The questions listed below received the five highest scores from our panel of judges. One of these questions wins the $1,000 prize for most thoughtful question. The winner will be announced Thursday (11/19) evening at the Ridgefield Playhouse in Ridgefield, Connecticut. The program starts at 7:00 PM. Here are the questions:
Question 1005 by Robert Milburn, WCSU
The important debate between economists seems to be the argument over what we should really fear: inflation or deflation. Fed Chairman Ben Bernanke has drastically lowered the Federal funds rate because it is his opinion that expansionary monetary policy will prevent depression by dampening deflation. Economists such as Paul Krugman agree arguing that coupling expansionary monetary and fiscal policy will prevent a liquidity trap, while others such as Martin Feldstein worry about the Fed’s ability to remove liquidity when the economy begins to recover; high inflation being the result. Mr. Epstein, was Fed expansionary monetary policy necessary to prevent deflation/depression and will the Fed be able to prevent extremely high inflation by reeling in liquidity?
Question 1006 by Jesse B. Nadel, Quinnipiac University
Mr. Epstein, you have stated that, “There are three reasons to abolish the Fed: recession, inflation and war.” Recently, the U.S. has been caught up in both war and recession and may be poised for extreme inflation in years to come. The wars in Iraq and Afghanistan have been extremely costly to the U.S. tax payer. Additionally, the current recession is one of the worst the U.S. has ever seen. Given the severity of these issues, one would surmise that you are currently in favor of abolishing the Fed. Assuming this is true, what would be your proposed alternative to the current system and how would you go about unwinding the Federal Reserve without causing further damage to what currently is a fragile economy?
Question 1008 by Jesse B. Nadel, Quinnipiac University
The Fed under Alan Greenspan was a major proponent of laissez faire economics and deregulation. However, with the benefit of hindsight, many people today blame this deregulation for contributing to the recent financial crisis and recession. In a testimony to congress, Alan Greenspan himself stated that his views proved to be wrong and that his “premise that you can let the markets regulate themselves was misplaced.” As someone who supports the abolition of the Fed, why do you feel that further deregulation would be beneficial to economy of the United States and how would deregulation prevent a future crisis from occurring?
Question 1025 by Naiomi Malay, CCSU
It is generally believed that the free market is a self-correcting entity that constantly strives for a perfect balance in which complete efficiency exists. Throughout history, however, we have witnessed a series of bubbles and busts, so regularly that they have come to be expected. This makes it easy for one to wonder whether an unregulated market is in fact not striving for balance, but instead pushing from one extreme to the other, stretching profits, inflation, and cost control to such a brink that a strong recession and/or depression is inevitable. With the uncertainty that exists in the market, who is to say that without outside regulation by a financially educated agency such as the Fed, that corporations and the market would not push us into constant crises with their relentless strive for shareholder wealth maximization at the cost of steady inflation and access to capital by citizens?
Question 1034 by Jacob Bobay, Pomperaug High School
I have paid great attention to current economic events, as well as the case for auditing, then subsequently abolishing, the Federal Reserve System. I have recently finished Congressman Ron Paul’s Revolution: A Manifesto, in which the controversiality of the Federal Reserve was discussed a great deal, advocating for its auditing. Supporters of such a move cite the current economic crisis as being orchestrated by the Fed itself, calling for privatization of banks. In response, critics, including Best-selling author John Mauldin, argue that eliminating the Fed would run the risk of the country spiraling into a long and devastating depression, possibly leading to unemployment percentages reaching 30%. This represents a valid fear. Is it possible that eliminating a national banking sytem would in turn lead to the return of the flawed and unreliable “wildcat” banks of the Andrew Jackson era, without some force to keep economic conditions in balance? Also, how would eliminating this balance, in both the short and long terms, impact the average American?