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Old 01-07-2013, 06:32 PM
1,699 posts, read 3,839,690 times
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It's nobody's job to adjust and balance the economy. Markets adjust and balance themselves. It is impossible for a 3rd party to adjust a market "better" than a market would adjust itself. All the Federal Reserve does is engage in price rigging of debt. Without the Federal reserve, if inflation was out of control, bond yields would rise anyway as market participants punish the government for reckless spending. Interesting that Phil P's example only addresses the Federal reserve stopping the economy from heating up too quickly because in the last 2+ decades they have done the exact opposite, to the point where we have 0% interest rates and absolutely no economic growth. That's not to mention the fact that the quantitative effects have yet to be felt. If it is indeed the Fed's goal to prevent growth right now, they are doing a great job.

The Federal reserve was not created to manage the economy in the way the earlier post describes. It was created following the collapse of the Knickerbocker Trust, and also to supposedly provide relief from the numerous depressions of the late 19th century. That of course ignores the fact that J.P. Morgan was the one who planted the rumors that caused the run on the Knickerbocker Trust in the first place which almost blew up the entire banking system in the process. It also ignores the fact that the numerous depressions in the late 19th century were due in large part to a play by the bankers in which they lobbied for the world wide demonetization of silver in preparation for the redemption of greenbacks by the U.S. government. These events were caused by the same people who insisted that monetary policy be handed over to them in order to prevent such disasters. This would be like Al Qaeda demanding control of the FAA in order to prevent events like 9-11.

The Federal Reserve was created to ensure that the banking system would continue to be run by the same interests in perpetuity. It's no coincidence that The First National City Bank of New York was represented on Jekyll Island, where the Federal Reserve Act was drafted in secret, and then nearly 100 years later, Citibank still enjoys special status with the Federal Reserve despite needing (and receiving) the largest portion of the largest banking bailout in history.

To say that the Federal Reserve does a better job of managing the economy than Congress is goofy because they are the ones who make it possible for Congress to constantly increase the debt year after year. Since the creation of the Federal Reserve there has not been a significant reduction in the national debt (except for maybe during the Clinton era when they used accounting tricks and robbed the social security trust fund to make it look like they had a balanced budget) but we have experienced a 98% reduction in the value of the dollar in that time. There are 3 ways for government to get money: taxes (stealing from the present), borrowing (stealing from the future), and inflation (stealing from the past). Congress doesn't need any help with the first 2, and the Federal Reserve is what makes the third one possible, without political recourse. In fact the last time that the national debt was ever paid off was in the 1830s after Andrew Jackson spent both terms of his presidency making sure the charter for the Second Bank of the United States was not renewed. In my opinion this isn't exactly a positive legacy that central banking has left behind.
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Old 01-08-2013, 02:23 PM
9,982 posts, read 7,293,069 times
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it's tribal, pure and simple.

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