One of the best articles I've seen on the whole Fed Reserve issue. Excerpt:
Ladies and Gentlemen, We Have a Winner...
When one considers the possibility that the Fed Chairman actually works for the banks, all the pieces begin falling into place.
It's only natural, after all, given that the original mandate of the Fed was to preserve banking stability. It is the Federal Reserve's job, first and foremost, to make sure that the U.S. financial system (and by extension the executives who stride atop it) perseveres through all economic storms.
In principle, the good of the country and the good of the U.S. financial system are supposed to be one and the same thing. In practice, the two can be at odds, sometimes dramatically so.
The charade of pretending that the two considerations are one and the same, though, is a key aspect of the brilliant bait-and-switch job foisted upon us all. Whenever a Fed (or Treasury) official's actions can be wrapped in the guise of “saving the system,” it is implied that said action was undertaken for the good of everyone. Ha!
What's more, not all bankers are created equal... as with seating arrangements in the king's court, it is always better to be closer to the throne. Given their combination of heft, gravitas and “too big to fail” status, the top four banking institutions probably wield more power and influence than the next 40 combined. And beyond that, no man's land. One can trace out the priorities of the Fed and Treasury in real time by observing how the giant money center banks get attended to hand and foot. The Bumbershoot Bank of Kalamazoo Kansas, meanwhile, is left to choke on prairie dust.
Banana Republics and Dictatorships
The main trouble with arrangements like this one is the way they tend to be favored by banana republics and dictatorships. When a small, concentrated “elite” class is consistently favored at the expense of everyone else, the long-run result is rarely pretty.
A tendency to endorse “socialism for the rich, capitalism for the rest,” as James Grant and others have put it, is not the best recipe for sustaining and growing a free-market economy.
Unfortunately, in granting semi-autonomous power to a “fourth branch” mainly beholden to the banks, that is pretty much what the United States has signed up for.
Simon Johnson summed up the forward-looking concerns nicely in a recent Seeking Alpha piece, “Is a Two-Track Economy Emerging from the Rubble?”
The United States has, over the past two decades, started to take on characteristics more traditionally associated with Latin America: extreme income inequality, rising poverty levels, and worsening health conditions for many. The elite live well and seem not to mind repeated cycles of economic-financial crisis. In fact, if you want to be cynical, you might start to think that the most powerful of the well-to-do actually don't lose much from a banking sector run amok ”“ providing the government can afford to provide repeated bailouts (paid for presumably through various impositions on people outside the uppermost elite strata).
If we as Americans still have some true fighting spirit left in us ”“ and enough of a grasp on revolutionary history to spark it ”“ then perhaps Fed Chairman Bernanke will get more than he bargained for in the next few years.
http://seekingalpha.com/article/158865-who-does-ben-bernanke-really-work-for
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