I guess no one told her about Fannie May/Freddie Mac being nationalized by *gasp* taxpayer money. Nor the sweetening of the buyout deal on Bear Stearns by JP Morgan in the realm of $30 billion.

Funny hearing her use catch phrases like "change", "politics as usual." I guess they're banking on the poor undecided swing voters who pick someone when they're standing in the booth to confuse who had that slogan that sounded so catchy and pick McCain ...

"... and the networks of lobbyists and special interests that used to run things up there, well whatever they're running now, I know it's not the state of Alaska!"

Heh, yeah and they sure did reel in the big fish when they scored an advisory role in the McCain campaign.

Downvote me if I'm wrong but doesn't being amalgamated by JP Morgan mean their shares are translated over as well?

Either way, classic Daily Show material

Not every day one gets to pimp Orson
http://www.videosift.com/video/Orson-Roasting-Dean
http://www.videosift.com/video/Orson-Welles-as-JP-Morgan-Tajna-Nikole-Tesle-1980
http://www.videosift.com/video/Orson-Welles-F-for-Fake-Chartres-excerpt
http://www.videosift.com/video/F-for-Fake-1974-Orson-Welles
http://www.videosift.com/video/James-Stewart-Dean-Martin-Orson-Welles

Firstly - the concept of a "lender of last resort" is one created by JP Morgan, himself. Secondly - you do know that JP Morgan helped to write the Federal Reserve Act, right?

Oh yeah, I guess it's fortunate that the government has just "some check" on the central banking system - not like they're supposed to be printing the money themselves or anything. Not like they ever have appointed anybody that wasn't already rich by inheritance(not by knowledge, mind you) to be governor, or lowered their salaries, or ever impeached anybody.

As for politics playing a greater role in monetary policy - what would be the difference? On the one hand, you have the politics of a small group of people controlling the monetary policy of the masses versus the politics of people who have to DIRECTLY answer to the people of the United States. Who currently benefits from the politics of a small group of people running the Federal Reserve?...Oh yeah, that's right - they aren't going to do something that is not in their best interests...if the government took direct control, whose best interests would they be required to answer for?

I think you maybe assume that the President would control the Fed if it came under direct governmental control - that's precisely the problem here - the only person that appoints the Chairman IS the President - neither the Congress NOR the Senate have any say in it. I am most certainly NOT suggesting that the President take direct control - I am suggesting that, what is stated in the Constitution, that the Congress and the Senate takes direct control.

It's very interesting that you've read "Secrets of the Temple(as you defend the value of the Federal Reserve so adamantly)," but, as you'll note - I do not reference Milton Friedman's monetarist theories - I reference his "Monetary History of the United States," more specifically his account of what caused the Great Depression, or, as he notes, the Great Contraction.

Have you by any chance read "The Creature from Jekyll Island?" Yet another interesting diatribe on the Federal Reserve that you might like.

We can extensively debate the causes of Yugoslavia's economic troubles, but I would hope you'd recognize the economic role that the United States played in their demise. In other words - what is stopping us from racking up the same amount of debt that they racked up with the IMF? As the IMF increases our credit to fund our various wars, they also retain the power to require that the loans we made with them be paid back, at any time of their choosing. Last I checked, that would equal what?...about $80,000 per American? I'll let you find the details of that on your own, but I hope that you do realize that most Americans do not have $80,000 to pay back the IMF loans that this country has taken out to fund our various wars.

So many things you say interest me - like why do you think it was a GOOD thing that the Fed didn't allow bank runs? I ask this mainly because, well, by doing so they didn't exactly curtail the spread of economic depression, as evidenced by the following 8 years - essentially they just held onto the little bit of money the people HAD earned instead of letting the people trade it as they would have otherwise - probably even lessening the devastation of the Great Contraction, but, well, we'll never know, because the Federal Reserve didn't do that.

Who could have made better choices? That's a good question - practically, a group of people that had closer ties to the caste of citizens that make up the working foundation of this country, and not a group of people that were neither a citizen of this country, or represented the caste of society that manages the working foundation indirectly.

In other words, I'd consider it a safe bet that the Congress and the Senate could have done a better job of managing the money supply - at least if and when the Great Depression happened, the people would have been required to take responsibility for it themselves, instead of theorizing about WHAT or WHO caused it, as we have done for almost the past 100 years.

Long and short of it - Americans have become complainers, mostly because they do not have responsibility over the various systems that affect them, and therefore they can NOT exercise any rights they DO have to make their own situations better - they can't take their cases to the Fed, they can't even petition for the Congress or the Senate to exercise control of the Fed, because both the Congress AND the Senate would just note the status of the Federal Reserve as a corporation, and, as such, it is not within their legal abilities to regulate a system that people themselves have prescribed to(by using Federal Reserve Notes).

Check this out: http://smallbusiness.dnb.com

Go there and search for "State of <state>" and pick the state. You'd be surprised at what is registered as a corporation these days.

Without the Fed, who is going to be the lender of last resort? We could revert to the situation to what it was before the Fed was created, which would mean that a handful of big banks, like JP Morgan, would be the lenders of last resort, and with that, in charge of the monetary policy. In fact, the Fed was created in part to break that clique of power.

At least now the government has some kind of check on the central bank system, by being able to appoint the governors, set their salaries, and impeach them.

Or we could bring the Fed under direct government control, but that would mean that politics would play a greater role in the monetary policy. Congressmen and the president realize that economy experiences cycles, and they could use the interest rate "lever" to make the cycles of boom correspond to election times.

Not that they don't try -- both Carter and Nixon both appointed "team players" as chairmen, loyal supporters that tried to lower interest rates when the president was in trouble. The 14 year appointment terms reduce those effects.

The reason Friedman Milton's book is out of date on the Fed is because since the 60s, Milton's "monetarist" philosophy has grown more accepted in the economic community, and even tried by the Fed. Milton was essentially saying that instead of complicated deliberations on when to speed the economy up, and when to cool it down (something that the Fed governors allegedly did just to make themselves feel important), the Fed should be there to make sure that money supply grows at fixed rate, so to take more of an accounting role. In fact, when Reagan was elected, and Milton Friedman became the president's economic advisor, the Fed did just that -- instead of working to "take away the punch when the party gets going", it changed it policy to that of a passive guardian of money supply, changing interest rates automatically to make sure there's a stable amount of money in the system. The whole account of what happened is long and fascinating, which you can read in the book "Secrets of the Temple: How the Federal Reserve Runs the Country", but the bottom line is that it backfired, and the Fed reverted back to the old mode of operation. Friedman's monetarist philosophy proved too simple for the real world. He later aknowledged "I was wrong. And I have no good explanation as to why I was wrong"

Yugoslavian scenario won't happen in US because the hyperinflation (quintillion of percent per year) was caused by the government issuing money to cover it's own fiscal deficit. In US, the Federal Reserve has the authority of issuing money, but not the government. The US government can pressure the Fed to loan it money, which in essence results in more money being printed, but within limits. By having to go to the Fed to ask for more money, it creates a balance on the government's control over spending, as opposed to Yugoslavia's case, when the government itself could quietly print more currency on demand.

As far as Argentina goes, one of the things that happened in the financial crisis was a bank run in 2001. The Fed, with their capacity to print currency, would not let a bank run happen in US. For instance the 1929 stock market collapse was not accompanied by a banking panic due to the quick action of the Federal Reserve Bank of New York.

United States uses IMF and the World Bank to lend money to developing countries, not the other way round. A more realistic scenario is if the Asian countries lose faith in US treasury bills and stop buying them. That would mean the current trade deficit would go unfunded, dollar would fall in value, and Americans would no longer be able to afford to buy chinese goods. That would be bad for China just as it's bad for US, in fact, it would probably cause a world-wide recessions, so the whole world would work to prevent this from happening.

The Fed could mess up the economy by flooding the streets with fed banknotes without limit, or by refusing loan requests at it's Discount window. However that can be said of anybody in charge of the monetary policy. A more relevant question is what what they are realistically expected to do. In retrospect, they've made some mistakes, but who could've made those choices better?