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Financial Justice

The Federal Reserve Should Be a Public Utility

| Madeline Chang |

In 1985, the Post-Industrial Society published by the New Democratic Movement began to articulate a new vision of an economy that will provide for and be inclusive of all people in our society. It observed at the time that “most fundamental structural problem of the U.S. economy is failure to increase productivity,” and for more than 30 years, now, the problem has only become worse.

With every crisis, the Federal Reserve prints more money, adding to an unsustainable level of debt, but wages and living standards do not grow for real people. The largest private banks, such as JP Morgan Chase, Deutsche Bank and HSBC, were never required to increase their lending to Main Street. So they didn’t. No one told the corporations who got bailout money that they were under any obligation to do anything with this cheap money either. So they didn’t.

They can go for the quick profit instead of investing in their workers or developing real products and technology.

But people can’t borrow money at 0% interest like banks can. And the banks turn around and charge form loans, credit cards, and student loans. Meanwhile, the central bankers are not even elected by the voters. They are basically free to decide monetary policy as they see fit without any accountability.

The whole structure is undemocratic. They have so much power yet there is no requirement that their policies lead to real growth.

In truth, there hasn’t been laissez-faire capitalism for a long time — and now the most powerful banks and the central bank are running the world. But because of that, the way forward is clear.

The Federal Reserve should be a public utility mandated to serve the productive economy, together with local public banks established to serve the liquidity needs of local economies.

Madeline Chang was a labor and community organizer in Chicago for over a decade.  She is currently retired and living in New York City, where she worked in the public schools for 30 years.

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