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Posts Tagged ‘the Federal Reserve’

The Credibility of the Federal Reserve

Posted by Larry Doyle on November 16th, 2010 7:12 AM |

The Federal Reserve is arguably the most powerful institution in the world. Additionally, it is one of the least understood.

In the midst of the ongoing financial experiment known as quantitative easing are we supposed to blindly trust the abilities of our central bankers within the Fed, especially Fed chair Ben Bernanke? I know of no institution, especially with the size and scope of the Fed, that has so much power in one man’s hands and simultaneously so little transparency and accountability.

Yet, despite that lack of transparency and accountability, at this very point in time our nation’s future largely rests in the hands of one Ben Bernanke and his control of the Federal Reserve. Should we have reason for concern? We should. (more…)

Audit the Fed or Washington Rope-a-Dope

Posted by Larry Doyle on January 13th, 2010 8:47 AM |

The American public wants answers.

The Washington establishment, primarily in the persons of Ben Bernanke and Tim Geithner, clearly feel America can’t handle the truth. What truth? The depth of economic despair and problems primarily embedded in our nation’s financial system. What institution has tried to fill the hole in our financial system? The Federal Reserve.

Given the shadowy operations of the private institution that is our central bank, Americans are justifiably nervous and concerned as to what lurks behind the shadows inside the Federal Reserve. To this end, with the leadership of Ron Paul (R-TX) the calls to ‘audit the Fed’ are growing ever stronger. (more…)

Don’t Call The Fed Independent

Posted by Larry Doyle on June 17th, 2009 3:04 PM |

An independent Federal Reserve Bank has been one of the cornerstones of free market capitalism. In my opinion, those days are over. Politicians, central bankers, and financial titans would certainly dispute this statement; the simple fact of the matter is the Fed has not been an independent entity for a long time. That lack of independence is now further exposed. President Obama’s plan to designate the Fed as the uber-regulator for our financial system solidifies it.

The need for an independent central bank has always been viewed as critical to the workings of our markets. The Federal Reserve itself promotes this independence:

Who owns the Federal Reserve?

The Federal Reserve System is not “owned” by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as “independent within the government.”

The market has traditionally viewed the workings of the Fed as being above the fray. In years past, that independence was critiqued as being almost secretive. The Fed heard those criticisms and has tried to be more transparent while still independent.

In my opinion, the Fed can no longer lay claim to being an independent entity. In fact, the more I see and hear of the Fed recently, it has not been an independent entity for a protracted period. When did the Fed begin to lose its independence? Under Alan Greenspan during the late ’90s, if not before.

While Greenspan was the chair of the Fed, he was enormously well respected. In hindsight, he was not near the star we thought and history will not treat him kindly.

Greenspan politicized the Fed more than we ever knew. He curried favor with the Clinton administration and was heavily involved in keeping the derivatives market unregulated. Until now. (more…)

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