Should the powers of the Federal Reserve be reined in?


Many people are wondering, what exactly is the Federal Reserve System (Fed)? The Fed was first started in 1913 with the passage of the Federal Reserve Act. As defined on Wikipedia, it is a quas- public/ quasi-private government entity. It is comprised of:: 1.a presidentially appointed Board of Governors, of the Federal Reserve System in Washington, DC.,2. the Federal Open Market Committee, 3. 12 regional Federal Reserve Banks in designated regions in the US operating as agents for the US Treasury (each with a 9 member board), 4. numerous member banks which subscribe to required amounts of non transferable stock in the Federal Reserve banks and 5. various advisory councils. Ben Bernake is the present Chairman of the Fed.

The Fed is responsible for furnishing an elastic currency and the means of re discounting commercial paper to establish a more effective supervision of banking in the United States and for other purposes. Some of these "other purposes" include money supply, monetary policy, inflation/deflation, systemic risk and the role of the Central Bank. The Fed is viewed as the "bank of last resort" for the United States.

The powers of the Fed are so broad,and far reaching in its activities that now there is a move in Congress to rein in its authority. Ron Paul maintains that the Fed is: "being secret and clandestine and serving special interests." He has sponsored a bill that would audit the Fed's monetary policy decisions. Hearing on the bill's provisions are being debated in the House. One of the goals of this bill is to strengthen the Fed's commitment to consumer protection.

The Fed is on the counter attack saying that any attempt to curb their powers would lead to higher interest rates and raise fears of future inflation. These are the usual boiler plate objections to any new changes that would benefit the greater population.

Should the powers of the Fed be reined in?

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