Fed’s Bullard says must shield Federal Reserve’s independence
This pains me to say but at the moment, Bullard is correct on this point. With the Fed pursuing their policy of quantitative easing (print money), there is a real concern with foreign investors that hold significant U.S. bond holdings that an erosion of the Fed’s independence could be a sign that a more populist approach to this stage of the economic recession. If the investors think the amount of money printing will increase to pay for more stimulus and bailouts then they will demand much higher yields and will increase the cost of imported goods which in turn will import inflation into the U.S. Long term I do think the independence on the Federal Reserve will be eroded because they are not maintaining the normal policy central bankers use of “price stability”.
News (Reuters):
St. Louis Federal Reserve Bank President James Bullard said on Tuesday that public anger over the U.S. financial crisis and subsequent bailouts could cause big problems if this escalated into a political challenge to the independence of the U.S. central bank.
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Modern Money Mechanics Videos by Tom Schauf CPA
This was an interesting watch, I have read through the manual he mentions that shows the reader how we “create” money in our economy. Here is a link to the manual “Modern Money Mechanics“, by the Federal Reserve Bank of Chicago. It is quite peculiar that we create our curreny through the “Fractional Reserve Banking” along with “Central Banking“. This is a very interesting subject that I will be exploring in more detail when I launch a new forum for this type of discussion.
Update (07/08/09): After noticing that this video on how money is brought into existence was so popular and out of no where the user pulled the video I took some time and found another hosted version of the video condensed into 70mins. Enjoy!
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