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Sen. Sanders Gathers Economists for his Planned Fed Overhaul Bill
Sen. Bernie Sanders (I-Vt.) on Thursday unveiled a dozen economists he has tapped to help draft a plan to overhaul the Federal Reserve he says is "riddled" with conflicts of interest, among other problems.
Headlining the group are Joseph Stiglitz, a Nobel Prize winner and former top adviser to President Clinton, and Jeffrey Sachs, director of the Earth Institute and special adviser to United Nations Secretary General Ban Ki-Moon. Headlining the group are Joseph Stiglitz, a Nobel Prize winner and former top adviser to President Clinton, and Jeffrey Sachs, director of the Earth Institute and special adviser to United Nations Secretary General Ban Ki-moon.
Other economists agreeing to offer their recommendations include Lawrence Mischel, the president of the Economic Policy Institute; Nomi Prins, a former managing director at Goldman Sachs and Bear Stearns; and Dean Baker, co-director of the Center for Economic and Policy Research.
The outspoken senator announced Wednesday he would be consulting economists as he put together legislation to overhaul the Fed, which he has long complained is opaque and overly beholden to the financial industry. He has been particularly critical of the Fed's actions during and after the financial crisis, as it loaned out trillions to financial institutions — including some whose top executives also sit on boards of Federal Reserve banks.
While the economists have agreed to offer their thoughts to Sanders, it is not clear exactly how those recommendations will come back, according to Sanders's office. They may come together for a meeting, or simply each offer a list of recommendations.
Sanders announced he was tapping economists for advice on reforming the Fed after a study from the Government Accountability Office said that the Federal Reserve banks should be more transparent about directors who have ties to the financial sector.
Rep. Dennis Kucinich (D-Ohio), another left-leaning critic of the Fed, got in on the action Thursday, using the report to criticize the central bank.
"The Federal Reserve operates with brazen disregard for the best interests of the American economy and with very serious conflicts of interest,” he said.
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Show AllThe Fed isn't a bank as much as it is a system of exploitation. It embodies the private control of the nation's currency and credit systems, obviously for private gain. All such "central banks" should be eliminated, and especially the BIS, the central bankers' central bank. Read Stephen Lendman's overview: http://www.globalresearch.ca/index.php?context=va&aid=2712
Ther is a lot of incorrect stuff in Lendmans article particularly the stuff about inflation - which is hardly an "unfair tax". He is falling for libertarian propaganda. A moderate amount of inflation os good - a combined cause, and effect, of improved workers bargaining power for wages, and lowers the real interst rate, on the worker's debts (real interest = nominal interest - inflation) Indeed, the most harmful policies of the Fed were its tight money, so-called anti-inflation, but actually anti-worker, policies through the 1990s. Recall Greenspan's panicked raising of interst rates every time the unemployment dipped 0.1%.
When you hear "anti-inflation" coming from a capitalist, translate it to "anti-worker".
A little bit of "good inflation" has been a contributing factor to the lowering of real wages over the last couple of decades. If one is on a fixed income, or if one's income is not rising at or above the rate of inflation, please explain how "a moderate amount of inflation is good".
And, on a side note, somewhat off topic, did you know that the government is also spending, not just social security contributions, but also your FERS and/or CSRS contributions for more war, so as to make the federal budget look less in the red that it really is? How do you feel about that? Do you think a moderate amount of that sort of spending is good, too?
"If one is on a fixed income, or if one's income is not rising at or above the rate of inflation, please explain how "a moderate amount of inflation is good"
Hm, could it be that wages have a price and inflation could be increasing because wages are increasing, which means people will have more money to buy things? If there is no inflation it would be impossible for people, businesses and government to pay back loans. See, there is this thing called interest. In the aggregate if people have to pay interest for loans and the like the only way (in the aggregate) they can pay back what they owe is for them to make more than they owe and have to pay back in interest. Explain how that could happen in the absence of inflation. Even Milton freaking Friedman said that SOME inflation is good, he just thought it should be pretty low.
"And, on a side note, somewhat off topic, did you know that the government is also spending, not just social security contributions, but also your FERS and/or CSRS contributions for more war, so as to make the federal budget look less in the red that it really is? How do you feel about that? Do you think a moderate amount of that sort of spending is good, too? "
Do you have any idea why? Why do we not have a pay as you go pension system like most Western countries? Why does the SS trust fund run a surplus? If we didn't have people save for retirement in advance and if current workers paid for older people's retirement, again like in most other developed countries, we would have to raise taxes on the wealthy and corporations. It is the establishment's unwillingness to do this that makes this all possible. It is much better to tax people MORE than SS needs, to run a surplus and then have the government draw on that surplus, than it is to raise taxes on the rich. What would you like Mr. Hayek, for SS to be cut or privatized? Or would you prefer for taxes to be raised? Would you like a pay as you go system instead? What is your solution?
Regarding the second part, you know what I like? I like a group of people who want to cut back spending at a time when private demand and spending is collapsing. It is failing the world over, the usually pro-Austerity IMF is even warning against it (while calling FOR it in some countries of course) and austerity is destroying economies from Greece to Britain to Latvia. These policies have failed for centuries. Ricardo called for Austerity in England after the war with France and it was noted how horrible a failure it was then. If you want to actually educate yourself on the real world, read Steve Keen. He points out that the private. household, debt to GDP ratio is over 1.5 times higher than it was during the Great Depression. Explain how cutting back spending when demand and spending on the real economy is collapsing, when people are massively in debt and are de-leveraging, is going to help the economy. Even IF you could argue that the nominal debt would decrease the economy would, we know this for sure, shrink even more (which is what we see elsewhere now by the way), which means the debt to GDP ratio would get even worse. A debt write down (ie a loss for the banks) and growth in the real economy at the expense of the over bloated financial economy is what is needed.
Oh, in case you didn't know: the vast, vast majority of the inflation is the result of PRIVATE interests creating money on computer screens. Doesn't matter if you believe in Modern Monetary Theory or the traditional fractional reserve banking tale, private interests create the vast majority of the inflation and always have. You libertarians (I presume, maybe I am wrong) have nothing to say outside of arguing whether or not the government should take part at all. If you in the traditional tale of fractional reserve banking then government shouldn't put any money into the system, like the horrible Free Banking Era, we should leave that to private interest. If it didn't then instead of private interests creating 95% of all inflation they'd be responsible for 100% of it. If you believe in MMT, when the private interests stop creating money out of thin air (which they do in fractional reserve banking as well) the government shouldn't step in with more money when banks stop creating money out of thin air. That too should be left to the fictitious "free market".
It is not simply "the Fed" - it is the Federal Reserve System. It's the Fed +fractional reserve lending +interest. Our money is created by the Fed lending money it creates out of thin air to the government, at interest; the banks - starting with this initial money injected into the system by the government, create money out of thin air through fractional reserve lending, at interest.
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The point is, all money in the system is created AS DEBT - the system literally creates infinite debt that can never ever be repaid. The dollar has lost 96 percent of its purchasing power since the Fed was created - created by bankers, for their benefit (if the Fed is sssoo great, why did they have to craft the legislation in secret and push it through Congress with lies? And if it is supposed to "stabilize the system", why did the Great Depression occur 16 years later?).
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The point is to get rid of the middle man - private bank cartel - and the government can create its own non-debt money. The government could then increase the money supply by, say, 2 to 3 percent per year to keep up with growth, but, with climate change and Peak Oil/Peak Everything, we need to go beyond the idea of growth and move toward a Steady-State economy.
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The present system leads to infinite debt and thus economic catastrophe one way or the other, so any temporary "gains" by individuals are illusionary. Inflation is indeed a hidden tax that robs people of their labor. Every time a bank creates money via fractional reserve lending, it is expanding the money supply, creating money as debt at interest, which absolutely requires the creation of more money-as- debt to pay the interest - ad infinitum. Every time more money is created, it dilutes the value of already existing money.
It is a system of debt slavery. You really ought to watch Zeitgeist: Addendum.
As I have said before, so many on this board are sssooo obsessed with demonizing libertarians that they cant bring themselves to admit that the Libs are correct in seeing the problem, they just dont have the true solution. The present system is immoral, and that should be the bottom line.
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Where do you think all this speculative money to create bubbles comes from? Our entire economy is a pyramid of debt. It is unsustainable. Those who control the money supply control us, and as such, by definition, we dont live in a democratic republic. Why are you opposed to the American people freeing themselves from slavery?
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Excellent post! I wholeheartedly concur.
jskinner: I agree with you that the not-federal Federal Reserve should be eliminated -- not "overhauled." Sanders is a fraud and a shill for the powers that be. Check out this article about his character by a professor emeritus of economics who calls him Senator Bait and Switch: http://alethonews.wordpress.com/2011/09/30/the-myth-of-bernie-sanders/
Sanders is the only true elected official that is a champion for the people. I hope he decides to run for president although he may not win he will be the senator who can bring a real challenge against this duopoloy of a political system we currently have.
pablo30,
Do not misunderstand me. I have deep respect for Sen. Bernie Sanders. But, why pick a pack of wolves (....top adviser to President Clinton, a former managing director at Goldman Sachs and Bear Stearns and blah, blah...) to overhaul the hen house?
Try reading Nomi Prins (Goldman Sachs) book, It Takes a Pillage, where she dissects the Wall Street scandal. And as for Stiglitz (Clinton advisor) he has been on top of the scandal from the beginning, before it began, warning against repealing Glass Steagall. No, this is a good group. They're economists and insiders on the right side.
"Insiders" have gotten us to where we are today. It is time to discard ALL of the old guard, even the supposedly "good ones". Their time is done. New leaders, of the people and for the people, must arise or we are done for.
Nomi is what could be called a "whistle-blower." Her "inside" knowledge of how the game is played is invaluable. She is trying to help we, the people. Sachs - yeah, perhaps questionable, but he too has repented of his sins, so to speak, and is now trying to do the right thing. Sanders is probably using name-recognized heavy weights with credentials to make his case that much more forceful. I know, such necessities kinda suck, but all of this is a start in the right direction
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Prins is the ONLY one on that list worth considering because of her inside knowledge, but she should not be the chairman or have the deciding vote on committee recommendations.
The problem with these heavyweights may be that they are too well recognized and have already been dismissed by Wall Street and, I presume, the administration. And that they may be seen by the financial establishment as representative of the "loony left" Along with Sanders, who's a socialist. Or sympathizer. But they and Robert Reich and the like would be good at putting down the basic reforms. But I suspect they have already been dismissed before even starting.......
Sachs pushed IMF austerity programs didn't he? I think, though, he's probably good on Wall Street. Hell, all you have to do to be good on that subject is to see and be revolted by the giant scam they pulled. And cut through the financial BS jargon to make financial institutions work fairly and honestly. If possible.
Try reading these people. And learning a little about them. You've got them all wrong. Either you trust Sanders or you don't. Why would he, in the interest of reforming Wall Street, go to the same old crowd? Prin and Nobel Prize winning Stigllitz are on the right side. Check it out first before damning them.
I don't know how but FDR used Joe Kennedy to reform Wall Street.
"......overhaul the Federal Reserve he says is "riddled" with conflicts of interest, among other problems."
........While you're at it, Senator, an overhaul of Congressional Ethics would be in order as well; specifically with regard to "insider trading" which inevitably creates conflicts of interest when self-serving lawmakers are voting on bills where the end result would effect their financial portfolios........This insider trading benefit increases the problems exponentially. .....As Thomas Jefferson once said, "I have not observed men's honesty to increase with their riches".
I am not to keen on the line-up. How can we trust a former GoldmanSachs' employee or a Clinton advisor or a policy shill? If it wasn't for J Sachs -irony...I wouldn't even trust Bernie's choices. It's certainly obvious that the fed must be reworked as well as the banker's bank that has ruined countries...see Confessions of an Economic Hitman
Try reading Nomi Prins (Goldman Sachs) book, It Takes a Pillage, where she dissects the Wall Street scandal. And as for Stiglitz (Clinton advisor) he has been on top of the scandal from the beginning, before it began, warning against repealing Glass Steagall. No, this is a good group. They're economists and insiders on the right side.
"Insiders" have gotten us to where we are today. It is time to discard ALL of the old guard, even the supposedly "good ones". Their time is done. New leaders, of the people and for the people, must arise or we are done for.
Try reading these people. And learning a little about them. You've got them all wrong. Either you trust Sanders or you don't. Why would he, in the interest of reforming Wall Street, go to the same old crowd? Prin and Nobel Prize winning Stigllitz are on the right side. Check it out first before damning them.
(I see we're repeating ourselves.)
Just having Sachs on there give me the warm fuzzies. During his tenure as editor of Scientific American magazine, he wrote countless rational pieces on economic policy. I don't see how we could go wrong with Stitlitz either, that he was an adviser to Clinton doesn't make him toxic, no matter what Rush says.
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Sachs is no good. He's had his hand in the neoliberal project from the beginning.
"An economist is someone who knows the price of everything and the value of nothing. "
Q:Why did God create economists ?
A:In order to make weather forecasters look good.
Q: Why has astrology been invented? A: So that economy could be an accurate science.
Q: Why do Economists provide estimates of inflation to the nearest tenth of a percent?
A: To prove they have a sense of humour.
Grow your own dope -- plant an economist.
Economics is extremely useful as a form of employment for economists.
The First Law of Economists: For every economist, there exists an equal and opposite economist.
The Second Law of Economists: They're both wrong.
We have 2 classes of forecasters: Those who don't know . . . and those who don't know they don't know.
- John Kenneth Galbraith
An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
- Laurence J. Peter
If all economists were laid end to end they would not reach a conclusion.
- George Bernard Shaw
If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.
- Winston Churchill
There is also a joke about the last Mayday parade in the Soviet Union. After the tanks and the troops and the planes and the missiles rolled by there came ten men dressed in black.
"Are they Spies?" Asked Gorby?
"They are economists," replies the KGB director, "imagine the havoc they will wreak when we set them loose on the Americans"
Kudos for my first laugh of the morning.
Here's a challenge for my friend, Bernie. How about a 99% tax on ALL income above $1,000,000 - all income, earned and that from investment...
Would the ruling crass agree to that?
ezeflyer...Thanks, no the ruling class would not agree. The BIG question is, how many of the mid and lower class would push for this??? I still see too much idolization and infatuation of the ruling class by the rest of us....the "I-want-to-be-a-millionaire-syndrome". How can we make being a milionaire as disrespected as being a smoker? I remember when everybody smoked every where. Then, in a relatively brief period of time, smoking was no longer socially acceptable. Being a millionaire should be disrespected - a sign of self absorption and greed. Having a second home while there are homeless should be frowned upon and maybe made illegal.
Millions of homeless. Millions of empty foreclosed homes. Makes sense to me.
I hope you're right, but as far as I know being a millionaire doesn't cause cancer.
ezeflyer...Ahhh, being a millionaire can cause others to die of cancer.
What We Want
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http://www.gpln.com/whatwewant.htm
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See item 22
Mark, I like it. One thing I would change on #22 is this: "have it owned by the U.S. Treasury after the current Secretary of Treasury is removed from office and replaced with someone who never worked for the Federal Reserve or any gigantic too-big-to-fail bank.
I have heard talk about the Federal Reserve over and over. So many I have heard have stated that the Federal Reserve is not a federal institution it is private! Is that true? I have heard the Federal Reserve is no more federal than Federal Express. Ok, if that is true, then why does everyone, including those who say these things, call it "the" Federal Reserve. If it's truly not an institution of the federal government, we should call it Federal Reserve, not the Federal Reserve. We don't call Goldman Sachs the Goldman Sachs, do we? So why do we call it the Federal Reserve? It's a grammar mistake, pure and simple.
"JAY: Well, let's back up a step. So does President D'Arista get rid of all the banking appointees and make this a public institution with only public appointments?
D'ARISTA: In one way or another, yes, absolutely.
JAY: So you end the Fed as we know it, and you create a central bank, which essentially is all about public appointments. So you get rid of these regional banks?
D'ARISTA: Yes, either get rid of the regional banks or reduce the number, 'cause some of them, like Kansas City and--you know, some of them are just too close to one another.
JAY: But even then, according to your model, they wouldn't be bank appointments anymore; they would be public appointments.
D'ARISTA: That's right. And they would have committees that would reflect the business interests or the banking interests of the area. They would meet with them, and [inaudible] get their views, but they would have no voice.
JAY: So what do you make of Bernanke's argument, and other chairs of the Fed, I'm sure, that number one, this would make the Fed too subject to political whim? Politicians that are trying to curry favor will develop policy that gets them reelected, not necessarily what's good for the economy, even the alliance that developed between people like Ron Paul and some of the left of the Democratic Party to audit the Fed. And Bernanke doesn't even think that the Fed should be audited because it somehow restricts their activities. So your proposal would sort of fly in the face of what Bernanke's talking about.
D'ARISTA: Absolutely. And for this reason. The Fed has absolutely no constitutional reason to exist except with the approval of the US Congress. The Constitution says that the Congress shall coin money and regulate its value. The Congress delegated that authority to the Federal Reserve, created an agency that is an agency of the Congress, not of the administration. The problem has been that the Congress has not exercised oversight, and it should. It--and so we're talking about operations, not who appoints."
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5883
The "independence" of the central bank is a direct attack on democracy. The people running the damn Fed aren't elected, they are appointed (a good number by the banks directly). The very idea that the institution creating money shouldn't enact policies that line up with popular opinion is as anti-democratic as you can get. If we can't control monetary policy we can't control much of anything else. Healthcare, education, infrastructure, environmental improvements, all need to be funded by the economy and all are massively impacted by Fed policies. So what logic exists, outside of some reality less economic theory, that would justify that?
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so is it federal or is it private
Bernie Sanders is my lobbyist!