Herman Cain and the Federal Reserve

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Many conservatives were elated when, on May 21, 2011, Herman Cain announced he’s running for the presidency in 2012.
In spite of Cain’s many impressive achievements and credentials, however, some of us are wary because of his close association with that strange hybrid creature called the Federal Reserve System. Cain was a former deputy chairman (1992–94) and chairman (1995–96) of the civilian board of directors to the Federal Reserve Bank of Kansas City.
The Federal Reserve System (FDS) was conceived in secrecy in 1910 on Jekyll Island, New York, then created in 1913 via the Federal Reserve Act. It is a strange public-private hybrid of privately-owned banks that act as America’s central bank with limited government supervision. As America’s central bank, the FDS supervises and regulates the banking system, manages the country’s money supply through monetary policy, maintains the stability of the financial system, and attempts to prevent and contain banking panics.
The importance of the Federal Reserve and its public-private nature have provoked many a conspiracy theory, which is not helped by its Inspector General Elizabeth Coleman’s admission in May 2009, that the FDS could not account for $9 Trillion in “off-balance sheet transactions,” whatever that means.
Coleman’s admission provoked outrage among the American people, who demanded Congress to audit the Federal Reserve. The Fed, in turn, resisted every effort. Its chairman, Ben Bernanke, at one time even resorted to fear tactics, darkly warning that an audit by the General Accounting Office “would be highly destructive to the stability of the financial system, the dollar and our national economic situation.”
All of this was made worse when, in December 2010, a limited one-time peak into the Federal Reserve revealed a secret taxpayer-funded bailout of foreign banks in the amount of a mind-boggling $12.3 Trillion – and Congress wasn’t even informed, not to speak of being consulted.
When asked about auditing the FDS, Herman Cain at first was defensive but eventually allowed that he is not opposed to auditing the Federal Reserve System. Below is more information on Cain and the FDS.
Herman Cain and the Fed
By Joseph Lawler on 5.27.11
Joshua Green at The Atlantic takes note of an interesting situation: Herman Cain, currently undertaking a populist and Tea Party-based campaign for the presidency, is a former Kansas City Federal Reserve chairman.
There are elements of the Tea Party, especially those influenced by Ron Paul, who are against the Fed in general. And the Tea Party has led the wider trend in Republican thought against loose monetary policy. For Cain to have been a member of the Fed and defend it some cases is an obstacle in his attempt to present himself as the Tea Party favorite.
Cain was appointed as a Class C director of the Kansas City Fed board in 1992. In that capacity, he provided advice to the president of the KC Fed (the conservative Thomas Hoenig) about conditions for private, non-bank businesses. According to Green, that particular bank was very conservative at the time, and so was Cain:

I had better luck with Drue Jennings, a Kansas City lawyer who served with Cain on the Federal Reserve Board and succeeded him as chairman. Jennings is quite fond of his old colleague. “Herman was a pleasure to work with,” he told me. “His views were pretty consistent with those of the Fed at the time. Alan Greenspan was, of course, chairman and Herman was in lock stop with the policies of the Fed.” Jennings added that this was not atypical; he could not recall a single dissent from anyone during this three-year term. Still, he said, Cain was no pushover. “He’s a guy you’ll never find in a gray area,” Jennings said. “He’s intelligent, well spoken, and very assertive to the point of almost being aggressive. He’s anything but shy.”
Jennings said Cain fit the profile of the Kansas City Fed. “Inflation was always the big bugaboo,” he told me, “and when it comes to monetary policy, he was an inflation hawk. I’ll tell you, that’s the most conservative bunch of guys I’ve ever met.”
At a recent Spectator press event I had the opportunity to ask Cain about his views on the Federal Reserve. His view is that the Fed’s current dual mandate is overbroad, and that it should not be tasked with promoting maximum employment. He argued that the only role of the Fed should be to stabilize the price level, and suggested that as president he would try to end the dual mandate.
While keeping inflation expectations stable doesn’t necessarily entail a specific Fed stance (for instance, during a downturn it would be necessary for the Fed to engage in very loose monetary policy to avoid deflation), Cain made it clear that he favored tighter money for the current economy. In other venues, he’s expressed approval of some kind of gold standard or other asset backing for U.S. currency. And he’s not impressed by current Fed chairman Ben Bernanke’s management of the crisis and weak recovery — he said flatly that he wouldn’t reappoint Bernanke in 2014 if he were president. Cain declined to suggest who he would replace Bernanke with, however. Although he had a few candidates in mind, he chuckled that he wouldn’t want to invade their privacy just yet.

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0 responses to “Herman Cain and the Federal Reserve

  1. Mad Angel is on FB

    When asked about auditing the FDS, Herman Cain at first was defensive but eventually allowed that he is not opposed to auditing the Federal Reserve System.
    It looks to me that he spoke honestly (defensively) “at first”….and the rest is most likely campaign rhetoric -NOTHING will change-
    We Americans are smarter than that now…..we got a rude awakening with Obama…

  2. Agreed. I wish we could find a candidate without some baggage. It’s hard voting for somewhere where our slogan (as voters) always being “Hell he/she could be worse.” or “Well they are the lesser of the two evils”

  3. Dave from Atlanta

    I have heard Cain speak on a local radio program and liked what he had to say. The fact that he was an insider at the Fed does set off alarms in my head, but the Fed is a fact of life until something else replaces it. His comments on reining in the Fed sound right to me, and I agree with his opinion on Bernanke. Maybe the fact that he has some real experience with monetary policy is a good thing. I don’t know for sure.

  4. Mad Angel is on FB

    That’s easy….Ron Paul….he’s the only one with CONSISTENT PRINCIPLED INTEGRITY
    The only thing holding him back is he would end all non-humanitarian monetary and military aid to all foreign countries….preferring to stay out of the internal affairs of other nations, which is what this country needs….
    there’s the old adage; if you can’t take care of yourself, you can’t take care of anyone else….which the US has been doing- to the detriment of itself

    • Look at first I was all for the “keep our nose out of other folks business” but in this day and age the world is no longer this massive sphere it was decades ago. We are regrettably linked to one another in more ways then one and there are times where we need to stick our nose in our neighbors business to make sure they are staying legit especially when it comes down to proliferation of nuclear materials. Iran anyone?
      Minding our business will not change the mind of people who still want to kill us and minding our business to allow these people to expand their evil will just get us surrounded.

      • Well said, Will.

      • Biological pathogens are far deadlier than ANY nuke when it comes to potential death toll – and they are far cheaper and easier as long as one is not concerned about containment. What are we going to do, invade every 3rd world nation that has at least one Petri dish? Really?
        The plain ugly fact of life and bottom line where being the world’s police man is this:
        WE – DON’T – HAVE – THE – MONEY. Period. We’re BROKE.
        Iran with nukes is Israel’s problem – and trust me, they will deal with it in no uncertain terms.

  5. Ronald Reagan was once a democrat as well as head of the Screen Actors Guild.
    Unless or until someone produces credible Polaroids of the Hermanator in bed with a dead woman or a live boy, I will remain firmly planted in his camp.

    • “A dead woman or a live boy”. Dave have you been looking at Barney Franks weekend schedule again 🙂

  6. Hey Will,wanted to tell you,good score yesterday-Will 1-Troll-0. Anyways,good to start learning these candidates involvements,I keep all of this stored in my memory. Ha! It is still early.:)

    • Thank you Tina, but I do believe we have not heard the last of that one and as we get closer to 2012 the troll activity will increase by a factor of 12 🙂

  7. Herman also back tracked on something he was first not going to do. Putting muslims in government. (big owheeee)

  8. sage-I am so in search of the truth.

  9. TheGrassyKnoll

    HERMAN CAIN is part of the federal reserve and a liar godfather pizza ceo what a joke who is he trying to fool that’s all you need to know about the man just part of the problem not the solution Ron Paul 2012

  10. The private Federal Reserve Banking Cartel is the root cause of ALL of our economic woes. As long as they control the issuance of currency, they rule our nation and the entire Federal Government is an irrelevant puppet show.
    Trying to address the economic problems of America without taking on the Federal Reserve is directly analogous to trying to treat gangrene with pancake make-up.
    The FED is deliberately crashing the dollar as the Global Banking Cartel (of which the FED is a part) crashes all other major currencies to pave the way for the creation of a global currency. The way things are going, the definition of the word “Millionaire” will be, “Someone who can buy a loaf of bread – ONCE”.
    If the Federal Reserve Dragon is not slain, and quickly, then the other issues won’t mater worth a hill of beans Ron Paul is the ONLY candidate who will actually take the FED on. His integrity is rock solid and he is all spine. He is the only person in D.C. who has faithfully upheld his oath of office, defending the Constitution against all comers for 30 years, without compromise through thick and thin.
    Look at the way the Mainstream Media (and that includes Fox) is acting – Ron Paul is the candidate they truly fear.
    Ron Paul really is America’s last hope. just beating Obama is not enough – We have to elect someone with the integrity, the principals, and the spine to make the hard decisions required to clean up Obama’s horrific mess and restore freedom to America.
    Ron Paul 2012.


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