The Invention of Money - This American Life

[BridgeTheGap]

(Some very interesting info in this program! - btg)

Five reporters stumbled on what seems like a basic question: What is money? The unsettling answer they found: Money is fiction.

Ira Glass speaks with several members of the Planet Money team, who all found themselves—in the course of their reporting—independently asking the same stoner-ish question: What is money? Ira and Planet Money producer Jacob Goldstein discuss a pre-industrial society on the island of Yap that used giant stones as currency. The book that Jacob read about Yap is called The Island of Stone Money.

Act Two. Weekend At Bernanke's.

Though the name of the Federal Reserve includes the word "federal," it's not actually part of the government. It's an independent institution tasked with something very simple, but very huge: Creating money out of thin air. And during this last financial crisis, the leaders of the Fed did things that they would never have considered doing in the past. Alex Blumberg and David Kestenbaum report on what the Fed usually does, and how, since 2008, it's taken a trip to what amounts to Fed Crazytown.

http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

[SDuderstadt]

1. The Fed IS part of the federal government...

it is what's called an independent federal agency, which means that it is self-funded and does not report to the President through a cabinet secretary...for a very good reason.

[Democracyinkind]

2. Very glad to see you taking up RW bullshit outside of the Dungeon.

Keep up the good fight.

I'm always baffled at the amount of RW-memes that end up being discussed on DU.

You've just debunked their favorite point.... Next up :

"But the FED is owned by "unknown" entities (they could be FOREIGN! Oh the humanity!"

"But the Gov pays interest to the FED and never gets it back"

"The people - or at least the congress - should own the FED".-..


There's plenty more where those came from. Of course, none of these arguments carry any weight with people familiar with the history and function of central banks.

Some basic skepticism towards the state and how it finances itself is always merited; but the kind of criticism of the FED discussed in the link provided in the op could be straight out of "The creature from Jekyll island" a favorite of RW-conspiracy nuts... And also one of the favorite topics of such people like Jared Loughner; whose obsession with "real currencies" has been amply demonstrated in the last few days.

Really, the whole FED-conspiracy is one of the most broadly accepted RW-conspiracy-BS-story and should not be peddled by Liberals who are totally unfamiliar with the subject.

Thanks for your concise and informed answer.

I totally felt the need to point out where these talking points usually come from.

[SDuderstadt]

3. For the life of me...

I don't know how so much RW propaganda has seeped into progressive discourse.

[BridgeTheGap]

4. You certainly don't mean Dennis Kucinich or Alan Grayson do you? Did they go right and I missed it?

Mistrust of an organization that isn't audited doesn't seem so out of line to me. And Alan Greenspan's reassurance that "nothing was wrong" before our economy damn near collapsed doesn't exactly lend itself to confidence.
Monetary is vitally important to our economy. Given the corruption that has become pervasive in this country, an audit of the Fed is way past due. Too much power and secrecy in this organization to not give it a good look. Unfortunately, this secrecy lends itself to conspiracy theories. Let the truth be known.

[SDuderstadt]

5. Are you claiming that either...

Kucinich or Grayson believe that the Fed is not part of the federal government?

Beyond that, the claim that the Fed has "never been audited" is simply not true.

www.publiceye.org/conspire/flaherty/Federal_Reserve.html

[BridgeTheGap]

8. Let me rephrase "isn't audited" to "isn't audited in areas where it should be."

i.e. how tarp funds were administered. If the Fed has no problem with transparency, then why, in 2009, did 316 members of the U.S. House of Representatives and 32 members of the U.S. Senate sign on to the bill to audit the Fed for the following reasons:

"The crucial issue of Federal Reserve transparency requires an analysis of 31 USC 714, the section of US Code which establishes that the Federal Reserve may be audited by the Government Accountability Office (GAO), but which simultaneously severely restricts what the GAO may in fact audit. Essentially, the GAO is only allowed to audit check-processing, currency storage and shipments, and some regulatory and bank examination functions, etc. The most important matters, which directly affect the strength of the dollar and the health of the financial system, are immune from oversight."

Where is the oversight of "vested interests" that Fed board members may have that could be relevant to policies the Fed sets and expenditures (i.e. TARP)that it has made?

[sendero]

7. If you had to pick one single factor..

.. as the proximate cause of our current economic crisis it IS THE FED.

It really doesn't make a whole lot of difference what the exact chain of command is, Greenspan flooded the economy with money (for POLITICAL reasons and because he is a Libertarian moron) and caused the housing bubble.

The Fed's CURRENT ACTIONS are aimed SQUARELY at bailing out the banks and the people be damned.

[groovedaddy]

9. Economists challenge Fed independence

“We find evidence that the Fed sets an unusually aggressive monetary policy in the run up to presidential elections when the Fed chair and the president have a political affiliation,” Burton A. Abrams, professor of economics, said, “and that this relationship holds, on average, for both Republicans and Democrats.”

Abrams and Iossifov evaluate the Fed's monetary policy actions for the period 1957-2004 by assessing its usual response to various economic conditions.

“The Fed seems to target its primary interest rate, the federal funds rate, quite predictably in response to inflation and unemployment considerations until a presidential election looms and the Fed chair and the sitting president have a party connection,” Abrams said. “At that point, the Fed seems to err on the side of over-stimulating the economy by targeting the federal funds rate lower than circumstances would suggest.”

Economists and political scientists have previously established a link between favorable employment news and subsequent votes for the sitting president or the sitting president's party. This link provides a political motivation for presidents to pressure the Fed and for Fed chairs with partisan affiliations to over-stimulate the economy in the run up to the election, Abrams said.

http://www.udel.edu/PR/UDaily/2006/mar/abrams032806.html

[sendero]

6. I listened to that.

... last weekend and it is the first time I ever thought of This American Life as a puff piece. It wasn't particularly inaccurate, but a lot was left out, it came off as a puff piece for the Fed.