Do we keep the Federal Reserve or get rid of it?

Since day one of the great recession, there has been much criticism of the Federal Reserve.  Led by vehement critics such as Republican Congressman Ron Paul of Texas, those who call for the abolition of the Fed claim that it does more harm than good. One expert economist, Dean Baker, says that the Fed “bears substantial responsibility for the current crisis”.

I disagree. While there are some structural changes and practices that I think the Fed can improve or discontinue, I would not support its entire annihilation. I suggest we change what is wrong and keep what is right. 

One of the things that the Fed got right was credit card reform.  Before any legislation was passed in the House or Senate, the Federal Reserve proposed and approved sweeping changes to curb the out-of-control abuse of credit card customers.  Do you remember?  In Dec. of 2008, the Fed announced that it received over 65,000 complaints from consumers about credit card companies, and as a result, decided to implement major changes. The Fed’s leadership in responding to the people gave the legislative process validation and needed momentum. 

What do you think? Do we keep the Federal Reserve, modify it, or get rid of it?

Comments

[Kevin D. Johnson]

Interest rate caps are as likely as international agreement on climate change. The banking lobby is too powerful. However, the best option, which has caps for now, is the credit union.

[Madeleine Howard]

The only problems with this reform, it is not going to be in affect immediately (8 months). In the mean time banks are going to raise interest and what ever they can think of. In this reform there is not limit to how much the bank can charge in interest rates. While we are experiencing a very low interest rate for borrowing money (like mortgage), the credit cards do not enter in this category and they can gauge you with fees and interest as much as they want. I think we should be able to put a certain cap on interest and fees. It is usury at its best