The current structure of The Federal Reserve Bank has outlived it’s usefulness. The Fed was born in secrecy among privileged, monied elites. It failed us in the Great Depression. It has failed us in the past two decades as evidenced by the Great Global Financial Meltdown of the past 3 years. I have a lot of respect for Joseph Stiglitz, a Nobel winning economist who never lost sight of what we’re supposed to do in economics: figure out how to improve people’s living conditions and welfare, instead of shilling for the monied powers that be.
Joseph Stiglitz – former head economist at the International Monetary Fund (IMF) and a nobel-prize winner – said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is “corrupt” and undermines democracy.
If we [i.e. the IMF] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure.
Stiglitz pointed out that – if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system – “it would have been a big signal that something is wrong.”
Stiglitz stressed that the Fed banks have clear conflicts of interest, since the banks are largely governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing:
So, these are the guys who appointed the guy who bailed them out … Is that a conflict of interest?
They would say, ‘no conflict of interest, we were just doing our job. But you have to look at the conflicts of interest”…
The reason you talk about governance is because in a democracy you want people to have confidence … This is a structure that will undermine confidence in a democracy.
This via: Washington’s Blog.