In trying to answer the big questions about the central banks and global economy- I think it is important to note these historical facts and ask what their relevance might be:
Paul Volcker was appointed by liberal Jimmy Carter to be the head of the Fed, and was re-appointed by conservative Ronald Reagan. Alan Greenspan was appointed to head the Federal Reserve by Reagan, and then was re-appointed by President Bush I, Clinton, and again Bush II. This begs the question of how such a powerful position in managing our nation’s monetary policies can remain so “above” all the political cat-fighting between so-called “liberal” politicians and so-called “conservative” politicians. Shouldn’t there be a real difference of opinion when it comes to who should hold such key positions of power in the overall economy? I will add that Paul Volcker was named by President Obama to be “First Chair of President’s Economy Recovery Advisory Board”- so the musical chairs continues- is this some kind of a game?
As a secondary set of troubling “coincidences”, I would present the fact that the architect for the Vietnam War, Robert McNamara, was appointed by the President to be the President of the World Bank, where he remained from 1968-1981. Fast forward to 2005 and Iraq War architect, Paul Wolfowitz, is appointed by President Bush to be President of World Bank- he resigned under pressure 2 years later due to a girlfriend controversy. What is it about dubious war promotion that seems to be part of the resume for leadership at the World Bank?
Now what are we to make of all this? Is there really a liberal Democratic and conservative Republican difference at the top of the heap when it comes to the monetary policies and politics, and the way in which foreign aid and loans are administered within the global community via IMF/World Bank- where the U.S. has very strong influence obviously.
I’m not looking for Conspiracy Theories, but I am wondering aloud how these facts should play out in our national debate on economics. The bail-out shell game of printing money to protect the economic interests that are “too big to fail”, seems to be a bipartisan gentleman’s agreement. What are your thoughts?
Well, “bipartisan gentleman’s agreement” is a bit of a conspiracy theory, isn’t it?
Your observation regarding the Fed chairman and other high level operatives playing musical chairs says to me that long ago the financial interests in the United States adopted a policy regarding politicians that would ensure their continuity. “Liberal” or “Conservative” means nothing to them as long as those they support for office protect their control over money.
After all, how many times has it been noted that financiers often contribute to opposing campaigns? President Obama received support from GoldmanSachs did he not? And Goldman has had not a few of its employees and leaders end up in government.
This is why it is so incredibly important to open the books at the Federal Reserve.
How should these facts play out in our politics? It should bring about a debate as to whether or not our economy is really “free”. Just as many would argue that government has no right to command the economy, so too should it be true that corporations should not collude with the government in order to steer the economy according to their interests. Only moral hazard can result, yet thats precisely the system we live under with the Fed.
The Fed right now is very frightened, as its claiming that any effort to force open their doors is an attack on their “independence”. Actually, given the powers they have thanks to Congress, “independence” really is code for “secret behind closed-door deals”. If they desire the independence of the free market, then they should relinquish the power to create money out of thin air.
If you were to have the monetary system you want, what would it be, and how much discomfort to the economy and those living in it would you be willing to inflict in the transition?
I’d take it to mean that at the expert level there’s been very little disagreement since the 1970s over what the monetary policy ought to be.
To the extent that those kind of experts maintain membership in one party over the other, it’s because of issues other than monetary policy.
Yes- and that begs the question as to whether monetary policy is the 800 lb. gorilla in the room whom no one is really talking about- if in fact these monetary policies (Federal Reserve Board) and the foreign aid administration (IMF/World Bank) are really huge in their impact on the general economy, the conditions of life for the poor and vulnerable and so on.
Well, in terms of under-rated positions of influence, I tend to think Chairmen of the Federal Reserve pretty much tops the list. Setting monetary policy has a substantial impact on the economy; far more, in fact, than most of the policy tools available to a sitting President.
As far as the direct impact on the poor and vulnerable, I think the poor are disproportionately impacted during periods of economic downturn and disruption, but I think there is incentive alignment here insofar as all of the parties concerned wish to minimize the effects of economic downturns and recessions. Congress has the authority to enact legislation to provide increased support for poor Americans, and Presidents can go along with or resist such legislation. But I don’t think there is anything specifically related to the poor or vulnerable that a Fed chair can do, other than what they are already inclined to do – try and use the tools at their disposal to maximize long-term prosperity.
I’d like to investigate the possibility of a commodity-backed competing currency within the U.S along side the dollar. It doesn’t have to be gold or silver, though those metals are constitutional and tend to be used. Considering that we are now hearing calls for a new global reserve currency, the American people must have an escape route to protect their political independence. While the dollar lasts, at least people can have a period of time in which to “transition”.
I would also take a second look at the virtues of allowing local currencies. Lots of people freak at the thought, but I think in today’s age people would naturally gravitate to “major currencies” and there would not necessarily be the complications some fear as long as the money is “honest”.
Granted, I’m not an economist by any means so maybe I’m crazy.
One need not engage in Conspiracy Theories to have a distaste for the DC-NYC power axis that wishes for as little sunlight onto their activities as possible. Ron Paul, who I only sorta like, is quite right about that.
The concept of a “deep state” – which exists in solid form in Turkey as elsewhere – is useful.
http://en.wikipedia.org/wiki/Deep_state
http://isteve.blogspot.com/2009/06/deep-state.html
The World Bank/IMF have had a huge role in deciding the economies for the poorer nations- there is this misconception among some conservatives that aid from rich countries to poor ones is necessarily counter-productive- I would offer that the interests of the World Bank/IMF have not been primarily with the poor- they have been guilty of either extremely poor judgment or worse. Perhaps you have heard of the notorious IMF Conditionalities? In any case the World Bank would seem to be a very unsuitable place for men like McNamara and Wolfowitz who had shown zero compassion for the poor and vulnerable who would become the victims of their wars.
Aid is not the enemy- it is the type of aid and the way it is administered and monitored that is the problem. A huge reform needs to take place, but we don’t wash our hands of the plight of the global poor- not when you are living in the singular global superpower anyway- try telling Jesus- “hey the best thing we rich nations could do for the poor is to let them alone- give them nothing” Huh? I think that we can do things that don’t encourage passive entitlement- we just haven’t done those things because we allow the World Bank et al to work behind the scenes dominating the aid programs. I know people who operate successful small-scale aid projects- if they had more money they could better more lives of more poor people- but these people aren’t getting the global funding from the big players- it isn’t the aid workers who have the most knowledge and life experience close to the people they serve who are getting the resources for the most part- and this is why I believe the Church continues to urge for more development assistance from rich countries to poor ones- while criticizing the way this aid has been implemented for the past few decades.
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Aid is not the enemy- it is the type of aid and the way it is administered and monitored that is the problem. A huge reform needs to take place, but we don’t wash our hands of the plight of the global poor- not when you are living in the singular global superpower anyway- try telling Jesus- “hey the best thing we rich nations could do for the poor is to let them alone- give them nothing” Huh?
I’m not clear at all that conservatives or even libertarians are suggesting that those in rich countries should ignore the plight of poor countries. For example, the somewhat libertarian-leaning podcast EconTalk that I listen to each week, which has strongly criticized the “throw money at their leaders” approach to aid has also done several interviews with people working on funding networks for small scale projects.
Similarly, Dambisa Moyo whose book Dead Aid has been getting a lot of attention on National Review and such doesn’t advocate abandoning Africa but rather stopping the flow of large checks to corrupt rulers. From the interviews with her that I’ve read, she is very much in favor of funding micro projects and funding infrastructure.
Good deal Darwin- and not because of your flattering close! Before we abandon the notion that aid is a bad thing inherently for the developing world- we need to re-direct the flow as you indicate- micro-loans, projects that make sense for the local communities according to the principle of subsidiarity, no more greasing the palms of the third world dictator/oligarichical class, if someone wants help for their country then the aid will come with lots of oversight, sunshine provisions, media scrutiny, great input by local populations and so forth- we need to be sure that we are in some cases giving the poor fishing poles, and teaching them to fish, and having succeeded there, leaving them in peace as we develop true friendships between peoples the same way we build true friendships between people. If I’m down and out, I like some help, but I don’t want to become totally dependent, and I don’t want to be someone’s lacky either.