The upcoming confirmation hearings for Janet Yellen, President Obama’s appointee to chair the Federal Reserve, are sure to garner a lot of attention. But in many ways, Yellen herself is largely beside the point. There will likely be nothing unique about her tenure.
It would be more useful to examine the Federal Reserve System itself.
Although the big banks and mercantilist politicians had been agitating for a new central Andrew Jackson vetoed the rechartering of the Second Bank of the United States in 1832, the modern Fed was the result of a 1910 meeting of some the world’s richest and most powerful men.ever since
Held at the exclusive Jekyll Island Club off the coast of Southern Georgia, the meeting was kept secret due to Americans’ distrust of monopolies. For the attendees, this distrust certainly required secrecy, because a monopoly is essentially what the Federal Reserve Act created. While the conspirators claimed that they were doing humanity a great service, this being the Progressive Era, after all, technocratic central planning was all the rage, as Adam Smith noted, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.”
The Federal Reserve System consolidated the banking sector, eliminating competition within that portion of the economy. Since its creation, the Fed has habitually encouraged risky behavior, rewarded incompetent management, and bailed out millionaires at the expense of the American taxpayer.
Failure is a necessary component of a market economy. A business generally fails for one of two reasons. First, the venture simply may not be workable. In this case, government intervention is an abject waste of taxpayer money. The money ends up going down a rat hole.