Why Federal Reserve bank has to be reformed?
Federal reserve bank policy is based on the top down economists on Wall street and the individual business man's opinion on Main street.
The new economy was formulated based on Obsolescence and replacement plus recycling. Which adjusts supply and demand. When supply has the production capacity, no inflation will exist. When supply lack capacity, substitution or replacement by another product satisfy the demand. When demand is lacking, obsolescence of the old product eliminates saturation and creates demand again. No business cycle can happen when fine tuned. Supply and demand will be within a 1% tolerance but not to each other. Inflation does not exist if consumers are willing to pay for the extra fringe. Surplus capacity will prevent monopoly to force inflation on consumers.
Wall streeters are now consulting the public companies to a consensus of earnings, which will project the worth of stock value. Top down economists are replaced by microeconomists. Each company is looked over each quarter by their financial performance. Main street management is influenced by the close examination of Wall street as more Main street companies becomes public companies. More company wants growth and improved stockholders' value.
Federal open market meeting has to be reformed to look at industries separately and average performance of the industries and job growth within the industries. Or FOMC has to look at job distribution of industries 15%, government 10%, unemployed and retirees 10%, services such as financial and merchandise distribution 37%, and small business such as restaurants, and repair shops 28%. FOMC has to look at the regional community banks doing land development who might work with both Federal Reserve and Home loan board. The world has changed and Federal Reserve bank must reform as the world does. We have to form policies with numbers and not just judgement from our feelings such as top down economists or local business men do.
Worldwide bank mergers and acquisitions changed the money flow. Regional economy may have national banks with more reserve to service well, a poor region with less deposits in their local banks. Regional Federal reserve presidents may influence national banks with their local discount window to have a loose monetary policy locally by providing liquidity(even change of multiples or give out coupons). World banks can have the same local loose monetary policy with their local central bank.
All in all, when will we have the reform? Not a minute too soon, if it happens now. |
