More Uncomfortable Questions for Fed Supporters
It appears that I'm not done yet. Look, nobody wants to go through life fat, dumb, and drunk. Well, almost no one. If I'm wrong about the Fed, there should be some answers to my questions. Last post, I asked four questions for Fed supporters. I received no answers. Read the blog here. The four questions were simple and concerned the following topics:
1. The Cantillon effect of money creation on the middle class.
2. The effect of inflation on fixed incomes.
3. The knowledge problem of central planning.
4. The proper amount of money in an economy.
My next series of uncomfortable questions has to do with Congress. One of the Fed apologist's fallback positions is that monetary policy should be independent of the politicking of Congress. Some take this position even further, citing Congress' incompetence as the reason why control of money should be in the hands of austere, wise, and noble gentlemen with perfectly trimmed beards. Let's tackle the independence from politicking argument first.
Has the Federal Reserve ever acted independently in its monetary decisions before? Nonsense.
"By law, the Fed is independent. The president and Congress can do no more than name its seven governors, including the chairman. The governors share responsibility for monetary policy with presidents of the 12 reserve banks which are supervised by the board; these presidents are appointed by their banks’ boards and confirmed by the governors." - The Economist, Shill Magazine of Statist Propaganda
Would you consider Federal Express to operate independently of government if it's CEO and Regional Vice Presidents were chosen by the President and Congress? How about McDonald's? Walmart? Betty's Trinket Shop on 4th Street?
"By law, Betty's Trinket shop is independent. The President and Congress can do no more than name it's three shift supervisors, its manager, and owner. Those people share responsibility for designing and marketing the trinkets with other employees which are supervised and appointed by the shift supervisors, manager, and owner." - Shill State Magazine
See how independent Betty's Trinket Shop is?! Wow. I feel dumb.
So my first question for Fed supporters is, what evidence do you have that the Fed has maintained its sacred independence during its 96 year existence? Honest Fed apologists admit that the record is rather bleak. Hmm, I wonder why?
The Congress is Stupid Argument
Of all of the apologist arguments, this is my favorite. The "Congress is Stupid" argument is perhaps the most stupid argument an apologist can make. If Congress is so stupid and incompetent, how can you allow these individuals so much latitude in legislating the rest of our lives? Certainly I can think of many important functions that Congress currenly controls which, if they are as stupid as you claim, they should perhaps back off. Healthcare is one example. If Congress is too stupid to understand monetary policy (a concept many simpletons here at CAPS understand quite well), why are they legislating how I will receive health care? Why are my mandatory retirement benefits (Social Security) under their moronic oversight? Why do they determine subsidies, tarrifs, oversee international treaties, etc? If Congress is this stupid, how smart are the other sectors of government? Who are these clows running the transportation grid, utilities, military, etc?
So my next question for Fed supporters is, if Congress is so stupid that it can't handle monetary policy, what the **** are we paying them for?
The Congress is Lazy Argument
Some might object that Congress isn't really dumb, but too lazy/busy-ruining-lives to handle monetary policy. I wonder if these people understand why we have a Congress in the first place.
CONGRESS IS SUPPOSED TO ANSWER TO THE PEOPLE!
Sorry to shout. But it needs to be said. If you keep treating Congress like a day care center, don't be surprised when they never take any responsibility. They act like children because you treat them like children. You never vote them out of office. You don't even make them take responsibility for war. Do you know the Iraq/Afghanistan wars have lasted longer than WWII? Congress isn't responsible for them. They didn't declare war, like they should, so you can't blame them when they go bad. Neat trick, huh? Now think back to 2002, when the intellectuals convinced you that it was Ok for Bush to execute the war without a declaration. Do you feel like a sucker?
So my final question (for now) for Fed supporters is, how can you blame Congress for any failings if you are unwilling to trust them with something as important as monetary policy?
(By the way, in that same Economist article. they admit that the Fed never gets audited. I guess FinancialModeler was wrong again... See comment #4.
"That Congress may not audit the Fed or approve its budget provides an added element of security. But that may now be at risk.")
David in Qatar