Congressman: "Fed's job to take away the punch bowl just as the party is getting started"

[Matt Collins]

SRSLY!?!?

What does this analogy even mean?!! :confused: :confused::confused::confused: :rolleyes::rolleyes:









Dear XXXXXX:

Thank you for contacting me about H.R. 459, the Federal Reserve Transparency Act. I appreciate the opportunityto respond.

I have heard from many constituents about versions of this particular bill. I agreewith the need for transparency and openness, and I have long supported measures that increase governmentaccountability. In 2008, President Bush signed into law my InspectorGeneral Reform Act (http://cooper.house.gov/index.php?option=com_content&view=article&id=198:cooper-ig-reform-bill-passes-congress-awaits-presidents-signature&catid=38:latest&Itemid=177), which brought greaterautonomy and authority to the IGs who serve as our first line of defense against waste and fraudin the federal government.

The Fed has come under harsh criticism due to the many unprecedented actions it hastaken to help stave off our nation's economic collapse. Nobody likes to hear this, but the Fed's job is to take away the punch bowl just as the party is getting started. Many lawmakers, including myself,have not agreed with every decision made by the Fed. It is important to remember, however, that our economyis still recovering from the worst financial crisis since the Great Depression. The Fed's ability touse all the tools in its toolbox played a crucial role in ensuring we didn't fall off the cliff. I doshare your concerns with how funds are being distributed. In fact the GovernmentAccountability Office (http://www.gao.gov/new.items/d11696.pdf) conducted an auditof the Fed last July. There needs to be a proper balance between the Fed's actions and its transparency,and congressional oversight to ensurethe Fed can act to preventsimilar crises in the future.

I will keep your comments in mind when H.R. 459 comes to the House floor for a votelater this month. Thanksfor taking the time to share your views with me. I encourage you to sign up for my e-newsletter (http://cooper.house.gov/index.php?option=com_content&view=article&id=120&Itemid=114),and to follow me on Facebook (http://www.facebook.com/JimCooper)and Twitter (http://www.twitter.com/repjimcooper).I hope to hear from you again soon.


Sincerely,
http://www.cooper.house.gov/images/cooper-signature.gif
Jim Cooper




Member of Congress


If we weren't in such a crisis, this incoherent statement would be laughable!

[CaptUSA]

This guy's been drinking too much of the fed's "punch"

[Chester Copperpot]

jim cooper - youre fired.

[AuH20]

He basically stated that the seemingly unbiased status of the Fed is protecting the American people from the gluttonous nature of our politicians. It's the same copout Obama used when asked about the Fed. It's a talking point not based in reality if you understand how the Federal Reserve system operates. The Federal Reserve colludes with other central banks often specifically responding to political pressures. Secondly, in terms of regional voting the head of the NY Fed garners more votes for policy decisions than other regions, in that the bank really isn't national at all. Peel away the camouflage and it's a New York City based operation at it's core.

[TonySutton]

promise people social security and then change the rules every so often to tax more while offering less

I am sure this is one of them

[angelatc]

Gee - guess who didn't take economics. That's the other side of textbook Keynesianism. When the economy is struggling, you pump in money to inflate it, but when it starts to recover, you are supposed to pull back the government spending, raise interest rates and slow things back down.

That's how this was sold to the American people. Under the careful management of economic experts working behind the scenes, no longer would the average American need to worry about recessions and depressions. The Fed would manage the ebb and flow of the business cycle so we wouldn't need to worry our pretty little heads about it.

The punch bowl analogy makes perfect sense. When the party is dull, the Fed puts a bowl of spiked alcohol out there on the table, but once people start loosening up and gabbing a bit, it's their job to take it away before somebody has too much, then stumbles into the table, spilling it all over the carpet.

If only men were perfect, this might work.

[Matt Collins]

The punch bowl analogy makes perfect sense. Insightful.

[jmdrake]

Jim Cooper < worthless

[emazur]

If the Fed's job is to take away the punch bowl just as the party is getting started, then its Congress's job to ensure a rowdy bunch of drunkards surrounds and threatens the Fed and tells them to put that goddamn punch bowl right back on the table and add some more alcohol while its at it.
Greenspan says Congress pushed Fed on housing boom (http://www.reuters.com/article/2010/04/07/financial-crisis-greenspan-pressure-idUSWAT01427220100407?type=marketsNews)

"If the Fed as a regulator had tried to thwart what everyone perceived as a fairly broad consensus that the trend was in the right direction, homeownership was rising and that was an unmitigated good, then Congress would have clamped down on us," he told a questioner at a congressionally appointed commission investigating the financial crisis.

"There's a presumption that the Federal Reserve's an independent agency, and it is up to a point, but we are a creature of the Congress and if ... we had said we're running into a bubble and we need to retrench, the Congress would say 'we haven't a clue what you're talking about'," Greenspan said. (Reporting by Glenn Somerville; Editing by James Dalgleish)

And speaking of the "independent agency", you might be interested to know that during his time in office ALL 7 members of the Federal Reserve board were appointed by George W. Bush by Spring 2006 (little more than 5 years after he'd been elected to office) and these members had to be approved by the Senate, which I'll be bet wasn't all that different from 2006 than it was in 2001.

[TheBlackPeterSchiff]

And up is down and down is up.

[trey4sports]

good god. Congress is filled with some of the most fuckin' intellectually-challenged people in our country.

[jmdrake]

What I just sent Cooper.

You have a video on your website about why congress is so unpopular. Well I can tell you why. It's because of a lack of accountability and transparency in government. That lack of accountability and transparency has led to endless wars and immeasurable debt. I'm sure that you are aware that during the financial crisis lack of accountability has reached an all time high. The federal reserve went so far as to lend OVER HALF A TRILLION to FOREIGN BANKS without even having the decency to tell congress which foreign banks the money was given to.

See: http://www.youtube.com/watch?v=uvn_INw9HYE

Some may argue "Well they had to do that to fix the financial crisis". Well it's debatable whether the fed "fixed" the crisis, or helped create it. The malinvestment caused by artificially low interest rates arguably creates the boom and bust cycles the federal reserve is supposedly meant to stop.

See: http://www.forbes.com/sites/mattkibbe/2011/06/07/the-federal-reserve-deserves-blame-for-the-financial-crisis/

We have a chance for real accountability with the federal reserve. That is through the full and complete audit of the federal reserve. The GAO audit done last July is simply insufficient. For one thing it doesn't begin answer the pertinent questions asked by Alan Grayson regarding foreign banks. Further no one has ever gotten to the bottom of the threat by then treasury secretary Hank Paulson to Bank-of-America CEO Kenneth Lewis that the Federal Reserve would cause him to lose his job if he didn't buy failing Meryl Lynch.

http://www.commondreams.org/headline/2009/07/16-10

Why is government allowed to bully private industry like this? And why are you not standing up for the free market? Why is Hank Paulson not in prison?

I am tired of the conclusory statements I keep hearing from both republicans and democrats on this issue. The idea that the fed must be doing a "good job" so we can't fully look at the books lest they quit doing a "good job". If everything is fine then a full and complete audit will not stop them from continuing to do a "good job".

[Matt Collins]

good god. Congress is filled with some of the most fuckin' intellectually-challenged people in our country.The sad thing is that many people consider Cooper to be one of the "most intelligent" members of Congress. :rolleyes:

[nobody's_hero]

I'd stop sending this guy emails. We wouldn't want to encourage him to do anything about the Fed, considering that he seems to lean more towards giving it more power as a 'solution.'

It would be better if he did nothing at all (the same could be said for many congress critters).

[emazur]

While looking up a great Paul Volcker quote: "[bailouts are] the most basic function of the Federal Reserve. It was why it was founded."
I came across the origin of this punchbowl phrase:

http://money.cnn.com/galleries/2011/news/1103/gallery.federal_reserve_flubs/4.html

William McChesney Martin, Jr., the longest serving Fed chairman, once famously described the Fed's role as ''to take away the punch bowl just when the party gets going," referring to the need for the Fed to raise interest rates before asset bubbles are formed.

Martin's successors have since recited that quote hundreds of times, but few have successfully heeded its advice.

Instead, loose monetary policy was partially responsible for the debt crisis in the 1980s, the dot-com bubble of the 1990s and the housing bubble that popped in 2008. Essentially, the economy drank (and kept drinking) the Fed's punch until it had one heck of a hangover.

[Zippyjuan]

While looking up a great Paul Volcker quote: "[bailouts are] the most basic function of the Federal Reserve. It was why it was founded."
I came across the origin of this punchbowl phrase:

http://money.cnn.com/galleries/2011/news/1103/gallery.federal_reserve_flubs/4.html

What I was going to add. Nicely found. McChesney Martin was Chairman of the Fed from 1951- 1970.

[kathy88]

Ummm.... was that letter scanned? Like, where all those typos for real?

[MJU1983]

I love Twitter! :)

https://twitter.com/mju1983/status/223599083972067329


Dear @repjimcooper. Fire whoever is authoring your responses re: the federal reserve. They are embarrassing and incoherent ‪#AuditTheFed‬