The Federal Reserve System was created in 1913 during a banking crisis.
The chairman of the Federal Reserve is appointed by the President, subject to approval by Congress.
The other four members are chosen by their peers in banking, a rather unusual arrangement for the institution that is overseeing that same industry.
Capitalism worships at the altar of market forces.
Yet, capitalistic America doesn't allow the market to prevail because it employs the Board of Governors of the Federal Reserve System to macro-manage the economy by using the prime interest rate and the amount of money in circulation.
These five men have the impossible task of predicting the future, relying on trends and computer models based upon yesterday's statistics.
The variables involved are limitless.
The influence of politicians and Wall Street add to their burden.
Not even intellect can predict the future.
The Fed's managing the economy using their two tools is like the National Football League (NFL) trying to balance the scores of football games with first-down yardage and game time.
For example, if the scores of professional football games were too low, the league could shorten the yardage for first downs and lengthen the game time; vice versa, if the game scores were too high.
The NFL macro-managing would fluctuate between scores too high or low, just as our economy alternates between prosperity and recession.
Additionally, the Board of Governors has been saving companies with taxpayer's money, rather than allowing them to fail (market forces) and ending the problem.
· The Continental Bank in 1964, · The Long Term Capital Management Hedge Fund in 1998, · The savings & loan industry in 1989 and, more recently, Bear Stearns.
These compensations of businesses "too large to fail" have postponed each crisis with the cost rising precipitously.
The dollar amount of these bailouts has risen from millions to billions and now trillions.
The rescue of Fannie Mae and Freddie Mac involves $5.
3 trillion.
That's more than half our national debt of $9.
5 trillion.
Other current and expected bailouts are adding more trillions.
Why not allow capitalism work? Set a fixed prime interest rate and a permanent amount of money circulating so that efficient market forces will regulate our economy.
The chairman of the Federal Reserve is appointed by the President, subject to approval by Congress.
The other four members are chosen by their peers in banking, a rather unusual arrangement for the institution that is overseeing that same industry.
Capitalism worships at the altar of market forces.
Yet, capitalistic America doesn't allow the market to prevail because it employs the Board of Governors of the Federal Reserve System to macro-manage the economy by using the prime interest rate and the amount of money in circulation.
These five men have the impossible task of predicting the future, relying on trends and computer models based upon yesterday's statistics.
The variables involved are limitless.
The influence of politicians and Wall Street add to their burden.
Not even intellect can predict the future.
The Fed's managing the economy using their two tools is like the National Football League (NFL) trying to balance the scores of football games with first-down yardage and game time.
For example, if the scores of professional football games were too low, the league could shorten the yardage for first downs and lengthen the game time; vice versa, if the game scores were too high.
The NFL macro-managing would fluctuate between scores too high or low, just as our economy alternates between prosperity and recession.
Additionally, the Board of Governors has been saving companies with taxpayer's money, rather than allowing them to fail (market forces) and ending the problem.
· The Continental Bank in 1964, · The Long Term Capital Management Hedge Fund in 1998, · The savings & loan industry in 1989 and, more recently, Bear Stearns.
These compensations of businesses "too large to fail" have postponed each crisis with the cost rising precipitously.
The dollar amount of these bailouts has risen from millions to billions and now trillions.
The rescue of Fannie Mae and Freddie Mac involves $5.
3 trillion.
That's more than half our national debt of $9.
5 trillion.
Other current and expected bailouts are adding more trillions.
Why not allow capitalism work? Set a fixed prime interest rate and a permanent amount of money circulating so that efficient market forces will regulate our economy.