"What I can’t understand is the willingness of thoughtful, studious men who presumably have been brought up in the spirit of American institutions and should be imbued with their principles, proposing a scheme to Congress which in effect delegates avowedly and consciously this vast power for price fixing to a small group of men who, in an economic sense, might come to be regarded as nothing short of a super-government. It is undemocratic, absolutely contrary to the spirit of America institutions, and so dangerous in its possible ultimate developments that I cannot see the slightest merits for its proposal." [My underlining - FJS]This quote, regarding the Federal Reserve’s ability to influence interest rates through open market operations comes from a letter, written in 1923, by then New York Federal Reserve President Benjamin Strong. Ninety years later there are still questions regarding the desirability of this power and the effectiveness of its use.
Source: Credit Writedowns
The Real LIBOR Scandal
By Frederick Sheehan (FJS)
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