The Federal Reserve is a form of exogovernment

Many creatures have exoskeletons. Turtles and crabs are typical examples of creatures with exoskeletons. These creatures need exoskeletons because the outside skeletons are part of their bodies and they have no other way to 'preserve' their shape. Certainly, creatures with endoskeletons (mammals and birds, for example) do not need an exoskeleton in addition to their endoskeleton. This happen to be so for several obvious reasons related to evolutionary pressures, energy conservation, and -most of all- mobility.

As it turns out, the US (and -as far as I know- all other nations) has an exoskeleton too in addition to its endoskeleton. The extra exoskeleton which I call exogovernment is destroying our chances of economic growth. It is slowing down our ability to react to economic evolutionary pressures. Let me explain why I think this is happening.

The US government is the natural and organic internal skeleton of the American nation. It represents its people's freely elected choices and it has deep historical connotations and roots, in addition to unbeatable practicality. As a nation, we could not live for a very long time without our government. The question is: can we live with a paralyzed government while we use an external skeleton? I fail to see how.

As we stand right now and as I see it as clearly as daylight, the endoskeleton has delegated its fundamental economic and regulatory functions to an external body that functions as an exoskeleton. This external skeletal body is the Federal Reserve.

Our economic problems are as deep as they get: impossible to manage public debt levels, lack of a robust manufacturing base, ultra high dependence on consumption in the formation of GDP, unstable financial markets, regulatory confusion, the most expensive health care system in the world, wealth disparity worthy of a banana republic, severe educational inconsistencies, the dominance of financial markets over real economic development, and the list goes on and on.

The endoskeleton (read the US government) cannot seem to be able to address any of the economic problems above and has delegated their resolution to the Federal Reserve. As an exogovernment, the Federal Reserve is not elected and not fully accountable to anyone. The Fed has a very vague mandate that cannot be regulated and fully ascertained. For instance, it can, and it does -based on very new developments called 'quantitative easing'- , 'buy' bonds issued by the USG and prints money at will in exchange for those bonds. What will the Fed do if the USG cannot pay off the bonds? Nothing. Nada. Zilch. And the Fed knows that very fact extremely well and it knows that the value of the currency is being debased deliberately and conscientiously. And we are simply treated as peons in the face of pure monetary adulterations.

Is currency debasing not the ultimate form of white collar crime? The Fed is slowly and surely replacing all the financial wealth we have with lower value dollars. In addition, it is encouraging us almost openly to invest our financial wealth in US equities. Let me recap the following facts: the Fed is stealing from us almost openly and it is screaming at us that nobody can guarantee financial stability.  This is purely insane, I think.

The Fed (our exogovernment) sets the interest rates both by statute and by using a bit of fear. Right now interest rates are extremely low and by deliberately setting the rates this low the Fed is undermining the economy since interest rates are forward looking.

When economic players see  interest rates near 0% they rationally think that the future is going to be a lot worse than the present. Why would anybody invest in an economy with such low future prospects? It is almost criminal for the Fed to tout that keeping interest rates low for the next 2 years 'will spur economic growth' when it knows very well that just the opposite is expected to happen. In addition, savers are being punished wile spenders are being rewarded. Why should this trade-off be allowed? And why should it be allowed to be made by an institution not truly controlled by anybody?

Problems endemic to the government must be solved by the government. External bodies cannot do the government's 'dirty' and hard work and we are being robbed by our wealth by the Fed. Why do we continue to tolerate this? We need a responsible government that eliminates the interference of the Fed in our economic processes. The Fed has poisoned the economic climate of our nation for too long and it is about time for us to stop that.

How can we stop the Fed from distorting our perceptions of the economy? Here are a few avenues, but I am sure there are many more than the ones I list below.

1. Strong legislative action by the US Congress;
2. The US Attorney General should open up an investigation in the Fed's decisions;
3. The Fed should have much better defined and restricted roles using 1 above;
4. The USG should solve our economic problems so that the Fed has no opportunity to be an exogovernment agency;