BleepingComputer.com: Replacement system for the Federal Reserve

Flaws of the Federal Reserve...

1. Stock holders (private owners-that the Federal Reserve refuse to call as such) of a so called non-profit business get a 6% dividend every year. If there was no owners there would be no dividends..if it was non profit..there would be no dividends..
2. It is an independent entity. Their monetary policy decisions are not part of our check and balance system. They do not need approval from our Executive or Legislative branches of government..Even the audit act limited overseeing of most of the monetary policy actions or decisions.
3. The Federal Reserve has not maintained their responsibilities of managing the U.S money supply to achieve; maximum employment, stable prices (prevention of inflation and deflation) and moderate long term interest rates
4. Once appointed into the board, appointees enjoy a 14 year term..
5. Constitutionality of the operation is questionable..



Pauline

A lot of people would think that independence of a reserve bank is a good thing.

I do, it in itself is a check and balance-it means our already greedy government cant control our money. Like I said-our economy being in shambles has nothing to do with the federal reserve-but everything to do with our own greed.

Congress, by Constitutional law, is the only one that should be coining our money and regulating the value of it.

Federal Reserve controlling our economics is not a big secret. Their history of their corruption is also well known..

I refer those who believe it is a good thing, to read our Constitution as well as the Congressional Record of the Fourth Session of the Sixty Seventh Congress 1923 regarding how they deliberately set out to eliminate farmers, force, etc.



Pauline

oh ya, and congress would be any less corrupt. I mean seriously, all power corrupts thats just a fact of life. If we went to a bartering system it would be just as screwed up, people would horde stuff as well-you would end up with person A: with lots of food, and person B: with lots of oil, who would trade with each other, sure, but then youd have person C: with neither of the two, nor anything A nor B wanted and would then starve to death because all that person had useless trinkets. See my point? At least with money-it makes a happy medium, something everyone wants. Everyone wants money-not everyone wants say, corn, or oil, or stuff like that. If there is one medium that everyone wants, then it makes it easier to purchase all the other things that we want-I may want corn, so Ill buy corn with it, but jack might want pizza, so he can buy pizza. But if I want corn, and all I have is pizza, and jack has corn, but wants pizza, then I have to find jack, and that may or may not be possible. but if we both have money, we dont have to travel for four hours to find someone with something we want-we can just buy it.

This post has been edited by the_patriot11: 22 January 2012 - 09:37 PM

At least with Congress we have a choice in who is running it, we can vote them out after 2 years and there is 100 members making the decision. Their decisions can also be vetoed by the President or challenged in the Judicial System..... Under the Federal Reserve the President selects them, we have no say, they are there for 14 years with no over-site, The Executive and Judicial system have no say over anything they decide nor for the most part, even know what those decisions are..

"The Federal Reserve has not maintained their responsibilities of managing the U.S money supply to achieve; maximum employment, stable prices (prevention of inflation and deflation) and moderate long term interest rates"

By what measure? The American economy will never tolerate the intensity of central control found in the Soviet states, but that is the only level of control that can even potentially, and there is no system that can actually do so, achieve such goals in absolute terms. In a free market economy the goals of low unemployment and low inflation act against each other in Monetary terms, you cannot have a monetary policy that boosts employment that doesn't also increase inflation. Moreover both low (non-zero) levels unemployment and inflation have benefits to an economy. It would take a full blown essay to explain them, but as a few examples:


Unemployment helps to keep the economy flexible, and allows firms the prospect of growth. If everyone were in work it would be much harder to grow, because the firm would be constantly poaching workers (driving up their own costs and thus their own prices).

Moderate inflation makes it possible to adjust wages and prices to the free market optimum without causing the resentment of giving people a pay cut.
Inflation often accompanies economic growth (to such a degree that measures designed to reduce inflation stifle growth), and may actually encourage growth to some extent.


I don't know enough of the politics in America to comment on those issues, though as I've already mentioned an independent central bank that prevents a government from manipulating the economy to their own needs is not necessarily a bad thing.

It is a bad thing when the independent organization is given authority to to manipulate freely and unanswerable for it's own needs .



Pauline

I still fail to see how the federal reserve is taking away jobs or in any way affecting the economy-how people spend money, and how much money they have to spend, is what controls our economy (ok its way super simplified) the federal reserve doesn't really affect a lot of that. I mean what are they going to do to help employment, hire another 2 million people? theres a waste of tax money.

They control the money supply, they decide what our dollar is worth, decide if credit will be cheap or expensive, easy or hard. When they raise the interest rate, growth and consumer spending slows, when they lower it, growth and consumer spending speeds up.
When interest rates go up, supply and demand go down which causes unemployment to go up.

From the Federal Reserve Board
How does monetary policy influence inflation and employment?
"In the short run, monetary policy influences inflation and the economy-wide demand for goods and services--and, therefore, the demand for the employees who produce those goods and services--primarily through its influence on the financial conditions facing households and firms.


Pauline

I always thought that while a reserve bank can influence the value of a currency though sales of foreign exchange, they do not actually control the value.

When the fed lowers the interest rates, it reduces the foreign exchange value of the dollar, it lowers the prices of the U.S. produced exported goods and raises the prices we pay for imported produced goods.


Pauline

[quote name= It is called a "medium of exchange" because it allows goods to be traded more easily.
.valued in a single central quantity such as dollars those calculations are so much easier.
[/quote]

1. If looking for a replacement to paper money that would be available immediately today as EFT = Electronic Funds Transfer and simply eliminate paper currency.
Advantages: 1. Easily tracked transactions discouraging crime 2. Eliminate gov't printing wasted employment, guarding, etc. 3. Better collection of taxation 4. Every U.S. citizen on their credit card etc. to have attached U.S. citizen and other countries do the same. 5. Immediate knowledge if an employer sends money to a person working for him that crosses the boarder and easy to monetarily fine that individual thus able to drop the wall & security of the U.s. and other countries such as Mexico saving billions as few would cross unless they are being paid.

Disadvantages: 1. Unproven fear of the government being able to see what you buy at 1A.M.

2, If looking to Replace the Federal Reserve....Good luck.

While interest rates can (and generally will) effect exchange rates, with a floating exchange rate the currency's value is allowed to fluctuate according to the market. Modern economic theory holds that a government cannot maintain a fixed exchange rate, free movement of capital and an independent monetary policy. Two can be controlled and the other is controlled by the market.

I personally, don't see anything "wrong" with the federal reserve. Sure they can influence the value of the dollar to a point, but their not the sole influencer, and in reality it needs to go up and down based on the economy.