What we all remember President Woodrow Wilson for, are his 14 points in the name of democracy. But it is time to add the 15th point he made to our recollections- the federal reserve. Back in 1913, Pres. Wilson helped form and establish the federal reserve- the institution meant to supervise the economy.
Since then it’s been known for making terrible judgment calls (such as in The Great Depression- 20’s) or maybe better ones (such as in the Great Recession-00’s)?
The federal reserve is perhaps a social attempt to curb capitalism, to keep it close to home and not let it run off with our money, or at least- not let it run off without the govt. making profit.
The problem? We now have a democratic govt. running a capitalist country, whose economy is being run by a republican (Mr. Ben Bernanke, Chairman of the reserve) in a somewhat socialist institution. Which leads me to ask myself- what in the world could such an institution achieve?
It failed at recognizing the onset of the recession, it failed at preventing ‘too-big-to-fails’ from rising and it is currently asking itself how it can prevent them from becoming even bigger (after just bailing them out). The answer to this question is- it can’t.
‘Too-big-to-fail’ institutions are the epitome of capitalism. That’s what it’s all about isn’t it? The strongest in the market survive. And when congress awards you 787 billion dollars in the middle of a recession, you’re obviously going to survive and grow at the expense of the weaker institutions, the ones who were originally supposed to be protected by the same federal reserve that appealed for the almost $800 billion bailout package for Americas greatest. Was that stimulus a good thing for all of America? probably, but that’s temporary, because when we ask ourselves if it will help prevent the next recession the answer is: most definitely not. As long as the system is run by the strong who encourage their fellow strong and pat each-other on the backs, it will forever be kept off ‘Main Street’, and so will its profits.
I am able to recognize that if Wall Street were left to sink, it would have taken 300 million Americans down with it, but I am not so naive as to accept such a monetary-supervision-and-decision-making system that is ever so inherently flawed.
For the ‘too-big-to-fails’ to stop existing, would require a switch from absolute capitalism to a more socialist economic method- one can’t argue for Keynesian economics and at the same time vote republican and wish Meryl Lynch would just tone it down and stop paying its executives ridiculous salaries. Time for America to make up its mind.
Should Lehmen Brothers have been saved? Should AIG have been left to sink? Regardless of the answers, the current American institutional system for dealing with questions of capital governance isn’t operating properly, maybe because if an elephant tries to behave like a donkey, he ends up on his face.