If there were a national referendum to abolish the FED what would the average voter need to know to vote yes or no?
Won’t get rid of taxation because under the FED system government debt (really taxation) is going to be the initial stimulus in most growth even if keyed to good things like infrastructure spending.
To big to fail is a problem if we are going to have the advantages of banking competition and private banks.
Although people claim the FED fiat currency fractional reserve system is zero sum and does not create the money needed to pay debt except through more debt, loans even at the very bottom of the money multiplier cycle are adding more capital than they require for repayment. This does create inflationary pressure on everyone but it also keeps people interacting addressing needs and structures a part of the economy with contracts which makes things more predictable and stable. Further, wanting a shelter from inflation means older people will invest nest eggs in T Bills to keep the cycle going and provide credit for younger people to realize their dreams and address physical depreciation of capital.
The profit the Fed makes stays with banks that must be headquartered in the US and most of its rebated back to the Federal government. The government is in control as public officials appoint the headships and appoint a minority of the members on the lower boards. These banks apparently aren’t able to take much off shore and the US still holds most of its T-bills. Yes they have immense power to pick winners and losers but short of having more banks how do we deny any bank that power?
We could eliminate the profit of the private banking elements (and I’ve heard save a trillion over the last century) but assuming competition also lose the efficiency and care that a competitive system brings.
From what I can tell the hole again is with sponsorship and it leading to “too big to fail” (loss of efficiency and more risk even in comparison with public banking) also cronyism in who gets loans and access to capital in successive Fed actions (apparently particularly painful.)
I don’t see the problem unless its sponsorship, and I think that might be to blame in part for the Fed’s long history of recessions and possibly more regressive use of inflation. I think its sponsorship effects behind the student loan usury- its sponsored politicians blocking it. It turns out currency competition also wasn’t such a good thing as it creates unnecessary friction and cost. Think ATM fee. The FED got rid of this, although it created the larger currency wars with the dollar. I think the main things is the dream of getting rid of Tax isn’t possible with the Fed and fiat currency.
Capitalism at its base is meant to be a system designed to encourage risk and to socialize the cost of smart risks. Once again this can work as long as sponsorship doesn’t rig the risk taking or blind it. Wall St. can work too if people invest in individual stocks one at a time- its mutual funds that turn it into a ponzi scheme. Executive options and sponosored taxes that pay firms to essentially self liquidate (thieving pensions and calling that profit through cost savings) also destroy things. Credit Default swaps etc., same problem with mutual funds. Not so necessary to bundle in the first place if we have anti trust, monopoly/oligopoly protections and don’t have “too big to fail.”
I once heard Alan Greenspan state that a key part of his job was making sure the average person didn’t get too comfortable. It thought at the time this was the purest expression of evil. But in light of FED type thinking the interest rate would be like a computer clock cycle for the economy. Turn it up too high and the economy overheats- literally physically and psychological people get exhausted and can’t keep up. Turn it down too much and you get depreciation and literal depression as people find themselves in a trash heap.