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'If two people always agree," says Ben Bernanke, "one of them is redundant." So, imagine what the Federal Reserve chairman thinks of Rep. Barney Frank's legislation designed to dampen dissent within the Fed.
Fond of diversity in everything but thought, a certain kind of liberal favors mandatory harmony (e.g., campus speech codes). Such liberals, being realists at least about the strength of their arguments, discourage "too much" debate about them (e.g., restrictions on campaign spending to disseminate political advocacy).
Now Frank wants to strip the presidents of the Fed's 12 regional banks of their right to vote as members of the policymaking Federal Open Market Committee.
Five presidents are permitted to vote at any one time, and Frank's bill is partly a response to three of them voting incorrectly, in his opinion. In August, the FOMC voted 7-3 in favor of an indefinite extension of the very low interest rates of the last three years.
Frank says he has "long been troubled" from a "theoretical democratic standpoint" by the "anomaly" of important decisions affecting national economic policy being made by persons "selected with absolutely no public scrutiny or confirmation."
It was not, however, until August that this affront to Frank's democratic sensibilities became so intolerable that he proposed a legislative remedy.
When three regional presidents voted their skepticism about cheap money, Frank decided to act against the problem, as he sees it, that allowing five regional bank presidents to vote "has the effect of skewing policy to one side of the Fed's dual mandate."
That is the side of preserving the currency as a store of value — controlling inflation. This comes, Frank thinks, at the expense of the other side, which he calls "promoting employment." The actual language of the mandate speaks of promoting "maximum employment," which is problematic: "Maximum" means "the highest attainable" and this might depend on ignoring the other half of the mandate.
The results are skewed, Frank says, because the regional bank presidents come from "a self-perpetuating group of private citizens who select each other and who are treated as equals in setting federal monetary policy with officials appointed by the president and confirmed by the Senate."
That is, members of the boards of directors of the regional banks select those banks' presidents and those members are — here we come to the crux of Frank's complaint —"overwhelmingly representative of business," and particularly the financial sector, therefore "they are not in any way representative of the American economy."
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'Middle-class families shouldn't pay higher taxes than millionaires and billionaires," repeatedly proclaims President Obama, arguing for his proposed $1.5 trillion tax increase over the next 10 years. "That's pretty straightforward. It's hard to argue against that." In fact, Mr. Obama's statement ...
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Posted By: dwdrury(4930) on 9/29/2011 | 12:05 AM ET
Mr. Will only hints at the difference between Frank and Ron Paul. The latter seeks to do away with the Fed, to go to a market based system for setting rates and valuing the dollar. As most of the comments here seem to prefer. As compared to Mr. Frank's intent to turn it into a tool of the Executive Branch. History shows that ends badly, see Zimbabwe and the Weimar Republic, and numerous Latin American examples.
Posted By: nominator(40) on 9/28/2011 | 9:44 PM ET
Frank and company were as much of a causation to the current real estate problem as any of the "Wall Street" money managers. He gave the green light for the lower standards which opened Pandora's Box. He should have been removed like his cohort Dodd. He should have no say in any financial matter.
Posted By: Imprimis(580) on 9/28/2011 | 8:59 PM ET
Frank has done enough damage with his sponsored legislation contributing in large part to the housing bubble. Now he wants to go to the head of the line in front of Reid and Pelosi. How is this excuse re-elected? We get what we deserve. It obviously hasn't gotten bad enough.
Posted By: bobbygordon(6885) on 9/28/2011 | 8:53 PM ET
What exactly does c, i, p, a spell anyway, Mr Administrator?
Posted By: bobbygordon(6885) on 9/28/2011 | 8:51 PM ET
"It" shouldn't be "run" by anyone other than me and you... assuming you are talking about the market for interest rates. ... Central planning and price fixing... including interest which is the price of money... is communistic central planning. The "FED" would be free to parti***te in those free and fair markets... if any such thing actually existed here in Mother America... Comrade.
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