I am hoping this does not happen, but rather this causes some regulatory debate in Congress to start up, and maybe they'll act on it. http://www.nytimes.com/2008/03/29/b...int&adxnnlx=1206798955-0koIcxXb+uDHoolNcNVBkQ
It is amazing that when safety nets eliminate market incentives to invest wisely, the government responds with bigger safety nets.
It reminds me of 9/11, where government ineptitude and willful ignorance led to a catastrophe which they quickly took advantage of.
I read a lot on this yesterday. Pardon the pun, but I was too depressed about it to even post in the Depression thread. Well, once this is done, all market failures can be totally blamed on the FED without doubt. Because now they will be the regulators, controllers etc. What concerns me is that the FED is unelected, except by the banks, and now they will be making and possibly enforcing law for industry. This has the potential to be a massive fascist shift, where the businesses get to regulate themselves, by government power.
Problem => Reaction => Solution Create a problem Provoke and shape a reaction Propose a solution It's very effective for gathering more power, more taxes, shifting opinion etc. You can break down almost every significant government growth period to this.
I think this is being done to postpone recession, and prevent the housing bubble from bursting. Does his mean that the government wants to keep bailing out broken banks and financial institutions? keep propping them up with tax-payers money, so hat they can keep inflating he economy, and prevent any consolidation. What do you believe, could be the objective of giving more powers to the FED?
Well for sure, there are probably some ideological aspects to this but for the most part, I see it as crisis management, which for government usually means a lot of butt covering and misdirection. Well, there is a catch to seeing nefarious purposes to every government action and intervention. It can make you crazy. I use this analogy to make my point. The NBA had a referee exposed in the last year for collaborating with gamblers to alter the outcome of games and pass trusted info to such folks. Now they only discovered 1 guy (publicly). There are probably 60 or 100 referees. For years fans have complained that games are fixed, that the league is manipulating outcomes to generate more commercially lucrative results (just read Mark Cuban's blog's comments back when the Mavs were in the Finals). But what if the refs are just incompetent? What I mean is, what if partisan fans only notice when they are disadvantaged, and not advantaged, and have bought into a theory that if it wasn't for outside pressures, the refs would call every game perfectly. We all know that referees make mistakes, but because we're so engrossed in assigning blame for losses, or lost opportunities, and we have a ready made target with not only motive, but opportunity, we might make the wrong judgment. So in that regard, what if the FED is just "pretty incompetent"? If you're into the Austrian School of Economics, you don't believe there is a particular role for the FED at all, and that it can only create problems through intervention. But the difference between say a fanatical anti-statist (such as you or I) and the Austrian philosophy, is that we automatically assign motive, the Austrian School does not. In other words, the Mises.org crowd know that FED interventions will inevitably cause trouble and backfire, but you and I go a step further and blame it on the Illuminati (that's a joke, sorta ). So my answer to your question is, they may not even have an objective beyond covering their @sses. It might not be some grand plan for world domination. In fact, even if it was, based upon the fact that more people are realizing that the FED is imminently fallible, that would just mean that these moves are like kickboxing a waterfall. At the end of the day, the free market will win. Unless they can remove or control human nature, planned economies always fail. It's just a matter of time.