of the Federal Reserve what to do. On the other hand, the President does appoint the Fed Chairman and the Fed governors too. So I’m going to appoint my dogs, Clio, Georgie, and Bodey. They’re very cute dogs so I don’t foresee any problems with Senate confirmation. (Senators rejecting cute dogs would cause a furious national outcry on Facebook and Twitter.) I assure you my dogs are very independent. If I tell them, “sit,” or “stay,” or “come,” they just look at me with dull incomprehension and keep on chasing squirrels. And yet I think I can get them to give me a unanimous bark of approval for pursuing my monetary policy objectives... “Clio, Georgie, Bodey – want a treat?!” Now, what else can I get my Central Bank to do for me? A Central Bank manages the currency and money supply of a nation. In this case that’s the United States of Me. I’m headed back to the Xerox machine at the copy shop right now. A Central Bank also manages a nation’s interest rates. There are a number of different interest rates that a Central Bank manages – target rate, nominal rate, effective rate, discount rate. Therefore my central bank will manage interest rates so that I, too, have a variety to choose from. There’s that ultra-low rate on my Visa card balance that I mentioned before. But in other situations, I’d like other rates. No more 0.4% six-month CDs, please. The Reserve Bank of My House will make sure
that the return on my savings account falls somewhere between Venezuela government bond yields and Mafia loan shark vigorish. My Central Bank can take care of this because another thing Central Banks do is oversee commercial banks. And my local bank could use a little oversight. Next time I go there I’ll bring Georgie, the chairman of my Fed. Georgie is an adorable black Lab, but she also has teeth like a set of steak knives and a deep and fearsome growl. Then I’ll explain to the bank manager that when I balanced my checkbook, yes, I did add a $1,230 check I wrote to my previous balance of $984 instead of subtracting the $1,230 from the $984. But that’s what a government does with “off-budget” federal spending involving such programs as Social Security. Therefore, using official U.S. federal budget math, I now have $2,214 in my checking account, not -$246. And Georgie will provide oversight by governments and individuals is that governments are much stupider. The main difference between governments and individuals is that governments have Central Banks and individuals don’t. The other main difference between
American Consequences | 7
Made with FlippingBook flipbook maker