Originally posted at FreedomWorks.org.
23 more Republican Senators (edit: now 19!) to go!
Check out my new op-ed in the Daily Caller:
The Federal Reserve’s Public Relations Campaign is Doomed to Fail
Also, I created a page on Facebook: http://facebook.com/JulieBorowski
Originally posted at FreedomWorks.org.
1. The Federal Reserve Has Far Too Much Power to Control Our Economy
Federal Reserve Chairman Ben Bernanke has the power to dramatically impact our economy at a drop of the hat. The central bank completely controls and determines the money supply. It is permitted to create as much money as it wants out of thin air with no restrictions. This is the antithetical to the principles that America was founded on. Our Founding Fathers would be outraged that one centralized institution has unchecked and unprecedented power to control the economy and thus our lives.
2. The Federal Reserve Has Significantly Devalued Our Currency
The laws of supply and demand apply to money. The more dollars we have in the circulation, the less the currency is worth. Our money supply has rapidly increased over the past century due to the Federal Reserve printing massive amounts of money like there is no tomorrow. This is what will almost inevitably happen when a quasi-governmental entity can simply print more money to its heart’s content. Since the Federal Reserve came into existence in 1913, the dollar has lost over 95 percent of its value. Today’s dollar is worth less than a nickel compared to the pre-1913 dollar.
3. The Federal Reserve Hurts the Poor and Middle Class the Most
Our hard-earned money is essentially stolen through a hidden inflation tax. Inflation is the increase in the supply of money and credit. It is often wrongly defined as the general rise in the price of goods and services. But higher prices are actually a direct consequence of inflation since increasing the supply of money decreases the purchasing power of the dollar. Inflation hurts the poor most since they have less disposable income. Consumers with low disposable incomes will be negatively impacted by higher prices for food and clothing.
4. The Federal Reserve is Run By Unelected and Unaccountable Bureaucrats
The Board of Governors at the Federal Reserve are not directly elected by the American people. This means that those who run the Federal Reserve are unaccountable to the people. The seven members of the Board ultimately decide the price or purchasing power of our money. That kind of central planning would never exist in a true free market economy.
5. The Federal Reserve Has Made Our Economy Less Stable
The Federal Reserve has brought us endless boom-and-bust cycles. The U.S. economy was much more stable before the Federal Reserve came into existence. It bears significant responsibility for every financial crisis over the past century including the Great Depression, the stagflation of the 1970s and recent economic meltdown. The Austrian Business Cycle Theory explains why we see such wide fluctuations in the economy. The theory states that a false boom occurs when the Federal Reserve lowers interest rates below the market rate which increases the supply of money. Artificially low credit cost sends out misleading economic signals to producers. They are inclined to respond by greatly expanding their production around the same time. In retrospect, these investment decisions called malinvestments are seen as a bad allocation of resources. Malinvestments will lead to wasted capital and economic losses. The expansion of credit cannot continue permanently which means that inevitable bust will follow a false boom created by the Federal Reserve.
6. The Federal Reserve is Far Too Secretive
The central bank severely lacks transparency. Throughout its 100-year history, it has always operated under a veil of secrecy. The Federal Reserve has never been fully audited by any outside source. Our elected representatives in Congress have very little oversight over the central bank. It has continually resisted any kind of congressional oversight claiming that it would endanger its “independence.” A comprehensive audit of the Federal Reserve would not harm its so-called independence. It would only expose how the Federal Reserve has been manipulating our currency behind closed doors. And Ben Bernanke surely doesn’t want that to happen.
7. The Federal Reserve Benefits Special Interests
The policies of the Federal Reserve hurt the average American. It benefits the privileged few at the expense of the rest of us. The Federal Reserve erodes most Americans’ standard of living while enriching well-connected elites. The central bank serves big spending politicians, big bankers and their friends. Special interests receive access to money and credit before the harmful inflationary effects impact the entire economy. This is why high power lobbyists protect and defend the existence of the Federal Reserve.
8. The Federal Reserve is Unconstitutional
The Constitution makes no mention of a central bank. While there have been historical debates on the constitutionality of a central bank, I see no justification for the argument that the Federal Reserve is constitutional. The federal government only has about thirty enumerated powers delegated to it in the Constitution. The power to create a central bank is not explicitly granted to the federal government in our founding document. Due to my strict interpretation of the Constitution, I find the Federal Reserve to clearly violate the Constitution.
9. The Federal Reserve Routinely Bails Out Big Banks
The Federal Reserve acts as the lender of last resort. The Federal Reserve was ordered through a Freedom of Information Act request to release 28,000 pages of documents in March 2011. The documents exposed that one of the largest recipients of the Federal Reserve’s money was foreign banks during the 2008 economic meltdown. The top foreign banks that received money were the Brussells and Paris based Dexia SA, the Dublin based Depfa Bank Plc, the Bank of China and Arab Banking Corp., according to Campaign for Liberty.
In July 2011, due to a provision under the misguided Dodd-Frank financial overhaul law, the Government Accountability Office (GAO) conducted a one-time, watered-down audit of the Federal Reserve. The GAO investigators were not allowed to view most of the Federal Reserve’s monetary policy decisions including discount window lending, open-market operations and details on its transactions with foreign governments and banks. This first ever audit of the Federal Reserve revealed $16 trillion in secret bailouts to corporations and banks around the world in less than three years. These bailouts happened without a single vote taking place in any chamber of Congress.
10. The Federal Reserve Encourages Deficit Spending
The Federal Reserve is largely responsible for the out-of-control spending by Congress. The federal government can only obtain money through taxation, printing or borrowing money. Printing money has become the federal government’s preferred method. This is also the most destructive method since the federal government is able to simply print more money as needed to finance its drunken spending spree. It has become a never-ending cycle of spending and printing more money. Voters can put pressure on their representatives to halt politically unpopular tax hikes and lenders could stop loaning money to the U.S. government. But it’s fast and easy for the Federal Reserve to print more money at a whim.
Originally posted at FreedomWorks.org.
Speculation has risen that Fed chairman Ben Bernanke may announce yet around round of quantitative easing or QE3 on Friday. As economist Thomas Sowell says, “when people in Washington start creating fancy new phrases, instead of using plain English, you know they are doing something they don’t want us to understand.” The term quantitative easing in layman’s terms just means that the Fed will print more money out of thin air. What could possibly go wrong? Well, for starters, the value of the U.S. dollar will continue to decline and it could set the stage for hyper-inflation.
Of course, the first two rounds of quantitative easing have failed miserably to stabilize the economy. This should have signaled that pumping new money into the economy is just not the solution. But Fed officials who have refused to accept reality continue to run the printing processes on overtime. After QE3 fails—and it will—we might as well expect to see QE4, QE5 and so on until the dollar is literally worthless.
The actions of the Federal Reserve have a dramatic impact on the lives of every single American. The central bank essentially controls the value of the money that we have in our pockets. QE1 and QE2 can be blamed in large part for the skyrocketing price of food at the grocery store. The same supply and demand rules apply to money. The more dollars we have in the circulation, the less valuable the money becomes. The Fed is a main reason why it’s costing us more dollars to fill up our gas tank nowadays.
For decades, Rep. Ron Paul (R-Texas) was the lone voice in Washington speaking out against the Federal Reserve. He writes that “the inflation tax, while largely ignored, hurts middle-class and low-income Americans the most. Simply put, printing money… dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real — the individuals who suffer most from cost of living increases certainly pay a ‘tax.’” QE1, QE2 and QE3 are nothing more than stealing wealth from the people through the hidden tax of inflation.
Our Founding Fathers would surely be outraged by the existence of the Fed. These great men believed in a limited government that was held accountable to the people. The Federal Reserve, which is generally regarded as a quasi-governmental entity, has less oversight than even the Central Intelligence Agency (CIA). The most powerful central bank in the world makes all of its decisions without even a single vote from our elected representatives in Congress.
You can bet that the Fed is up to no good behind closed doors. Due to a provision under the misguided Dodd-Frank financial overhaul law, the Government Accountability Office (GAO) conducted a one-time, watered-down audit of the central bank back in July. It gave the American people their first peek into the central bank’s books but prevented investigators from peering into their deliberations on interest rates and the most crucial transactions of the Fed. We still need to pass a true audit the Fed bill like Ron Paul’s Federal Reserve Transparency Act of 2011 that would require comprehensive audits on a regular basis.
The first ever audit revealed that the central bank “loaned” out $16 trillion at a zero percent interest rate to corporations and banks around the world during the height of the financial crisis. To put that number into perspective, the Gross Domestic Product (GDP)—the value of all economic activity within a country— of the United States is only $14.12 trillion. It’s no wonder that the Fed is desperately trying to protect their privileged secrecy.
The Fed used to be the giant elephant in the room that nearly everyone ignored. We can see the political tide shifting since it has suddenly become popular to criticize the Fed. I have a strong feeling that the rise of the Ron Paul phenomenon has something to do with it. The author of the book End the Fed just might be onto something. A true audit is the first step to letting the American people know what’s going on with their money. The next step is to abolish the Federal Reserve System.
Originally posted at FreedomWorks.org.
To put it mildly, Treasury Secretary Timothy Geithner has a miserable track record. His fingerprints are all over the current fiscal disaster. Geithner has been grossly wrong on everything from the bank bailouts to the trillion-dollar “stimulus” plans. Under his watch, the U.S. credit rating was recently downgraded from AAA to AA+. He has had a direct role in bailing out the auto industry and spendthrift nations such as Greece, Ireland and Portugal with U.S. taxpayers’ dollars through the International Monetary Fund (IMF). The dynamic duo of Ben Bernanke and Tim Geithner wrongly thought that simply printing more money could get out of this mess. Geithner should immediately resign or President Obama should kick him out of cabinet position. Either situation is a win for the American economy.
Senator Rand Paul (R-Ky.) and Rep. Connie Mack (R-Fla.) have recently announced their intention to introduce a vote of no confidence in the Treasury Secretary. According to Sen. Paul, “the stock market gave a vote of no confidence to Timothy Geithner yesterday and for the past 11 days. Geithner has shown no acumen in predicting, diagnosing, or treating America’s economic woes. The time has come for him to resign.” Similar calls for Geithner to resign have been echoed by House Speaker John Boehner, Sen. Jim DeMint (R-S.C.) and other prominent members of Congress. It seems like Geithner is an unpopular figure in Washington as well as the rest of the nation.
A congressional vote of no confidence against Geithner will send a strong message to President Obama. With the Labor Department’s unemployment rate still over 9 percent — the real unemployment rate is likely significantly higher— and inflation running rampant, it’s hard to believe that anyone could possibly have any confidence in Geithner whose job is to manage the nation’s finances. Just a few months ago, Geithner said that there was “no risk” of the U.S. losing its AAA ratings. You might even remember his New York Times article titled “Welcome to the Recovery” back in August 2010. Real recovery is still nowhere in sight a year later.
Anyone who believes we’re on the right path to economic recovery might be living under a rock. In a recent NBC interview, Timothy Geithner criticized S&P’s decision to downgrade the U.S. credit rating by saying, “S&P has shown really terrible judgment and they’ve handled themselves very poorly…They’ve shown a stunning lack of knowledge about basic U.S. fiscal budget math.” But the truth is that it’s odd that S&P didn’t downgrade our top-tier credit rating a long time ago. The United States, the world’s largest debtor nation, is over $14.5 trillion in debt. It’s maddening that the Obama administration has the nerve to question S&P’s knowledge on fiscal budget math when the U.S. deficit and debt are at all-time highs.
Timothy Geithner has shown himself incapable of facing economic reality. Noted investor and firm believer in Austrian economics Jim Rogers recently said, “it seems to me it’s physically, humanly impossible for the U.S. to ever pay off its debt. They can roll it over and continue to play the charade, but the U.S. is bankrupt.” Unlike Geithner, Jim Rogers was one of the few to predict the current financial crisis.
The former New York Federal Reserve Chairman has no shortage of scandals. Geithner played a key role in the over $170 billion taxpayer bailout of American International Group (AIG) during the height of the financial crisis. The multinational insurance giant used a significant chunk of the money to pay bonuses to executives despite the fact that the money-losing company was severely mismanaged. It was revealed that Geithner even urged AIG executives to keep quiet about the $105 billion of payments made to banks, which AIG had insured against losses, including Goldman Sachs and Deutsche Bank. Geithner surely didn’t want taxpayers to know that their hard-earned money went to bankers who made bad investment decisions.
Tim Geithner has zero credibility in diagnosing and solving our current economic woes. He is determined to maintain the same failed status quo policies. Someone who has a clue about the economic situation we face would be preferable to Tim Geithner. He’s got to go—for the sake of our future prosperity.
Originally posted at FreedomWorks.org.
Over the past few years, we have seen a renewed interest in the role of the Federal Reserve. Rep. Ron Paul’s (R-Texas) presidential runs, along with the financial meltdown have directed much needed attention to the central bank. The American people are finally waking up to the giant elephant in the room—the Fed—which bears significant responsibility for many of the financial crises over the past century.
Something big is happening. The Atlantic recently reported that “on college campuses, Obama’s not cool anymore.” Young people are instead flocking to the message of limited government, personal liberty and sound money. Ron Paul has been the loudest critic of the Fed in Washington for over thirty years. His multiple campus tours have been a resounding success. Many universities do not have auditoriums large enough to seat all the students wanting to hear Dr. Paul speak. Anyone who attended the 2011 Conservative Political Action Conference (CPAC), where Ron Paul won the presidential straw poll, can attest to his enthusiastic support, especially from young people.
Nearly everyone knows that the typical college campus is biased in favor of leftists. From personal experience, it is difficult being a liberty-minded student in a political science college course. That’s why it’s incredible that so many college students are rejecting the Keynesian policies espoused by their professors. Young Americans for Liberty (the continuation of Students for Ron Paul) now has a total of 222 chapters nationwide. These young people are educating themselves on ideas generally not taught in a college classroom. They’re instead picking up books by Ludwig von Mises, F.A. Hayek, Murray Rothbard and other Austrian economists.
These young Americans for liberty overwhelmingly support abolishing the Federal Reserve System. You can hear them chanting “end the Fed!” at rallies. Ron Paul dedicated his book End the Fed “to the young people… who are the heart of the anti-Fed movement.” Young people bring energy and enthusiasm to the message of sound money. It has suddenly become mainstream not just to criticize the Federal Reserve but to question its reason for existence.
The track record of the Federal Reserve has been a dismal failure. Defenders of the status quo might tell you that the Federal Reserve is necessary to maintain the stability of the financial system. The stated purpose of the Federal Reserve, taken by its own definition on its website, is to “conduct the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.” Not only did the Federal Reserve fail to prevent the Great Depression, the 1970s stagflation and the recent financial crisis, but it was the primary culprit behind these financial disasters. We would not experience such dramatic economic swings were it not for monetary policies that distort real prices and encourage improper investment decisions.
Fed supporters claim that our economy would be chaotic without the central bank manipulating our money supply. Think again. The United States has a long history without the Federal Reserve. From 1776 to 1912, the value of the dollar increased by 11 percent. During this time, we experienced a few financial panics, but they were far less severe and rare back then. Many Austrian economists place the blame for these crises on the policies of the First and Second Bank of the United States. It is hard to blame the free market because we’ve never had free market capitalism.
The U.S. economy has experienced far more ups and downs after the Federal Reserve came into existence in 1913. The value of the dollar has declined by roughly 95 percent in less than 100 years. The dollar buys 95 percent fewer goods in 2011 than it did in 1913. Inflation, the loss of value in the dollar, is created by the Federal Reserve manipulating the money supply behind closed doors.
It is inspiring that the youth in America are involved in exposing the truth about the Federal Reserve. We certainly face an uphill battle against powerful special interests. Yet, these dedicated young Americans show no signs of giving up. As Victor Hugo said, “no army can stop an idea whose time has come.”