On Nov 13, 2007 5:34 AM, Paul Zarembka <[EMAIL PROTECTED]> wrote: > There was an article in the NYTimes on Sunday describing Ron Paul and > mentioning that he wants to dump the Federal Reserve and return to the > gold > standard. The basis of the justification seems to be along the lines I > mentioned -- that Central Bank control the economy through the continual > expansion of debt, made necessary by the Central Bank earning interest on > money they create and control. >
A lot of criticisms can be made against the central bank but it not a particularly relevant whether it earns interest or not. Many libertarians also make a big deal of the claim that the US Fed is a private bank to which the Treasury is highly indebted. This is a mere technicality of no importance whatsoever. A much better criticism can be made about the close relationship between the Fed and commercial and investment banks on Wall St. There is a growing perception (accurate?) that the Fed acts largely in the interests of finance capitalists even to the exclusion of industrial capitalists who would probably prefer a tighter rein on debt expansions. A more socialist criticism would be that the Fed cares nothing about the poor not even on paper. Their official mandate is to maximize GDP *growth* irrespective of income distribution and inequality, and they more or less singlemindedly pursue that goal - with some biases towards the financial sector as mentioned above. One last criticism can be made that the Fed is very far from being a representative government agency. Fed governors are not elected and they are almost invariably wealthy white men and they are accountable to no one. -raghu.
