Blinder on Democratizing the FED

[James Devine <jdevine@xxxxxxxxxxxxxxx>]

Bill Lear posts the following: In FOREIGN AFFAIRS > you will find Alan
Blinder (former Vice Chairman of the FED) arguing, quite seriously, that
more of government should be shifted to a "politics-free zone", safe from
"partisan politicking", as has been done with "independent agencies like
the Federal Reserve" (this is from the blurb in the table of contents).<

This is the crap that the econ. textbooks and the Krugmans of the world
hand us teachers every day (and people like the UK's PM take it seriously,
moving to make the B of E more like the FRB). Somehow the Fed is
nonpolitical? independent? Gadzooks!

Methinks that the Fed should be treated in theorizing as nothing but a
government-sponsored and -protected banking cartel. It responds to the
political pressures from its members, the banks, and its allies on Wall
Street. Epstein and Ferguson showed convincingly that the banks
successfully opposed expansionary open-market operations during the early
1930s, making the Depression worse. Since then, as Tom Dickens and others
have shown in a lot of papers, the Fed has consistently acted as an
"executive committee" of the financial bourgeoisie.

How do we control this beast?



Jim Devine   jdevine@xxxxxxxxxxxxxxx
http://clawww.lmu.edu/1997F/ECON/jdevine.html
"A society is rich when material goods, including capital, are cheap, and
human beings dear."  -- R.H. Tawney.