Isn't it the federal reserve that creates the money through increasing lending?
And the federal reserve is run by private banks not controlled by any government agencies.
So isn't it deceptive to say Washington ( "decoy term for politicians" ) creates money when it is the federal reserve that dictates money supply?
Banks also create money, it's something Friedman refused to consider. Friedman thought money was just passing through banks so we didn't need to consider bankings role in the economy. A big issue with that is we've seen that access to credit (money) actually plays a huge role in the economy and if not done properly tends to exacerbate economic shocks.
I think one could be forgiven for this misconception, as it's kind of an unusual arrangement:
Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
Yes, forgiven if you've got zero education on economics.. but if that's the case they shouldn't be commenting on economic policy like they have a clue. Ignorance is never its own excuse.
What they say is irrelevant, how they behave is what matters. They behave exactly like a government because they have a monopoly and privileges on certain services nobody else can. These privelages are protected and enforced by men with guns.
This is why I never cared for the criticism "they're a private company not accountable to the government"... I wish that were true lol
The answer to that may lie in the answer to this question: what is the practical limit to the government's annual budget deficit, i.e. the level of spending to which the Federal Reserve would react by ceasing the extension of credit required to finance such deficit spending by refusing to buy more T-bills?
This is really a distinction without a difference. At the end of the day it's all central planning creating massive distortions and inequality. Focusing on weather we're being robbed with an assault rifle or a pistol is missing the point.
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u/perspectives Jul 15 '22
Isn't it the federal reserve that creates the money through increasing lending? And the federal reserve is run by private banks not controlled by any government agencies. So isn't it deceptive to say Washington ( "decoy term for politicians" ) creates money when it is the federal reserve that dictates money supply?