Nominations That Really Matter

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What if I told you that there is a secretive organization that operates in America and influences geopolitics more than almost any other organization on earth? An organization that controls trillions of dollars – and affects many aspects of your daily life, whether you own a home, how much your mortgage is, and how much your money makes in the bank? An organization that holds its meetings in secret and that is ruled by people who, once appointed, are basically accountable to no one? Without meaning to sound conspiratorial, there is such an organization: the Federal Reserve. Its seven Governors are some of the most powerful people on earth.

The American people are highly critical of the Federal Reserve and of the Fed’s policy of quantitative easing in particular, which received only a 27 percent favorable rating in a recent Bloomberg poll. Many economists say that the Fed’s easy credit in the 1990s and early 2000s created the dot-com and housing market bubbles. And we just recently learned details of how the Fed secretly bailed out foreign central banks using billions of our dollars. But despite these sharp criticisms of the Fed, America still is not paying sufficient attention to what the Fed does and how it does it.

For example, did you know that Kevin Warsh is resigning from the Federal Reserve Board of Governors, seven years before the expiration of his term? This should be big news because it means that President Obama will have filled every Presidentially-appointed seat on the Federal Reserve Board, except for one. Given the Fed’s impact on every aspect of our economy and our prosperity, you’d think this would be at least as big as the Super Bowl or the Oscars.

Both the American people and Congress have always paid much more attention to Supreme Court Justice appointments than to Fed Governor appointments. Although the Chairman of the Fed, Ben Bernanke, is well-known, few Americans pay attention to the other Governors, even when they are appointed. But now that real power over our economy rests in the Federal Reserve, we ought to change that. After all, the Fed Governors have a major impact on the US, the global economy, inflation and money supply, whereas the Supreme Court Justices actually have more limited powers.

The Federal Reserve was created to ensure the stability of our financial system and lessen bank panics. But since the recent financial crisis, the Fed has assumed huge responsibilities over almost all aspects of Americans’ economic lives. The Federal Reserve used the crisis to make an enormous power grab, in part by suggesting that it is the only part of our government smart enough to grapple with the complexities of modern American finance and the financial crisis. Today, the Fed also controls the money supply. Inflation. Unemployment. Banking regulation. Our currency. Interest rates. Risk management. Consumer credit.

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