Rise of the Super-Fed
Rise of the ‘Super Fed’
July 1st, 2008 by Michael Nystrom
The ostensible purpose of the Federal Reserve, created in 1913, was to maintain price stability and preserve the stability of the financial system itself. Considering that it now takes $21.78 to buy what one dollar would have purchased in 1913 (based on the Minneapolis Fed’s own inflation calculator), and that the global financial system is facing the worst crisis since the Great Depression (a crisis for which the Fed has finally taken responsibility – read the second to last paragraph of the link), it is safe to say that the Fed has failed miserably at its mandate.
In the real world, we’d be seriously considering abolishing the Fed. But in the strange world of the Federal Government, they’re instead looking to expand it into something of a ‘Super Fed,‘ with ‘oversight of all financial markets and firms, including investment banks. It would be responsible for financial market stability and would be expected to spot and control “systemic risks.
This is not a free market.
And as the article concludes,
it is foolish to think that the Fed (or “Super Fed”) can foresee all future problems or prevent future bubbles and busts. It is even foolish to think that the Fed will consistently make correct forecasts of the results of its own actions. After all, everybody, no matter how clever and diligent, no matter how many economists and computers one employs, makes mistakes when it comes to predicting the future.
Please, no additional powers for the Fed. We need to solve our problems, not compound them.