The Federal Reserve and the Federal Reserve Board are part of our federal government. They are appointed by the President and must be confirmed by Congress. The Federal Reserve members and especially the Chairman of the Board, have a huge responsibility and a huge influence on the economy of the United States and the world.
    So the question is “Are they helping or hurting the economy?” Should the Board keep their hands off the economy, or do we need them to make sure things run smoothly?
    I’m sure there isn’t one simple answer, but I will say that the Federal Reserve is not doing what they should be doing – which is as little as possible. I think the Federal Reserve has a role in the banking system and on protecting business and consumers. The Fed should do this by not meddling with the economy. They need to have a “hands off” policy that doesn’t interfere with the natural cycles of the economy.
    Politics today has made it almost impossible for the Fed to be non-partisan and for them to do the correct thing. Every time there is an election, the economy is always a major topic with voters. Each party wants to claim they can make the economy better and neither party wants to be responsible for a bad economy. I think this puts pressure on the Fed to do something when they really shouldn’t do anything.
    The Fed has several tools in its pocket to adjust how the economy works. They can raise or lower the interest rates and they can add or remove money in the banking system. Those two things can have large repercussions if used improperly. Improperly may not be the correct word. I am sure the Fed never intentionally uses those tools to hurt the economy but sometimes a short-term fix can cause long-term problems.
    As Bill Clinton was leaving office, the economy was taking a turn for the worse, and after 9/11, the economy went into a tail spin, so the Feds cut interest rates and started pumping cash into the banks and into the economy. That was a good thing because it took the economy out of the Clinton recession and turned it around.
    We have had 7 years of almost phenomenal economic growth, but I think it has all come at a cost. The cost is the current mess we are in with the housing market and the other problems that are starting to show up in the economy.
    When the Feds cut interests rates to such a low rate, they did jump start the economy, but they made it too easy to obtain loans. Also there was so much money available, many times the amount of money loaned was more than needed, or that could be handled by the consumer.
    We are paying for that now. Sooner or later hard cash was needed to make good on  the loans. People were using the housing market as a get rich quick scheme and someone was going to be left holding the bag when the market became saturated. The Feds should have tightened things up before they hit the bottom.
    Once the Feds started raising rates and tightening up on money, the economy started to decelerate a lot, so the Fed was left with a dilemma, leave rates alone or cut them again to start the economy back up again.
    The Fed is really having trouble balancing things, because now we have to also worry about inflation and stagflation too. As long as the Fed keeps artificially manipulating the economy, we are always going to have to worry about huge adjustments.
    The Fed should stay away from manipulating the economy unless it is absolutely necessary. As I have said in the past, government shouldn’t be there to protect people from themselves. Most of this housing mess is due to people buying more house than they need and expecting to have someone else bail them out if there is a problem. That is flat out wrong. Why should I have to take care of my house payment as well as my neighbor’s house payment because they bought a house twice the size of mine when they didn’t need it?
    These people need to take their lumps just like the next guy but instead, the Fed and the federal government are going to step in and manipulate things to keep things going. This may fix the short term problem, but is it going to cause another problem in the future?
    The Fed needs to stop manipulating the markets and the economy – it isn’t really helping things. Let’s go back to the hands off approach and let the economy run on its own. We don’t need the government stepping in every time something might go bad.

-Bill Weaver

    The federal reserve is perhaps one of the most important government offices in existence. Let me restate that, one of the most prominent offices in existence.
    It is said by some experts that the Chairman of the Federal Reserve is the second most powerful person in the US (if they have the respect). Again as always, I would like to inform my readers what exactly the Federal Reserve does. I believe the basics are always needed to form a rational opinion.
    The Federal Reserve System, usually the Fed for short, controls the flow of money, credit, and makes loans to other banks. Their greatest and most prominent duty is to set the federal fund rate. This is the rate of interest at  which banks lend each other money.
    Any change to this rate affects the economy immediately as investors and banks react to the change. Any actual long term effects are debated by economists. What the rate changes are supposed to do is to prevent inflation, but not cause a recession. They make these changes based on several different factors on the economy in secret meetings. These rate changes were not publicly announced until 1994.
    Now to the real question, does the Fed do what it is supposed to do? It depends on who you ask. For me, the big trouble I see is their ability to interpret what the economy is doing. Predicting the economy is like predicting the weather, some people may be more accurate than others, but nobody is right 100% of the time. The system is just too large!
    Former Chairmen, like Alan Greenspan, were able to keep the economy relatively stable by keeping a low rate of inflation for a number of years. The new guy, Ben Bernanke, is apparently quite smart when you read his biography, but he has been criticized that he has been too quick to raise or lower rates. Some have even gone as far as to blame him for the housing crisis.
    This leads me to the conclusion that the Fed is one of those departments that have a bit too much power. A lot of its power, however, is not given by the government, but the financial leaders of the United States. They instantly jump on any changes that the Fed makes and don’t look for themselves if it is safe to jump.
    I believe Chairmen Bernanke and his committee do not give enough time for the economy to adjust to the changes. I also believe that the economy is becoming too large to manage in that way. I am not sure if there is a feasible way to manage an economy as large and diverse as the United States’.
    The economy stimulus packages will not work worth a hoot in the long run. Most people will spend it as fast as they get it, either on bills or something like a night on the town. It is a quick fix that will be gone before you know it.
    It is just like when you get your tax returns (if you get taxes back like my mom does). Last year, she made a down payment on a car. That was all of it. The next month, we were in the same shoes as before, but at least we had a car. It might help with the housing crisis temporarily. It might just stave off one more month before a foreclosure, but it is like a diet. You make lose a few quick pounds on a diet, but if you don’t change your life style, you are going right back to where you started.
    Thank you for making it this far. As always, any comments, concerns, or love notes can be emailed to This email address is being protected from spam bots, you need Javascript enabled to view it with the Subject title ‘Democratic Political Columnist,’ and I will be sure to get back to you. Just remember, don’t take the word of me or any of the other writers here. We all have our own bias. Go out and learn about these things. They aren’t as horrible and boring as they sound.

-Eleanor Wyatt 

    “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
                      ~Henry Ford
    The Federal Reserve act of 1913 created a quasi government agency to lord over our currency. The major rational behind this idea was to make our currency more stable and less vulnerable to economic warfare (for a greater understanding I suggest taking macro economics). With this act, a new currency was created, The Federal Reserve Note, which led us down the road to fiat currency.
    For all sakes and purposes the Federal Reserve creates debt. Our currency has no inherent value, only implied value. Each dollar represents a dollar of obligation on the government’s part. Essentially, all our currency is backed by the value of this nation. Every building, every natural resource and all things made and assembled here. In essence, by planting trees, building new buildings, creating new mines with alchemy and by making things in America we are becoming richer every day (WE ARE BONED).
    Exacerbating this situation is the fact that our government pays off our debts with debts. Printing money is an interesting process, when money is first printed it has the same value as the current estimated value of our currency. But, once the government pays off its obligations and the money trickles down to us, all money is worth less because there is more of it representing the same amount of value.
    A grand example of a fiat currency would be Rome which went from having 100% silver coinage to 0.02%.  Strangely enough, nobody wanted worthless money from a declining empire. Kublai Khan introduced fiat money to a conquered China which saw unprecedented growth as witnessed by Marco Polo. Sadly, the issuance of the currency out rode growths in trade and population leading to inter warfare. The French tried three times with fiat money in the past, all of which ended disastrously.
    Don’t think these are the only times fiat money has been discredited. We have Zimbabwe, Germany after WWI, Argentina, Turkey and Mexico just to name a few. This system simply does not work. It lends itself too easily to abuse and there is not enough citizen oversite.
    We don’t even elect the people who control our money. I have a firm confidence that if we ever learn from our mistakes, this will go down as the most discredited economic policy right next to Keynesian economics (commie economics 101).
    Currently, the Federal Reserve is being run by Ben “Helicopters” Bernanke. Bernanke received this nickname from his favored policy of essentially dropping money from helicopters onto the economy to fight deflation. The government benefits from this by destroying their debt easier as I explained above.
    Bernanke has been hitting the news a lot because of his recent rate cuts. Right now the rates are down to 3% from 6.45% last year around this time. Fed interest rates are primarily used as the interest rates in loans between banks (This leads into the complicated process of banks creating money through interest but it is a rather complicated process so Google the movie “Money as Debt” if you’re curious).
    Rate cuts are designed to persuade money to flow, both from banks and you. Supposedly, this jump-starts the economy. Only problem is, too many people are wising up to the process. A worthless dollar from a decaying empire has never sold to well to consumers.
    The question of whether the Federal Reserve is good or not is fairly irrelevant. No matter how good it is at its job, its still working with an unworkable system. Their only job is to prop up the lies. But no worries folks, Bernanke is in his helicopter, and all is right with the world. 

-Jonathan Taft