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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.
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Amen.
Feature not Bug
Every argument every made to keep the fed “independent” from democracy is the same argument used by fascists, monarchist, and dictators against having elections in general.
Brilliant minds …
Independence in almost every venue usually means free from the influence of the policy makers’ potential victims.
Excellent post Jon, but it goes beyond the Fed. There should be a requirement not just for the Fed, but for Congress to be fully representative of the demographics of our society, race, gender, income, you name it, those who would represent our interests ought to actually be representative of us.
I’m amazed that it is not only tolerated but treated as a good thing that one important aspect of our government is outsourced to non-democratic powers. Would anyone tolerate if I said all trade policy should be independent of the unruly masses and a collection of only large milk producers and lumber yards will decided trade matters?
don’t think there is much the fed can do about bringing unemployment down (although they like to pretend otherwise) other than to support fiscal policy and we don’t have any of that.
still i think the fed should be brought under control of the treasury.
amen.
and owned by the banksters to boot.
The unemployed also wouldn’t fork over an assload of money to Wall Street banksters only to have it end up going to bonuses and the bottom lines of the banks.
The unemployed might also raise interest rates a bit so retired people might have a bit more income (if they’ve been fortunate to save a couple bucks), besides livin’ large on social security.
ya they own the place.
I read this story and I just shrug now days. just another story of plutocracy in action.
then I read the linked story to rollingstones about the guaranteed 220 million loans to banksters’ wives, who have no need for it and have no finance experience. and then I threw up a little in my mouth.
yup. they own the place.
5 seats, huh? There are a lot of people who need a seat at the FOMC table
- 1 unemployed
- 1 under-employed
- 1 public school teacher
- 1 small business owner
- 1 inventor entrepreneur
I went back to re-read Matt Taibbi’s “Griftopia” in trying to understand how Bernanke could channel Greenspan in ignoring unemployment, fearing inflation, while keeping the discount window open and fueling commodity speculation. It’s one thing to read it in the run-up to the renewal of the Bush tax cuts by Obama (I recall throwing the book behind the sofa after the vote and letting the dust bunnies accumulate. It was obvious the fix had been in for months based upon conversations I’d had with Silicon Valley venture capitalists).
I have yet to see any rational defense by Bernanke, or for that matter, any strong words issued by Dems about Bernanke’s support for speculation.
We need only look at the absurdity of oil market to see speculation fueled by the Fed. I recently sat in on a chemical process presentation by a petroleum refinery engineer who commented in passing about the steep drop in US consumption of gas since 2008. The steepest drop since Great Depression. He acknowledged that consumption was still low, and this was when gas was still $3.65.
The FED is the private bank Jefferson warned US of! Now all the other little banks and the corporate interests, like parasites feed off the remains of Americans and their families. Make no mistake. This is reality. Drug addicts, like corporate scum and their addiction to easy money, pushing paper, destroying lives and extracting wealth using the color of law are just like fucking slaveowners? Leveraged servitude to oil whores and financial institutions??????????????????????????????????????????????
What would Jefferson say from his grave? I warned you! I told you! I’m right. Protect the corporate slave owners who continue to buy government and law, using their corporate shell to avoid accountability. Time for a little top kill! BP style?
With all due respect, progressives, and of course I am one, putting five unemployed folks on the Fed is peepeedicking.
For a real Fed solution that can work, a la Dennis Kucinich’s monetary reform proposal, have a look at this posting yesterday from Stephen Zarlenga of the American Monetary Institute on HUFFPO.
http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html
The Fed would no longer be responsible for helping private bankers create the nation’s money, we resort to the new Money System Common.
The government creates the money.
The Fed actually becomes part of the government.
See Kucinich’s groundbreaking proposal here:
http://kucinich.house.gov/UploadedFiles/NEED_ACT.pdf
Time for American progressives to remember that there used to be Greenback – Progressive parties, from where MANY progressive ideas emerged.
The Money System Common. Like a prairie fire.
Just saying.
Jefferson was a slaveholder and he was also in debt to said banks till he died. Nevertheless, he was right about them, even if he was a hypocrite.
It is a joke to point out the absurdity of the current system. Not actually my plan.