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Old 08-11-2009, 03:42 PM   #16
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I would argue that the Federal Reserve has been a political, rather than an independent, non-partisan office, ever since, and we should probably evaluate ways to get this monetary institution back on track.
How can it be a political office when Fed Chairmen serve under both Democratic and Republican administrations?
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Old 08-11-2009, 04:05 PM   #17
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How can it be a political office when Fed Chairmen serve under both Democratic and Republican administrations?
Two reasons.

One, the Fed's actions will reflect on the popularity of the President, so the same political and corporate influences that affect the behaviour of Congress are probably quite fiercely lobbying for the Federal Reserve to act in a way that is to their favour.

Two, the Fed can be replaced by the President once his term is up. This is currently the case with Bernanke, as his term is expiring this year. So, again, if you don't play politics the right way, you could be replaced by someone who will.
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Old 08-11-2009, 04:40 PM   #18
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Two reasons.

One, the Fed's actions will reflect on the popularity of the President, so the same political and corporate influences that affect the behaviour of Congress are probably quite fiercely lobbying for the Federal Reserve to act in a way that is to their favour.

Two, the Fed can be replaced by the President once his term is up. This is currently the case with Bernanke, as his term is expiring this year. So, again, if you don't play politics the right way, you could be replaced by someone who will.
The terms of the Board of Governors (i.e. not the chairman) are staggered and last 14 years, which reduces political pressure, according to the The Fed web site. Another party they have to answer to is their own shareholders - i.e. the banks.
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Old 08-11-2009, 10:27 PM   #19
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"Give me control of a nation's money supply and I care not who makes its laws."

~ Mayer A. Rothschild
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Old 08-11-2009, 11:01 PM   #20
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To comment about the Federal Reserve, I would happen to agree that it is at fault for these bubbles and bursts, mainly because the Fed has not taken up its historical responsibilities over the last 20 years. The Fed must certainly have known that persistently low interest rates during a time of economic prosperity was a ticket to disaster. These should have been moments that interest rates were slowly raised to more appropriate levels. Even going back to the 1950s, when the economy would heat up too much too quickly, it was not unheard of for the Federal Reserve to literally guide the economy into a mild recession through policy to prevent a deep recession later.

Unfortunately, prudent fiscal policy is now seen as political poison, ever since Bush I lost reelection due to recession. I would argue that the Federal Reserve has been a political, rather than an independent, non-partisan office, ever since, and we should probably evaluate ways to get this monetary institution back on track. One of the U.S.' persistent problems since inception has been figuring out the right way to manage monetary policy, and it appears that, after nearly a century of stability, it might be reverting back to historical pattern.
Good points. I do wonder why this hyping up of bubbles mentality seems to have become so prevalent in the Western world, and not just in the US.
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Old 08-12-2009, 09:48 AM   #21
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Good points. I do wonder why this hyping up of bubbles mentality seems to have become so prevalent in the Western world, and not just in the US.
A lot of the non-Western world experienced real estate bubbles as well - Iran, UAE, Vietnam, Singapore, India, China, etc.
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Old 08-12-2009, 02:31 PM   #22
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I couldn't have said it better.

Quote:
John Adams, letter to
Thomas Jefferson

"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation."++
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Old 08-12-2009, 02:38 PM   #23
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Good points. I do wonder why this hyping up of bubbles mentality seems to have become so prevalent in the Western world, and not just in the US.
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A lot of the non-Western world experienced real estate bubbles as well - Iran, UAE, Vietnam, Singapore, India, China, etc.
Much of the non-Western world has long been accustomed to violent bubbles and bursts--such is the historic volatility associated with investing in emerging markets. The most curious change in events is probably more to do with the fact that the Western world has started to devolve into the kind of volatility one would expect with these markets, rather than the other way around.

I would say that this is probably the fruits of deregulation and corruption in the West over the last generation, both of which emerging markets have long been defined by.
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Old 09-23-2009, 09:23 PM   #24
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Maybe when the market crashes nastily again in the next couple of months we'll smarten up and take the foxes out of the henhouse.
Stock Market Worry: Insiders Are Heavy Sellers - TIME
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