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So... the government doesn't run the federal reserve?

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
21,520
7,069
Colorado
Yeah. It's a collection of banks. The board members are elected by the member banks.

Scary, huh?
 

dante

Unabomber
Feb 13, 2004
8,807
9
looking for classic NE singletrack
The theory is that an independent fed encourages it to act for the economic good of the country, *not* the good of the president/political parties. Imagine if 3 months before every election the president chopped interest rates, spurred borrowing and juiced the economy. He'd be far more popular even though it might not be good for the country as a whole.

Btw, almost all Central Banks are independent (see: Bank of Japan, etc).

http://en.wikipedia.org/wiki/Central_bank
 

ALEXIS_DH

Tirelessly Awesome
Jan 30, 2003
6,147
796
Lima, Peru, Peru
The theory is that an independent fed encourages it to act for the economic good of the country, *not* the good of the president/political parties. Imagine if 3 months before every election the president chopped interest rates, spurred borrowing and juiced the economy. He'd be far more popular even though it might not be good for the country as a whole.

Btw, almost all Central Banks are independent (see: Bank of Japan, etc).

http://en.wikipedia.org/wiki/Central_bank
true dat.
 

skibunny24

Enthusiastic Receiver of Reputation
Jun 16, 2010
3,281
585
Renton, WA
The theory is that an independent fed encourages it to act for the economic good of the country, *not* the good of the president/political parties. Imagine if 3 months before every election the president chopped interest rates, spurred borrowing and juiced the economy. He'd be far more popular even though it might not be good for the country as a whole.

Btw, almost all Central Banks are independent (see: Bank of Japan, etc).

http://en.wikipedia.org/wiki/Central_bank
Ok, that makes sense, it also sheds some additional light on the whole bailout thing. But my mind... still blown.
 

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
21,520
7,069
Colorado
Read "the big short". It will explain a lot about it and the 2008 collapse.

*edit* Too big to fail, as well
 
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