A computer could determine acceptable interest rates. Heck, the market could. Get the clowns of the Federal Reserve out of there, and all of their political ties and bosses on Wall Street go away with them. The corrupted filth of the supposed impartial Fed...riiiight.
It is probably because "Most educated person's" never read Milton Friedman The answers to your questions and the follow-ups will require to write a book(s)... the thing is its already written “Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not– can have far reaching effects is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without and effective check by the body politic — this is the key political argument against any independent central bank… To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers” M. Friedman http://www.econlib.org/library/Columns/y2006/Friedmantranscript.html
I've read Friedman. His ideas on employment theory were important contributions to macroeconomics. You should also know that he was very full of himself and had a terrible understanding of behavioral economics, and human behavior in particular. As one of many examples of his being out of touch with everyday economic reality, he proposed replacing one kind of welfare with another, a negative income tax for the poor, i.e., a gift of taxpayer money. He said, "only two or three percent of the population would fall into that category." He failed to grasp that if conditions were transformed as he proposed, the number of poor would not miraculously shrink to his few percent, because there would be no affect whatsoever on the quality of decisions made by the lower class and poor. When he convinced the Fed that they should control the money supply as their primary tool to corral inflation, and the Fed actually put his ideas into practice, his approach failed badly, and the Fed had to return to setting short terms rates as their main policy tool. On the other hand you should know that, according to some people very informed on monetary policy, the Fed's response to the 2007-8 financial Crisis was Friedman all the way!!! What do you say to THAT! Friedman loved catch phrases. He fired these from the cuff, obviously having not thought them through. He had supreme confidence in his infallibility and brilliance; thus he possessed one of the worst and more dangerous of all human characteristics. There was not a humble bone in his body. His peccadilloes are expressed in his often quoted remarks. Upon the least close examination, some are revealed as pure lunacy that could never work well in practice. Often because they violate the tenets of basic human behavior. As an example, I submit your quote of his above. Now that you have read Friedman, and I hope have not been too much damaged by it, may I suggest you read John Quiggan's "Zombie Economics." I am giving you the benefit of a doubt here in assuming you have actually read Friedman and have not limited your exposure to his popular You Tube interviews. These in no way do his ideas justice. He often appears in such interviews to be a smug, raving lunatic. After you finish Quiggan, you might consider addressing my questions regarding your unusual, to say the least, suggestion of having no CB and no CB monetary policy!!!!!
Central Banks across the world have frequently used quantitative easing (QE) as a means to introduce greater liquidity into the economy. However, QE has raised the risk of moral hazard: investors will take greater risks, knowing that the potential costs will be borne, in whole or in part, by others. Moreover, QE has increased asset prices, which in turn has severely affected the ‘prospective return’ on all assets. I found a video that reveals some interesting facts about how central banks' interference has severely impacted global economies: http://multi-act.com/central-banks-moral-hazard-prospect-global-markets/
See my comments on this video in Post#12 here http://www.elitetrader.com/et/index...o-lead-to-disaster.294519/page-2#post-4189061
Getting ready for NEGATIVE interest rates.....fed is too weak to raise rates. every single time there is a hint that they are going to be raised in a month or two they come up with some excuse how they are data dependent....data dependent haha....yep were believing that one as well, its all lies!!!