can't believe no ine has commented on this silliness. There are always unintended consequences and the fed kept interest rates too low for too long. Nonetheless the Rothbardian argument against a central bank is paranoid and arises from his fundamental economic ignorance. like rand his default mode is irrational hatred of complex systems he doesn't understand.

as a group kibertarians are remarkable for being smart people who are easily seduced by dumb ideas.

A centtal bank is only a probkem if it is mismanaged. under most circumstances it can perform as a desirable control on the economy.

The central bank is nothing more than a communist style cartel existing to secure profits for the moneyed elites in the banking industry-what other industry has absolute protection guaranteed by the U.S. Government? When banks make bad decisions they should pay the same price as any other business or there is no incentive for them to avoid risky behavior. Why should the Fed be allowed to perpetrate inflation by printing money out of thin air to support banks that goofed up? Why is our money, the lifeblood of our economy, in the hands of any institution other than Congress which the Constitution specifies? Why was the Fed orchestrated buyout of Bear by JP Morgan not subject to anti-trust review? The whole system wreaks of anti-democratic elitism.

Kenn, so you realize how absolutely silly this sounds:

"communist style cartel existing to secure profits for the moneyed elites"

Normally communism and moneyed elites are pretty much polar opposites.

You seriously need to go read some Milton Friedman. In particular try the Monetary History of the United States, which while highly critical of central banking explains exactly why it is necessary and what its role should be in times of crisis.

Democracy is overrated and elitism is not necessarily a bad thing.

Dave

The Fed has deteriorated greatly in the last 30 years. It is responsible for endorsing the bad economic decisions that have brought us to this current economic crisis.

Failure of the Fed has been caused by both theory and practice. There is a very narrow range of usefulness to the fed, in theory, but that small usefulness has been exaggerated into putting the entire burden of economic performance onto the Fed. Plus, in practice, we have gotten very poor performance from the Fed chairmen, Alan Greenspan, in particular. They have retained their positions by sucking up to the president by endorsing his policies, not based on their job performance.

Dave is wrong. Communism and moneyed elites are not "polar opposites", because they are not mutually exclusive. They may be contrary, however, i.e., different in many important aspects.

In fact, a conscious goal of "moneyed elites" for the last 30 years or so has been to socialize risk while privatizing profit.

There are some interesting problems with the author's assertions - unless the author believes that the moneyed elites, so precious to Brother Nalle, run the American government.

The Fed is not really analogous to the Soviet Communist Party Political Bureau, whose full name was "the Political Bureau of the Communist Party of the USSR". In the Soviet Union, the Communist was the only lawful political party, and the Political Bureau was its executive committee. It wasn't an organ of the state, but it had a monopoly of political power. Up to this point, the analogy holds up. It's at the next step that it falls down. Anyone could join the Communist Party, and indeed membership was encouraged in the Soviet Union, as it gave many privileges (and exacted many responsibilities).

The Federal Reserve Bank is a consortium of private banks. Not any bank can join, although all banks in the States are under its purview.

So, it is a consortium of private banks that are the Fed, and while its various governors are appointed by the POTUS, one suspects that a list of acceptable nominees are forwarded him by the bankers who OWN the Fed.

In other words, the Fed is no communist conspiracy of any sort; it does concentrate power in the hands of a small group of American bankers in an obscene way, and given that it is only the United States that can mint money, this means that all of the "Federal Reserve Notes" are essentially counterfeit on their face. The claim that they are legal tender written on the notes is a baldfaced lie. But given that this is all that is circulating (aside from the counterfeits of the counterfeits), they are taken as legal tender.

Since most folks do not know that the Federal Reserve Notes are really illegal, they accept them as well.

I ought to have said above that given the ignorance of the American public regarding both the nature f the Federal Reserve Bank and the illegality of the money they use, this only confirms Brother Nalle's assertion that democracy is over-rated. The exploitation and poverty in capitalist states like America and now here in Israel, give the lie to his claim that elites are not necessarily a bad thing.

"Centralization of money and credit in the hands of an exclusive, state granted monopoly"- One of the ten planks of the Communist Manifesto of Marx and Engels.

Also, I know it is fiction (technically), but one need only to read Orwell's "Animal Farm" to understand that an elite position and a "communist" ideology go hand in hand.

As firms grow larger and larger, and their political climate allows it, these firms begin seeking profit purely through state decree rather than traditional exchange. This takes many forms, including, state granted right to monopoly (Federal Reserve), state created markets (automobile insurance), or the restriction of competition and hence, enhancement of market share (FDA).

A method that Americans seem to prefer is the "rising tide" idea that a rising tide lifts all boats. While technically true, the way we go about this is as fallacious as it gets. Basically the idea boils down to perpetual and rampant inflation of the money supply with concurrent hopes, often backed by complex legislation, that one's own firm will take in a larger share of the new "credit" than one's competitors. Basically hoping that one's own boat rises higher than anyone elses. THIS WOULD NOT BE POSSIBLE IF CREDIT AVAILABILITY WERE TRULY TIED TO SAVINGS.

In short, I concur with the author of this article.

For once Bliffle actually hits on the key issue here. It is not the Fed itself which is flawed. If there is fault, it is with the mismanagement of the Fed. Milton Friedman argues that mismanagement of the Fed through contracting the money supply was one of the major contributing factors to the depression. In our current situation mismanagement by going the other direction may be part of the problem. Having an institution which guides and controls the economy is desirable in theory, but only if it is used wisely.

Dave

"Having an institution which guides and controls the economy is desirable..."

Desirable, yes.

Possible to do with any precission and without unforseen and unintended consequences, unfortunately not.

Oh, and replace "economy" with "people", because that's what it really comes down to, doesn't it?

To suggest that the Fed is manipulating people is a pretty long stretch. How exactly are they doing it?

Dave

m&ms

Dave,

In the Soviet Union, communism through the politburo propped up a class of political and economic elites. The top Soviet officials did not stand in the same bread lines as everyone else and had their own resorts on the Crimea. In practice, this is how communism works. The Fed has an absolute control over our money and makes policy that essentially benefits the banking industry (moneyed elites). The banks can loan money out to make money on a fractional reserve basis and if there is trouble the Fed using our money will at least temporarily bail them out. I do not see much difference between the Fed and the politburo.

so...as long as the Fed prevents those breadlines common to improperly so-called communist countries what's the problem - ?

fascism works

"The top Soviet officials did not stand in the same bread lines as everyone else and had their own resorts on the Crimea."

Yes, it is the natural order of things that society will make itself into a pyramid type hierarchy with wealthy or powerful elites at the top and and large base of powerless comparatively poor folks at the bottom. The question becomes how you want to determine this order: Ill gotten gains or political/social ass kissing.

I despise the latter more than the former, others feel the opposite. Both methods have their good points and their bad ones. For instance, you can earn money by performing critical services and providing valuable goods to society, you can also earn it by siphoning funds from the pension you manage or purposely creating a shortage of a necessity so you can gouge on it's price.

Likewise, in the political power system you might be a rising star because you simply are a trustworthy advocate for what the majority feels is important, or you might be rising becuase you used your position to hand out favors to the right families.

The author is correct, Friedman was wrong. Capitalism never ceases to exist it is the natural order of things for all living things. Free market is what is destroyed in "communism" which never exists either it is only authoritarian control of the capital. The Fed is an example of this. It is a vestige of our own experiments with socialist ideas of central control and distribution. It should be eliminated. History shows that free market is superior to central control in all examples from Rome to Continental dollar to today. The noted evils of "capitalism"(free market) are generally the destruction of the free part when an industry or group achieves governmental protection or simply illegally prevents competition. The framers of the constitution were studied and experienced and thus proscribed such things. Seeking advantage is human nature and thus we slowly destroy what freedoms we have habitually until it all gets renewed again generally through great blood letting. Attempts at communism replace the natural seeking of advantage through achievement with the seeking of advantage through demonstration of need thus socialism destroys wealth and progress to the degree implemented.

Capitalism never ceases to exist it is the natural order of things for all living things.

Bullshit. Only humans practise capitalism. Other species have no concept of private ownership or profit.

INSUFFICIENT oversight is at least as bad as too much oversight. In 2003, the attorneys general from ALL FIFTY STATES tried to tell the Bush administration that legislation was urgently needed to stop predatory lending practices - and the Bush administration enacted a Civil War-era law that not only prevented ANY such legislation but also NEGATED all measures states had already taken to do so.

And what kind of shape is our economy in now, mainly due to subprime mortgage mess?

Also, should the we have government-run Universal Health Care? Hm. Did you know we are FORTY-FIFTH on the life-expectancy list, and EVERY nation on the list above us (except for Bosnia and Jordan, 42nd and 40th place, respectively) DOES have universal health care in one form or another, and this includes ALL of the free industrialized nations of Western Europe except for Ireland.

AND is that bad for the economy? Japan, near the top of the list, pays per capita for their Universal Health Care about HALF of what we ALREADY do for our NON-Universal Health Care. How do they do this, even though their people see the doctor on average three times more often than we do? Instead of people having to wait until their health problems get really bad (and hideously expensive), they take care of it AHEAD of time - MUCH cheaper that way.

ON TOP OF THAT, every business can then pass the savings of NOT having to pay for health care on to the consumer. Can you imagine how Detroit would be if our cars all cost $2000 less? That's about how much company health care adds to the cost of the product.

And I, an American citizen, ALREADY have 'socialized health care' - it's called TriCare...and you get it when you retire from military service. Imagine that - all the conservative retired military who rail against Universal Health Care by calling it 'socialized'...but they've ALREADY got it! Gotta love the irony....

"Did you know we are FORTY-FIFTH on the life-expectancy list, and EVERY nation on the list above us (except for Bosnia and Jordan, 42nd and 40th place, respectively) DOES have universal health care in one form or another, and this includes ALL of the free industrialized nations of Western Europe except for Ireland."

You're assuming there's a direct correlation there. What is it? Can you cite peer-reviewed scientific studies proving it?

"ON TOP OF THAT, every business can then pass the savings of NOT having to pay for health care on to the consumer."

Can, but likely won't unless obligated to.

Glenn is right.

The very high costs paid by USA citizens for oligopoly health insurance get reflected in high costs to USA society either in the form of wages or emergencies and that gets reflected in the prices of our export goods. Thus, the current healthcare system makes us less competitive in world markets.

Other nations can compete successfully against the USA because their labor costs are lower because of UHC.

The nation is paying a high price for indulging the greed of the top execs of the medical industry.