Imagine if five of the 12 voting members of the Federal Open Market Committee were selected exclusively by unemployed Americans, instead of the current system of having them chosen by rich bank executives.

This could be done. Currently five of the voting members on the FOMC, which sets monetary policy, are presidents of one of the 12 regional Federal Reserve Banks. These presidents are chosen solely by the private banks. There is no reason we can’t have quasi-private regional organizations of only the unemployment and underemployed–instead of Federal Reserve Banks–and just let these people choose five voting members for the FOMC.

If the unemployed had a say in the FOMC, our monetary policy would be radically different

We would definitely not have Ben Bernanke basically saying the Fed is going to ignore the full employment part of his mandate to instead mainly worry about inflation. There is probably no way the Fed would randomly set a new one percent inflation target with 8.8 percent official unemployment.

It is also likely with the unemployed having a say in how the Fed is run that maybe millions of under-qualified low-income Americans would have gotten modest special no-risk, no-interest loans from the Fed window during the crisis. Instead of how it currently works, where the banks and a few unqualified wives of rich bankers get massive special loans.

This thought experiment shows that monetary policy would be radically different, and so proves that the structure of the Fed is inherently flawed

I would clearly prefer a FOMC that put the concerns of the millions of unemployed and underemployed over the rest of the country, as opposed the our current system that makes the concerns of the large financial corporations paramount. Better yet would be a system that doesn’t radically favor the concerns of one group over everyone else, exercised through this apparently radical idea of publicly accountable, representative democracy.

The Fed’s prized “independence” from politics just means it is that much more subservient to the banks. If there is anything America should have learned from this financial crisis, it is that we need to totally eliminate any private bank control from the Fed and fully put this critical government function under the control of the government. It is not any group of people that is the problem, the entire structure of the system is a stacked deck.