And the next Fed Chairman is ...
President
Obama is finally having some success getting a few of his long-delayed nominations
for various offices and judgeships passed through our "Do-Nothing" Congress. Very soon, he will nominate a successor to
Ben Bernanke, Chairman of the Federal Reserve Bank, perhaps the most powerful
banker in the world. I say "perhaps"
because nobody knows how many billions or trillions of dollars the Rothschild
banking family controls.
Two people
who will be voting on the Fed Chair appointment, Independent Senator from
Vermont, Bernie Sanders and Elizabeth Warren, the new Democratic Senator from
Massachusetts, have come up with four very interesting, insightful questions they
will ask the nominee:
1. Do you
believe that the Fed's top priority should be to fulfill its full employment
mandate?
2. If you
were to be confirmed as chair of the Fed, would you work to break up
"too-big-to-fail" financial institutions so that they could no longer pose a
catastrophic risk to the economy?
3. Do you
believe that the deregulation of Wall Street, including the repeal of the
Glass-Steagall Act and exempting derivatives from regulation, significantly
contributed to the worst financial crisis since the Great Depression?
4. What
would you do to divert the $2 trillion in excess reserves that financial
institutions have parked at the Fed into more productive purposes, such as
helping small and medium-sized businesses create jobs?
These are
darn good questions and, believe it or not, they affect all of us right here in
Fairfield. I would like to explore them
with you, one by one over the next weeks.
First up, just what is the Fed's "employment mandate" and why should
that be their top priority?
After World War
II, with 12 million ex-GIs returning to the domestic workforce, Congress realized
there wouldn't be enough work for all of them in the depressed post-war economy
and feared an economic relapse into the Great Depression, Part Deux. To prevent this, they passed the Employment
Act of 1946, which called for the Fed to ease interest rates in order to make
money available for those who wished to start or expand their businesses. The Fed was supposed to track unemployment
figures and raise or lower interest rates to maintain maximal levels of
employment in this country. Unfortunately,
conservatives in Congress watered-down the Employment Act to the point where
what they passed was nothing more than a gentle wind. History repeated itself in the recession
following the Vietnam War, when Congress passed another version of the
Employment Act, complete with conservative gutting.
Since the
1990s, the Fed has used "NAIRU," the Non-Accelerating Inflation Rate of
Unemployment, to help set interest rates.
NAIRU is an imaginary balancing point where unemployment is used to
counter inflation. Instead of "full
employment," which conservatives view as inflationary, they figure that high
unemployment helps keep prices down. And,
as we see currently, high unemployment also keeps workers' wages down too. While I'm sure it's easy for wealthy bankers
to look down on us huddled masses and make these decisions, if you live in
Solano County, were the current unemployment rate is about 8%, what number
would you pick? Really, if you were an all-powerful
Fed Chairman, where would you peg unemployment?
You can raise and lower interest rates willy-nilly and see what happens
to employment and inflation in the online, "Fed Chairman game." Simply Google: "Fed Chairman game." It's not only fun, but it's a great propaganda
tool too! It will convince you that high
interest rates and unemployment are the only ways to control inflation. Assuming, of course, our highly complex,
globally-interconnected economic system has but three variables.
