Fire the Fed
“In this crisis, the Federal Reserve is an untrustworthy agent for the public interest. Its…bias is to defend the club members and cover up its own errors” [“The Gentlemen’s Bailout,” April 7]. The Nation hits the nail on the head. Now take the next step. Call for a public central bank. A bank that will not charge us interest on our own money. A bank that will honor its fiduciary duty to the public. A bank that will truly be independent of the interests it regulates.
The privately owned Federal Reserve has throughout its ninety-five-year history promoted the interests of its members over the good of the country. In the last decades we saw bubble after bubble, panic after panic, and yet the mantra was always “free markets,” “less regulation,” “more financial innovation.” And for what? The profits of its member banks.
This crisis is far from over, and much bigger catastrophes loom. In the meantime the public is subsidizing the very interests that caused the disaster: tens of trillions of dollars of credit default swaps and hundreds of trillions in derivatives in a market that is not regulated and has no financial standards for counterparties and no legal framework for determinations. Our entire GDP is only about $14 trillion. The loss of even a small percentage of these markets will bankrupt the country. The failure of the Federal Reserve to regulate these behemoth markets is reason enough to give it the boot. We need a public central bank.
The New Deal Was a Good Deal
Your special issue on the New Deal [April 7] brought back many memories. My parents voted for Hoover in 1932. My father, a poor but proud farmer, survivor of the Dust Bowl and Depression, refused to work for the WPA. (Most of our neighbors did. They drove late-model Model A’s; we drove a flivver and nearly starved.) Republicans called the savior of the poor, the WPA, We Piddle Around. A typical Republican joke was: “5,000 years ago, Moses said, ‘Load up your camels and asses, we’re going to the Promised Land.’ Roosevelt says, ‘Sit on your asses, light up a Camel–this is the Promised Land!'” But we always listened to FDR’s fireside chats on our battery-powered radio. When I first voted, for Truman in 1948, my father, who had become wiser, admitted he’d been wrong to vote against Democrats all those years.
WESLEY M. WILSON
New Haven, Conn.
I could not agree more that we need a new New Deal. But I would not necessarily argue that the Democratic candidates should promise one before the election. You will recall that during his campaign against Hoover, FDR promised to balance the federal budget!