Forbes: Is The Federal Reserve Overreaching?

[RonPaulFanInGA]

http://www.forbes.com/2009/05/19/federal-reserve-ron-paul-fdic-sec-opinions-columnists-bernanke.html

[silverhandorder]

"Systemic risk is like pollution." paragraph is where is is wrong. He says that firms stop practicing market discipline when they think that are too big to fail. Well this is the problem, why do they think so? They think so because they own the politicians and the government comes to their rescue as shown by the original bailout.

Yeah systemic risk hurts parties that were not part of it, however systemic risk is just a new colorful word for already existing word for this which is panic. The current existing Austrian economics arguments against regulating panics apply here. Keynesian economics is like a fucking zombie you prove it wrong and it simply changes the names of the variables and comes back at you.

edit: friends comment after reading this article :P


wow after studying economics for three years, knowing perfectly well what federal reserve is and kenysian models, I didnt understand a single thing in that article.

Looks like one of my exam answers that I wrote yesterday, a one sentance point translated into 3 pages of writing..

[purplechoe]

"...The wing nuts who didn't like my concerns about the independence of the Fed--more than a few of whom declared themselves to be supporters of Rep. Ron Paul, whose bill to audit the Fed was introduced on Feb. 26--should know that there are also legitimate concerns about how broad we make the Fed's mandate..."

[FreedomRings]

He wants to minimize the risk of bank failure and his solution is to hire a bunch of bureaucrats to analyze the risk and make the information public. The organization employing these bureaucrats would have to be as independent as possible ("it would have to be more like the Fed is now" - LOL) so they can analyze the banks without being subjected to political pressure.

In other words, instead of getting rid of the problem at the core, he wants to add another layer of obfuscation. I can literally hear him salivating in his ivory tower when he writes stuff like "We are now moving into the phase of the financial crisis where we think about how to fix the broken regulatory system so we lower the chances of crises of this magnitude occurring in the future." and "These are not easy tasks, but many economists are working to develop risk measures and pricing mechanisms."

Get a life, dude. :cool: