Not surprisingly, Harold Moulton disagreed — which may account for his unpopularity in many circles . . . at least those circles that don't understand money and credit. As the president of the Brookings Institution and author of The Formation of Capital observed,
In the view of many the transfer of the control of credit from private to public hands seems a natural and a desirable step. Since the interest of the public is paramount — why should the granting of life-giving credit not be vested in government hands? Others, equally interested in the welfare of the people fear that such a transfer of power will result, not in life and health for the economic organism, but in persistent decay. They point to a long history of government credit-granting in this and other countries, which revealed the baneful influence of political pressure, and to a long and eventually successful struggle in the nineteenth century to remove the extension of credit and the creation of currency from political control — to the end that credit, and in consequence productive activity, might be allocated on the basis of economic merit, thereby promoting productive efficiency and the expansion of the wealth and income of the nation. Recent trends suggest that we may have traversed a cycle of time and may be returning to the conceptions which dominated the political and economic philosophy of the eighteenth century. (Harold G. Moulton, The Financial Organization of Society. New York: McGraw-Hill Book Company, 1938, 483.)
Not surprisingly we've heard this before, and posted it a number of times on this blog. Nevertheless, it bears repeating, especially in view of the increasing level of demands to "End the Fed!" (see the comment to yesterday's posting) . . . and vest the federal government with even more power than it has at present:
As self-government was secured through a struggle for mastery over the public purse, so must it be maintained through the exercise by the people of complete control over public expenditure. Money is the vital principle of the body politic; the public treasury is the heart of the state; control over public supplies means control over public affairs. Any method of procedure, therefore, by which a public servant can veil the true meaning of his acts, or which allows the government to enter upon any great enterprise without bringing the fact fairly to the knowledge of the public, must work against the realization of the constitutional idea. This is exactly the state of affairs introduced by a free use of public credit. Under ordinary circumstances, popular attention can not be drawn to public acts, except they touch the pocket of the voters through an increase in taxes; and it follows that a government whose expenditures are met by resort to loans may, for a time, administer affairs independently of those who must finally settle the account. (Henry C. Adams, Public Debts, An Essay in the Science of Finance. New York: D. Appleton and Company, 1898, 22-23.)
if you're really interested in doing something constructive — and effective — about the Federal Reserve, come down to the Federal Reserve building in Washington, DC, this Friday, April 15, 2011. The rally starts on the front sidewalk of the White House (1600 Pennsylvania Avenue) at 10:15 am, then there is a walk to the Federal Reserve at 11:00 and a regrouping at the Federal Reserve at noon, with the festivities going to 1:30 pm.
Unless you'd rather just sit around and complain.