It isn’t just libertarians and Austrian economists lambasting the Federal Reserve System.
Democratic Massachusetts Senator Elizabeth Warren and Democratic West Virginia Senator Joe Manchin wrote in the Wall Street Journal on Tuesday that the Fed seems more concerned about protecting Wall Street than the rest of the country. They added that the Fed Board of Governors should be free of Wall Street insiders.
Warren, who has been quite the critic of the United States central bank since being elected, suggested that the best way to do this is for President Obama and his successors to adjust their approach to selecting Fed board governors.
“The five sitting governors have a variety of academic and industry experience, but not one came to the Fed with a meaningful background in overseeing or investigating big banks or any experience distinguishing between the greater risks posed by the biggest banks relative to community banks,” the two senators wrote.
“By nominating people who have a strong track record in these areas and who have a demonstrated commitment to not backing down when they find problems, the administration can show that it is taking the Fed’s supervision problem seriously. Nominating Wall Street insiders for the Board of Governors would send the opposite message.”
Although Warren is just another big government statist, her recommendation is a commendable step to take. With that being said, it wouldn’t necessarily change the way the Fed system would operate because instead of Wall Street insiders it would have Keynesian academics who believe there needs to be a central economic planning authority to micromanage the economy.
Remember, it isn’t so much about who’s leading the Fed or who is involved in its day-to-day operations. It’s the system itself that needs to be reformed and/or abolished because the central bank is the entity that produces all of the booms and busts, the recessions and bubbles, the recessions and depressions. It’s an inflationary nightmare that incites monetary destruction.
Soon after Ben Bernanke stepped down as head of the Fed, he was replaced by Janet Yellen. Now, many realized she was just as much a status quo inflationist as her predecessor, but she wasn’t lambasted as much as the system was.
Here is what Ron Paul said in an interview with the Daily Caller regarding her nomination:
“I put a lot of blame on the problems that we have, the booms and the busts and the unemployment and this recession that we can’t get out of –– it’s all due to the monetary system. And the head of the Federal Reserve just is the symbolic head of a deeply flawed system that should’ve never been created. I think they’re living a pipe dream and it’s going to soon be very apparent what terrible shape our economy is in.”
If the two aforementioned senators wanted real change in the Fed then they would encourage the institution to allow the market to determine interest rates, cease monetizing the debt, stop printing money and expanding the balance sheet, perform a public audit and permit currency competition.
These are real reforms that should be in place, and not who exactly runs the joint. With diminished power then it wouldn’t really matter as to who or what is a part of the Federal Open Market Committee or Board of Governors.
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