This is my final project for my highschool government class. So far my paper is very unorganized and I plan on writing a couple more pages atleast but please critique what I have so far if you have the time. Let me know any mistakes or anything I should add. Keep in mind that I am still a begginner when it comes to Austrian Theory and the Central Bank, Im just coming up with what I have been taught through this site, books, and lectures over the last couple of months. I would love a good idea for a title aswell if yall have any in mind!
Thanks!
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“Give me control of the nations money supply, and I care not who makes the laws.” – Mayer A. Rothschild (Former international banker and one of the most successful businessmen of all time)
Among one of the most important issues in America is one that goes highly unnoticed. Unfortunately an overwhelming majority of Americans have no clue what the Federal Reserve even is. Throughout high school and college education we are taught that the Federal Reserve System is vital and is here to keep us alive much like the need for air. Many experts are even ignorant when it comes to the Fed; why is that you may ask? If the truth be told, many of our present day problems can even be traced back to the irresponsibility of the Federal Reserve. The Federal Reserve System and the central planning of an economy is as much of a threat to Americans as any terrorist organization or middle east country but for some reason it is left out of our presidential debates, the subject of either political platforms, and few politicians from either side have the knowledge or courage to question this above-government entity. Our founding fathers warned us about the powers of banking establishments, fiat money, and central economic planning; over 200 years later we are now left with a private bank running America.
“I sincerely believe that banking establishments are more dangerous than standing armies…If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson
The Federal Reserve and the Constitution
“Congress shall have the power to coin money and regulate the value thereof and of any foreign coins,” (Article 1, Section 8, Clause 5 of the Constitution). Today this is not exactly the case. Today the United States Government has no power to issue money, control the flow of money, or to even distribute it. This belongs to a private corporation called the Federal Reserve Bank.
"Whosoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."- James Garfield (Former President of the United States)
The Federal Reserve came from the ‘Federal Reserve act of 1913’, where congress irresponsibly gave their duties to a group of private bankers.
Congressman Charles Lindbergh had this to say about the Federal Reserve Act of 1913, "the act established the most gigantic trust on earth. When the President signs this bill, the invisible government of the monetary power will be legalized…the greatest crime of the ages is perpetrated by this banking and currency bill."
What just is fiat money?
With influence from the Federal Reserve; our nation has abandoned the gold standard and adopted a tyrannical fiat currency. Fiat money means that our money has no backing what so ever. It is simply a piece of paper with no real value. Without the help of legal tender laws there is not much difference then a dollar issued from the Federal Reserve and a dollar I grabbed from my monopoly game.
The Federal Reserve is a counterfeiting machine. The Federal Reserve makes many Americans believe that wealth can easily be created with the help of a printing press or through a button pushed on a computer when in reality capital only comes from real demanded production.
The Federal Reserve is capable of counterfeiting in a couple of ways; fractional-reserve banking or printing paper. Through this ‘legalized counterfeiting’ comes about inflation. Many people think inflation is just ‘the rise of prices’ and try to blame it on evil capitalists or greedy businessmen while diverting the attention from the real culprit. Rising prices is not inflation; it is rather a side-effect of inflation. Saying rising prices is inflation is like saying a hangover is the same thing as drinking too much alcohol; when in reality a hangover is not the problem. Drinking too much alcohol was the problem and in consequence you now have a hangover. Inflation is the increase of the money supply and in effect comes rising prices. So now we have established only one of the problems with counterfeiting and increased quantity of paper money. You now maybe thinking to yourself, “So what, now everyone is getting more money so it cancels out the rises of prices, right?” This is another false assumption diverting attention from the consequences of the Federal Reserve’s actions. These actions inject more detrimental consequences into a society’s economy than just increased prices.
When money is counterfeited, whose hands does the money first reach? The counterfeiter receives money first. The trend from there on causes a ripple effect. Those who first receive the money benefit because prices in the market have not yet corrected itself to the increased money supply. By the time the money reaches the average Joes, the prices of goods have increased and then there are still those people who have not been distributed the new money at all or evenly and therefore lose purchasing power on their dollar. This serves as a hidden tax on those who receive the money late, or on those who do not receive the money at all. This further diminishes the existence of the vital middle-class in the economy and spreads the gap even more between the three classes.
This capability encourages deficit spending and debt. Not only does this encourage irresponsibility from the government but it also encourages irresponsible wars and foreign aid.
In 1966 before Alan Greenspan was given power over the Federal Reserve he had this to say about money, “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.” Maybe Mr. Greenspan should have stuck with his claims prior to inflating a massive bubble into our nation’s economy?
Why is the Fed here?
The Federal Reserve’s initial purpose was said to be to stabilize the economy, prevent recessions, depressions and to combat inflation.
The Federal Reserve has control over interest rates, the discount rate (rate at which it lends to banks), and the money supply. The control over interest rates is primarily used to fight inflation and increase spending; this monopoly control undermines the free market and has effects that we will discuss later. For now, let’s take a look at how well the Federal Reserve has done at ‘stabilizing the economy’, and ‘combating inflation’.
Is the Fed doing its job?
It is true that the market was inherently unstable prior to the Federal Reserve Act; but it is crucial to accept this intangible that comes along with the prosperous free-market. Instead; we are now trying to fight recessions only while turning them into depressions and making living standards worse for Americans in the long run.
Since its creation to battle economic downturns there has been the crash of 1921 which turned into short lived depression, the crash 1929; the Great Depression of ’29 to ‘39’ recessions in ’53, ’57, ’69, ’75, and ’81, another stock market crash in ’87, and now the economic turmoil we are facing today. Can we come to the conclusion that the Federal Reserve has done a good job at stabilizing the economy? I think not.
What about ‘The War on Inflation’? Since 1940 the dollar has lost 96% of its value and has inflated over 1000%.