An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
...Fed fatigue isn't just for Republicans. Pollsters ask few questions about the Fed, but the information we do have shows a public that has turned wildly against it. In the 1990s, and even in the 2000s, polls showed that longtime Fed Chairman Alan Greenspan was one of the most popular political figures in the country. Occasionally, voters gave him more credit for the economy than Bill Clinton. Before Greenspan finished his last term, the NBC/Wall Street Journal poll gave him a 43-percent approval rating and a disapproval rating of 12 percent. Americans have never felt that way about his replacement; the comparable figures for Bernanke in a late 2009 Bloomberg poll were 35/26. Republicans just grew colder on the Fed faster than anyone else. In 2008, according to Gallup, 61 percent of them approved of Bernanke. In 2009, only 36 percent did....
"The fact that Rick Perry says something does not necessarily mean that he's wrong, and that the institution has conducted itself in an impeccable way," says James Galbraith, an economist and professor at the University of Texas's Lyndon B. Johnson School of Public Affairs. "The Fed allowed a great overstatement of its powers to become conventional wisdom. It pretended that QE1 and QE2 would achieve something substantial in the economy, when in fact it couldn't."
The large and growing body of anti-Fed sentiment will almost surely result in political steps to curtail its activities or even abolish it. That's my personal opinion, anyway. As bad as the Fed has been throughout this whole crisis, I don't think the public realizes how much worse things could get if the Fed was abolished. We'd be back to the days of bank runs and wholesale destruction of savings a la the 19th century. I remember walking past Wachovia Bank the day it failed and seeing people calmly conducting their banking business inside, depositing checks and withdrawing funds, etc, as if nothing happened. That wouldn't have been the case were if it were not for the Fed. Sure, Congress could do the same, but to assume that they'd get that done, quickly, before any panic developed, is a pipe dream.
The problem with the Fed is the whole idea of an "independent central bank". The Constitutions gives the President the executive power to enforce laws passed by Congess There is no constitutional basis for the no place in that scheme for the Fed to exercise executive power independent of the President and his Tsy Secretary. And if they happen to suck, well that's what elections are for
The Fed's stance that its apart of the President and his Admin can best br compared to the Turkish Army's assertion its its the "guardian of the secular Republic" (ha that slogan would go over great in Texas) that turns against elected govts not to its liking, as recently as last month. http://www.thedailybeast.com/articles/2011/07/29/turkish-military-leaders-resign-leave-government-in-chaos.html
As Chief Justice Robert PCAOB opinion last year indicates, the Supt Ct is starting to turn against independent agencies. But where, in all this, is the role for oversight by an elected President? The Constitution requires that a President chosen by the entire Nation oversee the execution of the laws. And the “‘fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution,’” for “‘[c]onvenience and efficiency are not the primary objectives—or the hallmarks—of democratic government.’” http://lawprofessors.typepad.com/conlaw/2010/06/free-enterprise-fund-v-pcaob-opinion-analysis.html
Boo for Citizens United, though. That corporations as legal (fictional) persons are endowed with the same rights of natural persons is mind-boggling logic. It is going to lead to civil war.
The large and growing body of anti-Fed sentiment will almost surely result in political steps to curtail its activities or even abolish it. That's my personal opinion, anyway. As bad as the Fed has been throughout this whole crisis, I don't think the public realizes how much worse things could get if the Fed was abolished. We'd be back to the days of bank runs and wholesale destruction of savings a la the 19th century. I remember walking past Wachovia Bank the day it failed and seeing people calmly conducting their banking business inside, depositing checks and withdrawing funds, etc, as if nothing happened. That wouldn't have been the case were if it were not for the Fed. Sure, Congress could do the same, but to assume that they'd get that done, quickly, before any panic developed, is a pipe dream.
ReplyDeletePeople can't get a return on their savings, and they know that's because the banks are being bailed out at their expense.
ReplyDeleteThe problem with the Fed is the whole idea of an "independent central bank".
ReplyDeleteThe Constitutions gives the President the executive power to enforce laws passed by Congess There is no constitutional basis for the no place in that scheme for the Fed to exercise executive power independent of the President and his Tsy Secretary. And if they happen to suck, well that's what elections are for
The Fed's stance that its apart of the President and his Admin can best br compared to the Turkish Army's assertion its its the "guardian of the secular Republic" (ha that slogan would go over great in Texas) that turns against elected govts not to its liking, as recently as last month.
http://www.thedailybeast.com/articles/2011/07/29/turkish-military-leaders-resign-leave-government-in-chaos.html
As Chief Justice Robert PCAOB opinion last year indicates, the Supt Ct is starting to turn against independent agencies.
But where, in all this, is the role for oversight by an elected President? The Constitution requires that a President chosen by the entire Nation oversee the execution of the laws. And the “‘fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution,’” for “‘[c]onvenience and efficiency are not the primary objectives—or the hallmarks—of democratic government.’”
http://lawprofessors.typepad.com/conlaw/2010/06/free-enterprise-fund-v-pcaob-opinion-analysis.html
Good for Roberts on that one.
ReplyDeleteBoo for Citizens United, though. That corporations as legal (fictional) persons are endowed with the same rights of natural persons is mind-boggling logic. It is going to lead to civil war.