4 ms·

Do you have an alternative to the Fed? Likes and dislikes has nothing to do with it. Or let me ask you another way — why do you dislike the Fed?

jgalt212 9mo ago
I dislike that the Fed operates as if the happiness of the investor class is their number one priority.
- pixelatedindex 9mo ago
  > if the happiness of the investor class is their number one priority The investor class has capital, and America is capitalist. I’m not the biggest fan either but we gotta acknowledge the reality we live in.
- cman1444 9mo ago
  Of the dual mandate, which would you say prioritizes the investor class, and how would you approach it differently?
  - jgalt212 9mo ago
    > promote maximum employment and price stability (low, stable inflation, targeting 2%) The dual mandate says nothing about asset prices. The only prices it mentions are those involved in CPI calcs.
  - lovich 9mo ago
    You asked about which piece "of the dual mandate", but the OP said "operates as" which I am going to reply to. Does the Fed can any data from labor sources or unions? I am asking in honest because the few reports from them that I have looked into(mostly around unemployment) all seem to be polls solely sourced from investor class assets like companies. If they are only sourcing from one biased source for their data, they wouldn't have to have a bad mandate or manipulate it, to operate like it was for the benefit of the data source, right?
seanmcdirmid 9mo ago
You can dislike a solution but admit that you can't think of a better solution, or specify that it is better than an even worse solution. I can see why someone would have a issues with "a bunch of rich bankers appointed by politicians" controlling American monetary policy. But I can't really see a better way at least, until we can achieve a post-scarcity economy or something.
- pixelatedindex 9mo ago
  I’m not denying that, but that’s not how I read the comment. That comment comes across as a relief that the Fed is under attack, but is more upset that the source of attack is the executive branch.
- throw0101c 9mo ago
  > I can see why someone would have a issues with "a bunch of rich bankers appointed by politicians" controlling American monetary policy. Yellen had a long academic career before going into public service (with various roles at the Fed before becoming Fed chair): * https://en.wikipedia.org/wiki/Janet_Yellen https://en.wikipedia.org/wiki/Janet_Yellen Bernanke had a strictly academic career before going into public service (and was/is probably one of the foremost experts on the Great Depression, something that was handy in 2008/9): * https://en.wikipedia.org/wiki/Ben_Bernanke#Academic_and_government_career_(1979–2006) https://en.wikipedia.org/wiki/Ben_Bernanke#Academic_and_gove... Greenspan was in the finance world pre-Fed. Volcker was in government for his entire career pre-Fed: * https://en.wikipedia.org/wiki/Paul_Volcker#Career https://en.wikipedia.org/wiki/Paul_Volcker#Career I think people over-estimate how many "rich bankers" are in the Fed, especially at the FOMC. Bloomberg's Odd Lots podcast with some Fed members in recent years, especially the more obscure regional ones, about their work, and how they often go out and talk to local businesses about what's happening 'on the ground'.
  - seanmcdirmid 9mo ago
    Fair. I don't really have a preference for government, academic, or banking industry veterans.
hypeatei 9mo ago
The libertarian view is that interest rates should be decided by the free market and not a central bank. Mainly due to what we're seeing now (the executive trying to take it over) and that a small board of people can make bad decisions that have reaching effects.
- don_neufeld 9mo ago
  I wonder if any libertarians have considered reading about the history of banking? The Federal Reserve was not created “just because”. The US banking system was wildly unstable when run… largely as the libertarian view would have it.
- zozbot234 9mo ago
  This is actually quite correct. The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an inherently unstable system. You "cut" rates to increase money creation, which actually pushes your long-term rates higher due to expected inflation and leads to even more money creation for a constant policy rate, and vice versa. This can all be fixed very simply by changing the instrument to a crawling exchange rate peg, which has an inherently stabilizing effect, as seen from the effectiveness of currency board systems - that system doesn't shift against you if you stick to a bad peg, whereas it very much does if you stick to a bad policy rate. The long term policy goal (stability in the path of nominal incomes (prices + real activity) in the very short run, and prices in the medium-to-long run) would be unaffected, but the whole operational aspect would be simplified quite a bit.
  - throw0101c 9mo ago
    > The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an inherently unstable system. I don't know about "inherently unstable system", given that as central bank independence has grown so has, generally speaking, monetary stability: * https://en.wikipedia.org/wiki/Great_Moderation https://en.wikipedia.org/wiki/Great_Moderation
the_real_cher 9mo ago
I believe the fed replaced the gold standard.
- drpepper42 9mo ago
  No it did not. I don't know why people repeat this so often but it is very frustrating. Nixon unilaterally ended the gold standard because the US was printing money to pay for Vietnam and the rest of the world called the US on its bullshit. The end of the gold standard is relatively recent in history and the verdict is still out on the impact.
  - defrost 9mo ago
    The post-World War II Bretton Woods system was a limited form of the pre 1920s depression gold standard. Both the silver standard and bimetallism have been more common than the gold standard. Tying complex multi faceted economies to the physical abundance of specific raw materials fails to capture the full value of activities and assets. The true gold standard was a blip from the 1870s to the early 1920s.
    - drpepper42 9mo ago
      I think your observation assumes that inflating the value of gold relative to the rest of economy is a problem - if you do not care about that I'm not sure it matters. In any case gold served as a strong check on monetary policy even if it had problems. Certainly it is possible to have a "sound" monetary policy without gold. I'm just not convinced in societies ability to affect sound governance of monetary policy without some "stronger" guard rails. Especially not in today's climate.
  - Cornbilly 9mo ago
    >I don't know why people repeat this so often but it is very frustrating. The Ron Paul fandom spread this myth around incessantly during the late 2000s.
ProllyInfamous 9mo ago
[flagged]
derangedHorse 9mo ago
The eradication of the Fed and fiat money. As others have expressed, I also think the interest rate mechanism is clumsy and that bailouts do more harm in the long term than good (see one of the most recent examples [1]). [1] https://www.wsj.com/finance/banking/the-fed-launched-a-bank-rescue-program-last-year-now-banks-are-gaming-it-43e9cee3 https://www.wsj.com/finance/banking/the-fed-launched-a-bank-...
- beej71 9mo ago
  What are some of the problems with eradication of fiat currency?
  - paulryanrogers 9mo ago
    Gold is heavy and difficult to verify it's purity and authenticity
JumpinJack_Cash 9mo ago
> > why do you dislike the Fed? It prevents banks from doing their job, so does the existence of t-bills. They hinder the economy by suppressing creativity and ingenuity . Every time a person becomes an investor instead of an inventor the economy and prosperity of a nation falthers. You just don't see it in stats because stats can't measure against hypotheticals but that doesn't mean it isn't true
justin66 9mo ago
> Do you have an alternative to the Fed? The appears to be difficult for a lot of people to like, but the Fed still exists because the people who bitch and moan about the Fed can never voice an alternative that wouldn't immediately destroy everything if it were implemented.
- justin66 9mo ago
  Oh that's bothersome, and it's too late to edit. Above sentence should begin "The Fed."

jgalt212 9mo ago

I dislike that the Fed operates as if the happiness of the investor class is their number one priority.

pixelatedindex 9mo ago
> if the happiness of the investor class is their number one priority The investor class has capital, and America is capitalist. I’m not the biggest fan either but we gotta acknowledge the reality we live in.
cman1444 9mo ago
Of the dual mandate, which would you say prioritizes the investor class, and how would you approach it differently?
- jgalt212 9mo ago
  > promote maximum employment and price stability (low, stable inflation, targeting 2%) The dual mandate says nothing about asset prices. The only prices it mentions are those involved in CPI calcs.
- lovich 9mo ago
  You asked about which piece "of the dual mandate", but the OP said "operates as" which I am going to reply to. Does the Fed can any data from labor sources or unions? I am asking in honest because the few reports from them that I have looked into(mostly around unemployment) all seem to be polls solely sourced from investor class assets like companies. If they are only sourcing from one biased source for their data, they wouldn't have to have a bad mandate or manipulate it, to operate like it was for the benefit of the data source, right?

seanmcdirmid 9mo ago

You can dislike a solution but admit that you can't think of a better solution, or specify that it is better than an even worse solution. I can see why someone would have a issues with "a bunch of rich bankers appointed by politicians" controlling American monetary policy. But I can't really see a better way at least, until we can achieve a post-scarcity economy or something.

pixelatedindex 9mo ago
I’m not denying that, but that’s not how I read the comment. That comment comes across as a relief that the Fed is under attack, but is more upset that the source of attack is the executive branch.
throw0101c 9mo ago
> I can see why someone would have a issues with "a bunch of rich bankers appointed by politicians" controlling American monetary policy. Yellen had a long academic career before going into public service (with various roles at the Fed before becoming Fed chair): * https://en.wikipedia.org/wiki/Janet_Yellen https://en.wikipedia.org/wiki/Janet_Yellen Bernanke had a strictly academic career before going into public service (and was/is probably one of the foremost experts on the Great Depression, something that was handy in 2008/9): * https://en.wikipedia.org/wiki/Ben_Bernanke#Academic_and_government_career_(1979–2006) https://en.wikipedia.org/wiki/Ben_Bernanke#Academic_and_gove... Greenspan was in the finance world pre-Fed. Volcker was in government for his entire career pre-Fed: * https://en.wikipedia.org/wiki/Paul_Volcker#Career https://en.wikipedia.org/wiki/Paul_Volcker#Career I think people over-estimate how many "rich bankers" are in the Fed, especially at the FOMC. Bloomberg's Odd Lots podcast with some Fed members in recent years, especially the more obscure regional ones, about their work, and how they often go out and talk to local businesses about what's happening 'on the ground'.
- seanmcdirmid 9mo ago
  Fair. I don't really have a preference for government, academic, or banking industry veterans.

hypeatei 9mo ago

The libertarian view is that interest rates should be decided by the free market and not a central bank. Mainly due to what we're seeing now (the executive trying to take it over) and that a small board of people can make bad decisions that have reaching effects.

don_neufeld 9mo ago
I wonder if any libertarians have considered reading about the history of banking? The Federal Reserve was not created “just because”. The US banking system was wildly unstable when run… largely as the libertarian view would have it.
zozbot234 9mo ago
This is actually quite correct. The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an inherently unstable system. You "cut" rates to increase money creation, which actually pushes your long-term rates higher due to expected inflation and leads to even more money creation for a constant policy rate, and vice versa. This can all be fixed very simply by changing the instrument to a crawling exchange rate peg, which has an inherently stabilizing effect, as seen from the effectiveness of currency board systems - that system doesn't shift against you if you stick to a bad peg, whereas it very much does if you stick to a bad policy rate. The long term policy goal (stability in the path of nominal incomes (prices + real activity) in the very short run, and prices in the medium-to-long run) would be unaffected, but the whole operational aspect would be simplified quite a bit.
- throw0101c 9mo ago
  > The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an inherently unstable system. I don't know about "inherently unstable system", given that as central bank independence has grown so has, generally speaking, monetary stability: * https://en.wikipedia.org/wiki/Great_Moderation https://en.wikipedia.org/wiki/Great_Moderation

the_real_cher 9mo ago

I believe the fed replaced the gold standard.

drpepper42 9mo ago
No it did not. I don't know why people repeat this so often but it is very frustrating. Nixon unilaterally ended the gold standard because the US was printing money to pay for Vietnam and the rest of the world called the US on its bullshit. The end of the gold standard is relatively recent in history and the verdict is still out on the impact.
- defrost 9mo ago
  The post-World War II Bretton Woods system was a limited form of the pre 1920s depression gold standard. Both the silver standard and bimetallism have been more common than the gold standard. Tying complex multi faceted economies to the physical abundance of specific raw materials fails to capture the full value of activities and assets. The true gold standard was a blip from the 1870s to the early 1920s.
  - drpepper42 9mo ago
    I think your observation assumes that inflating the value of gold relative to the rest of economy is a problem - if you do not care about that I'm not sure it matters. In any case gold served as a strong check on monetary policy even if it had problems. Certainly it is possible to have a "sound" monetary policy without gold. I'm just not convinced in societies ability to affect sound governance of monetary policy without some "stronger" guard rails. Especially not in today's climate.
- Cornbilly 9mo ago
  >I don't know why people repeat this so often but it is very frustrating. The Ron Paul fandom spread this myth around incessantly during the late 2000s.

ProllyInfamous 9mo ago

[flagged]

derangedHorse 9mo ago

The eradication of the Fed and fiat money. As others have expressed, I also think the interest rate mechanism is clumsy and that bailouts do more harm in the long term than good (see one of the most recent examples [1]). [1] https://www.wsj.com/finance/banking/the-fed-launched-a-bank-rescue-program-last-year-now-banks-are-gaming-it-43e9cee3 https://www.wsj.com/finance/banking/the-fed-launched-a-bank-...

beej71 9mo ago
What are some of the problems with eradication of fiat currency?
- paulryanrogers 9mo ago
  Gold is heavy and difficult to verify it's purity and authenticity

JumpinJack_Cash 9mo ago

> > why do you dislike the Fed? It prevents banks from doing their job, so does the existence of t-bills. They hinder the economy by suppressing creativity and ingenuity . Every time a person becomes an investor instead of an inventor the economy and prosperity of a nation falthers. You just don't see it in stats because stats can't measure against hypotheticals but that doesn't mean it isn't true

justin66 9mo ago

> Do you have an alternative to the Fed? The appears to be difficult for a lot of people to like, but the Fed still exists because the people who bitch and moan about the Fed can never voice an alternative that wouldn't immediately destroy everything if it were implemented.

justin66 9mo ago
Oh that's bothersome, and it's too late to edit. Above sentence should begin "The Fed."