William Greider: Dismantling the Temple (The Fed)

[marmar]

from The Nation:



Dismantling the Temple
By William Greider

July 15, 2009


The financial crisis has propelled the Federal Reserve into an excruciating political dilemma. The Fed is at the zenith of its influence, using its extraordinary powers to rescue the economy. Yet the extreme irregularity of its behavior is producing a legitimacy crisis for the central bank. The remote technocrats at the Fed who decide money and credit policy for the nation are deliberately opaque and little understood by most Americans. For the first time in generations, they are now threatened with popular rebellion.

During the past year, the Fed has flooded the streets with money--distributing trillions of dollars to banks, financial markets and commercial interests--in an attempt to revive the credit system and get the economy growing again. As a result, the awesome authority of this cloistered institution is visible to many ordinary Americans for the first time. People and politicians are shocked and confused, and also angered, by what they see. They are beginning to ask some hard questions for which Federal Reserve governors do not have satisfactory answers.

Where did the central bank get all the money it is handing out? Basically, the Fed printed it, out of thin air. That is what central banks do. Who told the Fed governors they could do this? Nobody, really--not Congress or the president. The Federal Reserve Board, alone among government agencies, does not submit its budgets to Congress for authorization and appropriation. It raises its own money, sets its own priorities.

Representative Wright Patman, the Texas populist who was a scourge of central bankers, once described the Federal Reserve as "a pretty queer duck." Congress created the Fed in 1913 with the presumption that it would be "independent" from the rest of government, aloof from regular politics and deliberately shielded from the hot breath of voters or the grasping appetites of private interests--with one powerful exception: the bankers. ..........(more)

The complete piece is at: http://www.thenation.com/doc/20090803/greider

[MagickMuffin]

1. Gee whiz, don't you wish you could print up your own money

After ALL the Federal Reserve can print money outta the blue with no worries, no hassles, and NO oversight.

Must BE nice!

If we were to do that we would wind up in jail, if caught.

[formercia]

2. Like privatizing the Postal Service would give us better service

at less cost.

There's a million people rolling in their graves saying "I told you so."

[truedelphi]

3. Did you catch Bernanke on 'Sixty Minutes' a couple months back

He wanted to "Straighten out the misconception" that the money he offers to the financial firms on Wall Street has anything to do with the taxpayer.

Why when the decision is made to let one bank or another have some funding, he just "goes and sets up an account with that amount of money in it."

Why it is all so cleverly done, and without any ramifications. No need to worry about inflation. It is just FREE MONEY!

And so much of it ends up over with the good folks at Goldman Sachs, there really is no need to worry, is there! Sort of warms one's heart right up, doesn't it!!

[formercia]

4. After all, it's a private bank, isn't it?

Privatizing profit while socializing risk.

[OneBlueSky]

5. "Where did the central bank get all the money it is handing out? . . .

Basically, the Fed printed it, out of thin air." . . .
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"Inflation refers to a rise in prices that causes the purchasing power of a nation to fall. Inflation is a normal economic development as long as the annual percentage remains low; once the percentage rises over a pre-determined level, it is considered an inflation crisis.

There are many causes for inflation, depending on a number of factors. For example, inflation can happen when governments print an excess of money to deal with a crisis. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. This is called the demand-pull, in which prices are forced upwards because of a high demand." wisegeek.com
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things that make you go "hmmm" . . .