Our first topic for 2010 - the Federal Reserve

You can tell from the home page that the first major topic we are pursuing at A Sound Economy.org is the Federal Reserve, the US Central Bank. It is a timely topic because of all the things the "The Fed" has done to try to counteract the numerous bank, brokerage, insurance, money market fund, etc., failures of the last 18-24 months. Also because of the legislation currently pending in Congress to institute the first true comprehensive audit of Federal Reserve activities since the bank was created in 1913. The Federal Reserve Transparency act, HR1207, has over 340 co-sponsors in the US House of Representatives. That is an unprecedented level of interest and concern in what has generally been considered an arcane topic. In the US Senate the sister bill, the Federal Reserve Sunshine Act S604 (you can follow it at http://www.govtrack.us/congress/bill.xpd?bill=s111-604) has 32 co-sponsors, not enough to move forward yet. It is worth noting that these bills have been proposed and backed by Democrats, Republicans, and the lone Democratic Socialist. This shows that interest is coming from all political quarters and this is a truly trans-partisan issue.

A number of the things the Federal Reserve has done in the last year and half in response to the financial crisis have stretched the legal authority of the Fed to the limit. Maybe we should be glad they took decisive, if not entirely legal actions, or maybe we should be concerned. Opinions on this subject are certainly varied. This is why so many people think we should at least know what actions were actually taken, and why.

Introducing A Sound Economy.org

These pages were created to share insights into the structure and regulation of our monetary and financial systems with a wide audience. We hope to increase public understanding of how the nature of a monetary system affects the fairness and sustainability of an economy. We also want to encourage participation in the current political debates related to these issues. This stuff matters. They don’t call it the bottom line for nothing.

The 2008 financial crisis has been producing news stories for the last year that highlight some serious issues with our financial and monetary systems. The heightened public awareness of these aspects of our economy is potentially a very positive development in the long run. Some of the problems we have been experiencing can be traced to changes in financial regulations and some are related to political initiatives undertaken over the last several decades. Some of these problems are at least partially rooted in the very structure of our current financial and monetary systems. Lots of experts have lots of opinions on these subjects. It is hard to know what to believe. But we can be sure that whatever is eventually done will effect all of us directly. Losing your job and/or half your savings is a pretty direct effect, wouldn't you say? The changes or solutions ultimately put in place will be the result of a political process. Our interests will not be well served if we let this process get away from us.

This financial crisis has been a pretty confusing tangle of inter-related problems. To set things on the right track again we need to step back and take a wider view of the situation. We have to identify and ask the right questions. Then we can take steps to influence the political process based on our (hopefully) more informed understanding of finance/economics and on our sense of right and wrong and basic fairness. It is a central mission here at A Sound Economy.org to to help identify the right questions to ask. We hope you find this quest interesting and worthwhile, and check back here often. We are just getting started.