End the Fed

[Robert Meldahl]

If anyone would like to discuss the "End the Fed" campaign, please let me know. I believe that I can convince you that it is not the Fed that is the problem. The Fed is just an inadequate fix to the real problem. The real problem is that we have a banking system that generates an unstable money supply. The Fed and the FDIC are just vain attempts to fix a banking system that went haywire during the Civil War.

Ultimately, I am for making the Fed unnecessary by fixing the real problem. But if we do not fix the real problem, we're better off with the Fed than without it.

[Robert Meldahl]

This is the most important issue in our society. The greatest threat to liberty is a banking system that allows bankers to literally create money. The FDIC and the Fed are pathetic attempts to control this fraud

If you truly love liberty, challenge me on this one. I will show that I am correct without making fun of you.

[Tracy Zimmer]

While I am no expert on the Fed, banks or money, it appears to me that the Fed's primary purpose is to facilitate fractional reserve banking in its member banks. Without the Fed and FDIC, banks would often be subjected to bank runs and go out of business if they were not careful in their reserve requirements. So in essence, the Fed prevents a free market in banking.

By eliminating the Fed we could move towards a free market in banking which through competition should result in stability and prosperity. However, history has shown that governments don't allow the market to function as they pass laws which favor some banks over others, etc. and we wind up with the problems they had before 1913. By outlawing the practice of fractional reserve lending we end the real source of the problem and take away the primary purpose of the Fed.

The next (and perhaps larger) problem with the Fed is that is has the ability to be the "lender of last resort" to the US government. With this ability it can just print up money at will to facilitate the expansion of goverment and it has given us the welfare-warfare state. Ending the Fed takes away the blank check that the US goverment has had for too long.

The Fed also enjoys a monopoly whereby the Federal Reserve Note is the only legal tender in the US. This must end by allowing competing currencies and/or going back to the gold (or other commodity) standard.

I believe that a central bank in any form leads to a loss of liberty for many and a consolidation of power into the hands of a few.

[Robert Meldahl]

Thanks for a very intelligent and informed reply. You are essentially correct: the FDIC and the Fed actually give license to banks to risk deposited money. In the end, they make fractional reserve banking worse.

However, by blaming these lame patch-ups, we are missing the big picture. If loaning out money that is claimed as a deposit, bankers have a license to vastly inflate the economy during times of hubris and deflate the economy when they get intimidated. Our jobs, careers, and family welfare are dependent upon the emotions of the nation's bankers. Without the Fed, these emotions would still give and take our livelihoods from us.

The real campaign to end the Fed should be to end the need for the Fed altogether. Only one regulation needs to be in place -- the one where if you claim to have someone's property held for deposit and it is, in fact, not deposited in your secure possession, you are guilty of fraud and should be immediately indicted. This would guarantee a stable money supply and no unemployment caused by credit contractions. Employment would not be dependent upon some silly abstraction like "consumer confidence."

Imagine having a warehouse to store people's valuables. People's claims would be proven by their receipts for the deposited goods. Since the receipts for deposits are much easier to carry around than gold bars, the receipts themselves become "paper money," acceptable because they are redeemable in the the original deposited valuables. Now, imagine the keeper of this warehouse fraudulently issuing more receipts than he actually has valuables on deposit. Since the receipts are used as money, the warehouse keeper has committed an act of counterfeiting. But this is what banks do every day when they loan out money that is supposedly "safely deposited" in their safes. The money is reproduced and multiplied into the hands of both the original depositor and the borrower who pays the bank for this money-making.

This "fractional reserve banking" is the one and only cause of depressions and it makes honest free market liberty appear to be unstable and in need of more regulation from the most incompetent people in our society -- politicians. This is the reason why we, as a people, are being tricked into voluntarily surrendering our freedoms to people who want to redirect the parental abuse they suffered as children upon ourselves.

The current depression may last years (it has in Japan, a society complete with engineers, mathematicians, and financial experts). Enemies of liberty will always blame free enterprise and the lack of a central controlling authority; yet, the real problem is not one of a free market but rather a market enslaved by false money.

Tracy Zimmer said:

While I am no expert on the Fed, banks or money, it appears to me that the Fed's primary purpose is to facilitate fractional reserve banking in its member banks. Without the Fed and FDIC, banks would often be subjected to bank runs and go out of business if they were not careful in their reserve requirements. So in essence, the Fed prevents a free market in banking.

By eliminating the Fed we could move towards a free market in banking which through competition should result in stability and prosperity. However, history has shown that governments don't allow the market to function as they pass laws which favor some banks over others, etc. and we wind up with the problems they had before 1913. By outlawing the practice of fractional reserve lending we end the real source of the problem and take away the primary purpose of the Fed.

The next (and perhaps larger) problem with the Fed is that is has the ability to be the "lender of last resort" to the US government. With this ability it can just print up money at will to facilitate the expansion of goverment and it has given us the welfare-warfare state. Ending the Fed takes away the blank check that the US goverment has had for too long.

The Fed also enjoys a monopoly whereby the Federal Reserve Note is the only legal tender in the US. This must end by allowing competing currencies and/or going back to the gold (or other commodity) standard.

I believe that a central bank in any form leads to a loss of liberty for many and a consolidation of power into the hands of a few.