The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
Comments
Gold Standard VS Fiat Currency
Dear Mr. Blinder,
(I wanted to comment your article « The Fed’s Political Problem » (3.09.09) but the comments link was missing. So I will post here.)
Yesterday I watch the second part of the movie "Zeitgeist" (http://www.zeitgeistmovie.com/) and I am really wondering if the monetary system as we know it today should not be somehow questioned.
In the movie, they say that a big proportion of money is created out of debt and that scarcity is a necessary causes to saveguard profit. This blocks our society to fulfil its true technological potential. They also suggest that the fiat currency as we know it today is problematic because it does not take into consideration the planetary ressources. It makes sense to me.
Do you really think that the Federal Reserve will want to avoid inflation? I have the feeling that inflation is to the advantage of the managers of this extremely powerfull institution and that it is always going to come back.
Why do you divide between « technocratic » and « political » realm? Isn’t so that every decision, idea or opinion is normative? I think that we are all social beings influenced in some way by different values. People defending or others questioning the Federal Reserve have their reasons to do so… In a democratic society, its up to the majority to decide. And to answer your question, yes, I believe that our system would be better off with more decentralization. Don’t you sometime question the fact that 1% of the world population live with more than 40% of the ressources?
If some politicians are still « jealous » of the people working at the monetary institution, I think it is because that they have’nt understand yet that we are all in the same boat and interdependent. I believe it will come sooner or later…
It is contradictory when you say that « Congress has always had, but never used, the legal right to override the Fed's decisions. » Isn’t what they are trying to do now?
You can answer directly to my email adress : francois.dorais@hotmail.com
Best greetings.
Technocrats
Mr. Blinder,
First of all, I am not entirely sure what you mean by 'Tehcnocrats'. It seems that you are referring to a vague group of people representing private capital who work directly and indirectly with the legislative process - and whose actions affect us all. It seems to me you are suggesting that these certain people should be above the legislative process, which is designed to be how the people interface with our government. These certain people, these technocrats, you suggest - 'know more' than congress, and therefore should operate freely to make policy as they see fit, with no accountability.
Let's place this in human context.
Take a sober look at the world around you, Mr. Binder. Maybe you have, and you're one of those people that refer to the rest of us as 'consumers'. Perhaps you would not deny that most people in the world live under the invisible yoke of slavery, created by a monetary system which was designed to extract wealth from the people at the bottom of the pyramid, and redistribute it to the uber wealthy at the top. And this system has concentrated so much power into so few hands now, that billions of people (that you share the earth with, and who are imbued with the same natural rights as you), and who, as victims of globalism (or empire-making), are starving, homeless, war-torn; and no recourse to anything resembling a democratic process. This global capital system has empowered one class of people to decimate the rest - and it's those technocrats you refer to who do the pencil-pushing to make it happen. We serfs in the civilized west are waking up to realize our necks are next on the chopping block. It's been set up so brilliantly. The technocrats have taken their orders so well, creating innumerable dire circumstances, propagandizing their 'solutions' - cleverly disguised grabs for more power - at the ever-increasing expense of freedom.
Maybe you haven't taken a look, Mr. Blinder. Maybe you're in your own little world of 'technocrats' and left-brain cripples buying politicians, buying the legislative process, constructing statistics, doing what you do - and you are unable to see the big picture: that you are a human being, living on a planet with 6 billion other interconnected human beings, each no less important than the other - each with no less of a right to contribute to decisions which affect us all. And - each empowered by an inherent, inborn biological and spiritual drive for freedom which will not be subverted, no matter what you do to try and subvert it.
This system is most assuredly going down like the Hindenburg - and I will be among the privileged, in all of human history - alive to see it happen in my lifetime.
Many Blessings, Mr. Blinder
Science happens.
A technocracy would be as dangerous to the decision-makers as the rest of the body politic. Current forms of democratic governance are teetering on the cusp of effectiveness, but they are outperforming corporatism, fascism, and authoritarianism, no matter how any vultures may be taking advantage of uncertain times to shape shady realities.
It is only "natural" that humanity will transcend such simplistic solutions for governance, and it seems likely to favor a different skill set than the ones which came before. It won't matter how you wool the wolf.
Suggesting that technocratic bodies make important decisions pertaining to the wellbeing of entire civilizations, that the masses may use the resources of their governing systems to meddle in issues of private morality, is patently Dark-Ages.
Mr. Blinder is DEAD WRONG
As a recent MBA graduate who looked for a job in Finance at the wrong time, I have been watching the financial meltodown closely and, thanks to Ron Paul, have done a 360 in my views.
Contrary to what people like Mr. Blinder want to report to us, the crisis was not caused by the obscure, politially friendly diagnosis's "greed" or "lack of regulation".
Contray to these Keynesian arguments which would lead to power increases of the already super-powerful and secretive banking cartel called the Federal Reserve, THE CRISIS HAPPENED BECAUSE BUBBLES INEVITABLY FORM WHEN CENTRALIZED POWERS MANIPULATE THE MARKET AND SET ARTIFICALLY LOW PRICES/INTEREST RATES.
How do I know this? Because everyone who saw this crisis coming and have warned us for years, have said so. Also, it makes more sense than obscurities.
Just like "greed" is a poor diagnosis, saying Mr Paul "incredibly conivnced" congress is another incredibly naive and thoghtless conclusion for all the support this bill passed.
The PEOPLE, like myself, have pressured their congressmen to uphold the Constitution and protect our currency.
I don't want what financial independence I have to be in the hands of secretive banking tycoons.
I don't want them to decide Lehman will fail and Goldman will grow 10x more powerful, when the Fed has such close POLITICAL ties to Goldman Sachs. I don't want their political decisions funded by inflating away my wealth.
I simply want transparency.
Mr Blinder wants secretive centralized banking power.
What do the intelligent readers of Foreign Affairs want?
Mr. Blinder, please!
I agree with Mr. Blinder, "that government is pushed and pulled by interest groups and partisan politicking, often at the public's expense." I agree that there is a, "current estrangement between Americans and their politicians," and I also agree that it is a MAJOR problem within our government, particularly our federal government.
However, the reason that wealthy interest groups, in the medical, insurance, and banking sectors, the people who actually are steer our country, have so much influence over policy, is SPECIFICALLY because government has grown too big. The reason partisan policking stalemates the 'will of the people' while propelling legislation that benefit only a handful of the countries wealthest, is SPECIFICALLY because government has grown too big, and the reason people feel estranged from politicians that are voting against the obvious will of their constituents in order to recieve massive contributions and support from incredibly high paid lobbyists is SPECIFICALLY because our government has grown too big.
In his article, Mr. Blinder questions the purpose of government, when he states, "It would not be about the scale of government, but about the scope of politics; not about whether government is too "big" or too "small" in some abstract sense, but about what things the government should and should not be doing." Mr. Blinder wants to offer his own unique version of how the country should be run, and completely ignores the fact that the role of the federal government is written, clearly, in plain English, in our founding documents.
Mr. Blinder goes on to suggest that we want more government in certain areas. He then rattles off "crime prevention, environmental preservation, job security, and education, to name just a few." He will choose to ignore the fact that, over the last 10 years, we have seen a massive increases in federal government spending in each one of these areas, yet these very areas are more problematic, and are more of a concern than ever. Crime is up. Though we are on the verge of a police state, and threats by the Treasury and Federal Reserve regarding "martial law" are being echoed in Congress, crimes is on the rise from the rising politial and financial pressures faced by the people of this country. In part, largely due to the skyrocketing unemployment and home foreclosures. Federal level government protection of the environment has become nothing more than federal land grabs and Kilo decision gifts to developers, as environmental groups are increasingly being funded by large corporations looking to eliminate competition. Unemployment is skyrocketing, and the president says it's only going to get worse, insisting that unemployment will peak at 10%. Our kids, compared to the rest of the world, are quickly losing ground in quality of education. While we still have the best universities, American students grades are falling next to their increasing proportioned foreign classmates.
In the summary of this article it states, "Washington could learn from independent agencies like the Federal Reserve." That's rich. In this authors other article written about the political problems the Fed is currently facing with Ron Paul's Audit the FED bill, he states that the purpose of the FED is to, "designed to conduct monetary policy on decidedly nonpolitical grounds: it has only a vague legal mandate from Congress -- to pursue both "stable prices" and "maximum employment" -- and nearly complete discretion to fulfill its mission as it sees fit." Are our prices stable? Unemployment is at record highs. To suggest that more government functions be handed over to privately run agencies that have no oversight (oversight similar to that of the FED) like the privately owned Federal Reserve is LUDICRIS.
We need more accountability, not less. We need smaller government, not a larger one. We need local government, the government that is closest to us, to be the strongest, and a federal government, that is unaware and incapable of being aware of the problems that face local constuituents, to respect the constraints of the Constitution, particularly Article 1 Section 8, and the 10th Amendment. We need regulation that helps keep the markets as free and fair as possible. We need to end NAFTA, CAFTA, GATT, FTAA, and SPP and start generating a revenue stream on goods coming into this country and that are sold on our markets. We need to ban outright, or heavily tax, derivatives, the root cause of the worldwide financial crisis. We need to re-instate Glass-Steagle laws and stop the banks from using dervatives to make speculative purchases on commodities, thus driving their prices artificially through the roof. We need to shine a light on the $1.5 QUADRILLION in worthless derivatives, and end 'mark to market' speculative evaluations of these worthless derivatives. And finally, we need to audit, then end, the privately owned Federal Resseve, return the power of the purse to Congress, the power of the printer back to the people, and base our money on something other than figments of rich peoples imagination.
I doubt Mr. Blinder will agree. Some of his closest buddies, here at the CFR, are owners in the FED, so, I doubt they are going to want to lose their control over our country, which is why his article is so biased. But more power in the hands of fewer people is the OPPOSITE of the American way, and placing more power in the hands of fewer people, either politicians or "technocrats," (from his other article that insists technocrates are better that politicians for some government functions. However, the FDA, his example, does a horrible job at approving drugs, can you say Vioxx and menthol cigarettes) is where our country has gone off track and are the very cause of the problems our great nation faces.
No sir, you can keep your big government, your technocrats, and your global agenda based governance. I want no part of it, and I don't have to tolerate it. Under the laws of our country, big government is ILLEGAL!