Saturday, November 14, 2009

Big mistake: Obama Administration defends Fed

On November 10, Senator Dodd was right to propose eliminating the regulatory role of The Beast The Federal Reserve. Unfortunately, the Obama Administration continues their fearmongering that civilization will end if any group other than the Fed regulates "systemic risk."

From Bloomberg's Robert Schmidt and Sandrine Rastello:

Two Obama administration officials stood up for the Federal Reserve after a key senator proposed stripping the central bank of its authority to supervise banks.

Austan Goolsbee, a White House economic adviser, and Neal Wolin, the deputy Treasury secretary, said the proposal by Senator Christopher Dodd would weaken the nation’s ability to guard against future financial crises.

Nothing particularly shocking about this. But Senator Dodd's banking committee spokesman, Kirstin Brost offered a great counterpunch to the Administration's delusional claims about the wonders of the Fed:

“The Federal Reserve didn’t exactly do a stellar job handling systemic risk -- just look at how they failed to act on subprime mortgages,” Brost said.

I'm far from agreeing with Senator Dodd's 1,100 page bill fully though. So while America's financial system needs to be righted, I propose the strongest regulation possible:

The Congress shall have Power... To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures (Article I, Section 8)

Perhaps Senator Dodd could begin a national dialogue on regulating the financial system by discussing:

1) fractional reserve banking vs. full reserve banking
fiat money vs. honest money
the existence of the Federal Reserve

Tim White

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