Registered: Aug 2010
05-08-12 09:56 AM
Quote from trefoil:
There will always be a central bank in some form, but the form the Fed takes today is antiquated, and extremely (NY Fed anyone?) prone to corruption.
It needs to be made a subsidiary of the FDIC. After 1933, it had no redeeming social utility. It was supposed to act as the reserve that backed up the banks' reserves and make bank runs obsolete, but the Depression wound up showing it to be completely impotent for that purpose. The FDIC did and does a much better job.
As for setting interest rates, in normal times the interbank market, now known as the Fed Funds market, of course, can do that all by itself. In abnormal times, you can let the FDIC sub formerly known as the Fed provide enough money to prevent money markets from seizing up while closing down the insolvent banks. All of them, not just the ones who don't have a member on the board of the NY Fed.
There is no reason for it to exist. It's been obsolete for 80 years.
A strange night...Trefoil is spot on AND I agreed with a Krazykarl post.