Forum Post: Blame the FED

The Federal Reserve is at the very center of the American and Indeed the World Economic Crisis. First of all keep in mind that the FED is a private bank whose meetings are closed to the public and who answers first and foremost to the shareholders not the American People. To keep investment in the Markets up Alan Greenspan drove interest rates to record lows to ensure that people would invest in the market which is riskier instead of t-bills which are considered safer. The investors did so because they wanted their money to make more money and the low return on t-bills meant that they barely recouped the difference in inflation after they cashed in their t-bills. This created an environment of easy money through credit card debt and the underwriting of risky mortgages. Wall Street with their financial alchemy bundled mortgages together into mortgage-backed securities and somehow got AAA ratings on these investments. The investors both here and abroad bought billions of dollars worth of these mortgages. When the bubble finally popped both Wall street firms and Investors were holding these worthless mortgages that were now foreclosed properties worth pennies on the dollar. This huge loss of wealth paralyzed the economy. The investors and the banks who control the economy said the only way to fix the economy was to give them back the money that they gambled and lost. Now the FED in their quantitative easing policies are printing more and more money driving down the value of the dollar and in doing so creating a shadow tax by means of inflation that ensures that gas is $4 a gallon, milk is $3 a gallon, a case of Pepsi is $7 and a loaf of bread is $2. The total cost of the "market basket" above is $16. In 1990 this same basket of goods cost $8.50. So not only has the consumer price index increased rapidly but median household income has seen significant drops. The main charter of the FED is to keep unemployment at or around the natural rate. I argue that of equal if not paramount importance is to ensure that we have a strong currency to keep prices down and curtail inflation. Because it is a silent tax on the American people and it is being created by a private institution that is not ultimately accountable to the American People the very group whose interests it purports to safeguard.