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> they did very little to control the economy Huh? They explicitly controlled the economy. They pumped cheap credit and deliberately passed various legislati

> they did very little to control the economy Huh? They explicitly controlled the economy. They pumped cheap credit and deliberately passed various legislation to further inflate the housing and derivatives markets. You have to understand the government at all levels is in on the action when it comes to these bubbles. They profit both in terms of tax revenues and by straight-up payola. Government milks the scam just like the perps, and then when it falls apart they release a "lessoned learned" study and prosecute a few scapegoats they parade on TV. You'd have to be pretty naive to think the key regulators and legislators are genuinely surprised by these crises that roll around every 8 years. They're really involved in making them happen.

caudicus 19y ago
He's saying they should have tried to slow the economy down when it was raging upward...which I think you know, but you were just being overly cynical. In terms of the Fed wanting to promote the economy and "make money" for the government...not so much. The Fed as an organization is set up to operate independently, and in the long run the government is going to lose more money due to economic fluctuations. The whole point of a central bank is to smooth out the business cycles (to everyone's benefit).
- kingkongrevenge 19y ago
  > The whole point of a central bank is to smooth out the business cycles That's the cover story. A few centuries of data from source around the world clearly show that central banking destabilizes prices and economies and aggravates the business cycle. The purpose of central banks is to allow a connected elite to rip off the population at large through seigniorage. This is NOT conspiracy theory garbage. This has been popularly understood at various times in US history. Tom Paine wrote about it extensively as a best selling author. Andrew Jackson got a mandate to dismantle the national bank.
  - caudicus 19y ago
    Well, modern day central banks operate through Keynesian principles of economics which were not developed until the mid 20th century - http://en.wikipedia.org/wiki/Keynesian_economics http://en.wikipedia.org/wiki/Keynesian_economics - so I find it hard to apply the writings of Thomas Paine to them. I do realize the US Federal Reserve was founded before that (1913), but modern fiscal policy decisions are based on Kaynes' work. Related to that, the historical US National Bank (http://en.wikipedia.org/wiki/First_Bank_of_the_United_States http://en.wikipedia.org/wiki/First_Bank_of_the_United_States) and Central Bank (Federal Reserve) have very different objectives. Do not confuse the two.
    - vitaminj 19y ago
      Firstly, fiscal policy pertains to government spending and/or tax policy, none of which a central bank is involved in. Central banks are strictly in the business of monetary policy. Secondly, most western central banks (though not the Fed) explicitly concentrate on inflation targeting, not "priming the pump" (as Keynes would say). In fact Keynes wasn't really very interested in inflation, which is fair enough given that economists didn't seem to take it all that seriously until the stagflation events of the 70s. But having said that, I'm more inclined to agree with you than the grandparent. Without a central bank, how is the money supply controlled?
      - 1gor 19y ago
        >Without a central bank, how is the money supply controlled? By natural business cycle of economic expansion/ contraction. Cost of money fluctuates, when it goes up there are recessions that clear up the inefficiencies (i.e. all businesses that produce return below required market rate go bust). That's what lacking today thanks to central banks' intervention. They postpone the cleansing as much as possible, until the disbalances grow up in such a monster as we see today. The problem of course is that people don't like even mild recessions and politicians are following them. The Fed system was setup in 1913 after the population was fed up with regular boom/busts of late 1800s/early 1900s.
  - nostrademons 19y ago

caudicus 19y ago

He's saying they should have tried to slow the economy down when it was raging upward...which I think you know, but you were just being overly cynical. In terms of the Fed wanting to promote the economy and "make money" for the government...not so much. The Fed as an organization is set up to operate independently, and in the long run the government is going to lose more money due to economic fluctuations. The whole point of a central bank is to smooth out the business cycles (to everyone's benefit).

kingkongrevenge 19y ago
> The whole point of a central bank is to smooth out the business cycles That's the cover story. A few centuries of data from source around the world clearly show that central banking destabilizes prices and economies and aggravates the business cycle. The purpose of central banks is to allow a connected elite to rip off the population at large through seigniorage. This is NOT conspiracy theory garbage. This has been popularly understood at various times in US history. Tom Paine wrote about it extensively as a best selling author. Andrew Jackson got a mandate to dismantle the national bank.
- caudicus 19y ago
  Well, modern day central banks operate through Keynesian principles of economics which were not developed until the mid 20th century - http://en.wikipedia.org/wiki/Keynesian_economics http://en.wikipedia.org/wiki/Keynesian_economics - so I find it hard to apply the writings of Thomas Paine to them. I do realize the US Federal Reserve was founded before that (1913), but modern fiscal policy decisions are based on Kaynes' work. Related to that, the historical US National Bank (http://en.wikipedia.org/wiki/First_Bank_of_the_United_States http://en.wikipedia.org/wiki/First_Bank_of_the_United_States) and Central Bank (Federal Reserve) have very different objectives. Do not confuse the two.
  - vitaminj 19y ago
    Firstly, fiscal policy pertains to government spending and/or tax policy, none of which a central bank is involved in. Central banks are strictly in the business of monetary policy. Secondly, most western central banks (though not the Fed) explicitly concentrate on inflation targeting, not "priming the pump" (as Keynes would say). In fact Keynes wasn't really very interested in inflation, which is fair enough given that economists didn't seem to take it all that seriously until the stagflation events of the 70s. But having said that, I'm more inclined to agree with you than the grandparent. Without a central bank, how is the money supply controlled?
    - 1gor 19y ago
      >Without a central bank, how is the money supply controlled? By natural business cycle of economic expansion/ contraction. Cost of money fluctuates, when it goes up there are recessions that clear up the inefficiencies (i.e. all businesses that produce return below required market rate go bust). That's what lacking today thanks to central banks' intervention. They postpone the cleansing as much as possible, until the disbalances grow up in such a monster as we see today. The problem of course is that people don't like even mild recessions and politicians are following them. The Fed system was setup in 1913 after the population was fed up with regular boom/busts of late 1800s/early 1900s.
- nostrademons 19y ago