The Fed needs a revolution: A bold new plan to Take the Fed Public

[NorthCarolina]

The reason the Fed operates as a wet blanket on the economy has to do with who really controls the institution. If the desires of bankers and the rich outweigh the desires of laborers, then their fear of inflation (which cuts into their profits) will always take precedence over full employment. Former Fed Chair Ben Bernanke unwittingly gave a perfect example of that yesterday. Talking about how the Fed could institute “helicopter drops” of money to supplement federal spending and jump-start the economy, he stated from the outset, “no responsible government would ever literally drop money from the sky.” Who sets the boundaries of what’s “responsible” matters a great deal here.



No matter what terrific plan a politician has for creating jobs and boosting wages, it must contend with the Federal Reserve’s ability to unilaterally counteract it. If the Fed decides higher wages risk inflation, they can raise interest rates and deliberately strangle economic growth, reversing the wage effect. Why come up with ways to grow the economy, then, if the Fed will react by intentionally slowing it?

To make the central bank work in the public interest rather than the interests of a select few, you must reform the very structure of the Federal Reserve. That’s the purpose of a new proposal from Andrew Levin, an economics professor at Dartmouth College and former advisor to Fed Chairs Ben Bernanke and Janet Yellen. In conjunction with the activist group Fed Up, which advocates for pro-worker policies at the Fed, Levin has devised a framework to make the central bank a fully public institution, with all the transparency and accountability demanded of other government entities.

It’s such an important idea that Warren Gunnels, policy director for Bernie Sanders’ presidential campaign, talked it up yesterday on a conference call with Levin. While stopping short of endorsing taking the Fed public, Gunnels did say, “Senator Sanders believes we need to made the Fed a more democratic institution, responsive to the concerns of all Americans, not a few billionaires on Wall Street.”

Right now, the Fed is a quasi-public, quasi-private hybrid, taking advantage of that status to maintain high levels of secrecy. Members of the Federal Reserve Board of Governors are....

Link: http://www.salon.com/2016/04/12/the_fed_needs_a_revolution_why_americas_central_bank_is_failing_and_how_we_can_make_it_work_for_us/

Bernie has talked a great deal on the need to end the revolving door between Wall St. execs and the Fed, and it is certainly no secret that the Fed concerns itself primarily with matters of interest to the 1%. Change is clearly needed, and this article certainly presents an interesting idea for discussion.

[FlatBaroque]

1. Privately owned central banks are the root cause of many economic problems /