In honor of the 100^th anniversary of the founding of the Federal Reserve, PBS had a debate between 2 financial historians over the benefits of the central bank, and rather surprisingly, they both agreed that the Federal Reserve now sees one of its primary roles as supporting stock market prices:

Consuelo Mack’s Wealthtrack program on PBS had invited James Grant, Editor and Founder of Grant’s Interest Rate Observer, and Richard Sylla, the Henry Kaufman Professor of the History of Financial Institutions and Markets at NYU’s Stern School of Business. The opening scene for the program shows Sylla in a party hat lighting the candles on the Fed’s birthday cake while Grant snuffs them out – suggesting that Sylla would be making pro-Fed statements while Grant would take the opposing view.

What happened during the program, however, was that both men made the candid and bold accusation that the Federal Reserve, for the first time in its history, has assigned itself the job of propping up the stock market.

Grant had this to say: “New thing – it is in the business of talking up the stock market…The Fed is manipulating prices, especially on Wall Street.” To another question from Mack, Grant says: “The Fed has presided over the decay of finance.”

Professor Sylla adds more fuel to the fire, stating: “The Fed seems to have, I think almost deliberately, is trying to push the stock market up. I’ve watched this stuff for 40, 50 years now and this is the first time in my memory when it seemed to be official U.S. government policy that the stock market goes up. And the Fed likes this because it thinks that when the stock market goes up, people who own stocks feel richer, they’ll go out and spend more money, and the unemployment rate will come down.” You can watch the full program here.

Is it possible that the Federal Reserve, with its economic wizards and differential equations, doesn’t know that the more it props up the stock market and Wall Street, the more it is undermining Main Street and exacerbating wealth inequality in America?

I see sh%$ like this, and I start to agree with Rand (and Ron) Paul about the need to reign in the Fed.

The show goes further, and talks about how the rather customary expense ratio of 2% on a 401(K) means that Wall Street ends up with ⅔ of your money.

It’s why we need to cut back on Wall Street.  It’s like f%$3ing Kudzu.