Abolish the Federal Reserve banking system
- I am getting a Ph.D. in Economics and one fact is clear. From 1787 to 1913 the dollar went from $1.00 to $1.06. In 1913 the Federal Reserve Bank was created and the US dollar in 1913 is now worth $.04. That is right 4 cents, not to mention things like the Great Depression and the Great Recession.
The purpose of this post is to give reasons why I want the United States Federal reserve bank abolished. Wake up, the Fed is not the solution, it is the problem. Consider these facts about the US Federal reserve and their monetary policy. My idea is not some alternative theory, much mainstream economics like the Austrian school of Economics agree, revoke the powers of the US central bank because it is making us poor.
- The government monopoly on money does not allow free market forces, of supply and demand to correct disequilibrium and this greatly exacerbates cycles of boom and bust. It wipes out the middle class. At first, someone benefits from printing money, but then it becomes a steady transfer of money from the poor and middle class to the wealthy. Fixed income people or those on salaries, people who are not big investors lose, while the wealthy mitigate their risk and wealth gets concentrated at the top.
- Inflating the money supply is a form of taxation. It makes the debt smaller but your purchasing powerless.
- The US did not have a Federal Reserve until 1913, therefore do not assume just because we have one now, if we need one. Stop assuming.
- The Federal reserve mismanaged every major economic cycle in the last twenty years and arguably since its existence.
- The Fed is not transparent – Would you bank with a financial institution that would not show you their statements? When we do all these bailouts and closed-door meetings, that is your money, taxpayer money. Every single dollar of the bailout should be posted online and explained how we are getting that back.
- Banking chiefs are only humans – They make mistakes with our money, they are also political.
- Fiat empire – the dollar has become the gold of the world, this means we will have a global crisis now if the Fed makes a mistake, and they always do.
- Free banking from 1837 to 1863 worked and this was the only extended time the US broke out of the logarithmic norm of healthy 2% GDP growth.
- The central bank keeps Americans poor – By exacerbating boom and bust cycles the central bank stratifies society. There are extremes in the rich and poor. A more stable economy yields a robust middle class.
- Debasing the currency does not fix economies and never have.
- Where is it in the Fed mandate to bail out the investment banks, I did not see that in the constitution. If you let XYZ go bankrupt then it will send a signal and let the market regulate.
- The Fed is unconstitutional – This type of monopoly on money was not part of the founding father’s vision. Creating fiat money out of thin air. Congress has the ability to coin money and only gold and silver should be legal tender. Article 1, Section 8 of the US Constitution states that Congress is the only body that can “coin money and regulate the value thereof.”. This was the idea by Thomas Jefferson.
- Without the Fed, the government would have to. curtail spending, as they cannot print money. Wars, bailout it is all funded with printing money. Bailouts are unfair.
- The federal reserve is dangerous – It is secretive and controlled by a few. This much power in the hands of one man, even if the man is trying his best, is not what democracy is about. Every part of our government has checks and balances. It could be said to be the biggest national security threat.
- You just wrote a blank check – The Fed chairman could wake up in a bad move and push interests to 21 % if he wanted and send the whole world into crisis. One man had that much power with no checks or balances. It is good to trust people, but it is naive to give that much power to one man. Would you give some guy you do not know personally a blank check for all your savings and money? This is what the Federal reserve bank in the USA is about.
- People think we are protected by the system – considering the above the opposite is true. The Fiat money monopoly is not protected and could someday bring real economic meltdown, not like we have today.
Examples of Federal Reserve bank failures
- The Fed helped fuel the Internet stock bubble.
- Alan Greenspan brought interest rated down to 1% so we could all go shopping again after 9/11 and this created a credit bubble.
- The Fed, under Ben Bernanke claimed that things were contained right before the mortgage meltdown.
- The Fed even caused the great depression, then made it worse.
- The Fed now is playing a dangerous game of printing money called quantitative easing.
If you were an employer would you keep someone who did that much harm to your company? This is why Congress needs to eliminate the Federal Reserve.
I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. – Woodrow Wilson the creator of the Fed (in trade to campaign support and in response to the 1907 panic).
If you go to the website of the Fed a lot it seems to be an argument for its existence as they do not want to abolish the federal reserve banking, the board of governors, our central bank monopoly.
Alternatives to the Fed
Let the markets work. This is not conspiracy theory but freedom.
- Stop bailouts to the faulty banking system – Give every taxpayer in the USA a 1 year tax vacation. That would equal 1.3 Trillion dollars, the price of the last bailout. There would be such return to real prosperity.
- Gold Standard -Some people say return to the Gold Standard. It would work but there is a better solution. It is better than the current system but it is only a fix. The best would be currency competition.
- Free money system – Currency competition or free money was used and worked in the past, from the USA to Scotland. If we eliminated the Federal Reserve the world would not come to an end, believe me. Free money worked. It is not a crazy idea, the Federal reserve is a crazy idea.
Banks issue notes backed by something or else people would not use the currency. It would be not much different than credit cards today. People accept credit cards from competing banks. We would do this by repealing the ‘Federal Reserve Act of 1913’ , then next the “National Banking act of 1864”. It is that easy. Cancel the Federal reserve and our lives would be richer.
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