by Jarl Jensen
The unfortunate truth is that crafting a legislative change to the Fed is near impossible because their decisions are not voted on. They are given carte-blanche. The Federal Reserve needs to be fundamentally changed to focus on the productivity of people. As Adam Smith said, the wealth of a nation is the stream of goods and services a country produces. America’s wealth is not its total sum of gold, real-estate and company stocks. People need to work and produce value this is true wealth. When asset prices go up it’s a virtual wealth, an illusion. When people build products and provide services they are creating value. This is not what’s happening today people are borrowing money to pay their bills which drives up asset prices. People feel rich but they have a negative net worth and spending their whole lives in debt.
The Political Influence of the Moneyed Class
Perhaps more damning than the bias of bankers is that of the politicians. Claiming to speak for the voices of all their constituents, few politicians have been able to raise concerns about the Fed policy and change inputs to the economy. There is a pretty simple reason for the silence. When significant sectors like insurance and securities investment pour money into Congress and political campaigns, they ask for policy favors in return.
Bankers know they have tricked enough of the population into thinking credit is good, while at the same time buying the influence of politicians in monetary matters. This is how the American representative system rolls along. The result has a century of economic policy from Washington that claims to be for the little guy (the small business owner or working-class family) while covertly helping the big guys (wall street, importers, insurance brokerages, investment banks, etc.).
Conclusion
The representative democracy in place today is more of a façade than a reality. The founding fathers are rolling over in their graves because of how engaged the Federal Reserve is in the economy. Only a political movement of people that understands the long-term consequences of selling national debt to fund the military will be able to rid the economy of unnecessary debt.