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>Right now one individual (or group) controls something like 6% of all the coins available, and on a whim, could cause a major devaluation over night. The Fed

>Right now one individual (or group) controls something like 6% of all the coins available, and on a whim, could cause a major devaluation over night. The Fed does this on an annual basis and actually publicly states when it's going to devalue the currency through QE and rate cuts.

Frondo 10y ago
The Fed, like all public institutions, is ultimately answerable to every voter. It's one of the benefits of citizenship, the decision-making power is in our hands. No, your one vote won't change everything to suit your personal preferences, and if you wanted to change the way some aspect of our system works (like money, or health care, or drug policy, or whatever) it'd be a lot of work, consensus-building, and time. But, at least the power is in our hands, collectively.
- mixedCase 10y ago
  The Fed is not a public institution. It's a private bank. It's as Federal as Federal Express.
  - Frondo 10y ago
    From https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm, "Who owns the Federal Reserve? The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution." ...and, it goes on from there...
    - jsprogrammer 10y ago
      You left out some of the best parts. >However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, paid to member banks at a maximum rate of 6 percent, determined in part by each member bank's total assets. The bank is operated "not for profit", but generates $9x billion in "profit" for the Treasury (as claimed multiple times in this thread). "Ownership" is a moot red herring. Owning a fictional entity is useless; having claims on its cash flows is not. The Federal Reserve System issues stock to commercial banks and pays an annual dividend to them, before any money goes to the Treasury. It is literally all of the upside with none of the downside (e.g. liability). The investment pays for itself in twelve years and then continues to pay in perpetuity.
  - maxerickson 10y ago
    The Fed pays its profits to the US government. The chairman of the Federal Reserve board is appointed by the President and approved by Congress. It has statutory legal authorities. It's a little more federal than Federal Express. https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System
    - jsprogrammer 10y ago
      >The Fed pays its profits to the US government. After paying a dividend to its stockholders (commercial banks).
      - fanzhang 10y ago
        The dividend to stockholders are less than 10x what they give back to the Federal Government.
        jsprogrammer 10y ago
        What was "given back" was mostly proceeds from maturing Federal bonds. Commercial banks are just first in line to get a special cut, by law.
  - forgetsusername 10y ago
    This trope. The Fed chair is appointed by the government, and profits are returned to the US Treasury. It's independent insofar as the government doesn't have direct control. But they do have oversight, and could legislate it out of existence tomorrow.
  - the-dude 10y ago
    Reposting my comment https://news.ycombinator.com/item?id=11021613 https://news.ycombinator.com/item?id=11021613 : Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.
- escherize 10y ago
  The fed is not a public institution.
- schoen 10y ago
  Maybe a better way to put some Bitcoin proponents' criticism of the Fed would be that they don't like the monetary policy so far actually produced by politics, and would like to use a kind of money whose monetary policy is produced by something else. I have never come to a particularly clear or detailed position on monetary policy and so I don't know how good or bad a job of it I think the Fed has been doing from my perspective, nor would I assume that Bitcoin or any altcoin is doing a better job. But it makes some sense to me that someone could say "I wish I could use money that wasn't subject to the Fed, because I so often disagree with the Fed". I've seen some arguments about this that devolved into elaborate discussions about the institutional status and control of the Fed (as this thread might be in danger of doing...), but I've sometimes seen arguments that went in a different direction, where people suggested that it's important for the Fed to be able to set monetary policy for the money primarily used in the U.S., because monetary policy ought to be subject to political control, because it achieves important political objectives. I tend to suspect that some form of that is ultimately the issue in play at the bottom of some of these discussions: how subject to politics should or must monetary policy be, and how legitimate or illegitimate is it for people to try to use, on a significant scale, money whose supply and interest rate aren't determined by the central bank of the country they live in?
AlexMax 10y ago
But inflation of a currency is a good thing. Hyperinflation and deflation are the things you want to avoid.
- freework 10y ago
  Where do you draw the line between inflation and hyperinflation?
  - undersuit 10y ago
    Do you want to spread panic or temper it?
- paavokoya 10y ago
  Inflation is only necessary when resources and population are inflating. Because money represents current value in the economy, that amount decreases through consumption or increases from new-found resources. Sometimes deflation is necessary to maintain a balanced money.

Frondo 10y ago

The Fed, like all public institutions, is ultimately answerable to every voter. It's one of the benefits of citizenship, the decision-making power is in our hands. No, your one vote won't change everything to suit your personal preferences, and if you wanted to change the way some aspect of our system works (like money, or health care, or drug policy, or whatever) it'd be a lot of work, consensus-building, and time. But, at least the power is in our hands, collectively.

mixedCase 10y ago
The Fed is not a public institution. It's a private bank. It's as Federal as Federal Express.
- Frondo 10y ago
  From https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm, "Who owns the Federal Reserve? The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution." ...and, it goes on from there...
  - jsprogrammer 10y ago
    You left out some of the best parts. >However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, paid to member banks at a maximum rate of 6 percent, determined in part by each member bank's total assets. The bank is operated "not for profit", but generates $9x billion in "profit" for the Treasury (as claimed multiple times in this thread). "Ownership" is a moot red herring. Owning a fictional entity is useless; having claims on its cash flows is not. The Federal Reserve System issues stock to commercial banks and pays an annual dividend to them, before any money goes to the Treasury. It is literally all of the upside with none of the downside (e.g. liability). The investment pays for itself in twelve years and then continues to pay in perpetuity.
- maxerickson 10y ago
  The Fed pays its profits to the US government. The chairman of the Federal Reserve board is appointed by the President and approved by Congress. It has statutory legal authorities. It's a little more federal than Federal Express. https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System
  - jsprogrammer 10y ago
    >The Fed pays its profits to the US government. After paying a dividend to its stockholders (commercial banks).
    - fanzhang 10y ago
      The dividend to stockholders are less than 10x what they give back to the Federal Government.
      - jsprogrammer 10y ago
        What was "given back" was mostly proceeds from maturing Federal bonds. Commercial banks are just first in line to get a special cut, by law.
- forgetsusername 10y ago
  This trope. The Fed chair is appointed by the government, and profits are returned to the US Treasury. It's independent insofar as the government doesn't have direct control. But they do have oversight, and could legislate it out of existence tomorrow.
- the-dude 10y ago
  Reposting my comment https://news.ycombinator.com/item?id=11021613 https://news.ycombinator.com/item?id=11021613 : Well, Yellen recently said something along the lines of 'being part of the team' and Bernanke claimed something similar in his book or talks iirc ( sorry, no references atm ). The whole independent claim is just smoke and mirrors.
escherize 10y ago
The fed is not a public institution.
schoen 10y ago
Maybe a better way to put some Bitcoin proponents' criticism of the Fed would be that they don't like the monetary policy so far actually produced by politics, and would like to use a kind of money whose monetary policy is produced by something else. I have never come to a particularly clear or detailed position on monetary policy and so I don't know how good or bad a job of it I think the Fed has been doing from my perspective, nor would I assume that Bitcoin or any altcoin is doing a better job. But it makes some sense to me that someone could say "I wish I could use money that wasn't subject to the Fed, because I so often disagree with the Fed". I've seen some arguments about this that devolved into elaborate discussions about the institutional status and control of the Fed (as this thread might be in danger of doing...), but I've sometimes seen arguments that went in a different direction, where people suggested that it's important for the Fed to be able to set monetary policy for the money primarily used in the U.S., because monetary policy ought to be subject to political control, because it achieves important political objectives. I tend to suspect that some form of that is ultimately the issue in play at the bottom of some of these discussions: how subject to politics should or must monetary policy be, and how legitimate or illegitimate is it for people to try to use, on a significant scale, money whose supply and interest rate aren't determined by the central bank of the country they live in?

AlexMax 10y ago

But inflation of a currency is a good thing. Hyperinflation and deflation are the things you want to avoid.

freework 10y ago
Where do you draw the line between inflation and hyperinflation?
- undersuit 10y ago
  Do you want to spread panic or temper it?
paavokoya 10y ago
Inflation is only necessary when resources and population are inflating. Because money represents current value in the economy, that amount decreases through consumption or increases from new-found resources. Sometimes deflation is necessary to maintain a balanced money.