NC has some interesting reflection from a former Fed economist on how the Fed has gradually become a more political and less independent agency. This is pretty fundamentally scary to me, because I deeply believe that while markets may not be perfect, they tend to fuck things up much less than if you leave the decisions in the hand of a single monkey. The Fed becoming a political tool of the incumbent party would compromise the US economy deeply, permanently, and nearly invisibly.
Related to this I have another question, which makes me wonder if my observations are essentially irrelevant. Is it even possible for the Fed to function as it should -- ie. regulate the money supply -- with the way the financial system works now? Money is basically electronic at this point. This new technology seems to put the regulated banking system at a disadvantage compared to the shadow banking system. I feel like money can sprout from anywhere these days, and bad credit drives out the good until we arrive at a crisis point. Can anyone really even be in control of this system anymore? And once it's out of control, how do you bring it to heel?
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