On 2011-12-12, at 7:39 PM, martin schiller wrote:
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> On Dec 12, 2011, at 4:30 PM, Marv Gandall wrote:
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>> There are plenty of ... ways to nail the Fed on how and where it directed its efforts.
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> Do you hold a preference as to which of those ways collective efforts might most effectively be directed, and if so, your rationale?
Surely I don't need to direct you to much more knowledgeable critics than myself of the Fed's veiled and unconditional bailout of the financial industry in lieu of assistance to highly indebted homeowners, students, and other consumers, and programs aimed at new job creating industries. The first names which come to mind of a very diverse group are Timothy Canova, William Greider, Randall Wray, Willem Buiter, William Black, Yves Smith, Paul Krugman and, on the far left, our Doug Henwood and Julio Huato. I've undoubtedly missed some. Their tone and the sweep of their criticism of Bernanke and the Fed varies, but they all indict the Fed roughly along the lines I've mentioned above.
My own view is that some of the critics assign too much responsibility to the Fed for the continuing economic crisis since the fiscal policy of the state typically dictates the monetary policy of the central bank, as it notably did during the Depression and World War II. So I hold the present administration more culpable for the failure to ease the pressure on US workers and consumers, even within the objective constraints imposed on it by the capitalist system. There's also debate over how catastrophic allowing the big banks to collapse would have been, and the related political difficulty of taking them over and restructuring them under public ownership. Given the deep fears of another depression in the immediate aftermath of the 2008 election, the widespread antipathy to the bankers and the defeated Republicans, and the enormous hope and confidence vested in Obama's new administration, I think it would have been entirely possible to do so at that time. The relationship of forces has been greatly altered since then, and the same structures which produced the last crisis have been strengthened and emboldened, threatening a repeat of the 2007-08 collapse on an even larger scale.