“Money for Nothing: Inside the Federal Reserve” Film

Summary

Money for Nothing: Inside the Federal Reserve is an American movie featuring the activities that have affecting this country’s Central Bank, yet the public has never been aware of the evils and challenges exist in this giant financial institution. The movie was written, directed and produced by Jim Bruce. Live Schreiber narrated and moved the various scenes of this movie making it the best-selling documentary since its release in 2013. The movie’s central themes explain the challenges that America’s Federal Reserve has experienced for the last 100 years and the cause of the economic crisis witnessed in the late 2000s (Decker, 2013). The director believed that the public was kept in the dark for years and thus it had no clue about the cause if the world’s major financial crisis. He was motivated by the need to promote public awareness to ensure the central bank becomes accountable and transparent and uses effective policies. The film attracts people from different fields because of the interviews with financial historians, investors, traders and key Federal Reserve employees. Bruce focussed on the roles of the Federal Reserve to provide liquidity and cushion the country from the financial crisis by following the classical gold standard structure (Berkshire, 2013). The director believed that the Federal Reserce had emnbraced monetary practices that did not have positive outcomes but instead led to regular economic crisis. Bruce highlights how the Federal Reserve Act of 1913 was established to cushion the rich against inflation and expose the public to financial difficulties. The abolishment of the gold-based currency was believed to be an eye opener to investors and other stakeholders that control the economy. For instance, most people believed that the 1913 Act would make Wall Street a powerful tool, and this was likely to spur income inequality, economic stagnation and unscrupulous stock prices (Decker, 2013). The movie describes the impacts of changes in financial policies and how they retarded economic growth. For instance, the asset bubbles that Bruce called Jenga were Fed-driven and intended to benefit the rich at the expense of the collapse of small businesses and an increase in unemployment (Berkshire, 2013). The writer explains the failures of the former Federal Reserve Chairman Alan Greenspan, who created the room for ghost investments in the housing industry that led to the economic crisis of 2008. Greenspan never took his business seriously, and that is why his reaction to the Congress on the stock market crash disappointed members when they realized that he never bothered whether the economy would collapse or not.

Relation to Financial Management

Bruce believed that somebody should have taken responsibility for the financial crisis that affected America and other countries in 2008 (Decker, 2013). The movie was intended to explain the failures of the Federal Reserve in the last 100 years. However, it focussed on the economic crisis of 2008 and explained in details how top managers were responsible for the predicament. First, he believes that Alan Greenspan was never serious as the Chairman of the Federal Reserve (Berkshire, 2013). His comments, when he faced the congress, were a betrayal of the faith that people had in the country’s largest and most powerful financial institution. Greenspan did not believe that the reserve was responsible for the meltdown but instead blamed players outside the United States. The truth is that the 2008 economic crisis was caused by a combination of various factors. However, most of them originated from the poor policies initiated by the Federal Reserve. Therefore, the movie explains that poor management of the Federal Reserve by Greenspan and other key leaders caused the meltdown.

Secondly, the movie explains that managers have the greatest responsibility for ensuring their companies succeed. Bruce believes that the process of establishing policies that guide the activities of an organization is vested in key managers. He criticized the Federal Reserve’s past and present leaders for failing to predict the impacts of the institution’s policies on the economy (Berkshire, 2013). There was a huge gap between the policies and implementation programs. Efficient financial management requires leaders who can predict and plan how to overcome unexpected challenges.

Recommendation

Financial management is a key issue that determines the success of organizations. However, most managers do not pay attention to their roles and delegate important responsibilities to junior employees. The following recommendations may stop the occurrence and reduce the magnitude of financial crisis in the United States. First, the management of the federal reserve should be reconstituted to ensure managers do not stay in the same position for a long time. The changes in international economic practices necessitate the need for the Federal Reserve to be led by managers that understand the new dynamics in this field. Secondly, the roles of the Federal Reserve should be stated clearly, and all institutions play their parts efficiently. The existence or non-existence of weak policies exposes this institution to ridicule and failure. Thirdly, the United States should recruit people that have the passion for economic growth and dedicated to reforming this institution. Alan Greenspan was never serious, and that is why he took the matter lightly.

References

Berkshire, G. (2013).Film Review: ‘Money for Nothing: Inside the Federal Reserve’. Web.

Decker, J. (2013).Jim Bruce’s ‘Money for Nothing’ Reveals theScary Doings of the Federal Reserve. Web.