What can be done to realistically make the FED vanish?

The free market can control the money supply according to the laws of supply and demand far more efficiently than central economic planning can.

 

It has to be a realistic, logical, sound and practical alternative to control the money supply. We see how great the free market regulates prices.

 

We've seen how well the Fed regulates prices. A 2224% increase in prices since 1913.
We've seen what happens when the government institutes direct price controls.
We've seen the disastrous results of the Fed "controlling" the money supply and interest rates.

Yes. It does so more efficiently than any central economic planning ever could.

 

Don't you understand? The Fed is a private organization owned by very rich men, which means that they are smarter, more capable, and just plain better than you, you lowly commoner.

You should use their money that they deign to give you and be glad that they don't send their private soldiers to murder your family for your insolence.

Did I capture your mindset well enough?

 

The Fed is not a private organization. It's an independent government agency.

 

Made up of private banks.

 

It has member banks which are private, but it's not "made up" of private banks. It also has the FRB and FOMC, which are made up of government officials.

 

About 2 1/2% per year. Right where we want it.

We've seen what happens when the free market sets prices.

The USA becoming the economy powerhouse of the world.

I appreciate that is your opinion. You've never demonstrated it with any level of persuasiveness to me.

 

You don't understand what the Fed does either, yet that hasn't stopped you from making absurd claims about its necessity. Note, that knowledge of bookkeeping and vague concepts like "controlling the money supply" does not constitute knowledge of how the Fed makes decisions regarding monetary policy or how it implements policy.

In fact, I will go out on a limb and say that not a single supporter of the Fed on this forum has knowledge of the aforementioned topics.

 

This presupposes that money supply should be controlled. Why does the money supply have to be controlled?

 

Because it otherwise reacts in the wrong way, getting tighter in a recession and looser in an expansion.

Markets do not often act rationally in the best interests of the economy.

 

Please, enlighten us with your knowledge of these topics, and the sources of your information on them.

 

You are starting to become a troll.

 

Tell us how the private banks make up the Fed.

 

Why is it "wrong?" Is your argument that volatility of the business cycle is decreased in the presence of a control of the money supply? I don't disagree with this. But why is volatility inherently bad? I would rather be faced with the parameterizable risk of the market than with the partially reducible (maybe even irreducible??) risk as a result of the unintended consequences of monetary policy.

 

Because you don't want to make a recession worse than it needs to be and cause unnecessary damage to the economy and peoples' lives.

 

I'm familiar with the tools used by monetary policymakers. A model that has become popular in the last decade is the dynamic stochastic general equilibrium model - a macroeconomic model which attempts to describe the behavior of the economy, its sensitivities, and effects of a change in policy. I'm also familiar with how they model the future behavior of things like CPI, exchange rates, and so on, and the time series analysis tools utilized for forecasting. How far exactly do you want me to go into each of these?

My sources:

http://www.federalreserve.gov/pubs/ifdp/2011/1023/ifdp1023.pdf
http://www.federalreserve.gov/pubs/feds/2005/200534/200534pap.pdf

If you look at the appendix, you'll notice several nonlinear difference equations used to model CPI and such - all of which exhibit an enormous amount of chaotic behavior and are sensitive to initial conditions.

 

This can be said of the unintended consequences of "stabilization" or "business cycle smoothing" policies of the Fed.

 

Well, OK, that's a good start. So what is your beef with the Fed system, and what would you propose as an alternative?

 

Repeal legal tender laws and allow currency competition. The Fed can stay, it just has to compete.

 

You mean a mercantilist system replete with bailouts for debtors, price controls, government interventions on behalf of rent seekers, subsidies for special interests, and legal tender rules? That's what marked the "1700s economy" and what is in practice today. Being that you are fully in support of those things and vigorously defend them, you prefer the sort of economy that was to be seen in the 1700's.

 

We've discussed this proposal in depth and it has a number of flaws that I have not seen adequate responses to.

How do you keep track of the value of various currencies? What if the seller or IRS won't accept the currency you have? What if you are holding Madoff dollars?

 

nothing like hyperbole to start honest debate

 

I'm calling those who believe that those in power care about bettering the lives of anyone, retarded.

 

Supply and demand.

If a seller won't accept the currency "you" are using, then "you" need to find a currency he or she is willing to accept.

The IRS can publish a list of acceptable currencies.

Then you're an idiot?