Into the sunlight and then out the door…

William Greider assesses the Federal Reserve and the significance it has for the American system:

The Federal Reserve is the black hole of our democracy — the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies. That's why the central bankers have always operated in secrecy, avoiding public controversy and inevitable accusations of special deal-making. The current crisis has blown the central bank's cover. Many in Congress are alarmed, demanding greater transparency. More than 250 House members are seeking an independent audit of Fed accounts. House Speaker Nancy Pelosi observed that the Fed seems to be poaching on Congressional functions — handing out public money without the bother of public decision-making.

The problem the Fed now confronts:

Basically, what the central bank is trying to do with its aggressive distribution of trillions is avoid repeating the great mistake the Fed made after the 1929 stock market crash. The central bankers responded hesitantly then and allowed the money supply to collapse, which led to the ultimate catastrophe of full-blown monetary deflation and created the Great Depression. Bernanke has not yet won this struggle against falling prices and production — deflationary symptoms remain visible around the world — but he has not lost either. He might get more public sympathy if Fed officials explained this dilemma in plain English. Instead, they are shielding people from understanding the full dimensions of our predicament.

Yet, why would Bernanke and his staff wish to enlighten the public about the Federal Reserve when the institution ought to be scrapped and replaced by a public bank? They and their private bank masters would not care much for this at all since these banks not only own the Federal Reserve but have the capacity to job the system as it now exists. And they use their powers to implement policies they consider to be to their advantage. So far, as it turns out, the economic crisis has only resulted in the government giving additional powers to the Federal Reserve! This power-gathering is a feature of the system, not an aberration which the current government might care to address if not also fix. Unfortunately, resolving this crisis in a rational way and in pursuit of rational goals would require the creation of a power which could contend with the Federal Reserve. One would have to look toward a political movement that does not yet exist to motivate the Congress and the President to adopt this path.

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