October 11, 2011
High-Level Economists Support the Protests
People may assume that Stiglitz supports the Federal Reserve because “liberals like printing money”.
Nobel Prize Winning Economist Dislikes the Fed
In reality, Stiglitz strongly dislikes the Fed:
Joseph Stiglitz – former head economist at the World Bank and a nobel-prize winner – said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is “corrupt” and undermines democracy.
If we [i.e. the World Bank] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure.
Stiglitz pointed out that – if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system – “it would have been a big signal that something is wrong.”
Stiglitz stressed that the Fed banks have clear conflicts of interest, since the banks are largely governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing:
So, these are the guys who appointed the guy who bailed them out … Is that a conflict of interest?
They would say, ‘no conflict of interest, we were just doing our job. But you have to look at the conflicts of interest”…
The reason you talk about governance is because in a democracy you want people to have confidence … This is a structure that will undermine confidence in a democracy.
Stiglitz is not alone.
Many High-Level Economists Say “End the Fed”
Aren’t Criticisms of Wall Street and the Fed Inconsistent?
While it might at first seem confusing that Stiglitz could support the Wall Street protests and criticism of the Fed, these are really just two sides of the same coin.
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