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The extra layers of abstraction and buy-in from private banks is how we keep politics from completely dominating the value of money. The politics isn’t absent,
by SllX 3y ago
The extra layers of abstraction and buy-in from private banks is how we keep politics from completely dominating the value of money. The politics isn’t absent, but it is much more difficult to coerce the value of money in one direction or another without participation from the market.
- lotsofpulp 3y agoI don’t know what that means. The value of money has moved in one direction, for a very, very long time. It is basically government policy, to target 2% reduction every year.
- SllX 3y agoNo, it is Federal Reserve policy, which is very different from government policy, and the way they achieve it is by taking action in the market rather than putting a pen to paper and willing it so (like Congress does) so that you can rest easy that the value of your dollars are (through market forces, once all information has been consolidated down to a price) of reasonable value to the market and not something to be avoided. Other currencies haven't always had it so easy because maintaining a currency's value with only a slight year-over-year increase in inflation (and inflation has not been slight for a bit now) is not easy. It's also a policy that has buy-in from private banks, given that they are literally bought in to the Federal Reserve.
- lotsofpulp 3y agoSuppose you do separate the Federal Reserve from the US federal government, what role does a bank serve? Surely the federal reserve should be able to maintain the same database of accounts that Chase and BoA and Wells Fargo maintain. Although, I would argue the federal government and the federal reserve have the same mandate, which is maintaining a steady increase in asset prices. They might say they have other priorities, but their first will always be maintaining the social order, and politically, that requires sacrificing the currency’s purchasing power to maintain a minimum ROI.
- SllX 3y agoCould? Yes. Do we want it to? Not really. We already have private banks, and a lot of them with which to choose to take our business who are all bought into ensuring the stability of the Federal Reserve system through their ownership of the 12 system banks. Undermining either the Federal Government or the private banks would undermine the entire system.
- lotsofpulp 3y agoWhat does undermine mean? I still do not understand the purpose or utility of the bank for electronic funds transfers. And the federal government is explicitly the one guaranteeing that the numbers in your account at a private bank mean something, so how could the federal government be undermined? Surely my money being at Chase account # x or US government account # y is the same thing for me, except with Chase, there's a middleman in play who is taking a cut of interest from the Federal Reserve.
- dragonwriter 3y ago> No, it is Federal Reserve policy, which is very different from government policy The Federal Reserve Board of Governors, the things that sets the policy in question, is an executive branch agency, situated similarly to ones like the FCC. Fed policy is not "very different from government policy", it is government policy.
- SllX 3y agoOnly if you disregard the 12 banks that makes up the Federal Reserve system each with their own Boards and the Federal Open Market Committee.
- onetokeoverthe 3y ago[dead]