April 12, 2016

Reform the Federal Reserve

Bernie Sanders has talked a lot about breaking up "too big to fail" banks, but given that such power resides largely with the Federal Reserve System, which is less quasi-governmental than even Amtrak or the Postal Service, arguably, shouldn't he focus more on an overhaul of the Fed?

Yes, it's not an easy sound bite, but, a push is out there to do just that — namely, to stop the essential ownership of regional Feds by private banks, along with other reforms. Proponents say it would make it a more public institution, like that in other developed nations.

Of course, this all goes back to so-called "progressive" Woodrow Wilson.

By the time he took office, it was clear that some sort of national banking system was needed. Teddy Roosevelt, surprisingly, took a pass after the Northern Securities trust-busting and his dust-up with J.P. Morgan, only in turn to have to go hat in hand to Morgan during the Panic of 1907.

Taft got the income tax amendment past Congress and off to the states, something with TR also failed to do and for which Woody Wilson is wrongly given credit.

Which leads to the Federal Reserve. It was arguably the most conservative solution to the nation's banking needs available. That said, under the cover (the white hood, maybe?) of being a "progressive," Woody Wilson was still very much a states-rights Democrat. Getting an American version of the Bank of England was never on his agenda.

I would be a bit concerned about single terms for Fed governors, but everything else in the proposal sounds very good.

As for Sanders, he's the only one of the five mainstream party presidential candidates to indicate even a degree of serious interest in the proposal.

Puff Hoes gets one thing wrong. The Fed is "nonpartisan" only in the sense its beholden to a neoliberal, labor-unfriendly fiscal policy that's the key point of leaders of both mainstream parties.

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