You might describe the United States Federal Reserve Bank as the Bank of America, except there actually is a Bank of America, and it's not the same thing. Clever marketing move, Bank of America.
The Fed, as the Federal Reserve Bank is known, sets monetary policy for the United States. It has been doing this for a long time -- almost 100 years.
And, um, there are some people who do not particularly care for it. We have a name for those people. They're called Tea Partiers. And they are all totally insane.
One of the people who is not what you'd call a fan of the Fed is Congressman Ron Paul. Congressman Paul, a libertarian Republican, is in charge of the House Subcommittee which has oversight of the Fed. He has let it be known that he is really looking forward to pretty much kicking the Fed right in the nards over the next few years. It is now Congressman Paul's mission in life to make life a living hell for the head honcho over at the Fed, a professorial-type fellow named Ben Bernanke who kind of looks like your swell uncle who can recite Pi to the thousandth digit as well as a fart limerick without breaking a sweat.
Listen, an independent, almost wholly autonomous super bank that has broad and vast power to control things like interest rates and money itself is going to have it's detractors. Thus, these are Free Political Talking Points for People Who are Skeptical of the Fed.
- The Federal Reserve is in charge of three big things we really need:
- setting monetary policy: this is different than fiscal policy. Monetary policy is determining how much money is out there, and where interest rates are. Too much money, and and nothing is worth anything (deflation), too little money, and the price of everything skyrockets (inflation).
- supervising banks: pretty much what it sounds like, and yeah, this is harder to defend given the way big banks acted the last couple of years. However, there are some new rules and regulations out there, and you can find much of the information on the Fed site.
- providing payment services to depository institutions: pull out a one-dollar bill. Look at the top on the side with George Washington. It says: "Federal Reserve Note". This is the part of the Fed that makes your little piece of thin paper with black and green ink actually worth something.
- Before Woodrow Wilson signed the law which created the Federal Reserve in 1913, there were over 30,000 different currencies floating around. Bad idea.
- The Fed helps keep us all working by creating demand for jobs. They do this by managing interest rates. When interest rates are lower, borrowing money becomes less expensive, and then you can buy stuff. When you buy something, the demand for that thing increases, and thus are jobs for building that thing created.
- The Fed also provides all kinds of interesting statistical data that is useful and helpful to those who set monetary as well as fiscal policy nationally and globally.
Is the Federal Reserve Bank a perfect system? Hardly. But the idea of abloshing America's Bank is pretty nuts.
Cross posted at the Florida Progressive Coalition.