One question for Ben Bernanke
by Mike Kimel
The other day Ben Bernanke gave a speech in which he asked and answered five questions about the Fed:
1. What are the Fed’s objectives, and how is it trying to meet them?
2. What’s the relationship between the Fed’s monetary policy and the
fiscal decisions of the Administration and the Congress?
3. What is the risk that the Fed’s accommodative monetary policy will
lead to inflation?
4. How does the Fed’s monetary policy affect savers and investors?
5. How is the Federal Reserve held accountable in our democratic
I’d have asked only one question, similar to his first, albeit with a bit of prefacing. This is what I’d love to ask Bernanke.
The Fed has a very close relationship with the financial sector. Simple examples of this include:
a. Of the three advisory committees that advise the Board of Governors of the Federal Reserve directly, even in theory only one, the Consumer Advisory Council, has a non-zero number of members who don’t directly work for the financial sector. Regional Federal Reserve Banks are also, ahem, advised by similar committees made up entirely or almost entirely by financial institutions and/or their representatives.
b. By design, every one of the Fed’s methods for raising and lowering the money supply require direct interactions between the Fed and financial institutions. None of these methods even allow for any direct interactions between the Fed and members of the public. (Note that raising and lowering the money supply does not in any way constitute “regulating the banks.”)
c. Federally chartered banks and some state chartered banks are designated “members” of the Federal Reserve system – no similar appellation or roles apply to the public at large.
d. Federal Reserve banks serve as repository institutions for member banks, but none of the services performed by the Fed for banks are
available to the public at large.
e. And of course, there is something of a revolving door between the Fed and the financial sector.
Given all of this, what would the Fed’s objectives be, and how would it be trying to meet those objectives, if the interests of the public were given equal weight to the interests of the financial sector?
since ben hasnt responded yet, i’ll answer for him…
first & foremost, the Fed protects & serves the banks; everyone & everything else is secondary, including its stated objectives mandated by law…
Yes, but it needs to be stated. Right now, the public doesn’t understand what comes first and foremost for the Fed.
Mike, Bernanke is probably a very smart guy but he does not seem multidimensional.
While the Humphrey-Hawkins legislation and other mandates handed to the Fed specify inflation, output and employment as goals, the creating legislation specified “bank”. The Fed is a central bank, and implicit in that is that the Fed is a banker to banks. Criticism of the Fed predicated on any notion that central banks are in some other business than dealing with banks mistakes their nature.
There should be a mechanism for providing stimulus to people without going through banks. There is, however, no reason it should be the Fed, and no legislation allowing the Fed to provide direct assistance to people. It is worth raising the point that we need a mechanism to go around banks, but leveling criticism at the Fed for not being that mechanism simply misunderstands how things work and what is possible.
In other words, write yer Congress critter.
With all due respect, in this case I have to disagree with you. A central bank’s primary purpose is to manage the country’s monetary policy.
If you look at the Fed’s own description of what its purpose is (http://www.federalreserve.gov/aboutthefed/mission.htm), monetary policy comes before anything else. Banking regulation is their secondary purpose. If anything should be jettisoned or unloaded on other agencies, its regulating the financial sector. After all, you have other financial sector regulating bodies out there, but there is no other monetary policy body.
Even the U.S is not too big to fail and all three predecessors of the Fed , U.S. central banks have failed. The fed is a threat to the existence of the U.S.
Details upon request
The laws of economics state the Fed is an instrument of theft.
All of the Central Banks except North Korea, Cuba and Iran as well as most of the BIS are owned by the Rothschild Family. There is no separate European problem it is a global problem . All Fiat systems are based upon legalizing counterfeiting and all of them have collapsed in the history of banking including the first three central banks of the U.S. The current Federal Reserve System created in 1913 is facing imminent collapse as described in “The Creature from Jekyll Island”, fifth edition, published September 2010 at which point the National debt of the U.S. had reached $202 trillion, when all liabilities are included.
Everyone is aware of this and the decision to ignore these facts is politically motivated as described in chapter 24, 25, 26 The last 90 pages of this 600 page book. This economic collapse is no accident. It’s intention is a New World Government and world currency
The Federal reserve is neither an arm of the government nor is it private. It is a hybrid. It is an association of the large commercial banks which has been granted special privileges by Congress A more accurate description would be simply that it is a Cartel protected by federal law. ” Because all fiat currency in history has always collapsed. . The money supply will continue to expand, inflation will continue to roar, and the nation would continue to die. Issuing money without gold or silver backing violates the constitution. They are not subject to the law. It should be abolished. They are not independent of the government. they have taken over the government.
• It is incapable of accomplishing its stated objectives.
• It is a cartel operating against the public interest.
• It is the supreme instrument of usury.
• It generates our most unfair tax.
• It encourages war.
• It destabilizes the economy.
• It is an instrument of totalitarianism.
DETAILS UPON REQUEST. OR READ THE BOOK.
THE NATURAL LAWS OF HUMAN ECONOMIC BEHAVIOR
1. Long term price stability is possible only when the money supply is based upon the gold (or silver) supply without government interference.
2. For a nation to enjoy economic prosperity and political tranquility, the monetary power of its politicians must be limited solely to maintenance of honest weight and measures of precious metals.
3. A nation that resorts to use of fiat money has doomed itself to economic hardship and political disunity.
4. Fraction money will always degenerate into fiat money. It is but fiat money in transition
5. When men are entrusted with the power to control the money supply, they will eventually use that power to confiscate the wealth of their neighbors.
To expound otherwise has only two possible explanations, neither one of which would serve the interests of the public.