"Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.



These are clear conflicts of interest, the kind that would not be allowed at other agencies. We would not tolerate the head of Exxon Mobil running the Environmental Protection Agency. We don’t allow the Federal Communications Commission to be dominated by Verizon executives. And we should not allow big bank executives to serve on the boards of the main agency in charge of regulating financial institutions."



Sanders advocates that the FED members should be nominated by the President and confirmed by the Senate. However, that could be much more of a conflict of interest. Congress will do what is best in the short term and what is best for their seat. They will not confirm a board member who will perhaps raise interest rates to combat inflation, because this will hurt GPD in the short run and the congress person will be on the hot seat.

Sanders then suggests that instead of having board members from large banks they FED should be comprised of everyday people such as labor, consumers, homeowners, urban residents, farmers and small businesses. However this would create many problems with how the FED conducts business. First, these people will look to do what benefits them as most people do. As mentioned above sometimes the FED needs to do things that hurt in the short run in order to protect the long run interests of the economy. The FED may have to raise interests rated in order to fight inflation however this will hurt GDP and in turn jobs in the short run. The FED knows that the inflation is the thing they need to fight and if it means a short run dip in GDP then than that is the costs the economy must bear. However, consumers and laborers will not do this. They will not raise the rates if it means they may have less money to spend or makes it harder to get a loan. Also, the reason the FED is made up of banking and finance experts is because they are connected to the industry and have the knowledge to make good decisions. It strikes me as to why people dont want experts involved in the FED but don have a problem with it in order sectors. Could you imagine if the leader of NASA was not a scientist or former astronaut but a History Professor with a Doctorate(a great position mind you), or if the Secretary of Education was not a former teacher or administrator but a Navy Chaplain.



The point is that the FED needs to be independent of Congress to avoid short termed politicians meddling in monetary policy, and needs to be made up of people who know the industry because they are the most qualified. If anything, the Fed needs more connection to banks and asset managers, not less

Sanders then goes on to make his most insane argument by saying we should prohibit commercial banks from "gambling" with the bank deposits. At first this seems like a good thing, after all "gambling" is a bad thing or at least that is what my mom tells me. However, Sander also claim that we need to increase our loans to the common man and small businesses. Again, this is something that sound palatable. The word gambling(taking risks with deposits) has a negative connotation and small businesses are good. However, this shows just how clueless Sanders was with his proposal. In short what he wants to do is impossible and would have terrible effects on the economy. Sanders then goes on to make his most insane argument by saying we should prohibit commercial banks from "gambling" with the bank deposits. At first this seems like a good thing, after all "gambling" is a bad thing or at least that is what my mom tells me. However, Sander also claim that we need to increase our loans to the common man and small businesses. Again, this is something that sound palatable. The word gambling(taking risks with deposits) has a negative connotation and small businesses are good. However, this shows just how clueless Sanders was with his proposal. In short what he wants to do is impossible and would have terrible effects on the economy.





Lets dive in......





When I go and open a bank account I may be doing it for several reason but safety of my money is a big concern. The bank will take my money and protect it with the caveat that they will loan out my money to people in need of loans. For example, I deposit $1000 in a savings account. The bank will then loan out that $1000 to a small business who will then repay the $1000 + interest. The interest is the cost of borrowing money. This assumes that the loan was a "good" loan and while all loans are not "good" most banks account for this. The banks will then take a percentage of the interest to cover the costs or protecting my money and of course profit from their services. I will then get a portion of the interest as a "thank you" for letting the bank use my money. However, if you make it illegal to gamble with my money then you eliminate the banks way to turn a profit and cover the protection costs. This will essentially make banks nothing more than large safe deposit boxes, and I will have to pay to put my money in the bank. The added costs of banking will deter me from using the banks and the savings rates will fall because people would rather protect their money themselves than pay a fee. The savings rate will directly the investment rate if there is less money to borrow/"gamble" with





However, remember that Sanders also the banks to make more loans to the common man, and this is where the problem arises. By, increasing the amount of loans at a lower cost the banks will take on more risk. This is all happening in the same market where savings if falling due to prohibiting "gambling."









Sanders end by claiming the FED needs to be more transparent but they all ready do a great job of detailing the meeting content



Meeting calendars, statements, and minutes (2011-2017)



The lack of understanding shown in Sanders policy is why he lost not some DNC conspiracy Sanders is ultimately trying to have his cake and eat it too. If you want safer banks, you get less lending and more expensive loans. If you want more lending, you get riskier banks. You simply can not make banks give out more loans while preventing them from "gambling" with deposits.Sanders end by claiming the FED needs to be more transparent but they all ready do a great job of detailing the meeting contentThe lack of understanding shown in Sanders policy is why he lost not some DNC conspiracy

His knowledge of macroeconomics, the FED, and standard banking principles are that of a conspiracy theorist. Not that of quality candidate to be the leader of the worlds largest economy(GDP). Plain and simple.Let me explain....The New York Times had Sanders and Clinton write op-eds on how or if we should regulate and rein in "wall street." Hillary Clinton wrote a standard left of center piece with a good amount of pros and subjective cons based on you personal views. Bernie Sanders however wrote something that had little to no concrete concrete and a whole lot of bad ideas/border line conspiracy lines.As you may have guessed this post will dive into what Sanders said and it will leave Clinton's to the real economists.Sanders starts by criticizing the FED's decision to raise interests rates in late 2015. Criticizing the decision by itself is not a bad thing. Lots of economists and financial experts have varying views on the target rate, and they backup their claims with serious data and theory. Bernie Sanders does none of this. He simply uses the interest rat hike as a scapegoat to paint the FED as out of touch with the "common man." In this case he claims that a higher interest rate will hurt small business owners who need to borrow money. However, he is committing a straw man logical fallacy by illustrating a complex issue as a "no brainier." He just as easily could have used a similar tactic to attack aHe easily could have said that low interest rates hurt senior citizens who have money in savings accounts and the buying power of middle class citizens due to high inflation. Sanders, goes on to say the FED should not raise rates if unemployment is over 4%. Considering that there are six unemployment rates and the natural rate is around 4.5%(although is it impossible to know for sure) this seems problematic and will simply tie the hands of the FED.So, all in all, Sanders criticizing of the higher rates is just political gamesmanship as usual.Sanders next point is to attack the people who compose the FED. He claims that because most of the members are former executives of large banks they have a conflict of interests.