Federal Reserve Board Quotes
The Congressman was notorious for his extreme and unusual views of things. See {606976} for another of his extreme statements which turned out to be untrue. McFadden quotations are sometimes used to show that there is almost no limit to how absurd a view a politician in general, or a member of Congress in particular, might take and make public.
The legislation creating the Federal Reserve Board was then being debated. A few days later it passed despite reservations from Lodge and others. The powers relegated to the Federal Reserve Board have been debated ever since.
The State and local bankers and financers had opposed this of course as they often made money when everyone else including the government was broke and paid very high interest rates to borrow anything. Later, under Andrew Jackson, the Bank of the United States was ended. Later it was recreated and has evolved to the Federal Reserve System. However, as in Jackson’s day, populists and local bankers and financiers still argue against the idea of a national or central bank.
The ‘Fed’ refers to the Federal Reserve Board, the strength of which lies in its independence from politics. Some, however, believe that there should not be any entity that performs a major function in our society which is not accountable to the Executive Branch or the Congress or both.
Paul wanted to abolish the Federal Reserve Board. This is a political viewpoint that goes back to the Founding Fathers debates about a national bank. Andrew Jackson terminated the national bank and later the concept of the Federal Reserve Bank took its place.
The Federal Reserve Banks are private and are part of the Federal Reserve system whose head is a Presidentially appointed and Senate Confirmed Chairman. However, the operations of the bank including setting the monetary policy of the United States are performed independent of the Congress and the President, and in a number of cases the politicians have been very unhappy with the Fed’s policies. So a critically important function of government is not under the control of the democratically elected representatives of the citizens; the General Accounting Office which can audit every other function of government including the CIA may not audit the Federal Reserve System even though it handles more money than any other aspect of government.
What Franklin Delano Roosevelt began, President Nixon would in 1971 complete by removing America from the gold standard entirely and ending fixed rates of exchange. There have been those in government who did not understand the modern economics of money and who believed that currency had to have a fixed rate of exchange for gold or silver otherwise it was worthless. Roosevelt had to deal with them as did Nixon later. Even into the 21st century when it had been amply demonstrated that the best currency in the world was the United States dollar precisely because it was backed up by the full faith and credit of the United States Government, there were those who complain that United States money is not sound currency and argue for the return of the gold standard.
The Chairman of the Federal Reserve Board, creatively found alternatives that the Fed had never used before and almost all experts did not even realize that were possible. He and Treasury Secretary Paulson, almost certainly saved the American system of capitalism. But in the process, they in the early stages and Bernanke throughout the crisis took a number of steps to save the system where the very people and companies whose actions had triggered the entire crisis seemed to personally benefit while most Americans were hurt badly and none of them received any immediate personal benefits the way the large bankers did. The amount of money that Bernanke and his Federal Reserve Board associates spend was staggeringly large and that too distressed many Americans. Almost all of the money was actually returned to the taxpayers as a result of the work of the Fed and the Treasury officials, but no one could feel good about the unfair disparity that had so benefitted much of Wall Street particularly and Main Street and the rest of American only generally while so many lost their jobs, their homes, their dignity and their hopes. Only the big banks and bankers also got a personal huge windfall of taxpayer money and took no risk for that. The alternative would have ruined everyone and even have been worse for the average citizen.
The nation was beset by inflation. Volker raised the interest rate very dramatically much to the distress of most of the country including President Carter and the Congress. However, although Carter lost is bid for a second term partially as a result of the public unhappiness about raising the rates—see {634622}—Volker brought inflation under control.
Volcker was politically very independent and the President was facing re-election. Carter appointed him. The Federal Reserve took actions that were unpopular with most voters. Carter couldn't control the Federal Reserve. He lost the election.
