2008-03-24guardian.co.uk

... The Fed will claim it had to institute these measures to calm Wall Street. That is nonsense. The fair and economically efficient way to deliver emergency liquidity to Wall Street is through an auction facility that is open to all financial firms, and in which participants supply good collateral. Those who need the funds most will bid the highest. That way, taxpayers get properly paid for their support, and the funds go to those who need them most.

For the past 25 years, critics of the Fed have been dismissed, and the Fed's high standing has blinded the reality of its revolving door with Wall Street and its class-based conduct of policy. Now, the Fed's response to Wall Street's panic has revealed the reality of its crony capitalist world. That provides an opening for long-needed reform.


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