Finance, Forex and Investments

Do you agree with the concept of having a central bank?

I can't help but feel that all it does is keep us in debt. The "Federal" Reserve is a private business that charges us money, to print money.

Public Comments

1. It is good to have a central bank seperate from the government. It seems to have to kept things stable up to turmoil recently. And with prices China and other asian countries offer for their products theres no way the U.S can get out of debt. Remember every country has debt.
2. you must have a central bank or else regional banks will print own currency and trade betwen regions will become difficult and costly. I talking about states here. I like being able to spend a dollar i make in florida in a north carolina store with out exchanging it for carolina regional bank notes. Also, the larger the overall economy the bank note is supported by the less volatile it is. So if the economy takes a normal downturn in florida but not in the rest of the US my dollar is still worth a dollar
3. Yes, one only looks at history to see what it was like without it. Without a publicly owned central bank: -There would be no national coordinated monetary policy. Each bank would expand or contract credit based on their immediate business needs, not the natons requirements. - Smaller banks would be dependent on larger banks for credit extensions, currency, etc. History has shown that larger banks often consider smaller banks as competition and didn't care if they failed. (After 1935, the Fed was charged with looking after the overall health of the system) - Before 1905, there was over 30,000 different currencies in circulation. - In international monetary matters, the nations largest private banks would represent America - There would be no elasticity to the currency. You would see more cycles of inflation/deflation, and boom/bust as we saw in the 1800s - Banks would return to being audited soley by themselves in their shareholders interest. (After 1935, the Fed was charged with being the nations bank auditors to serve depositers interest as well.) - Clearing of checks would go back to private clearinghouses often run by large banks. Without an impartial clearinghouse, decisions in the process would sway toward the private interests that control it. So we really don't need a Federal Reserve if you prefer what the historical record has shown us. ==> Re: I can't help but feel that all it does is keep us in debt The Federal Reserve is not involved in the U.S. budget; it is congress that decided to go into debt or not. ==> Re: The "Federal" Reserve is a private business Not True. The "Federal Reserve *System*" is a publicly run organization though there is public-private relationship at the branch level. To summarize: The Federal Reserve System is a congressionally-chartered agency like the USPS and NASA. It is organized with a 100% government agency at the top (the Board of Governors), and branches beneath them that resemble corporations. (http://www.federalreserveeducation.org/fed101/structure/ ) The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it's charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level; it is a government agency. Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code). The Board determines monetary policy and provides high level oversight of the branches. The 12 branches, however, are organized to involve member banks in the day-to-day operation. Member banks are required to buy shares in their branch. Each bank has one vote. The shares get a standard 6% dividend. They can vote for 6 of their 9 board members. All 'profit' from the Federal Reserve branches are turned over to the Treasury at the end of the year. Also see: - http://www.geocities.com/CapitolHill/Embassy/1154/flaherty.html - http://www.publiceye.org/conspire/flaherty/Federal_Reserve.html - http://famguardian.org/Subjects/MoneyBanking/FederalReserve/FRconspire/FRconspire.htm ==> Re: that charges us money, to print money. I think if you researched the facts behind it, you would be less concerned. Though the exact set of transactions is a bit complicated, not one penny of the U.S. budget is allocated to pay the Federal Reserve money. In fact, when the Federal Reserve creates money, it actually saves the taxpayer money. How? By law, all money has to be collateralized i.e. backed with something of value. The Fed uses T-Bills it purchases on the open market (i.e. from the public). Now it is true that the Fed now gets the interest on those T-Bills. But, by law, all income after expenses is turned over to the Treasury at the end of the year. So 90%+ of that interest earned is returned to the Treasury. (No other bond holder does that).