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Comment by hayst4ck | Hacker News Reader

  The primary function of central banks isn’t managing 
  inflation and employment, it is acting as a lender of 
  last resort. In this way, central banks provide the 
  bedrock for the banking system. The Fed’s ability to 
  perform this role expanded during the Global Financial 
  Crisis. They created many different types of lending 
  facilities to provide liquidity to banks, and many 
  former broker-dealers (like Morgan Stanley and Goldman 
  Sachs) became bank holding companies so that they could 
  access them.

Am I crazy or was there an entire section that said "this isn't a crisis because the fed is happy to give banks that make poor investment decisions taxpayer money?"

Doesn't this say that when a bank makes a poor investment, they can borrow from the taxpayer so they don't have to realize their loss?

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The fed doesn't have access to taxpayer money.

Does that mean that instead of giving taxpayer money, they instead devalue all taxpayer money by inventing new money?

True. There's option to export a newly created inflation to other countries, at least partially. Thus, steal from other countries' citizens and taxpayers.

Honestly, it's a good thing. Given how dysfunctional the legislative branch is with fiscal policy I can't imagine a worse idea than putting it in charge of monetary policy as well.

It turns the fed into the only arm of the government able to levy a new tax.

Printing 20% more money doesn't seem materially different than taking 20% of everyone's money.

Either way an individual is able to buy 20% less stuff and the government is able to spend 20% of the value of the economy.

Except the fed has to answer less to the public than legislators do. We have a non-elected tax authority deceiving the country about the level of tax they are paying through the subterfuge of an overly complex system.

I would love to hear how this assessment is wrong (actually, not rhetorically).

It's not wrong, we have a wall street government. Did you notice at how those most responsible for the 2008 financial crisis, never went to jail... instead they were the advisory board for Obama on financial stuff?

If we want the workers to completely own the means of production, by all means put officials elected by the workers wholly in charge of fiscal and monetary policy. I'm not arguing against it. Just don't half-ass it, let's go all in on central planning.

The whole “devalues other money” thing is the ‘quantity theory of money’ which has never really been observable as true in normal economies - only at the very extremes (but other factors play in - all in all velocity of money is more important).

It was designed to do that.

The creature from Jekyll Island by G. Edward Griffin is a book that describes the creation of the FED, how it was done in secret.

They absolutely do. They print money, and the resulting inflation is an indirect tax; the glory of MMT.

It amuses me when people sometimes blame capitalism for bank failures, considering that banks are essentially governmental institutions with extra-steps. They're literally encouraged to engage in practices, such as fractional-reserve banking, which would be considered fraudulent or a scam in any other context. And to add insult to injury, they get bailed out when they lose their risky bets.

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