's abysmal performance.

Agree. It's been said long ago that a computer could replace the Fed.

ralph00 · Nov 19, 2009

I don't understand why folks think its so important to institutionalize the Fed's independence from Congress, but there is little concern about the institutional lack of independence from Wall Street. Check out the organization of the NY Fed lately??? Its owned and run by Wall Street.

nazzdack · Nov 19, 2009

Quote from sprstpd:
They should replace the Fed with an interest rate formula.

The Fed Funds futures contract. Done!

efficiency · Nov 19, 2009

Quote from Ivanovich:

Agree. It's been said long ago that a computer could replace the Fed.

Really?

The orginal intent in 1913 was to buffer booms and busts with two mandates being 1. Stable prices. 2. Full employment.

The Fed has indeed failed in both regards. In recent years 5% is accepted as full. As for prices, I use the Hershey bar as an example, It remained at 5 cents until 1969. It's breakout should be seen graphically from the 1920's until now. Gold, $35 in 1971 and $850 in 1980 would be a proxy.

There's more to the Fed than interest rates. Such as open market operations to control the money supply retrieving or dispensing Treasuries, and check clearing. Yes Virgina, what could be a paperless society, we have a lot of paper flowing.

As for interest rates, Fed Funds is more or less moral suasion. Banks do not borrow from the discount window but from correspondents. The long end of the yield curve is purely what the market will bear. Many loans are pegged to the Prime rate. That's completely irrespective to the Fed (as is LIBOR).

Does the Federal Reserve System personally impact you?