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Ask HN: Why again do we need a Federal Reserve or other central banks?
What would financial markets look like if the free market controlled interest rates and not a central bank?
- AnimalMuppet 4y agoIt would look like a positive feedback loop, running away until it crashed spectacularly in a panic that introduced a depression. How do I know? Because we already ran the experiment. Look at the panics and depressions of the 1800s. They are your answer. We created central banks for a reason. We really didn't like the way it worked out without them.
- salawat 4y agoFat lotta good it seems to do. We still have those, maybe less frequent, but holy moly the amount of money involved requires many more zeroes to express nowadays.
- AnimalMuppet 4y ago"Fat lotta good"? 2008 didn't turn into 1873. That's actually a really big deal.
- salawat 4y agoYet. The can was kicked down the road for someone else to end up cleaning up after.
- bwestergard 4y agoStefan Eich has recently published a book on precisely this topic. https://press.princeton.edu/books/hardcover/9780691191072/the-currency-of-politics https://press.princeton.edu/books/hardcover/9780691191072/th...
- allears 4y agoThe so-called "free market" isn't really free. It's dominated by the biggest players, who do their best to manipulate it for their own self-interest. In order to have an economy that is broadly beneficial for the greatest number of citizens, regulation is absolutely necessary. And even then, market manipulation and unequal distribution of wealth is still a real problem.
- salawat 4y agoThe Federal Reserve has nada to do with that. That's FTC, SEC, FINRA, and CFPB. The Federal Reserve is literally only monetary policy through the FR Banks. And all they seem to have a really good track record of doing is working with D-o-Treasury and Congress to inflate asset prices.