Why We Need the Fed

[MrBogosity]

Most if not all of this article could go in the Fail Quotes thread: http://www.theatlantic.com/business/archive/2011/01/why-we-need-the-fed/69554/

Just some highlights:

Here are its four central duties, from a document (.pdf) on its website:

1. Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
2. Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
3. Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
4. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

Yeah, and how's THAT been working out so far?

Warning: MAJOR FAIL ALERT:

If you got rid of the central bank, you would need to push many of these functions to other regulators or private firms. For example, inflation has to be kept in check somehow.

So, you keep inflation "in check" by managing a fiat currency, the very thing that causes inflation to begin with???

The problem with eliminating the Fed is that you would need to delegate these responsibilities to another entity that could do them better.

This is that cultish thinking again: there MUST be some entity managing this from the top-down. Just like we MUST have been intelligently designed and could not have evolved.

The U.S. needs some monetary policy. The government has chosen to allow the Fed conduct monetary policy with significant independence, directing it to achieve two objectives: price stability and full employment.

And what we got was perpetual inflation and big rounds of high unemployment. Did this joker even THINK before he wrote this article? Did he not hand it to anyone else first who could say, "This is stupid, don't say this"?

Another way to conduct monetary policy could be to peg currency to a commodity like gold. The U.S. used to take this approach through the gold standard. With this strategy, some think you don't need a Fed, because the quantity and value of the currency depend on the quantity of the commodity. Kohn says that this approach can be inflexible and dangerous:

Periodic bank panics occurred under the gold standard;

Only with fractional reserve banking.

the Fed was founded to deal with those.

Yeah, and what happened in 1933 again?

And you're at the mercy of the supply of gold in the world,

This idiot doesn't even know the FIRST THING about the gold standard! Why do these idiot cultists think that somehow having a gold standard ties the currency to every single gram of gold in the world? It's ONLY the amount held in reserve by the entity issuing the currency. If there is a "downward pressure," people holding gold privately will exchange their gold for the currency, putting the system back into balance. They'll do the opposite if there's inflation.

It wasn't until after the U.S. went off the gold standard that we were able to begin emerging from the (Great) Depression.

Except that the Fed wasn't FOLLOWING the gold standard. It just shoved the gold in a vault and pretended that it didn't exist.

He believes central bankers can do a better job of achieving price stability and other objectives with more flexibility than a commodity standard that ties the money supply to rigid rules.

Right, because they're imbued with supernatural abilities like the Pope or Oprah.

If you were to get rid of the central bank entirely, then you would need to find other regulators and/or mechanisms to take over its essential responsibilities.

Right, because we're too stupid to manage our own affairs, and the Fed knows better how people and industries should spend and invest their money than those people and industries do.

I wonder if these people apply this thinking to other aspects of life?

Garbage man: I'm here to pick up your garbage and take it to a landfill.
Indiviglio: But what will you replace it with?

Barber: Right, you're next. Sit down and I'll cut your hair.
Indiviglio: But what will you replace it with?

Policeman (escorting a handcuffed robber out of a store): Right, this guy won't be troubling you any longer.
Indiviglio: But what will you replace him with?

Doctor: We need to cut out this cancerous tumor before it kills you.
Indiviglio: But what will you replace it with?

Indiviglio's wife: [packing her bags] Daniel, you're an asshole! I'm leaving you!
Indiviglio: But what will you replace me with?
Indiviglio's wife: [smiles and puts her vibrator in her bag]

[Travis Retriever]

Right, because their imbued with supernatural abilities like the Pope or Oprah.

(emphasis added by me).
You mean "they're"?

Grammar and spelling aside, very nice rebuttal to what appears to be a pretty terrible article.
It kinda reminded me of that sfiorare idiot posting a link saying "The Federal Reserve System is not 'owned' by anyone and is not a private, profit-making institution." (source)
Right, so if it's unowned, does that mean I can homestead it, and take it for myself?  No?  Then it IS owned by someone. I mean, duh!

[MrBogosity]

(emphasis added by me).
You mean "they're"?

Damn bogons...