Redefining Class: Finance vs. Everyone Else

[niemivh]

This is an older idea I've had kicking around for a while and listening to Guns and Butter http://www.kpfa.org/archive/id/71485 has rekindled it.

Trying to salvage our political system we need to turn the dynamic of class struggle (which is always with us contrary to what the naive members of this forum think) in the paradigm of Finance vs. The People (rich, poor, middle class, business owners, everyone).

To do this we promote ideas that reorganize the political spectrum along those lines:

1)  A Tobin Tax
2)  A national infrastructure & research program
3)  Shifting tax burdens unto Wall St.
4) End the Fed by nationalizing it

And perhaps avoid the oft-used "left-wing" call for higher income taxes for the time being.  Those arguments have very little traction where I think the general populace would be much more open to the idea of a Tobin Tax or ending the Fed.

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[GideonGono]

4) End the Fed by nationalizing it

This is meaningless

[nafai]

Well, it's not entirely meaningless.

It's true that the Federal Reserve System is owned by the member banks (which are private) who hold special privileged shares in the Fed that they aren't allowed to sell.  The Fed isn't technically private but it isn't technically public either.  It's....  well it's in a class all its own really.  See the book "The Creature From Jekyll Island"

It's also true that the Constitution gives Congress the power to coin money, regulate commerce, etc etc.  The US Treasury used to handle the money supply as well as monetary policy.  Congress could reclaim the power the Fed has if it wanted, all it would have to do is rescind the Federal Reserve Act.

I'm not sure the consequences would be positive, though.  By that I mean, I'm not sure the Congress (or the Treasury) would be any better at managing monetary policy than the Fed is. I'd rather have the market manage monetary policy than any human beings.  But that's not going to happen.  Our system is really dependent on artificially low interest at this point.  If the market set the interest rate, our unemployment situation would be a lot worse than it is because the artificial stimulus wouldn't be there. We'd probably be in the middle of another Great Depression.  Then again, that might not be a "bad thing" -- markets need to correct in order to remove the imbalances and malinvestment.  A market-set interest rate and the subsequent economic impact would be severe, but it would probably be over quickly and we could move on with rebuilding the economy.  And the people with their hands caught in the cookie jar would learn a valuable lesson.

Already, the bad judgment and irresponsibility that got us where we are is starting to return. "easy money" is coming back as part of the "easy" monetary policy the Fed is foisting on us, which means no one was really punished for the bad decisions they made, like the banks giving loans to people who couldn't afford the houses, the people taking on all that debt, etc etc.  The banks get bailed out, the people get bailed out, but like a kid with an overindulgent parent nobody is learning fiscal responsibility or personal responsibility.

It is a great experiment in moral hazard, and although it is intellectually quite interesting the prospects of how it's going to end up turning out are pretty scary, if you ask me.  Something's gotta give, I don't see how our current course is sustainable.  The fiscal deficit, the trade deficit, the personal debt of all the Americans, the quantitative easing (read: devaluation) of the currency, etc etc.

[GideonGono]

4) End the Fed by nationalizing it

This is meaningless

I'm not sure the consequences would be positive, though.  By that I mean, I'm not sure the Congress (or the Treasury) would be any better at managing monetary policy than the Fed is.

Already, the bad judgment and irresponsibility that got us where we are is starting to return. "easy money" is coming back as part of the "easy" monetary policy the Fed is foisting on us, which means no one was really punished for the bad decisions they made, like the banks giving loans to people who couldn't afford the houses, the people taking on all that debt, etc etc.  The banks get bailed out, the people get bailed out, but like a kid with an overindulgent parent nobody is learning fiscal responsibility or personal responsibility.

This is why said statement is meaningless. None of this behavior is mutually exclusive to Private, Semi-private or Public Central Banks. The problem is Central Banking in and of itself. The Reserve Bank of Zimbabwe is fully in state control yet that didn't stop them from raping the country.

[GideonGono]

This is an older idea I've had kicking around for a while and listening to Guns and Butter http://www.kpfa.org/archive/id/71485 has rekindled it.

We may disagree on ideology but it's refreshing to see that at least some  people realize the sham that is the political system. Very interesting analysis as well. I'm gonna put that guys book on my to-read list.

[niemivh]

4) End the Fed by nationalizing it

This is meaningless

I'm not sure the consequences would be positive, though.  By that I mean, I'm not sure the Congress (or the Treasury) would be any better at managing monetary policy than the Fed is.

Already, the bad judgment and irresponsibility that got us where we are is starting to return. "easy money" is coming back as part of the "easy" monetary policy the Fed is foisting on us, which means no one was really punished for the bad decisions they made, like the banks giving loans to people who couldn't afford the houses, the people taking on all that debt, etc etc.  The banks get bailed out, the people get bailed out, but like a kid with an overindulgent parent nobody is learning fiscal responsibility or personal responsibility.

This is why said statement is meaningless. None of this behavior is mutually exclusive to Private, Semi-private or Public Central Banks. The problem is Central Banking in and of itself. The Reserve Bank of Zimbabwe is fully in state control yet that didn't stop them from raping the country.

What is your alternative plan to central banking?  Please explain in detail how it works.