Federal Reserve

Well I have seen a couple comments on here suggesting the country should abolish the Federal Reserve system.

But wouldn't that just exacerbate the problem President Bush's rescue plan is designed to solve?

Wouldn't there be more banks fail if they didn't have to maintain reserve ratio requirements as set by the Fed?

Wouldn't interest rates fluctuate wildly if the cushioning effect of the Fed were taken away?

I have other questions as well but it is hard enough to keep a discussion on topic as it is so I will just limit the question to reserve requirements and interest rates.

Does anybody understand this system and how it works?

The system doesn't work, that's the problem.

When the Federal Reserve is abolished, Congress will regain control of the currency and monetary policy, as set forth in the Constitution.

Just as I thought....

"The poor have sometimes objected to being governed badly; the rich have always objected to being governed at all." - G. K. Chesterton

Well I guess everyone on the anti-Fed side of the discussion has a general conviction that keeping the Federal Reserve system is wrong.

But no one can answer simple questions about it.

i.e.

"Wouldn't there be more banks fail if they didn't have to maintain reserve ratio requirements as set by the Fed?

Wouldn't interest rates fluctuate wildly if the cushioning effect of the Fed were taken away?"

Can Congress not require many of the same rules the federal reserve does Sherm?

Sherm,

You're not going to like the answers. The simple fact is that Congress can and should place some regulations on the banking industry. Interest rates shouldn't be artificially manipulated by a private bank or government body and money shouldn't be printed out of thin air.

The more I think about it, the more I wonder why the Fed didn't just "loan" these institutions more money themselves. They do it all the time. They printed $200 billion just a few months ago in a futile effort to stave off the mortgage crisis. That didn't work and the trillion dollar bailout isn't going to fix anything either.

Our dollar is basically worthless now. We don't know what all the Fed is doing. We don't know what they did last year or the year before because they hold many of their meetings in secret and don't release the minutes of the meetings for five years or more. These aren't elected officials. These are private bankers, the elite of the elite, and the control everything from how much currency is in circulation to interest rates and more.

They are accountable to noone. As bad as the US Congress is, and as corrupt as so many of our elected leaders are, if they screw up too bad, we have at least the possibility of getting rid of them. Not so with members of the Federal Reserve. They just keep screwing us over and over again and we are stuck with them unless and until Congress decides enough is enough and takes control back.

Ziggy talks about how the "wealthy" don't like to be governed at all, but the truth of the matter is that the wealthiest bankers in this nation have been governing our monetary policy for 95 years! You guys are both big time into the concept of redistribution of wealth. Do you really think the Rockefellers and Morgans plan on giving up their personal wealth and power to the tired, huddled masses? Get real.

Do you really think the Rockefellers and Morgans plan on giving up their personal wealth and power to the tired, huddled masses?

No. And as long as they can buy Congress, they won't even need to worry about it.

BTW, West Virginia's very own Rockefeller voted FOR the wealth redistribution bailout to millionaires. Surprise surprise.

cricket....

cricket........

Ziggy talks about how the "wealthy" don't like to be governed at all, but the truth of the matter is that the wealthiest bankers in this nation have been governing our monetary policy for 95 years!

Duhh, yeah. They don't want to be governed.

But they are just fine when they can govern everyone else.

sodbuster wrote:Well I have seen a couple comments on here suggesting the country should abolish the Federal Reserve system.

But wouldn't that just exacerbate the problem President Bush's rescue plan is designed to solve?

There is no "plan". This bailout doesn't "rescue" people and institutions. It delays the inevitable, but does provide some time for those on the inside track to take the money and run, if they haven't already.

sodbuster wrote:Wouldn't there be more banks fail if they didn't have to maintain reserve ratio requirements as set by the Fed?

The problem is, the Fed already doesn't require enough of a reserve ratio. Congress, should end the Fed and reclaim control over our monetary policy and our currency. Congress could then increase the requirements.

sodbuster wrote:Wouldn't interest rates fluctuate wildly if the cushioning effect of the Fed were taken away?

The Fed is artificially manipulating interest rates. This is causing problems and we can clearly see now. The markets should set the interest rates, with some oversight from Congress. Obviously, nobody wants usuary to be legal, but realistically it already is. Look at payday lenders and the rates charged by some credit card companies. These issues need to be addressed and the Federal Reserve isn't going to do it.

sodbuster wrote:I have other questions as well but it is hard enough to keep a discussion on topic as it is so I will just limit the question to reserve requirements and interest rates.

Does anybody understand this system and how it works?

I'm not sure who understands all the intricacies of this system. I am not an economist and do not pretend to be one. I know what I know after reading up on the subject for a long time. The Federal Reserve is a private bank that you can't even buy stock in. They set the interest rates, decide how much currency is floating around and in doing so are creating inflation. They are not controlled by any branch of government, they are an entity all its own and conduct much of their business in secret. The President nominates candidates to the Fed's Board of Governors from a pool chosen by.....the Federal Reserve........which the Senate must confirm. Likewise with the Chairman of the board.....like Bernanke and Greenspan. They serve 14 year terms and I can find no mechanism for impeaching or otherwise removing them.

I can't, for the life of me, understand why a man so interested in redistribution of wealth would want such an entity to have such a stranglehold on our economy. Unless, of course, he thinks the ultra-elite should determine what crumbs the rest of us get.

Thank you Stephanie for your direct answer.

"I can't, for the life of me, understand why a man so interested in redistribution of wealth would want such an entity to have such a stranglehold on our economy."

As to your question immediately above. I believe it is a premature assumption that I want the Fed to continue as is.

I am just interested in what the alternative would be, and how it would affect us commoners.

I have to say I doubt it is practical to do as Aaron suggests and let Congress handle it directly.

But I have been wrong before.

Sherm there are few other options. Congress must take control of our currency. Congress should place some regulations on these financial institutions. The Federal Reserve is obviously not doing an adequate job.

It really is beyond belief that there is almost no recourse. The time to strike is now, before they print even more money out of thin air.