The Federal Reserve
I am new to this website and so far it seems like most people here are pretty socially liberal and fiscaly conservative. One thing I haven't really seen mentioned is the Fed. I was curious as to whether most people in the industry are either pro Fed or just indifferent. Is fiat money necessary for the banks to thrive?
Read about the history of the Fed and you'll see that the Fed is completely unnecessary.
I completly agree with you, I just wanted to get a general consesus on it without coming across as some kind of conspiracy theorist.
I know what you mean, however, there's no reason for a group of people to print money at interest when the Tsy could do the same without debt and no taxes to pay the interest.
What history are you referring to. "Lender of last resort" isn't just a catchy phrase, bank runs and liquidity crises were commonplace and seasonal occurrences prior to the creation of the Fed. More recently when Volcker was chairman, people were borrowing money and buying so much shit demand greatly outpaced production which led to massive stagflation. In turn the Fed raised rates to 18% (?) to stem the tide of that insanity. During the "Great Recession", whatever your opinions, they did prevent a much worse scenario from playing out. Had they not stepped in you would've gone to your ATM and no money would've came out. Their actions also allowed the private sector to de-leverage prior to the government (who still needs to IMO). Look at countries like Greece where government austerity occurred at the same time as private sector de-leveraging - it wasn't pretty. I never thought I'd be an advocate of the Fed, and I do question the extent of their role but it's... short sided to say they are "completely unnecessary."
Yeah. In pure political and economic theory I don't like the Fed. In reality when we're a/the reserve currency and the largest controller of currency and how the world prices nearly everything important, I have a hard time saying we could get rid of it.
Yes we could rid of the Fed but it would wreak havoc beyond belief on the US and everyone. Move beyond theory and into the real world. (not you archer)
Agreed w/ArcherVice... In a stylized perfectly capitalist world, the Fed would be unnecessary. However, given that such a world is a fiction, the Fed represents the least worst approach, IMHO.
What else can you say about an organization that preaches data dependence then gives a time-table at the same meeting? These are the individuals that set the benchmark rate that drives asset valuations... But I give Yellen a pass for defining the word 'a couple' in the most condescending way possible to that journalist.
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