What is the best system to replace the Fed?

[Tahuti]

What happens with deflation is not an increase in purchasing power. It is a falling of wages. Debts are in nominal (constant) dollars. If you have $100 in income, and $25 in debt payments, what happens when your wage falls to $90? $80? $70? The debt to income ratio goes way up. And that means a lot more people default on debt. And that means that a lot of banks stop lending money. And that means that a lot of companies go out of business and a lot of people lose their jobs.

Indeed do real debts increase during deflation, but again, an economy using the Gold-Standard would work very differently than today's economy, as people would avoid debts wherever possible.

Yet it kept coming back, not because it was any good, but because there wasn't any alternative.

Gold as money is an exercise in ignorance and absence of alternatives. Once you know better, once you have other choices, gold can't be justified.

I'm not saying it was great, but as you pointed in short, I said there was no better alternative. Once institutions such as a Central Bank were conceived, fiat-money would be able to keep most of it's value without having to lead to Zimbabwe style hyperinflation, and thus Metallic standards became obsolete.

 

[Abegweit]

Bascially [sic] in my opinion, not enough regulation and poor existing regulation is whats wrong with the fed

Y'know if the bureaucrats you worship were actually competent enough to make the regulations you pray for, they would abandon their day job and make millions on the rigged market instead.

The reason why the marketers make their millions is simply because the bureaucrats are too stupid (too corrupt?) to understand that the regulations they impose make billions for Wall Street out of the hides of ordinary people.

 

[Bordz]

Y'know if the bureaucrats you worship were actually competent enough to make the regulations you pray for, they would abandon their day job and make millions on the rigged market instead.

The reason why the marketers make their millions is simply because the bureaucrats are too stupid (too corrupt?) to understand that the regulations they impose make billions for Wall Street out of the hides of ordinary people.

Lmao, I don't worship anyone and I'm not a US citizen and the reason you just cited is the "poor regulation" I refered to. So thats 3 levels of fail.

 

[Integral]

Neither. What's more, that's exactly what RP has been saying.

Sorry. I don't get it. What exactly is your case? That you worship Ben Bernanke's magical skillz?

If you read my other posts in this thread, you'd know better than to accuse me of "worshiping" Prof. Bernanke. I have made my views on Fed restraint quite clear, and you may ask if you have further questions.

Prof. Bernanke is a fine economist and a darn good Fed chairman; that does not mean his conduct has been without flaws.

 

[Abegweit]

He was talking about the early 19th century Court, not the current 5 in the conservative majority.

I don't believe for a second that you are stupid enough not to understand that I was talking about the early 19th century too. But you have been well taught. You push lies right up to the limit. YOU brought up the current court. No one else. You clearly are a good student.

And a troll.

 

[JollyRoger]

If I was lying, then he wasn't talking about the early Court.

 

[Abegweit]

If you read my other posts in this thread, you'd know better than to accuse me of "worshiping" Prof. Bernanke. I have made my views on Fed restraint quite clear, and you may ask if you have further questions.

I have no interest in asking anything of you. You obviously are a worshiper. See your next sentence.

Prof. Bernanke is a fine economist and a darn good Fed chairman.

'Nuff said. Your are a worshiper. BTW, there is no such thing as a "darn good Fed chairman". That's an oxymoron.

 

[Abegweit]

If I was lying, then he wasn't talking about the early Court.

Still playin' the game, huh? Give it up. Do you really think anyone likes lawyer tricks?

 

[Arwon]

You live in a former penal colony that pretends to be an independent country even though Her Royal Worship is your head of state. Your opinion means nothing to anyone.

---

Why are you even mentioning those? This discussion is about the Federal Reserve and ONLY the Federal Reserve. If those other banks really aren't any different from the Fed, then this only means that they suck too.

Firstly, there's no need to put on the trollerskates.

The reason those things are relevant is because my entry point into this thread was my earlier question about why some Americans are so weird about their central bank:

It seems strange that this is an issue. Why are some Americans so weird about their central bank?

Is this another of those ecxeptionalism things, or doesn't it work the same as normal countries' central banks?

There's simply no serious constituency in Australia mumbling about the evils of the Reserve Bank of Australia, saying it should be abolished or it's a counterfeiting ring or whatever. Glenn Stevens, head of the RBA, is not a totemic hate-figure like a Greenspan or a Bernake, in fact barely anyone knows his name. To the best of my knowledge, neither is there a comparable phenomenon in most other comparable countries. So yes, the American attitudes towards it strike me as deeply strange and confusing.

So yes, it looks like an exceptionalism thing, since the US central bank basically works like a normal central bank.

Also: International context is a good thing. It prevents you from having to work from a sample of one.

 

[Integral]

I have no interest in asking anything of you. You obviously are a worshiper. See your next sentence.

'Nuff said. Your are a worshiper. BTW, there is no such thing as a "darn good Fed chairman". That's an oxymoron.

I have mentioned the flaws of the Fed under his leadership and written about them extensively, both in this thread and across this site.

The Fed's decision to let nominal income fall by 8% from trend in 2008 was what turned a garden-variety recession into a near-Depression.

I am willing to have a discussion with you on the merits of Fed policy, though you should refrain from childish name-calling.

--

Arwon: I do think it's an American thing. I'm really not sure what causes it.

 

[Dachs]

I have mentioned the flaws of the Fed under his leadership and written about them extensively, both in this thread and across this site.

The Fed's decision to let nominal income fall by 8% from trend in 2008 was what turned a garden-variety recession into a near-Depression.

I am willing to have a discussion with you on the merits of Fed policy, though you should refrain from childish name-calling.

Dude, it's Abegweit. Pointless.

 

[G-Max]

well considering we were like the only western country not to go into recession during the gfc

Giant Fat Cross?

BTW, there is no such thing as a "darn good Fed chairman". That's an oxymoron.

LOL, win.

There's simply no serious constituency in Australia mumbling about the evils of the Reserve Bank of Australia, saying it should be abolished or it's a counterfeiting ring or whatever. Glenn Stevens, head of the RBA, is not a totemic hate-figure like a Greenspan or a Bernake, in fact barely anyone knows his name. To the best of my knowledge, neither is there a comparable phenomenon in most other comparable countries. So yes, the American attitudes towards it strike me as deeply strange and confusing.

So yes, it looks like an exceptionalism thing, since the US central bank basically works like a normal central bank.

Okay then. Explain the structure and function of the Aussie central bank to me in excruciating detail, and I will point out any differences that I notice. Let's start with "Who owns the Reserve Bank of Australia, anyway?"

 

[Arwon]

You guys don't seem able to agree on who owns the Federal Reserve. It's established by act of Congress, derives its authority from legislation, and its head is appointed by Congress. Yet you claim it's a private entity...?

"Ownership" is a slippery term when you're discussing independent government institutions anyway. Who "owns" the Bureau of Labor Statistics or the Supreme Court?

 

[sophie]

You guys don't seem able to agree on who owns the Federal Reserve. It's established by act of Congress, derives its authority from legislation, and its head is appointed by Congress. Yet you claim it's a private entity...?

Yes, it is.

 

[Arwon]

But it still determines monetary policy, and functions as lender of last resort, as per legislation, right? It's still an instrument of public policy, right? Just because private banks are stakeholders or members or whatever (is membership even voluntary?), doesn't mean it's not a public institution. Private and independent aren't the same thing. Neither are ownership and control.

 

[G-Max]

The Fed is a privately owned, privately operated entity that was created through an illegitimate act of Congress and is only theoretically subject to Congressional oversight.

 

[Arwon]

Yeah see that just sounds like conspiracy theory nonsense to me.

 

[G-Max]

It's not nonsense. You can read the Federal Reserve Act for yourself.

 

[Integral]

The Federal Reserve is a public-private partnership.

The 12 regional banks are legally private entities. The stockholders of said banks are the financial institutions which fall within the 12 regional banks' geographic area of operation. About one-third of the commercial banks in the US are shareholders in one of the regional banks. All nationally chartered banks hold stock in one of the Federal Reserve Banks and state chartered banks are encouraged to do so. The Presidents of the regional banks are elected by the member banks. The Boards of the regional banks are jointly chosen by stockholder banks (2/3rds) and by the Board of Governors in DC (1/3rd).

The Board of Governors in Washington is a Federal agency with its seven members being appointed by the President and confirmed by the Senate. The staff of the FOMC is mostly career professionals with, I presume, some research assistants and support staff handpicked by the seven members.

The Board of Governors and the Fed more generally are subject to Congressional oversight: four times per year the Fed chairman goes before Congress (twice to the House, twice to the Senate) and gives testimony on his actions and the conduct of monetary policy.

The FOMC itself is composed of the 7 Governors (who, again, are picked by the President subject to Senate approval) and a rotating group of 5 of the regional bank Presidents (who are elected by banks). So the "public" arm always has a majority of FOMC seats.

 

[Hygro]

I don't for the life of me understand how citing political-system construction documents from the 1700s has any merit to an economic debate.