@Cyth You make some good points and most people on this board should not have a hard time agreeing with most of your views...
However, abolishing the Fed Reserve is not one that I believe we should engage. I understand the failures of the Fed and it Board Chairmens' actions over the past 30 years causing the major financial crisis this country has faced. But, the Fed does have a serious and important role in our economic system.
My history and college education tells me that the Fed was founded by Congress to provide stability in the banking system and the economy by:
1) serving as the one clearinghouse for all negotiable instruments passed by businesses in the US and aboard
2) serving as the custodian of US currency (the US Treasury prints the currency)
3) serving as a bank to banks
4) serving as the financial arm of the US Government in relation to foriegn banks and governments.
My history further tells me the Fed regulated the credit extended to any bank by another bank, and by the Fed to any bank. In the 30's - 60's, a majority of credit issued to US businesses and individuals came from the banks regulated by the Fed, the US Treasury, and state banking commissions. In the late 60's other sources of credit were made available to those in our economy and the world - namely companies like GE, GMAC, Ford, Sears, JC Penney, oil companies, etc.
The Fed had no control over those credit lines like it had over bank credit. Then the credit card industry erupted with VISA, MasterCard, American Express, etc. In the 90's and this decade, new sources of mortgage monies poured into the country from overseas and from local investment houses. Again, the Fed did not have authority to regulate those sources of credit. Congress, not the Fed, encouraged subprime mortgage markets and forced the banks to absorb most of the credit risks.
All i'm saying is that we should probably stop calling a car manufacturer a bank and give the Fed the authority to regulate credit through the banking system by prohibiting non-regulated companies from creating credit.
IMHO this would Strengthen the regulatory process of the banking industry and get security houses and insurance companies out of doing what banks should be doing.