| (This issue hits politics, and below I give an illumination of why conservatives and liberals should both be concerned. But please note I'm not taking any position other than that people should learn more about the Federal Reserve.) One of the "reforms" that was enacted in response to the 2008 crisis was to give the Federal Reserve regulatory powers. They now get to decide whether banks are "viable" or not and if they are not viable, can force them to merge with candidates of the federal reserves choosing. This might sound reasonable to you, if you focus on the "Federal" part of the name and that makes you think of the Federal Reserve as an agency of the federal government (like the DEA or FCC)... but the reality is that the Federal Reserve is a commercial, for profit, bank owned by major banks. (The ownership is kept secret but the owners of the "too big to fail" banks are highly correlated with ownership in the fed.) Thus you have a bank which has way too much power to begin with -- it literally profits by issuing US government debt-- able to force mergers of smaller, potentially competitive banks, with its owners. This means that the owners of Morgan Stanley can force banks that might be competitive with Morgan Stanley into Morgan Stanley on terms that are good for Morgan Stanley, via the hand-wave of having the "Federal Reserve" decide that the target bank is "in danger". I'm not giving you conspiracy theory, this is the literal facts of how the Federal Reserve was set up and is run. For an authoritative account of the history of the Federal Reserve read "The Creature from Jekyll Island". Liberals are often very concerned about the corruption of government institutions or misuse of government power by corporations-- this is a far more relevant and dangerous example than most others of this action. Conservatives are often very concerned about the undermining of the sovereignty of the country and the federal government, and here we have a major group that has massive control over the federal government (it is the Federal Reserve that enables deficit spending). Since conservatives oppose deficit spending, this institution is a key enabler of the massive government debt they are concerned about. Everyone with a passing interest in finance and economics should really read this book. The Creature from Jekyll Island is wonderfully written and not too dry. (Lots of historical anecdotes and since they are from within the last 100 years they are pretty relatable.) |