Talk:Monetary policy of the United States/Archive 2

Accurate use of source (with precise wording) should not be changed

I used a cited source that specifically said "nearly all" of interest income collected by the Fed is returned to the government. This was changed to "a large portion" on the basis that "most people prob would not consider 80% as "nearly all".

The quote was accurate. If you want to dispute the basis for "nearly all", use a source.--Gregalton (talk) 07:00, 2 February 2008 (UTC)

Apologies ... BigK HeX (talk) 09:48, 2 February 2008 (UTC)

audit exclusion

From Zenwhat:

Open market operations are not subject to being audited[44] because doing so would be redundant, since such activity is already reflected in interest-rate changes.[citation needed][original research?]

I've flagged the text. I've never seen such a claim of "redundancy" made as a case for the audit exclusions. Please reference. BigK HeX (talk) 10:06, 2 February 2008 (UTC)

"Balance" ... sure is bulky

Someone fairly neutral please chop this down ... from the wiki article:

Congressional oversight on monetary policy operations, foreign transactions, and the FOMC operations is exercised through the requirement for reports and through semi-annual monetary policy hearings;

Smale, Pauline. "Structure and Functions of The Federal Reserve System" (PDF). Congressional Research Service. pp. pg 6. Archived from the original on 2008-02-01. Retrieved 2008-02-01. {{cite web}}: |pages= has extra text (help)

ultimately, scholars have conceded that the hearings did not prove an effective means of increasing oversight of the Federal Reserve, perhaps genuine accountability never blossomed because "Federal Reserve officials are, after all, masters of managing the competing pressures on monetary policy within a politicized environment that virtually requires that they conceal a good portion of their policy intentions; in addition, Congresspersons prefer to bash an autonomous and secretive Fed for economic misfortune rather than to share the responsibility for that misfortune with a fully accountable Central Bank."

Havrilesky, Thomas M. (1995). "The Pressures on American Monetary Policy". Springer; ISBN 0792395611. pp. pg 113. Retrieved 2008-02-01. {{cite web}}: |pages= has extra text (help); templatestyles stripmarker in |publisher= at position 11 (help)

Thanks. BigK HeX (talk) 11:39, 2 February 2008 (UTC)

Yes, it is bulky, and can be edited to fairly reflect the text. Would have been much easier if the effort had been made to represent the source neutrally. The source's point appears to be (broadly) the relatively stronger influence of the executive (elected government) over the legislative branch (elected legislature) with respect to the Fed. He also provides a pretty strong statement to the effect that if Congress doesn't exercise effective oversight, it's because Congress does not wish to ("plausible deniability"). This is an entirely different and more nuanced view than what you represented the text to be.--Gregalton (talk) 17:13, 2 February 2008 (UTC)

Daly discussion summary

I've posted the following on the reliable sources noticeboard:

This discussion has taken place (inadvertently) on several pages (here, fringe notice board, talk page. I would like to summarize the responses:

• BigK Hex: Supports use of this source.
• BernardL: Notes that source is a credible source in economics; unclear whether yes/no for undue or usage in this particular article.
• EdJohnston: Using Daly is undue in this context.
• Gregalton, EGeek, Relata refero, ZenWhat: opposes source as undue, not appropriate source in this context, clearly heterodox.
• Haemo: has not commented specifically on Daly, but believes article has POV issues.

There is clear support for Daly as a source in this particular context only from the editor that inserted the text in question. I note that the specific formulation in question has been used by that same editor since essentially the first revision of this page - only the source has changed in response to requests; see 7 January version: see this version for example.

There is one editor who has not responded to the specific question, the appropriateness/reliability in this context.

There are five editors who specifically say that using Daly in this context is undue or inappropriate.

Is this summary in any way unfaithful to the discussion? I believe this summary makes clear that there is unambiguous support only from one editor, and the source should not be used.

For those who have not been through the history, from the January 7 diff: "Despite the arguments of many "myth debunkers," Americans actually do have to pay for the money that is printed by our government. This payment is in the form of the interest that is charged on the bank loans - loans which are required in order for money to be injected into the economy, and even simply for existing money to be maintained (as noted in "Step 7" in the above process)." This is the specific argument used before Daly got into the picture; this is a clear indication that the issue has been finding a source, any source, that supports the statement the editor wants to make, rather than finding a neutral, credible source or determining what the mainstream view is.--Gregalton (talk) 17:05, 2 February 2008 (UTC)

Also cross-posted from RSN.

"I believe this summary makes clear that there is unambiguous support only from one editor, and the source should not be used." .... Err ... riiiight. At best, you've only opened the door to regarding this as a minority viewpoint and then a new discussion revolving around whether it is a significant or not, which would determine its ultimate fate. So, far there look to me to be:

• at least 2 that likely support significant inclusion,
• probably 4 that likely support removal, and
• 1 that is questionable, but probably supports that the viewpoint is significant, even if only held by minority.
• So, at 3 supporting inclusion with better balance, versus 4 supporting removal, that pretty much equals No Consensus.

In any case, Jimbo has been paraphrased as saying, "If a viewpoint is held by a significant minority, then it should be easy to name prominent adherents;"

Prominent adherents that have been directly quoted in drawing the same conclusion include:

1. Herman Daly;
2. a notable former Chief Economist for the minority staff of the House Budget Committee;
3. Congressmen Jerry Voorhis and John Rarick;
4. many prominent conspiracy theorists, such as Jacques Jaikaran, G. Edward Griffin, Chris Martenson, among many others.

This doesn't even include authors and works where the conclusion is developed gradually (which I *think* applies to Irving Fisher). In all, even if this were to be treated as a "minority viewpoint" then it still would seem to deserve coverage for its notability, if nothing else.

Also .. psssst. You might not have noticed, but that older text was sourced too. You disputed it, and got more academic sourcing. Big whoop.

Anyways ... final conclusion is no consensus on reliability. Possible consensus might be possible on whether the viewpoint is only minority-held. BigK HeX (talk) 18:59, 2 February 2008 (UTC)

OR tag.

I added this: "Audits by the GAO are limited to administrative expenses because auditing open market operations would be redundant, since such activity is already reflected in interest-rate changes."

This isn't research. It's common knowledge among those who have even a basic understanding of how the Federal Reserve works. See howstuffworks' article on the Fed and Wikipedia's own article (when it's in good shape anyway).

Above, BigK had been looking for sources to prove the claim that the Fed has never been audited or isn't audited properly (aside from his attempts at pushing the "money is public debt" claim). The New York Times article cited is infotainment, playing up public ignorance and fear about the Fed.

Open-market operations are not audited because it would be redundant. When the Fed buys or sells securities, they do so on the open market (hence the name) and their actions are always reflected in interest-rate changes. Fed buys securities: Money supply goes up, interest-rates go down. Fed sells securities, money supply goes down, interest rates go up. If they audited this, they would count precisely how many treasury securities the Fed bought and what would they conclude? They'd find the same pattern of behavior matching the flow of interest rates. It's likely you could find a source for what I'm saying here, but not necessarily because the criticism made is so absurd that economists and Fed officials might not even address it.

Still, the claim could be sourced very easily. Simply dig out any econ textbook (or check the sources on other monetary articles) and slap a reference up for "such activity is already reflected in interest-rate changes". ☯  Zenwhat (talk) 09:38, 3 February 2008 (UTC)

If it could be sourced, then please do so. The Fed's purchases on the Open-market are anonymous, and the effect on interest rates is NOT exact (hence why they actually attempt to fall into a range with their target rate). Source or remove, please.

As to, "BigK had been looking for sources to prove the claim that the Fed has never been audited" .... WP:RS allows the source, so call it whatever you will. If you want to contravert the source then find someone who says differently .... which is impossible. If you cannot find a contradiction about external audits of monetary policy transactions, then your complaint on this point is frivolous. BigK HeX (talk) 12:14, 3 February 2008 (UTC)

I can see no more recent source (apart from 1983) that claims that open market transactions are not audited at all, and the law was changed after that to require audits of financial statements. Open market transactions would affect financial statements, and hence are audited. So the only documented claim (apart from historical) that can be made in this area is that open market transactions are not audited by the GAO, as this was excluded from areas GAO may audit. (One could opine that open market operations are not audited within the scope of the financial statements audit, but this would require a source.)

It is patently untrue that GAO audits are limited to expenses: the Comptroller General explicitly says otherwise. For this reason I've removed the dissertation characterization: while I don't have a strong opinion on the dissertation issue in general, in this case the source saying otherwise is authoritative.--Gregalton (talk) 14:43, 3 February 2008 (UTC)

The law on stem cell usage changed, too .... and that legal revision was equally as relevant to audit of monetary policy transactions, as explicitly described above. Instead of finding irrelevant legal developments, a much better dispute could be made by providing a reliable source that explicitly contradicts the assertions made. You imply that audit information is readily available, so too should be any info on external audits in this case. Please provide. BigK HeX (talk) 16:16, 3 February 2008 (UTC)

You can make all the assertions you like, but unless it has a source more recent than 1999, it is nothing more than inuendo. I have shown the fed is audited and independently so, and the only source you have to make the claim that there is no audit of open market operations is from before that date. Surely if that is the case you can find supporting documentation.--Gregalton (talk) 16:41, 3 February 2008 (UTC)

Err ... you have not provided ANY indication of external audits being performed on monetary policy transactions at ANY point in history ... not after 1999, and not before it. Please read the details of the GLB act (some details are above). It has no relevance to the point you are trying to make. BigK HeX (talk) 18:10, 3 February 2008 (UTC)

Here ya go ... Board of Governors ... see highlighted text on the page. Book published in 2002. Can we close this issue? BigK HeX (talk) 18:47, 3 February 2008 (UTC)

I think this source supports my version of the situation: Money and the Federal Reserve System: Myth and Reality, G. Thomas Woodward, Specialist in Macroeconomics, Economics Division, July 31, 1996, Congressional Research Service Library of Congress, CRS Report for Congress, No. 96-672 E. (This source is also available in book form at [1], I'm just using this one; unlike some other branches of government, the CRS does not systematically publish all their reports).

I cite: "One of the difficulties in understanding the audit issue is in the different types of audits. Most people think of audits as financial audits. These are principally concerned with whether an institution has spent the money and maintains the funds as it has claimed in its financial statements, and whether it is complying with procedures designed to safeguard it from misappropriation of funds. This is no doubt the kind of audit most people have in mind when expressing their concern over whether the Fed gets audited."

I continue: "But audits are also designed to review management efficiency and to evaluate the policy of an institution. It is the latter kind of audits that are the reason for the restrictions on GAO's audit authority over the Fed. The concern is that more extensive audits will become policy evaluations second-guessing the Fed's monetary policy, and not examinations of Federal Reserve financial safeguards and procedures. Under current law, policy is reviewed twice annually by the Congress."

This seems to address precisely the issue at question: a) Fed is audited, independently, in the sense of checking its expenditures, assets, etc; b) these audits are published, including the audit standards; c) There is no reason to believe that these financial statements could exclude open market operations (which, by definition, affect the Fed's earnings and balance sheets; and d) the type of audit at question for the GAO - the type which is excluded - is a review of the policy of the institution, which has been excluded for explicit reasons of indepedence.

Is this sufficient on this area?--Gregalton (talk) 17:34, 3 February 2008 (UTC)

I have no qualms with discussion detailing the various types of audits. Heck, I included that information myself in one of my original versions. All of the addition since that time have merely been elaborations that have taken a small point, and carried it to prominence that is probably not really called-for, according to the primary subject matter. In other words, our "elaboration wars" are making mountains out of molehills. Perhaps, this is how editing works in wikipedia ... in the end the only "problem" is that "proper weighting" is being sacrificed for accuracy, which is not so big a problem, I suppose. IMO, that entire section should be all of maybe three sentences ... something like, "The types of audits that are performed by independent auditors include audits of financial statements and audits of internal controls, the results of which are published and available to Congress and the public. The GAO is also allowed to audit many aspects of the Federal Reserve system; however no audits are allowed to be performed on monetary policy transactions by any group outside of the Federal Reserve. Monetary policy transactions have totaled 500 billion dollars per year, and political interference in this area could affect the delicate economic balance." Something like that.

The article does some differentiation between different types of audits. Some types of audits certainly are performed but, as Woodward explains, some types of audits are excluded, for political reasons or whatever reason (certainly NOT for any reasons of "redundancy" as the text currently states).

Audits of financial statements are not equal to audits of monetary policy transactions (as stated by many people who believe the exclusion is significant, and it is also strongly implied by the Comptroller source you've used). The excluded types of audits are notable and significant ... so, that information should be present in the wiki article. So long as that information is present and clearly conveyed, I have no dispute with any other information about audits being included, but text that muddles a pretty straightforward issue [OMOs are not audited externally] is something that I would have to contend. BigK HeX (talk) 18:07, 3 February 2008 (UTC)

Side note ... be forewarned that Woodward tangentially supports another point that you have been contending against me. I've been holding off on using it while there are so many other open issues. So, if you are confident in asserting Woodward as a "reliable source," then that would save me the argument later. BigK HeX (talk) 18:12, 3 February 2008 (UTC)

The statement "OMOs are not audited externally" should not be in the text unless an up-to-date, reliable source is in there. The only statement of this sort that is supported is "OMOs are not audited by the GAO."--Gregalton (talk) 18:27, 3 February 2008 (UTC)

It is up-to-date. It's just as up-to-date as the Federal Reserve Act that empowers the Fed with influence over the monetary base ... and that one is from 1913. No relevant changes have occurred since the writing. I have provided a source that Wikipedia qualifies as "reliable" so the onus is on your to prove your assertion that the source is now wrong. So, the important issue is that ZERO contradictory evidence has been provided to state, "here's an external audit of OMOs." It'd be much easier to convince me to drop it by contradicting it with a reliable source, not conjecturing from legal revisions (especially not legal revisions which clearly do not address monetary policy). Again ... please see above for info on GLB. BigK HeX (talk) 18:51, 3 February 2008 (UTC)

Gibberish. The law changed the audit requirements. The change in law is relevant and exactly on subject.--Gregalton (talk) 19:14, 3 February 2008 (UTC)

.... now prove it.

Please find any connection between the GLB Act in 1999 and monetary policy (AKA, "relevance"). Heck ... feel free to even post unreliable sources here in talk. Do that, and I'd strongly consider deleting the text, even without you having to construct a "wikipedia-level" contradiction.

But, just as an aside, the law that you keep quoting only changed one thing. The Fed had the option of requesting independent audit of summary statements each year. They were doing so without legal compulsion. The 1999 revision merely made it legally required to have the audits of summary financial statements. BigK HeX (talk) 19:35, 3 February 2008 (UTC)

My point is and has been regarding external and independent audits, not "monetary policy," since you keep repeating this "no external audits" nonsense. Since the law changed the audit requirements for the Fed (to formalize the requirement for an independent audit), quotes from pre-amendment periods regarding audits may reasonably be expected to no longer be relevant.

If what you mean to say is "GAO does not audit open market operations or monetary policy", that would seem to be redundant (albeit differently redundant than the discussion above): the law says that GAO cannot audit open market operations (and hence it does not).--Gregalton (talk) 19:50, 3 February 2008 (UTC)

I have never stated that there are no external audits ... in fact, I personally included some of the details of audits into the wiki article myself. However, I have quoted sources that show that OMOs are not audited externally. 1999 is irrelevant to this point, though. BigK HeX (talk) 19:59, 3 February 2008 (UTC)

The current version of that section draws no objection from me. BigK HeX (talk) 20:07, 3 February 2008 (UTC)

Monetary Goals

The entire "Fulfilment of goals" section makes no sense. Most of the section explains how the current goals were not met since the Federal Reserve's creation in 1913 instead of 1977 when the current goals were formed. I'm not sure how this should be edited. --EGeek (talk) 07:09, 4 February 2008 (UTC)

It does need to be edited for the 1977 change, but they still retained their 1913 mandate to pursue maximum employment and stable prices. Overall that section probably needs work on its tone. BigK HeX (talk) 15:06, 4 February 2008 (UTC)

Actually, "the original Federal Reserve Act contained almost no explicit macroeconomic goals for the System to follow." Congress did not mandate specific goals to the Federal Reserve until 1977. --EGeek (talk) 19:53, 4 February 2008 (UTC)

Ahh ... there seems to be some ambiguity but it does look like the macroeconomic goals were developed in beginning in 1946, and laid out with more precision in '77. I'll have to edit that up. BigK HeX (talk) 23:09, 4 February 2008 (UTC)

Timeline reflected accurately now. Still needs to be fixed for tone ... and possibly, balance. BigK HeX (talk) 16:54, 5 February 2008 (UTC)

It's Miller Time

Didn't want it to get lost in the shuffle, but please don't forget about my request of pointing out where Miller refers to interest costs (or costs of any kind). Again, I apologize if you've done this already. I'd ask that you humor me with a succinct explanation of Miller discussing costs, or deny my request. BigK HeX (talk) 06:57, 31 January 2008 (UTC)

Costs are endogenous to demand, hence to creation of money, hence justified. But I think it would be better to resolve the Daly issue. At the noticeboard for reliable sources, you have indicated that mainstream sources say "the same thing". Paraphrasing. I think it would be more useful to provide those sources.--Gregalton (talk) 07:42, 31 January 2008 (UTC)

Err ... endogeny is irrelevent. We are not discussing causality. Again, the only causal link that Daly asserts is between GDP and money supply (which is quite obviously what Miller is criticizing; he plainly writes, "the connection between money and GDP growth is therefore not as obvious as Daly assumes.").

I still have not seen any evidence of Miller disputing that There Exist Costs. He might be disputing causality of costs (but I doubt even that much).

This misrepresented source will need to be adjusted to fit the actual text (at which point it will be made irrelevent to the wiki article, since Daly's causality assertion is not used). BigK HeX (talk) 08:16, 31 January 2008 (UTC)

I never said Miller disputed the cost. By definition, interest is cost of capital, and capital is required to finance economic activities. Miller says:

The growth of fractional-reserve fiat money is better understood as a response to the financing needs of economic activities, not the cause of those activities.

Therefore, the need to grow justifies the cost of growth. Miller also compares a full-reserve banking system ("100% Money") with a fractional reserve banking system and shows that capital under a full-reserve system would cost more and cause instability in the physical economy due to the increased opportunity costs of the financial system. --EGeek (talk) 09:03, 31 January 2008 (UTC)

But since Daly's simple quote never asserts or intimates that costs are unjustified, how is Miller's critique relevant to Daly's statement? --- "Over 95% of our money supply [in the United States] is created by the private banking system (demand deposits) and bears interest as a condition of its existence." Daly simply asserts that costs exist ( he plainly says "as a condition of its existence"). If you want to use Miller's source to explain how costs are justified, do as you will, so long as the wiki text matches the citation.

The current text cannot stand as is, because it plainly reads as:

"economist Eric Miller criticizes Daly's logic [about the fact that interest costs exist alongside 95% of the money supply], concluding that money is created in the banking system in response to demand, which justifies its cost.

Daly's logic about this particular point is not anywhere criticized by Miller, whereas the current text implies differently. Rewording this statement would be much appreciated. BigK HeX (talk) 09:15, 31 January 2008 (UTC)

If you want to cite interest as the cost of capital, then use a textbook or a dictionary for a source. I fail to see why you are using Daly as a source on this subject. —Preceding unsigned comment added by EGeek (talk • contribs) 21:36, 2 February 2008 (UTC)

The "replacement" says nothing even similar in meaning. BigK HeX (talk) 06:36, 6 February 2008 (UTC)

This is what you were arguing over:

"Daly simply asserts that costs exist (he plainly says 'as a condition of its existence')"

The new text says:

The private banking system charges interest to borrowers as a cost to borrow the money.

This replacement notes that cost exist "as a condition of [the loan's] existence." --EGeek (talk) 06:47, 6 February 2008 (UTC)

Err ... yes. Daly makes mention of the costs existing, and the relation to monetary policy. The replacement makes no mention of monetary policy at all. If the costs had no bearing on monetary policy, then, of course, it would irrelevant in the context of the article. My entire rationale for including that section of text was due to its relevance. If it is ultimately decided that the text is not directly relevant to monetary policy, then we can delete that paragraph. I contend that it is relevant, and have some verifiable sources that agree. I haven't really been convinced by the "academic sub-field specialization" arguments, and am looking to the noticeboards, but no clear consensus there yet. BigK HeX (talk) 07:58, 6 February 2008 (UTC)

Okay. I put the Miller text back in to balance Daly. Also note that this paragraph not only ignores previous statements above, but also makes no distinction between m0 and m1+ money supplies, and reserves, which is important when explaining how OMO and the fractional reserve system interact which each other. --EGeek (talk) 20:27, 6 February 2008 (UTC)

I agree that the text should elaborate more on the aggregate distinctions. I didn't want to dleve too deeply into the "Criticisms of fractional reserve banking" as that seems to be a hot-button topic. But, it might be necessary. BigK HeX (talk) 02:12, 7 February 2008 (UTC)

Countrywide bank run?

I don't think countrywide, which has has increases in deposits, has suffered a bank run. PouponOnToast (talk) 16:18, 12 February 2008 (UTC)

I agree. There are a few issues with this: it was spoken about in the press as a bank run, but this is not the same as showing that there was one. There is also a specific meaning of a bank run (and considered a key distinction), which is that a bank which is truly insolvent is not facing an irrational withdrawal of funding by lenders (incl depositors), but an entirely rational one; a bank which is solvent can, however, face liquidity problems unconnected with actual solvency due to irrational panics. So one distinction is that a bank run is reserved for cases of a solvent bank facing a liquidity panic caused by the bank run; a fundamentally insolvent bank that faces a rapid withdrawal of funding is an insolvent bank whose lenders one day realized the problem. Put another way, the 'bank run' itself is the problem, not the bank.

In the case of countrywide, the issue is further complicated by the fact that a very large chunk of countrywide is not a deposit-taking bank, and hence not subject to the reserve requirement, and hence not necessarily relevant. Further, countrywide's run on deposits was really caused by well-founded fears about the solvency of parent/group, not the bank itself - which is an interesting issue in bank regulation, but not really germane to reserve requirements per se.

Is there a compelling reason to discuss countrywide in particular here?--Gregalton (talk) 16:48, 12 February 2008 (UTC)

No, there's not. PouponOnToast (talk) —Preceding comment was added at 16:55, 12 February 2008 (UTC)

auto-archive

I am going to be bold and establish an auto-archive here, this page is now excessively long.--Gregalton (talk) 07:59, 19 February 2008 (UTC)

Would be a very welcome modification. BigK HeX (talk) 16:41, 19 February 2008 (UTC)

"Private"

Would just like to underline that I'm not trying to be contentious about this - but the "privateness" of the FRBs is a constant theme of conspiracy sites, and I think more neutral if this is not repeated unnecessarily. One can disagree about how private they are, but since the same paragraph addresses the question of privateness just before (in a text that appears to be mostly agreeable), I don't think it needs to be addressed again.--Gregalton (talk) 11:38, 18 February 2008 (UTC)

I am underlining again that saying they are "private" in isolation is not fully descriptive, and not, as you state, "generally accepted." To quote one source: "Congress chartered the Federal Reserve Banks for a public purpose. The Reserve Banks are the operating arms of the central banking system, and they combine both public and private elements in their makeup and organization.[2] As part of the Federal Reserve System, the Banks are subject to oversight by Congress."

As I stated above, saying they are private is a favourite theme of conspiracy theorists, and why I object to leaving it without context like that.

There are also other sources which dispute directly the "private" ownership, stating that it is a form of private ownership which conveys essentially none of the usual benefits of ownership.--Gregalton (talk) 16:11, 18 February 2008 (UTC)

The Federal Reserve Banks are not private.[3] The system is "quasi-public" because the member banks are private commercial banks, which are part of the "system".--EGeek (talk) 20:56, 18 February 2008 (UTC)

"I am underlining again that saying they are "private" in isolation is not fully descriptive"

There's nothing "isolated" about the word private. You've dedicated the expansion of that text to discuss how much they are controlled by the Board. In any case, they are private, as described by their own banks (not to mention court determinations).

In fact, the primary problem is that their private status is being disregarded, while the "balance" is being expanded. If we're going to expand the text beyond the agreed version then I'm am going to make sure that the non-public control receives due weight.

"Is the Federal Reserve a privately owned corporation?". Federal Reserve Bank of San Francisco. Retrieved 2008-01-12. the 12 Federal Reserve Banks are chartered as private corporations

As cited above, they are private. Feel free to elaborate on the public control, but I am directly quoting the Federal Reserve banks, and will continue to support the text, especially in light of the heavy discussion of specifics regarding federal involvement which paints a picture of official federal control that far exceeds the actual nominal control that elected governance possesses.

Bottom line is that, by definition, the "quasi" label means there are private elements, and yet those are being completely disregarded and glossed over. That use of rose-colored glasses (positive spin) to omit pertinent details would seem to be an NPOV issue, at least as much as the negative spin that I have been corrected on. BigK HeX (talk) 21:25, 18 February 2008 (UTC)

If you would have read my source, you would have found that...

"The Federal Reserve System is not 'owned' by anyone and is not a private, profit-making institution."

and...

"The twelve regional Federal Reserve Banks... are organized much like private corporations"

They are organized that way so they can operate independently of the rest of the government. In regards to you POV accusation, it works both ways. Using the word "private" without full discussion, leaves important material out that readers will interrupt wrong; therefore, only stating that the Federal Reserve Banks are "private" is also POV; however, as I said before, this material is already located in the Federal Reserve System article. --EGeek (talk) 01:55, 19 February 2008 (UTC)

Technically, I don't need to read your source, as I have better ones. Feel free to include your findings, but mine are the ones held in more prominence (seeing as they are from the most authoritative sources possible).

"The Federal Reserve System is not "owned""

Notice that has NO bearing on a description of the Federal Reserve banks.

"only stating that the Federal Reserve Banks are "private" is also POV"

I only quote the sources ... you'd have to take that complaint up with them (or the RSN, I suppose). BigK HeX (talk) 03:41, 19 February 2008 (UTC)

Err ... so, the non-conspiratorial beliefs of conspiracy theorists are somehow off-limits? I don't think such a contention can overpower well-referenced facts, especially in the context of the elaborations being provided that are explicitly attempting to marginalize the private status. BigK HeX (talk) 21:25, 18 February 2008 (UTC)

Your refusal to read other sources is instructive - to say your sources are "better" when they are both from the Federal Reserve is strange.

As for the conspiracy theorist beliefs: the point is whether emphasizing the (nominal) private ownership is wp:undue. As for additional sources, apart from the federal reserve itself, numerous highly credible sources state that "ownership" of the FRBs does not convey the usual rights of ownership: see [4], where numerous quotes say "ownership does not carry with it control" (Britannica), "semblance of private ownership", "This ownership is significantly different from ownership by private corporations", "Despite their private ownership, they are in a real sense public banks" (Lloyd George Reynolds, Economics), "These regional Federal Reserve banks should be distinguished from private ... legal rights of ownership and control that normally belong to stockholders", etc. See also [5] here, "This stock does not carry with it the normal rights and privileges of ownership." Or as frequently put, they may be "private" but are under the control of the Federal Reserve Board - ownership conveys almost none of the usual benefits of ownership.

So the point that EGeek and I are emphasizing is that these are not private in the usual sense of the word, and using the term out of context gives undue attention to an issue that is far more nuanced. Since conspiracy theorists love to emphasize this point w/o context, it indicates that an NPOV article should strive to balance this.

As it stands, two sentences before this the exact same issue is addressed - why I have said taking one word out of context and sticking it in here is undue and redundant. Why repeat later?--Gregalton (talk) 09:46, 19 February 2008 (UTC)

I don't feel it detracts from accuracy, since the word private is well-placed in context; all of the surrounding text is dedicated to elaborating on the nuances. BigK HeX (talk) 16:39, 19 February 2008 (UTC)

You seem to prefer emphasizing that the private status of the Federal Reserve banks are mitigated by the public control [AKA "nuanced"], yet the text does not delve much into the disconnect between the Federal Reserve System and the elected governance. Officially, the "public control" is quite nominal, at best. In other words, the public control is just as "nuanced." I didn't expand the text to describe that, because I figured the discussion of all of these nuances were not strictly relevant to the topic of monetary policy, and that it should (hopefully) all be covered in the Federal Reserve System article. However, if we are equally vigilant in describing how the public ocntrol is nuanced, then I'd be much less persistent in the use of the apparently-damning label ("private"). If that is the route we desire, then let me know an I'll expand the text to accomodate, but let it be known that I'd personally find such an expansion as irrelevant to the primary topic of the article. In my opinion, such tangetial topics should be given only brief treatment and allow the reader to investigate the matter in full by referring to the main article of the topic; this is why I was fine with the short blurb proposed by Haemo above. BigK HeX (talk) 16:39, 19 February 2008 (UTC)

"Your refusal to read other sources is instructive"

What's so "instructive" about that. I am not the one deleting information from the article. Last I checked, a person doesn't have to verify citations before not changing the article... BigK HeX (talk) 16:19, 19 February 2008 (UTC)

"to say your sources are "better" when they are both from the Federal Reserve is strange"

Err ... my sources about the status of Federal Reserve banks comes from Federal Reserve banks and the US Supreme Court. That would be a self-admission AND a legal ruling --- as stated above, I do not believe that more authoratative sources are available. That should take precedence even over EGeek's source (the Federal Reserve Board of Governors), and even if it didn't, his source still does not contradict the statement about the status of Federal Reserve banks. BigK HeX (talk) 16:25, 19 February 2008 (UTC)

What US Supreme court reference?

EGeek's source says "are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."

Or, to state what has been stated above and sourced, "private" ownership here is different. To say private "without" noting the differences is missing the point, and wp:undue.--Gregalton (talk) 16:46, 19 February 2008 (UTC)

• "much like private"

That's not a contradiction. BigK HeX (talk) 17:01, 19 February 2008 (UTC)

My entire contention is that the all of this elaboration of the FED is WP:UNDUE (well, I'm exagerrating ... it's not undue but rather not WP:TOPIC). IMO, all that is needed is a short blurb indicating the parts that could be relevant to monetary policy, and a link to the main article.

• "private" ownership here is different. To say private "without" noting the differences is missing the point

And, equivalently, all of this text dedicated to noting the differences --- without noting the similarities, it also misses the point. BigK HeX (talk) 16:59, 19 February 2008 (UTC)

Private (con't.)

Personally, I'd be happy deleting the entire section and leaving it to the article on the federal reserve. Or, as I suggested, just deleting the word private from this sentence, since the exact same subject is addressed immediately prior; if that sentence is acceptable, why all this text?

While I note your point about the similarities, it's generally not necessary to mention similarities to a type (e.g., a four-legged dog is not unusual, a seven-legged dog is), and may be misleading in certain circumstances.

Once again, which supreme court text are you referring to? I honestly missed that.--Gregalton (talk) 20:05, 19 February 2008 (UTC)

• "just deleting the word private from this sentence, since the exact same subject is addressed immediately prior; if that sentence is acceptable, why all this text?"

That argument works in reverse, though. If you find the previous sentence acceptable, then why the problem with the second sentence. I'm pretty sure a rational reader unfamiliar with the topic is given enough context in that section to come away with the opinion that the private status is not particularly damning. Having that one word present doesn't seem to make or break that understanding.

"it's generally not necessary to mention similarities to a type"

Generally, no. But, as we've established here, the Fed is far from typical. The banks are not private businesses in the common sense of the word, as the article makes note. But, the Board is also far from "public" in the common sense of the word, and there the article fails to make note. I find that to be a balance problem, but I also find WP:TOPIC to be an even more overriding problem with that section, so I have neglected to balance the text. If the single word "private" can convey enough of a sense of independence for a curious reader, then I will allow that to suffice.

As for the court case, it's the same Lewis case for Tort standing that you addressed once before. BigK HeX (talk) 04:37, 20 February 2008 (UTC)

Well, I won't address that court case again. To reiterate: my problem with "private" is that it is misleading: it does not convey that this is not private in the normal sense. (As witnessed by numerous conspiracy theory sites that play up this point and miss the usual qualifiers).

I'm not sure that I agree that the Board is not "public" in the common sense of the word, but if some clarification is needed there (the text seems quite specific), then so be it. No-one disputes (to my knowledge) that it is an unusual government agency and has more independence than most, of course.--Gregalton (talk) 07:09, 20 February 2008 (UTC)--Gregalton (talk) 07:09, 20 February 2008 (UTC)

But, that's the thing I keep reiterating. "Private" may be misleading without context, but that entire paragraph gives the appropriate context. BigK HeX (talk) 07:37, 20 February 2008 (UTC)

So why repeat it two sentences later without the context?--Gregalton (talk) 07:48, 20 February 2008 (UTC)

Err .. my contention is that the entire paragraph IS the context. Not sure how you can say it stands "without context." BigK HeX (talk) 08:02, 20 February 2008 (UTC)

Please look at what I've done - the sentence in such hot dispute is repetitive anyway. The citations have been moved to the previous sentence where this is discussed.

Of course the para is the context - but why repeat without the qualifiers? If it's already covered, it's already covered. That's why all I ever suggested was removing the repetitive part.--Gregalton (talk) 08:06, 20 February 2008 (UTC)

Noted. Doesn't look too objectionable, though I'll probably consider changing it as follows:

...System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations; they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors. The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C. It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official, and its funding also preserves independence. The Governors are nominated by the President...

That would remove the repetition about public appointments, and balance the "nuanced" issue of public-control. BigK HeX (talk) 09:08, 20 February 2008 (UTC)

My only comment is that the last sentence (without official obligation...) seems to overstate the case (compared to the source). I'll mull over how to phrase.--Gregalton (talk) 09:59, 20 February 2008 (UTC)

For clarity: there are requests that the Fed is required to accept, including certain audits by GAO. So perhaps a way to put this is that "by law, the Board operates without any official obligation to accept the request or advice of elected officials on the conduct of monetary policy." There could be much more detail, but this ties the independence to the issue of monetary policy.--Gregalton (talk) 11:10, 20 February 2008 (UTC)

Thanks for the flag clean-up

Anyone think there's any chance this article would get a "good" rating, after the last few flags/tags are taken care of? BigK HeX (talk) 08:58, 26 February 2008 (UTC)

Honest opinion: no. The "how money is created" section is a mess, most of the sections are repetitive of other articles (rather than distinct from them in any meaningful way), there is too much detail on some things that are (after reading through the text and notes) non-issues (e.g. the audit non-issue), criticism of the fed, etc. It is better than it was, though.

The biggest gap is the theory and practice of monetary policy: evolution in thinking over time, why the Fed largely uses an interest-rate target (change from money-supply target), the link with fiscal policy (although perhaps this is too obscure), the real issue with the Fed's structure during the depression (when private banks *did* have a lot of influence), independence of the Fed (change and evolution over time), real substantive policy issues and academic discussion (like the asset bubble controversy, China and others fixed-currency issues, the so-called "savings glut", the fixation on deflation as a bigger danger than inflation i.e. Krugman's liquidity trap or whatever it's called, core inflation vs overall inflation, etc.).

This is, of course, just my opinion on what I would like to see on monetary policy. Like too much of the internet and wikipedia, too much of the article in its current form is informed by conspiracy sites and non-mainstream sources. The focus on marginal sources (and the time and electrons spent trying to find any sort of balance) detracts from time and effort getting to issues and subjects that are actually relevant. Again, in my opinion.--Gregalton (talk) 09:14, 26 February 2008 (UTC)

Good points. I'll do some research in the month ahead and try to fill in the bigger gaps that I can. Much of it probably will still be repetitive, but I'm not really bothered by repitition of info across Wiki articles. BigK HeX (talk) 16:35, 26 February 2008 (UTC)

Additional key subject: the Taylor rule! Can't be an article on modern monetary policy and not mention this.

Repetition in and of itself is perhaps unavoidable, but if the article doesn't either provide new information, or tie existing information together according to the theme of the page, it won't be a good article.--Gregalton (talk) 16:37, 26 February 2008 (UTC)

I agree with the opinion that "money creation" part is a mess. --Doopdoop (talk) 22:59, 26 February 2008 (UTC)

Are there conspiracy theories?

Ryan Delaney (talk · contribs) deleted a subsubsection which read

Conspiracy theories

At the extreme, it may be difficult to distinguish between the most ardent critics of government interference and private control or usurpation of "monetary policy." In certain circles, it is a frequent claim that "the government," "the banks", and "the elite" are the same, and have designed and established the system in order to profit from that system. Monetary policy conspiracy theorists may be referred to as "monetary cranks", or other terms depending on the particular solution they are proposing.

I reverted him because I have seen several conspiracy theories over the years. Johnpseudo (talk · contribs) reverted me on the grounds that there were "No sources". It is easy to find these conspiracy theorists. I did a Google search on "'Federal reserve' conspiracy" and immediately found the conspiracy site [6]. The subsubsection may not be important enough to include, but it certainly reflects a long-lasting current in popular thought. JRSpriggs (talk) 21:54, 24 November 2008 (UTC)