Saturday, June 21, 2008

Critics of the Federal Reserve---they never seem to be satisfied

Basic criticism that you hear is that since the Federal Reserve system is a combination of public and private bodies that it operates to enrich the folks in the private sector who carry out the transactions that the Fed decides on. It's true, the idea that having the private sector operate much of the central banking system of the U.S.--albeit with large staff who are career Federal Reserve system civil servants--is not really good, but when you bring up the idea of having a completely nationalized central bank the Fed critics go even more nuts. Don't you know that was one of the planks outlined by Karl Marx in the Communist Manifesto?!! Yeah, it's in the Communist Manifesto, scary! Actually, complete nationalization of the banking system was what was outlined there. But if having a public-private system isn't acceptable to them and having a purely public system isn't acceptable to them than what is? Having huge banks just set policy themselves? That would be corporatism Would it be to get rid of large scale banking institutions entirely? Riggght.....yeah, just keep dreaming about that one.

People in the U.S. forget, or actually don't forget because they never learned, that the early U.S. opposition to a central bank was linked to how the Bank of England functioned in the service of the monarchy. Central banks were used by monarchist states to enforce geopolitical ideas and to generally gain control of the country's economy.

In today's world Central Banks are needed to keep the entire capitalistic system from collapsing through its own idiocy. It serves a positive function in buffering downturns.

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