Thursday, April 15, 2010

Dr. Dudley of the Federal Reserve again

I blogged and posted a link to Dr. Dudley's paper on Asset Bubbles--Dr. Dudley is president of the Federal Reserve Bank of New York. NPR's Planet Money has picked up on this. His interview showed that some consider it difficult to control asset bubbles, the FED has not done this up to now, and should in the future. And the FED does not have the power to make detailed regulations, to say these financial transactions are good for the economy and these are not.

But sortition juries can look at individual transactions. If someone needs to sell their home or a piece of land they bought because they need intensive medical care, perhaps a senior citizen needing to go to a nursing home, then that purchase is good. Other transactions between investors or speculators are not as useful. A sortition jury could rate each of these. The Federal Reserve coudl respond to asset bubles, inflation or other macro-economic bads by setting the percentage that needs to approve a transaction. If the economy is heating up, then a transaction needs 70% of the sortition jury. At other times, financial transactions only need a third of the jury approving it.

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