Why I don't take anti-Federal Reserve propaganda seriously
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05-04-2012, 08:51 PM
Why I don't take anti-Federal Reserve propaganda seriously
One, the people who spread these wild claims say demonstrably wrong things;

For example:

The Fed never gets audited, except that it does, regularly and in several different ways. For an example:


The Fed keeps the interest from the Treasury bonds it buys, except that by law it has to reimburse most of its earnings back to the Treasury, and it tells us how much:


I could go on, but you've probably heard similar nonsensical, checkable assertions from people who should know better. No doubt they have acted upon the ignorance and urban legends about money promoted by "Austrian economists."

And two, the Fed's way of doing things, which has a theoretical justification called Chartalism or Modern Monetary Theory, has some interesting arguments in its favor:



Basically Chartalism holds that the state creates money by creating the need for it through taxation. Taxes serve as an economic regulating mechanism instead of a source of founds for the government. Mosler gives the example of a British colony in Africa some decades back, where the colonial government wanted to hire the natives to grow certain crops, but the natives wouldn't take the jobs. So the government levied a tax on the natives' huts which they had to pay with British coins. What do you know, the natives then took the farm jobs to earn the coins to pay the tax. Our Federal Reserve Notes work in basically the same way, and Mosler points out counterintuitive consequences, for example, that deficit spending doesn't deplete savings, but instead creates them, an empirical fact based on straightforward accounting, or so Mosler argues. You should read it and decide for yourself.

In other words, don't take the Fed-hating cranks' assertions at face value without (1) investigating them, and (2) seeing what the other side has to say in defense of its policies.
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Why I don't take anti-Federal Reserve propaganda seriously - advancedatheist - 05-04-2012 08:51 PM
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