Organized Crime
34. The Myth of a “Libertarian” Fed
One of the more absurd spectacles during the “Great Recession” was how so many commentators blamed the crash on a Fed that was “too libertarian” and not enough of a central planning board. Business historian John Steele Gordon wrote in the Wall Street Journal that the cause of the crash was the “baleful” influence of Thomas Jefferson and his anti-central banking views that still live on today. Wall Street stockbroker Henry Kaufman wrote in the Financial Times that “libertarian dogma” had led the Fed astray. This comment was repeated by many others who appeared to assume that: (1) Since Fed Chairman Alan Greenspan had been a protégé of Ayn Rand’s forty years earlier; and (2) since Ayn Rand is associated with laissez faire; then (3) the Fed under Greenspan’s chairmanship was not in any way involved in regulating financial markets or in orchestrating boom-and-bust cycles with its monetary policies.
A bigger absurdity has never been published in such august publications as the Wall Street Journal and Financial Times. All one needs to do to realize this is to search the Web for a Fed publication entitled “The Federal Reserve System: Purposes and Functions.” In addition to recklessly manipulating the money supply and causing boom-and-bust cycles that sometimes result in Great Depressions, the Fed has “supervisory and regulatory authority over a wide range of financial institutions and activities.” Those functions were not put on hold in any way during the Greenspan chairmanship.
•Bank holding companies
•State-chartered banks
•Foreign branches of member banks
•Edge and agreement corporations
•U.S. state-licensed branches, agencies, and representative offices of foreign banks
•National banks
•Savings banks
•Nonbank subsidiaries of bank holding companies
•Thrift holding companies
•Financial reporting procedures
•Accounting policies of banks
•Business “continuity” in case of economic emergencies
•Consumer protection laws
•Securities dealings of banks
•Information technology used by banks
•Foreign investment by banks
•Foreign lending by banks
•Branch banking
•Bank mergers and acquisitions
•Who may own a bank
•Capital “adequacy standards”
•Extensions of credit for the purchase of securities
•Equal opportunity lending
•Mortgage disclosure information
•Reserve requirements
•Electronic funds transfer
•Interbank liabilities
•Community Reinvestment Act sub-prime lending demands
•All international banking operations
•Consumer leasing
•Privacy of consumer financial information
•Payments on demand deposits
•Fair Credit reporting
•Transactions between member banks and their affiliates
•Truth in lending
•Truth in savings
All of this massive financial market regulation and regimentation was in full force during the Greenspan era. None of it could be even remotely considered to be “libertarian” or “Jeffersonian” in any way. The Fed is a central planning agency, and the above list is a list of some of its hundreds of central planning tools. Like all attempts at central planning, it only destabilizes the economy while propping up the politically-connected plutocracy with cheap credit, bailouts, and other forms of corporate welfare.
