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> What more do you want then? I'd like the Federal Reserve to control overall fiscal policy as well. The Fed tells Congress exactly how much it can spend each

> What more do you want then? I'd like the Federal Reserve to control overall fiscal policy as well. The Fed tells Congress exactly how much it can spend each year, and Congress divvies it up however it likes.

Ressuder 10y ago
Why are you so keen on handing over the decision of austerity measures or not while in a recession, for example, to unelected politicians?
- smallnamespace 10y ago
  Because I think our unelected politicians would do a better job than our elected ones. For one thing, it avoids partisan gridlock. Need I mention how many times Republicans threatened to not raise the debt ceiling and cause default? And there's a technical reason as well: if the Fed credibly commits to using fiscal policy in a predictable, countercyclical way, then the mere presence of this policy ought to dampen recessions. On the other hand, whether Congress actually passes stimulus spending or not is highly unpredictable and so the markets cannot rely on it.
  - cloakandswagger 10y ago
    You have a lot of trust in those unelected politicians. I imagine their first fiscal decision would be granting themselves the authority to buy corporate debt. Nothing beats acquiring productive, physical assets with infinite fiat currency! What's the term for an economy where the state owns the means of production again?
    - smallnamespace 10y ago
      Buying corporate debt is not a fiscal decision. If the Fed wanted to do that today, there is no law on the books stopping them. Fiscal policy concerns how much the government spends, and on what. Furthermore, you only own a company when you own its equity, not its debt. No offense, but for someone who seems so worked up about what the Fed might do to us, you seem rather uninformed on the basic facts of what it actually does and how.
    - cloakandswagger 10y ago
      We've reached the comment limit here, but it is absolutely not agreed that the Fed has legal authority to buy equities. "Former Fed official Joseph Gagnon has lamented that the Fed’s asset purchase authority “is limited by law to the Treasury, agency, and agency MBS markets plus foreign exchange” (emphasis added), and others agree." http://blog.supplysideliberal.com/post/114021461013/greg-shill-does-the-fed-have-the-legal-authority http://blog.supplysideliberal.com/post/114021461013/greg-shi... They could attempt to do so with some really creative legal interpretations, but it would probably take an act of Congress to resolve all of the resultant lawsuits.
      - smallnamespace 10y ago
        Yes, but the post generally agrees with my assessment, which is the Fed could go and buy equities or corporate debt if it really wanted to (and other central banks, just as the ECB or JCB, have already done just that, without nationalizing their economies in the process): "Substantively, the Fed probably enjoys greater discretion in unconventional monetary policy—possibly extending to the purchase of equities—than is commonly assumed." FYI, you were probably restricted from replying immediately to my post, not because of the comment depth.
  - deleted 10y ago
    [deleted]
RobertoG 10y ago
And what criteria would use the Fed? Whatever is better for the country? following what theory?
- smallnamespace 10y ago
  That same objection can be raised against technocratic control of monetary policy as well, and in fact, people argued against creating the Fed for exactly this reason. So what makes fiscal policy so special that we need to keep it out of the Fed's hands? Monetary and fiscal policy are the two main levers that the government has over the economy, but only giving one of them to the Fed means that the Fed has its hands tied in many circumstances (like today, when rates are persistently low), and requires the Fed to constantly guess what Congress will do and react to it. Anyway, to answer your question, the Fed would exercise fiscal policy with the same aims and goals by which it uses monetary policy.
  - cloakandswagger 10y ago
    > Anyway, to answer your question, the Fed would exercise fiscal policy with the same aims and goals by which it uses monetary policy. Then we are so screwed.
  - deleted 10y ago
    [deleted]
jomamaxx 10y ago
"I'd like the Federal Reserve to control overall fiscal policy as well" This is beyond irresponsible. The Fed is a bank (and privately owned) - not an apparatus designed to manage the state. They have absolutely no businesses determining fiscal policy. We elect people to manage our finances, maybe what we need is 'better democracy'.
- smallnamespace 10y ago
  > The Fed is a bank (and privately owned) - not an apparatus designed to manage the state. Not true: https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm "The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest." and also "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. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund."
  - jomamaxx 10y ago
    The FED is definitely privately owned. It's a private company with a share structure. Most banks in America have a share in it - or rather the regional bank. " Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest." Don't be so naive. A private company tells you 'they are to server the public interest' and you believe them? Listen - I'm not a conspiracy theorist. Generally speaking, the Fed is much like other central banks. But make no mistake - it is not a public entity. Try this: the US government does not have access to the financial records of the Fed. Congress wanted to do an audit of the Fed - and they were blocked from going back past 2004. Think about that. The US currency system is controlled by an entity that will not let the public see what's in their records. That's insane. My bet is that from 1913 to past the Nixon era there is crazy, crazy stuff on the books, and confidence in the US currency would go crazy if that information got out. Also - just because it does not generate a profit does not mean that it's not used for the benefit of the banks. They set interest rates that suit their interest, not necessarily the interest of the general public. The Fed should definitely be nationalized.

Ressuder 10y ago

Why are you so keen on handing over the decision of austerity measures or not while in a recession, for example, to unelected politicians?

smallnamespace 10y ago
Because I think our unelected politicians would do a better job than our elected ones. For one thing, it avoids partisan gridlock. Need I mention how many times Republicans threatened to not raise the debt ceiling and cause default? And there's a technical reason as well: if the Fed credibly commits to using fiscal policy in a predictable, countercyclical way, then the mere presence of this policy ought to dampen recessions. On the other hand, whether Congress actually passes stimulus spending or not is highly unpredictable and so the markets cannot rely on it.
- cloakandswagger 10y ago
  You have a lot of trust in those unelected politicians. I imagine their first fiscal decision would be granting themselves the authority to buy corporate debt. Nothing beats acquiring productive, physical assets with infinite fiat currency! What's the term for an economy where the state owns the means of production again?
  - smallnamespace 10y ago
    Buying corporate debt is not a fiscal decision. If the Fed wanted to do that today, there is no law on the books stopping them. Fiscal policy concerns how much the government spends, and on what. Furthermore, you only own a company when you own its equity, not its debt. No offense, but for someone who seems so worked up about what the Fed might do to us, you seem rather uninformed on the basic facts of what it actually does and how.
  - cloakandswagger 10y ago
    We've reached the comment limit here, but it is absolutely not agreed that the Fed has legal authority to buy equities. "Former Fed official Joseph Gagnon has lamented that the Fed’s asset purchase authority “is limited by law to the Treasury, agency, and agency MBS markets plus foreign exchange” (emphasis added), and others agree." http://blog.supplysideliberal.com/post/114021461013/greg-shill-does-the-fed-have-the-legal-authority http://blog.supplysideliberal.com/post/114021461013/greg-shi... They could attempt to do so with some really creative legal interpretations, but it would probably take an act of Congress to resolve all of the resultant lawsuits.
    - smallnamespace 10y ago
      Yes, but the post generally agrees with my assessment, which is the Fed could go and buy equities or corporate debt if it really wanted to (and other central banks, just as the ECB or JCB, have already done just that, without nationalizing their economies in the process): "Substantively, the Fed probably enjoys greater discretion in unconventional monetary policy—possibly extending to the purchase of equities—than is commonly assumed." FYI, you were probably restricted from replying immediately to my post, not because of the comment depth.
- deleted 10y ago
  [deleted]

RobertoG 10y ago

And what criteria would use the Fed? Whatever is better for the country? following what theory?

smallnamespace 10y ago
That same objection can be raised against technocratic control of monetary policy as well, and in fact, people argued against creating the Fed for exactly this reason. So what makes fiscal policy so special that we need to keep it out of the Fed's hands? Monetary and fiscal policy are the two main levers that the government has over the economy, but only giving one of them to the Fed means that the Fed has its hands tied in many circumstances (like today, when rates are persistently low), and requires the Fed to constantly guess what Congress will do and react to it. Anyway, to answer your question, the Fed would exercise fiscal policy with the same aims and goals by which it uses monetary policy.
- cloakandswagger 10y ago
  > Anyway, to answer your question, the Fed would exercise fiscal policy with the same aims and goals by which it uses monetary policy. Then we are so screwed.
- deleted 10y ago
  [deleted]

jomamaxx 10y ago

"I'd like the Federal Reserve to control overall fiscal policy as well" This is beyond irresponsible. The Fed is a bank (and privately owned) - not an apparatus designed to manage the state. They have absolutely no businesses determining fiscal policy. We elect people to manage our finances, maybe what we need is 'better democracy'.

smallnamespace 10y ago
> The Fed is a bank (and privately owned) - not an apparatus designed to manage the state. Not true: https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm "The Federal Reserve System is not "owned" by anyone. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest." and also "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. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund."
- jomamaxx 10y ago
  The FED is definitely privately owned. It's a private company with a share structure. Most banks in America have a share in it - or rather the regional bank. " Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest." Don't be so naive. A private company tells you 'they are to server the public interest' and you believe them? Listen - I'm not a conspiracy theorist. Generally speaking, the Fed is much like other central banks. But make no mistake - it is not a public entity. Try this: the US government does not have access to the financial records of the Fed. Congress wanted to do an audit of the Fed - and they were blocked from going back past 2004. Think about that. The US currency system is controlled by an entity that will not let the public see what's in their records. That's insane. My bet is that from 1913 to past the Nixon era there is crazy, crazy stuff on the books, and confidence in the US currency would go crazy if that information got out. Also - just because it does not generate a profit does not mean that it's not used for the benefit of the banks. They set interest rates that suit their interest, not necessarily the interest of the general public. The Fed should definitely be nationalized.