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It may surprise some that a gold nut like me would say this, but I have come to re-evaluate the mid-century central banking systems like the US federal reserve, and I've changed my opinion somewhat.
The federal reserve system, in its theoretical basis, is not altogether bad and even ingenious in that it tries to place monetary policy outside of month-to-month government whims.
The idea (on paper at least) was to achieve a middle ground between privately issued money and what some call 'fiat' money.
The more controversial idea (IMO) is the idea that interest rates could be 'rationalized', that is to say that a group of technocrats would know better than the government or the market.
However, in its execution, the group of experts were all big bankers. It sounds counter-intuitive, but the last people who should be trusted with a nations monetary policy are those who have such obvious private interests in that policy.
In an ideal world, an independent central bank like the Fed theoretically could be a tremendous brake on government spending and a guarantor of the long-term value of citizens savings.
But I think the last few years have exposed some major weaknesses especially in the makeup of the boards and chairmen.
There should be reforms aimed at shutting out former and current banking industry and treasury department people to prevent the incestuous private/public corporatism seen in the last few years, and strict regulations preventing bankers from 'growing' their own blue-ribbon academics.
Maybe even radical reforms are necessary like making the appointments and membership of the board secret (especially from the banking industry and most government personnel outside a congressional committee), or farming out the jobs to academics in disinterested neutral nations.
Anything that would actually create a truly independent and trustworthy central bank.
The federal reserve system, in its theoretical basis, is not altogether bad and even ingenious in that it tries to place monetary policy outside of month-to-month government whims.
The idea (on paper at least) was to achieve a middle ground between privately issued money and what some call 'fiat' money.
The more controversial idea (IMO) is the idea that interest rates could be 'rationalized', that is to say that a group of technocrats would know better than the government or the market.
However, in its execution, the group of experts were all big bankers. It sounds counter-intuitive, but the last people who should be trusted with a nations monetary policy are those who have such obvious private interests in that policy.
In an ideal world, an independent central bank like the Fed theoretically could be a tremendous brake on government spending and a guarantor of the long-term value of citizens savings.
But I think the last few years have exposed some major weaknesses especially in the makeup of the boards and chairmen.
There should be reforms aimed at shutting out former and current banking industry and treasury department people to prevent the incestuous private/public corporatism seen in the last few years, and strict regulations preventing bankers from 'growing' their own blue-ribbon academics.
Maybe even radical reforms are necessary like making the appointments and membership of the board secret (especially from the banking industry and most government personnel outside a congressional committee), or farming out the jobs to academics in disinterested neutral nations.
Anything that would actually create a truly independent and trustworthy central bank.
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