Interesting topic.I do think that people should have a say in the monetary policy of the nation they are a part of. The US system is supposed to be a Constitutional Republic where elected representatives act in the best interest of their constituents. I think it can be argued that system is in currently in need of reform.
Here is some information from the federal reserve website:
Who owns the Federal Reserve?
The Federal Reserve System is not “owned” by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation’s central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.
The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. This central banking “system” has three important features: (1) a central governing board—the Federal Reserve Board of Governors; (2) a decentralized operating structure of 12 Federal Reserve Banks; and (3) a blend of public and private characteristics.
The Board—appointed by the President and confirmed by the Senate—provides general guidance for the Federal Reserve System and oversees the 12 Reserve Banks. The Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations. The Chair and other staff testify before Congress, and the Board submits an extensive report—the Monetary Policy Report —on recent economic developments and its plans for monetary policy twice a year. The Board also makes public the System’s independently audited financial statements, along with minutes from the FOMC meetings.
In addition, though the Congress sets the goals for monetary policy, decisions of the Board—and the Fed’s monetary policy-setting body, the Federal Open Market Committee—about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.
Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District’s Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
With that said Cardano’s governance system is still being defined but will probably involve a form of liquid democracy:
I believe that the value and supply of money should be controlled by the free market alone. Market parties like banks should be able to provide loans which could increase the supply of money while assessing the risks for such loans and requiring the interest rates they feel is just. In this way interest rates, money supply, value of money and it’s purchasing power is fully determined by the free market. When an economy produces valuable goods and services and increases it’s productivity the value of that economy’s money will increase (and the other way around)
The way governments, through the central banks, intervene with this mechanism and increase the money supply hence lowering the interest rates brings imbalance to our economy. Resulting in the debasement of our money hence lowering the purchasing power of money. This process is like a bad tax since it does cost money (since lower purchasing power means you need more money to by the same goods/services) but does not add any value.
Therefore i believe we should separate money creation and politics like we separated religion from state in the past.
By the way, I don’t think that inflation as a monetary policy like cardano has built in is a problem. As long as newly created money (or ada in case of cardano) is used to add value. With Cardano, newly minted ada is used to pay stake pool operators and also to add to the cardano treasury which in turn is used to fund the catalyst project.
I agree with you, the monetary system needs a reform. Maybe you have seen the late 90’s documentary “the money master” from bill still (available on youtube). If not, it’s was an eye opener for me. Although it made me think that indeed the FED whose creation was passed a 23rd of december 1913, is indeed operating for private interest.
From the link in your description I read
The Reserve Banks’ and LLCs’ financial statements are audited annually by an independent public accounting firm retained by the Board of Governors.
I would love to see proof the the congress doing some independent auditing of the FED. I don’t think there has been any.
Concerning Liquid Democracy the article seem very interesting, and I apologize for not having read thoughtfully it yet. My first impression is that it is complex, or at least more complex that paper ballot. I would advocate that True democracy should be very easy to understand and should not rely on a highly technological infrastructure.
If I remember correctly my macro-economy course. The idea of the free market been the best option is from Adam Smith. He was making the assumption 3 century ago that the economical agents were all some kind of selfish barbers. He did not consider supra-national firms or such powerful economical actors that they would dwarf states even with citizens in the hundreds of millions.
I respect your point of view but money been today a commodity like any other, I don’t see how we could stop big and powerful firms to pressure the public in order to avoid falling. Don’t we need some political power to force the too big to fail, when they should in a free open market ?
What do you think the government is doing when they are not accepting we got a crisis like we had in 2008 and like we have now with covid? Instead of cutting costs they just keep spending and printing. Instead of working to fix the problems they mostly make them larger by adding to deficit spending and debasing our currency. Don’t you think the government is actually exactly doing now what you are afraid big companies would do in my free market scenario?
And about your point. I understand where you are coming from and I agree we don’t want huge companies that should fail actually don’t. But can you give me an example (thought experiment) that would show how a huge company that actually is performing poorly would not fail in a free market economy? I don’t see how that would work. Actually many banks that did bad investments were saved by the government in 2008 where they would fail if the government would not be there to bail them out and I believe that would have been a good thing.
Ps: i believe having a government is important for things like security, minority protection, Healthcare, army and such matters. Just not controlling the economy like they can do now.
I agree with you. In a true free market, big that should would fail. I think government should not have bailed out the big failing players in 2007. In our space many think so, since Bitcoin is probably a response to the USA government bail out. *
Although I agree with the theory, in practice is a free market possible ? Can a market stay free when big players emerge from it ? Isn’t a free market generating player that in the end don’t want the free market? So who or how should we stop them to use their power to make bail out plans?
I love this idea of liquid democracy. It would rock if it was just for people like you and me, but I agree with Ron Rivest (RSA guy) when he says that the democratic process should be kept really simple. Don’t you ?
I see something anti-democratic in the use of a complex cryptographic system to cast or delegate vote. That been said, I can understand that democracy may simply not scale. To reduce today’s problem we may have to trust some technically competent people.
For example, who among us, has proof read the bitcoin code? I personally looked at it, but I’m far from having analysed it. In the end we still rely on trust. So either way we end up trusting someone probably because of his charisma rather that his technical ability.
I don’t see a problem with big market players as long as they can be competitive and deliver better value than smaller players. Currently, big players can “bribe” government officials to give them the added advantage to stay big while they should fail or decrease in size. When the government no longer has this power, what else could these big players do? Try to give me an example. Really curious what you can think of. I can’t. And don’t you think big companies become lazy and inflexible losing ground if they don’t change and adapt? Enough examples even nowadays.
When the government no longer has this power, what else could these big players do?
That’s where maybe I don’t understand you. How can you avoid the big players to replace the government if the government has no mean to save or kill them ?
If you want to understand what else they big players could do, think of West African countries. We have weak governments. I believe that it is because they are weak, they composing with the interest of international and powerful companies. When a politician stick his head up and tries to do his job “defend the common good” like for example fight against the ecological damage that an oil or mining company is doing to the environment and the population, he get replace with a coup. That’s the what else
From 1793 - 1861, approximately 1,600 private banks were granted state charters to print and circulate their own paper currency. Eventually, 7,000 varieties of these “state bank notes” were put in circulation, each carrying a different design.
Between 1863 to 1929, the Government again permitted thousands of banks to issue their own notes under the National Banks Acts of 1863 and 1864. These were called “national bank notes,” but unlike the earlier “state bank notes,” they were produced on paper authorized by the U.S. government and carried the same basic design.