Today's earlier posting in the "Restoration of Property" series (below) outlined specific reforms that need to be implemented if the Federal Reserve System (the central bank of the United States) is to get away from serving as a source of political pork and return to the purpose for which it was designed, intended, and is now desperately needed: provide liquidity for private sector growth by discounting qualified industrial, commercial, and agricultural paper to finance projects that will produce marketable goods and services, and do so in a way that opens up the opportunity for all citizens to participate in production as owners of both labor and capital. Thus, it seemed a bit of serendipity and was momentarily encouraging to read the headline on the lead article in today's Washington Post: "A Rare Chance to Remake the Fed" (Neil Irwin, A1, A11).
The encouragement was short lived. The lead-in continued in smaller type, "Vice Chairman is Retiring; Most of Bank's Board Will Be Obama Nominees." Reading the article, it became clear that the idea is not actually to "remake the Fed," but to consolidate the final steps in a takeover process that started almost before the ink was dry on President Wilson's signature on the Federal Reserve Act of 1913. As the article states, "During the past two years, the Fed has taken extraordinary actions to contain a financial crisis and prop up the economy. Now the institution must decide how and when to wind down some of those emergency measures."
Contrary to the rosy implication contained in this passage, the crisis is anything but over. As the article hints, the only thing that has kept the economy going (at least for selected groups, such as companies "too big to fail" and holders of toxic assets finding a ready market for their badly depreciated assets at inflated prices) are those "extraordinary actions." While economists and other experts daily trumpet that the Great Recession is over, the stock market and the economy at large continue to reel at the slightest hint that the world's governments might stop printing money and spending it in such massive quantities.
The idea that somebody might someday actually have to pay back the colossal — and still growing — mountain of debt is ignored, while the necessity of working to rebuild the economy by producing marketable goods and services so that there is something to redistribute and tax is nowhere mentioned. Instead, "economic growth" seems to be defined strictly in terms of consumer spending, government spending, and, above all (bow), how the stock market is doing — in other words, how much money the rag-pickers and secondhand dealers in debt and equity can exchange among themselves without producing a single marketable good or service. Current monetary and fiscal policy is oriented exclusively to dividing up an ever-shrinking pie without bothering to figure out where to get another pie or even rebuild the bakery.
Perhaps most astounding is the extraordinarily damaging admission by unnamed "sources" that, "the president is seeking one or two strong macroeconomists — people well qualified to judge how the economy is evolving and how and when to make monetary policy less supportive of growth — and one person with a strong financial markets background." (A11) Thus, not only is anyone not bothering to try and figure out how to 1) produce marketable goods and services 2) in a way in which more (preferably all) people can participate as owners of both labor and capital, they are stating outright that the Fed's (meaning the government's) policy is to stifle economic growth, and do so in such a way as to benefit that sector of the economy, the "financial markets" (and there's a reason Wall Street and the other exchanges throughout the world are called secondary markets) that produces nothing in the way of marketable goods and services.
For all intents and purposes, then, "remaking the Fed" in the current lexicon means confirming the central bank and the central government in their ruinous course of spending without producing, borrowing without repaying, and creating money — money necessarily being a direct derivative of production and an aspect of private property — completely separated from the production of marketable goods and services.
Rather than working to make the Federal Reserve "less supportive of growth" (!), President Obama should seize his "rare chance" to "remake the Fed" and implement some genuine reforms. Instead of talking a good game about "change" without actually getting out on the extremely uneven playing field, Obama has the opportunity not only to duplicate the achievements of another president from Illinois, but to do Abraham Lincoln one better by emancipating all Americans from involuntary economic servitude, and extending the homestead concept from land alone to all forms of productive assets by signing the Capital Homestead Act of 2012 on the 150th anniversary of Lincoln's revolutionary initiative.
Obama has only to act — and the time is now. It may only need your participation at the peaceful rally outside the Federal Reserve on April 15, 2010 to convince him.