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Constitution Class - Happy 4th of July (pg. 5)
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| pkcRAISTLIN |
| quote: | Originally posted by Capitalizt
The bill wasn't about removing the fed's independence pk. It did not change the structure of our monetary system in any way. |
Yeah, maybe if Ron Paul could be believed. But we all know his bias and desire to dismantle the Fed.
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The Transparency Act of 2009 (H.R. 1207), a bill originated by Rep. Ron Paul, Texas Republican, that mandates Government Accountability Office (GAO) audits of the Federal Reserve, has the support of more than half the members of the House of Representatives. In one sense, it's almost comical. The insinuation that Federal Reserve Board Chairman Ben S. Bernanke is against openness is like saying Popeye is against spinach.
Long before he came to Washington, Mr. Bernanke argued for greater Fed transparency in the belief that it would help stabilize markets and that the public has a right to know. At the Fed, he advanced the publication of the minutes of monetary-policy meetings, made available more frequent Fed economic forecasts and added to public information on the Fed's balance sheet and lending programs. He has long been in favor of the Fed announcing a numerical inflation target to reduce uncertainty in financial markets.
Yet it's understandable that in the worst recession of the postwar era, Congress wants to know more about what's happening inside the Fed, especially in light of the big-bucks innovative programs newly created by Mr. Bernanke and his colleagues to ease the financial crisis. Unfortunately, many in Congress aren't making the distinction between optimum transparency and excessive transparency, or what some economists have labeled dangerous meddling.
The Fed has a history of autonomy and legally protected independence, out of which has grown a trust on which markets have come to depend. That trust will be threatened by perceived attempts to politicize the Fed, whatever the motive. Markets will worry that the Fed's mandate to control inflation and maximize employment has been weakened.
Many see a GAO audit of the Fed as a threat to the Fed's independence and a not-so-subtle attempt by Congress to influence monetary policy. That perception will undermine confidence in the Fed's ability to control inflation, thereby unanchoring inflation expectations and leading to faster rising prices, higher interest rates, a weaker dollar and economic instability. H.R. 1207 empowers the GAO to make recommendations to Congress for legislative or administration action -- unnerving language.
Mr. Bernanke has made it clear in recent testimony that he is not against all auditing of the Fed -- just not traditional monetary policy. He doesn't want second-guessing of the Fed's open-market operations or Federal Open Market Committee (FOMC) decisions concerning the federal-funds interest rate, reserve requirements and discount window lending. He has said unequivocally that audits of the Fed's extraordinary new financial programs would not be unwelcome, nor would audits of any new regulatory authority the Obama administration might give the Fed.
Why, then, is a majority of the House of Representatives calling for an unrestricted audit of the Fed, including an investigation of monetary-policy actions? A cynic might say it's a grab for power by Congress to influence future inflation. Why? To monetize an unsustainable rise in the federal debt? To let inflation devalue the currency instead of bringing the budget under control? The cynic might also point out that having the ability to influence interest rates before elections could tempt even the devil, let alone a politician.
More likely those members of Congress supporting H.R. 1207 are doing so because of the heat they're feeling from their hard-pressed constituents. Backing the bill makes supporters look good, though in their heart of hearts, many in Congress probably know it's very risky and wouldn't be disappointed if it fails. It's uncertain whether the Senate would approve a Fed audit bill without monetary policy carved out, or if such a bill would be welcomed by the White House.
A compromise could save the day and bring a sigh of relief all around.
The document that illuminates monetary decision-making in detail isn't the minutes of the FOMC discussions, published three weeks after policy meetings. The minutes are only a summary. It's the verbatim transcript of FOMC meetings that names names and spells out the details of policy deliberations, warts and all. It makes delicious reading, though it's seldom looked at because the Fed won't release transcripts until five years have passed, lest the revelations fuel financial speculation. Here's where a compromise might be possible.
If the Fed were to publish verbatim transcripts of FOMC monetary-policy decision-making one year after meetings instead of five, that could satisfy enough disgruntled members of Congress to relegate H.R. 1207 to the dustbin. It shouldn't be a bitter pill for Mr. Bernanke to swallow.
Ironically, Mr. Bernanke himself may be partly responsible for the current brouhaha over transparency. His predecessor, Alan Greenspan, spoke to Congress in arcane terms that even economists found hard to decipher. In contrast, Mr. Bernanke speaks clearly and understandably and consequently invites more questions. When the door of understanding is opened, it instills the desire to become involved. Such are the risks of transparency.
Alfred Tella is a former Georgetown University research professor of economics.
http://www.washingtontimes.com/news/...iting-the-fed/ |
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The right reform for the Fed
By Ben Bernanke
For many Americans, the financial crisis, and the recession it spawned, have been devastating -- jobs, homes, savings lost. Understandably, many people are calling for change. Yet change needs to be about creating a system that works better, not just differently. As a nation, our challenge is to design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.
These matters are complex, and Congress is still in the midst of considering how best to reform financial regulation. I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions. Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence. These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States. The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution's ability to foster financial stability and to promote economic recovery without inflation.
The proposed measures are at least in part the product of public anger over the financial crisis and the government's response, particularly the rescues of some individual financial firms. The government's actions to avoid financial collapse last fall -- as distasteful and unfair as some undoubtedly were -- were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.
Moreover, looking to the future, we strongly support measures -- including the development of a special bankruptcy regime for financial firms whose disorderly failure would threaten the integrity of the financial system -- to ensure that ad hoc interventions of the type we were forced to use last fall never happen again. Adopting such a resolution regime, together with tougher oversight of large, complex financial firms, would make clear that no institution is "too big to fail" -- while ensuring that the costs of failure are borne by owners, managers, creditors and the financial services industry, not by taxpayers.
The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis. We have extensively reviewed our performance and moved aggressively to fix the problems.
Working with other agencies, we have toughened our rules and oversight. We will be requiring banks to hold more capital and liquidity and to structure compensation packages in ways that limit excessive risk-taking. We are taking more explicit account of risks to the financial system as a whole.
We are also supplementing bank examination staffs with teams of economists, financial market specialists and other experts. This combination of expertise, a unique strength of the Fed, helped bring credibility and clarity to the "stress tests" of the banking system conducted in the spring. These tests were led by the Fed and marked a turning point in public confidence in the banking system.
There is a strong case for a continued role for the Federal Reserve in bank supervision. Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks, as demonstrated by the success of the stress tests.
This expertise is essential for supervising highly complex financial firms and for analyzing the interactions among key firms and markets. Our supervision is also informed by the grass-roots perspective derived from the Fed's unique regional structure and our experience in supervising community banks. At the same time, our ability to make effective monetary policy and to promote financial stability depends vitally on the information, expertise and authorities we gain as bank supervisors, as demonstrated in episodes such as the 1987 stock market crash and the financial disruptions of Sept. 11, 2001, as well as by the crisis of the past two years.
Of course, the ultimate goal of all our efforts is to restore and sustain economic prosperity. To support economic growth, the Fed has cut interest rates aggressively and provided further stimulus through lending and asset-purchase programs. Our ability to take such actions without engendering sharp increases in inflation depends heavily on our credibility and independence from short-term political pressures. Many studies have shown that countries whose central banks make monetary policy independently of such political influence have better economic performance, including lower inflation and interest rates.
Independent does not mean unaccountable. In its making of monetary policy, the Fed is highly transparent, providing detailed minutes of policy meetings and regular testimony before Congress, among other information. Our financial statements are public and audited by an outside accounting firm; we publish our balance sheet weekly; and we provide monthly reports with extensive information on all the temporary lending facilities developed during the crisis. Congress, through the Government Accountability Office, can and does audit all parts of our operations except for the monetary policy deliberations and actions covered by the 1978 exemption. The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.
We have come a long way in our battle against the financial and economic crisis, but there is a long way to go. Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.
http://www.washingtonpost.com/wp-dyn...112702322.html |
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| Capitalizt |
| I'm sure that was his end desire..but it aint gonna happen unless people have an incentive to be pissed off about what the fed is doing..how much money it is creating and who is getting the buddy buddy multi year "loans" at 0%. Only when public awareness is raised will there be demands for change or at least greater transparency of their operations..and the assets and liabilities they are managing/creating in the name of all of us. |
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| Halcyon+On+On |
| quote: | Originally posted by shaw
I fail to see the problem.
Except maybe the war thing. :p |
:stongue: |
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| iTranscendence |
Fabian socialism with a fiat money system controlled by fractional reserve banking is utter rubbish and not even a legitimate monetary system under the constitution.
Sound money, sound economy. |
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| pkcRAISTLIN |
| quote: | Originally posted by iTranscendence
Fabian socialism with a fiat money system controlled by fractional reserve banking is utter rubbish and not even a legitimate monetary system under the constitution.
Sound money, sound economy. |
You don’t understand anything about economics. |
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| iTranscendence |
I love it when libtards who don't even live here, fall for propaganda from the neo-cons and likudniks.
http://www.prisonplanet.com/article...nda_exposed.htm
Everything else on his voting record is too nuanced for libtards to understand. Community doesn't exist in the world of the Fabian school of economics, just a bunch of plebs to worship and serve the state while they champion it as for the people, what a pathetically thin veiled charade. |
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| pkcRAISTLIN |
| Wow, not prisonplanet! :haha: :haha: :haha: |
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| Capitalizt |
| ..I hate when people who semi-agree with me on some things post crazy . Is this whatshisname from a while back? culrout? |
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| iTranscendence |
The best thing about sheep in America who actually believe socialism works. They seem to have no concept that the very same interests they decry as controlling the "right" are the funding channels behind just another way for them to fleece the population.
:stongue: |
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| pkcRAISTLIN |
| quote: | Originally posted by Capitalizt
..I hate when people who semi-agree with me post crazy . Is this whatshisname from a while back? colrout? |
:haha: nah, in iStupid’s defence he can at least spell and form sentences. Colorut couldn’t even get the basics right. So us in wingnut watch still have high hopes for the COR’s latest entrant in conspiracy buffoonery. His economics knowledge is on par with colorut’s though. |
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| iTranscendence |
I love when Fabian socialists claim someone is an economic neophyte because they come from the system they despise for being universally more successful in causing wealth for the majority of a population, the Austrian school.
Then they shoddily try and connect the current multi-national corporate fascist oligarchy to the concept of a free-market using them as a propaganda cudgel against the free-market. When in reality it that Corporatism could never have happened with out a corpulent and overreaching socialist style governmental structure.
The father of fascism, Benito Mussolini, defined fascism as corporatism.
“Fascism should more properly be called corporatism be...cause it is the
merger of state and corporate power,”
It is good for a :stongue: |
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| idoru |
| quote: | Originally posted by iTranscendence
It is good for a :stongue: |
You're talking about all of your posts, right? |
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