Economics Professor and monetary expert Randall Wray told me thatwe should end the regional Federal Reserve banks, as they have such terrible conflicts of interest, strip out all regulatory power from the Fed (since it doesn’t believe ine regulation, anyway), and implement monetary policy with a very small staff. He is not opposed to moving operations over to Treasury and/or the FDIC.

Professor of economics Steve Keen told me that he would pretty much limit the Fed to being a clearing house between different banks. In other words, in his view, the Fed could be stripped of all of it’s regulatory, monetary and emergency bailout powers.

Economics professor Michael Hudson told me:

Before 1913 all the Fed’s operations were conducted quite well by the Treasury. (David McKinley’s book for the 1907 described this quite well a century ago.) the Fed’s aim was to Decentralize policy. The way things turned out, Wall Street leaders were given veto power. The role of Tim Geithner — in giving billions away in cash-for-trash trades the DAY before he was designed new Treasury Secretary (from his NY Fed position) tells it all. But would the Treasury be different? The key is to put it back in the public interest, not Wall Street. Easier said than done. *** [Congressman Dennis Kucinich's bill to nationalize the Fed, and his call on protesters to demand nationalization of the Fed] drastic, but it is the only way to check the fact that commercial banks create debt money recklessly, and now “casino capitalism” gambles that are bound to fail. If we could implement the 100% reserve proposal and administer it correctly, I’m all for it. The government would NOT create credit for gambling, or ensure it.

PhD Economist Marc Faber said that protesters should Occupy the Federal Reserve.

Famed economist Milton Friedman wanted to end the Fed:

This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System… and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities… Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank… To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers.

Austrian-school economists such as Murray Rothbard want to abolish the Fed:

Given this dismal monetary and banking situation, given a 39:1 pyramiding of checkable deposits and currency on top of gold, given a Fed unchecked and out of control, given a world of fiat moneys, how can we possibly return to a sound noninflationary market money? The objectives, after the discussion in this work, should be clear: (a) to return to a gold standard, a commodity standard unhampered by government intervention; (b) to abolish the Federal Reserve System and return to a system of free and competitive banking; (c) to separate the government from money; and (d) either to enforce 100 percent reserve banking on the commercial banks, or at least to arrive at a system where any bank, at the slightest hint of nonpayment of its demand liabilities, is forced quickly into bankruptcy and liquidation. While the outlawing of fractional reserve as fraud would be preferable if it could be enforced, the problems of enforcement, especially where banks can continually innovate in forms of credit, make free banking an attractive alternative.

I noted Tuesday:

The New York Sun reported that a … Nobel economist may have implied that the Fed should be abolished: Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics … cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

Nobel prize-winning economist Joseph Stiglitz strongly dislikes the Fed:

Joseph Stiglitz – former head economist at the World Bank and a nobel-prize winner – said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is “corrupt” and undermines democracy. Stiglitz said: If we [i.e. the World Bank] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure. Stiglitz pointed out that – if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system – “it would have been a big signal that something is wrong.” Stiglitz stressed that the Fed banks have clear conflicts of interest, since the banks are largely governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing: So, these are the guys who appointed the guy who bailed them out … Is that a conflict of interest? They would say, ‘no conflict of interest, we were just doing our job. But you have to look at the conflicts of interest”… The reason you talk about governance is because in a democracy you want people to have confidence … This is a structure that will undermine confidence in a democracy.

Indeed, as I noted Sunday:

Former Fed officials agree. For example, the former Vice President of Dallas Federal Reserve said that the failure of the government to provide more information about the bailout signals corruption. As ABC writes:

Gerald O’Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. “Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.

In fact, many high-level economists have blasted the Fed for bungling virtually everything it does.

And while – admittedly – many mainstream Keynesian economists may be hesitant to question the Fed’s existence because the Fed is a big part of the printing press on which Keynesianism relies (and the Fed has essentially bought the economics profession), the same arguments which Keynesians have made against the “too big to fail” banks apply to the Fed as well.

For example, Nobel prize winning economist Paul Krugman wants the big banks to be broken up because their very size warps the political system:

My view is that I’d love to see those financial giants broken up, if only for political reasons: it’s bad to have banks so big they can often write laws.

Former chief IMF economist Simon Johnson says much the same thing.

The Federal Reserve is an enormously powerful institution, which doles out tens of trillions of dollars – many to foreign banks and governments (and see this and this) – without democratic input of any nature whatsoever. While Fed apologists say that the bank’s “independence” must be preserved, the fact that the Fed has sent trillions overseas shows the Fed is somewhat independent of American interests.

And the fact that the Fed funneled trillions to the biggest banks – instead of main street or public works projects – runs counter to the wishes of most people and of Keynes’ actual prescriptions. (Keynesians speak of “saltwater” and “freshwater” schools of thought, depending on whether economists think money can be pumped anywhere and it will stimulate the economy, or it should be pumped in specific places. But the Fed hasn’t done either, but has instead given huge sums to the big banks, and then encouraged them to park the money). See this and this.

Liberal Keynesians should oppose such a gigantic concentration of power – shielded from accountability to the people – on basic principles.

Indeed, both liberals and conservatives should despise something which runs so counter to the “separation of powers” envisioned in the Constitution.

Note: The American people want the Fed ended or at least reined in as well. See this, this and this.