The Federal Reserve Is Too Tight....With Banks?

by JASmius

An epic misdiagnosis offered up by two economic quacks from two tell-tale institutions:

Political independence represented an important principle in the 1914 founding of the Federal Reserve.

It isn't an important principle any more, quite obviously.

"The problem [now] is that while the Fed is largely independent of politicians, it is intimately connected, and even answerable, to the financial institutions that it is supposed to regulate," Stephen Haber, a political science professor at Stanford, and Ross Levine, a business professor at the University of California, Berkeley, write in the Wall Street Journal.

"The Fed's founders understood that politicians had to be blocked from using monetary policy to juice the economy before elections."

The Fed is hanging out of Barack Obama's bunghole.  They've been debasing the money supply for the entire six years that The One has been in office, blowing huge bubbles on Wall Street, cooking the unemployment books, masking the true 1930s-esque state of the economy and self-subsidizing the near-$18 trillion on-budget debt with the aforementioned worthless greenbacks.  They, from Janet "Old" Yellen on down, couldn't be any less "politically independent" if they had Obama "swoosh" tattoos (which they do - just in places not usually publicly viewable outside of an episode Dating Naked).

And now these two jagovs from the capital of academic Marxism claim the Fed's problem is that they're too close to banks and financial institutions?  Well, gents, you generally do have to get close to somebody you're intending to strangle - hell, are already strangling.  Otherwise known as "closing on your target".

And Haber & Levine's "solution"?:

"First, the tight links between the Fed and the financial-services industry could be weakened by reconsidering the number of Fed directors appointed by banks. Second, Fed officials should be required to agree to a waiting period — perhaps as long as five years — after leaving the Fed to take a position at a financial-services firm," they suggest.

"Third, there should be greater transparency and oversight of the Fed's role as a financial regulator. Congress should establish mechanisms — including a group of experts with the authority to demand information from the Fed and the capabilities to assess Fed performance. [emphasis added]

Or, in other words, reduce the Fed's political independence even more, and reduce the financial sector's already crippling defenselessness against the Regime.

The Stanford/Berkeley mentality is precisely what brought about the Panic of 2008, devastated the financial sector, and collapsed the economy in the first place, all to the benefit of the party that Messrs. Haber and Levine doubtless support.  Not much a surprise, then, that their prescription is to metastasize the same disease with an even bigger relapse by further empowering the Democrat Financial Logic Bomb's architects.  The coup de grace, as it were.

I guess that'll be O's next illegal/unconstitutional Executive Decree after he gets around to amnestizing the next six million illegals.  The man can only work so hard, you know.