by the Milton Freidman opposed the FED. https://en.wikipedia.org/wiki/Monetarism Monetarism is an economic theory that focuses on the macroeconomic effects of the supply of money and central banking. Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability. This theory draws its roots from two historically antagonistic schools of thought: the hard money policies that dominated monetary thinking in the late 19th century, and the monetary theories of John Maynard Keynes, who, working in the inter-war period during the failure of the restored gold standard, proposed a demand-driven model for money.[4] While Keynes had focused on the stability of a currency’s value, with panics based on an insufficient money supply leading to the use of an alternate currency and collapse of the monetary system, Friedman focused on price stability. The result was summarised in a historical analysis of monetary policy, Monetary History of the United States 1867–1960, which Friedman coauthored with Anna Schwartz. The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch.[citation needed] Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer", and business could anticipate all money supply changes.[5][6] With other monetarists he believed that the active manipulation of the money supply or its growth rate is more likely to destabilise than stabilise the econom
I just posted the article. I didn't write it. I posted it because of the premise that the Fed needs to be "blown up". Whether that is with someone like Cain or other people with real world experience is the only thing I care about.
I agree wholeheartedly with everything in here other than the talk about the Fed killing the housing market. First, that's not right wing garbage, its truth. Easy money has encouraged an inflationary rush into all asset prices, housing being one of them. Housing is not affordable, and this is directly attributed to the Fed's policies.
Friedman was a radical. He was a mixture of very good ideas and horrible ideas. Whereas most of us are mixtures of pretty good ideas and some not so good. Friedman was at the extremes. When the Fed tried his ideas about controlling inflation via the money supply, the experiment failed mightily! (Volcker's time) He had influence over Reaganomics which we have yet to recover from. Yet I can't entirely dismiss his thinking as totally nuts, because in fact we have gone way overboard with regulatory capture, something that would have been entirely held in check had Friedman's ideas persevered. As a young man he was greatly influenced by Hayek and attended the Mount Pelerin Society Meetings. The irony is that Hayek moderated his views as he got older, and recognized and admitted where he had gone wrong. Whereas Friedman, while he changed his views as he matured, never fully recognized, or was too vain to acknowledge, where he had gone badly wrong. My defense of the Fed in these Forums is only a defense against the ridiculous claims of those who know nothing of Central Banking and its critical role in creating a stable banking and monetary environment for business and society. But my allegiance and respect is not blind allegiance. The Fed has made serious mistakes from time to time. On balance however, it is one of the best run Federal agencies, and the model to which the rest of the world aspires..
The fact that the Fed's #1 cheerleader on this site, the so-called Libertarian that supported the bailout of AIG and GM, etc, thinks I am misguided makes me feel even more certain of my position.
Read the context of the reply to UsualName. The Federal Reserve killed the housing market (for millenials). They did this by inflating asset prices through easy money policy until housing prices were way beyond the level millenials can afford. They didn't kill the housing market, they inflated it beyond affordability. Of course, eventually when everything comes crashing down like it did before, it will be because they did it. Remember Bernanke telling everyone to go out and get an adjustable rate mortgage? Remember when Bernanke said there would be no housing crisis? Good times.