Contact the Federal Reserve
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
Today, the Federal Reserve's duties fall into four general areas:
- conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
- supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
- maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
- providing financial services to depository institutions, the U.S.government, and foreign official institutions, including playing a major role in operating the nation's payments system
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Solving America’s economic problem is the most urgent issue of the day. It is the engine that drives all other engines. Solving this issue also fixes many other problems. Lives and livelihoods depend on an efficiently functioning economy. It is linked directly to health, wealth, prosperity, to liberty, and to happiness. It is too serious an issue to be left to “invisible” hands. It needs to be dealt with directly by everyone in general, but to a select few in particular.
The Federal Reserve Board is the focus of this essay. Its members are not doing enough. If they were we would have full employment; we would not have the greatest inequality of wealth and income in the industrialized world; average incomes would be much higher; employment opportunities would be plentiful; corporate banks would have less influence in the direction of national policies; and most importantly, there would be a higher amount of money in the form of M1, and less money in M2 – M1. This latter issue would help to solve many economic issues that plague us.
The key to greater economic activity lies in increased GDP. When GDP rises, employment also rises, incomes rise, tax revenues rise, budget deficits fall, wealth increases, and it flows to more and more residents. Greater prosperity also means greater educational opportunities, more home ownerships, and less poverty. Less poverty means a reduction in a whole host of social issues such as mental health problems, hunger, poor education and illiteracy rates, suicides, crime, incarcerations, drug usage, teen pregnancies, life expectancies, obesity rates, and greater social mobility.
To be sure, the Fed needs help from others in bringing about all these changes. The most notable are a more progressive tax system, and inheritance laws that limit wealth accumulation. And so, we could justifiably add the Congress and the Council of Economic Advisors as two more bodies who are not living up to their responsibilities under the laws of the land. But we could also add the community of economists to this list. Many, if not most, know that there is much truth in this essay. They have an obligation, individually and collectively, to give a strong voice to solutions that can work while avoiding all the distractions that politicians and ideologues put up.
But let’s concentrate on the Fed.
The Employment Acts of 1946 and 1978 made full employment a national objective, thus there are many agencies and persons who have responsibilities in these matters. But nothing drives economic activity like money in the hands of consumers. They account for 70 percent of GDP. Add in government spending, and we are up to 90 percent of GDP. And then add business investment (derived from profits and spending) and we have summed up today’s economy. Net exports are negative, thus our balance of trade is an impediment, not a positive in calculating GDP growth.
GDP depends on new money getting into circulation (M1). The mechanism is via loans to individuals and to small businesses. Every dollar that gets into M1 currently produces $6 dollars in GDP. $1 trillion M1 dollars produces $6 trillion of GDP.
In contrast, M2 – M1 dollars go into personal investment accounts where they produce no GDP at all. That money does make wealthy individuals a lot wealthier. And that is the source of the greatest inequality in world history; it explains why wages are not growing, and why prosperity is not flowing to the bottom 90 percent of residents.
The bottleneck and the diversions take place within our corporate banks. They are the real obstacle. Corporate bankers are wealthier than Fed economists. They have many connections and alliances with the wealthiest residents in America and around the world. Corporate bankers can borrow from the Fed, but the Fed does not tell them who they can lend that money to. Still, it is the Fed’s job to solve this problem. They must insist that the money they created under their charter and consistent with the laws, are also applied in a manner that is consistent with our laws. It’s that simple. Here are the five Fed board members who are not doing their jobs:
Janet Yellen, chair
Stanley Fischer, vice chair
Daniel K. Tarullo
Jerome H. Powell
Lael Brainard
Phone: 888-851-1920 (Phone), 877-766-8533 (TTY)
Fax: 877-888-2520 (Best method)
Write, call, fax, or email them. Ask them why more money is not flowing into M1, and less into M2 – M1. Insist that they work to solve this huge issue in favor of the 90 percent of Americans and legal residents, instead of making the top 10 percent richer. In solving this issue they would also be helping to solve the long list of social ills stated earlier. The benefits are enormous. There is no downside.
Copy this essay and mail it to them if you prefer. Copy and send it to 25 of your friends. Repost it on your website. Send it to universities, to mayors, to governors, to corporate CEOs. Send it to newspapers, to newsletters, to web sites, and to concerned persons wherever they may be. Just send it. Please.
Anyone who is skilled with starting petitions, please consider making this issue into a petition that receives wide circulation.
GDP depends on new money getting into circulation (M1). The mechanism is via loans to individuals and to small businesses. Every dollar that gets into M1 currently produces $6 dollars in GDP. $1 trillion M1 dollars produces $6 trillion of GDP.
In contrast, M2 – M1 dollars go into personal investment accounts where they produce no GDP at all. That money does make wealthy individuals a lot wealthier. And that is the source of the greatest inequality in world history; it explains why wages are not growing, and why prosperity is not flowing to the bottom 90 percent of residents.
The bottleneck and the diversions take place within our corporate banks. They are the real obstacle. Corporate bankers are wealthier than Fed economists. They have many connections and alliances with the wealthiest residents in America and around the world. Corporate bankers can borrow from the Fed, but the Fed does not tell them who they can lend that money to. Still, it is the Fed’s job to solve this problem. They must insist that the money they created under their charter and consistent with the laws, are also applied in a manner that is consistent with our laws. It’s that simple
Ron