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Originally Posted by Jin-Roh
The Federal Reserve Act of 1913 was designed by the big money interests in this country. (Read The Creature From Jekyll Island.) Considering that the Money Trust wrote the damn thing, don't you think they might have designed it to be in their best interest?
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I am definitely open to that possibility. But that isn't what Ezra claimed. He claimed that the Fed admitted to doing this and that, which they haven't. That doesn't mean they didn't actually cause it; they just don't admit to causing it (in the engineering-the-crash sense.)
Quote:
Originally Posted by Jin-Roh
Some of you econ junkies understand a central banking system, have read through its theoretical processes and are convinced it will work, if only they follow the right policies.
In the real world, that power will always, always, always be corrupted. I don't care how good your theoretical system is when its axis is held solely by the trust that men won't behave selfishly.
You might as well deny gravity and walk off the edge of a building.
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I think there is a fundamental misunderstanding of what, at base, the Fed is designed to do. The Fed is not designed to stop all recessions, to stop all crashes, to stop all bubbles, etc. There isn't one central banker that will say the Fed has that power. No organization can be designed that can do that. The point of the Fed is to make the crashes, recessions, depressions less serve and to control the supply of money to help create economic growth and stability.
People have difficulty wrapping their heads around alternative outcomes of situations. For example, if there was no Fed, there is a good chance the recent credit market seizure would have yanked down the banking system something awful. Something like we haven't seen in 80 years.
But the Fed stepped in and prevented that. The free-market wouldn't have prevented it. The government wouldn't have prevented it. People think that because markets are unstable then that means the Fed has failed. That's simply not true. Free-markets, by their nature, will naturally become unstable. The Fed's job is to try to take the edge off of that instability and make it sure it doesn't cause a collapse.
So does the Fed work? Yes, it does. That's a fact. That's why almost every major economist in the world supports the Fed as an institution. You can pull out Thomas Jefferson quotes, or Mises quotes or Ron Paul quotes or whoever you want.
But you need to realize the people you keep quoting have no real current economic credibility whatsoever. And if you want to let individuals without any real economic credibility design an economy, be my guest. But don't do it in the country that I live. I don't feel like waiting in line at a soup kitchen any time soon.