Neo Kervoskia
09-06-2006, 21:55
Should the Federal Reserve's monetary policy be set to a popular vote amongst the people? Probably not and I'd gouge out a kitten's eyes if it were.
Markreich
10-06-2006, 00:27
Most people can't/don't balance their checkbooks... how the heck are they going to understand national and international financial policy?!?
New Granada
10-06-2006, 00:31
This idea is commensurate with doing surgery the same way we do jury duty.
No, that'd be massively foolish. Monetary policy is the most powerful tool the US has to stimulate economic growth, restrain inflation, and keep the value of the dollar as stable as possible. It should be left in the hands of those skilled enough to understand the ramifications of fiscal and monetary policy, not the average person. Hell, most people can't balance a checkbook or manage their debt so having them manage the world's largest checkbook and debt would be catastrophic.
Our economic health and the value of our currency is both a domestic and an international issue; if the US economy tanks, so does the world because we represent 1/5 of the world's GDP and a huge chunk of world trade. Also, if out currency tanks, the ramifications worldwide are huge. The price of all commodities soars; for example, nearly $21 dollars of each barrel of oil is simply to cover the depreciation of the dollar since 2002. In fundamental terms, the price of oil is only 9% above its 2000 level despite rising over 130% nominally since that year.
Thirdly, the Federal Reserve often has to make decisions that are unpopular or that cause economic hardship; unfortunately, the democratic system would be unable to make these decisions because most people don't understand the economics behind them. For example, in 1982 Paul Volcker raised interest rates to stifling levels, plunging the economy in to its worst recession since the 1950's; he was brutally castigated by public opinion, but in the end people realized that what he did was necessary to rescue the economy from the inflationary spirals of the 1970's.
He is directly responsible for starting the high-growth, low inflation boom of the 1980's and 1990's along with the bull market in stocks which resulted in soaring real and disposable income for a lot of people, and yet in 1982 he was seen as a heartless monster who was pushing the economy in to disaster by the general public. That is why FOMC policy should not be set by a vote, because popular opinion is both myopic and emotionally driven.
This idea is commensurate with doing surgery the same way we do jury duty.
Basically yeah. Although jury duty is complusory and this wouldn't be. In fact it's worse than that, because many would want to deliberately disrupt the economy or mold it for their personal gain.