Audit the Fed is coming up for a vote in July!
Audit the Fed is coming up for a vote in July!
Originally posted at FreedomWorks.org.
The value of the U.S. dollar is rapidly declining. The dollar is worth roughly half of as much as it was in the mid-1980s. Since the creation of the Federal Reserve in 1913, the dollar has lost a whopping 97 percent of its purchasing power. The Federal Reserve excessively printing money has devalued our currency which means the dollar can’t buy as much as it used to.
Many people assume that the increase in prices over time is just a natural occurrence. But that’s not true. The Federal Reserve’s manipulation of the money supply is primarily responsible for the rising prices of goods and services. The more dollars in circulation, the less the money is worth. It now takes more dollars to buy the same amount of goods as it had taken before. It used to take 79 cents to purchase a pound of bacon in 1962, now it cost approximately $4.77. The poor get hurt the most by rising prices since they have less disposable income.
More Americans are understandably losing trust in the dollar. After all, the paper dollar is backed by absolutely nothing and the Federal Reserve can print as much as it wants with no restrictions. Unfortunately, unconstitutional federal tender laws force Americans to use these Federal Reserve notes issued by the Federal Reserve. Americans are not legally allowed to use other forms of currencies such as gold and silver in transactions.
Unlike the paper dollar, gold and silver holds their value over time. That’s exactly why there are laws forcing Americans to use the Federal Reserve issued fiat currency. Without any coercive laws, Americans would likely start using valuable alternative currencies instead of the paper dollar. The Federal Reserve desperately wants to preserve its monopoly on currency.
Americans should be free to use whatever currency they desire. It’s time that the paper dollar is forced to compete with other forms of currency. The prospect of Americans using alternative currencies would likely encourage the Federal Reserve to stop destroying the value of the dollar through inflating the money supply.
While ending the Federal Reserve is the ultimate goal, repealing unconstitutional federal legal tender laws and legalizing competing currencies is a step in the right direction.
I’ll be uploading quite a few videos from the International Students for Liberty Conference over the next few days.
Here is the first one:
Congressman Justin Amash Says End the Fed
New video to go with my post:
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.
The Federal Reserve fought tooth and nail for over two years to keep their actions hidden from the American people. The central bank lost part of their battle for secrecy when they were court ordered through a Freedom of Information Act request to release 29,000 pages of documents earlier this year. Although it was just a one-time and limited release of their records, the papers revealed that one of the largest recipients of the Fed’s money was foreign banks during the 2008 economic meltdown. Bloomberg News has further examined the thousands upon thousands of pages of transactions to discover more Fed secrets.
The Federal Reserve had committed $7.77 trillion as of March 2009 to “rescuing” the financial system, according to a new study from Bloomberg News. The Fed also kept secret which banks were in trouble during the height of the financial crisis while bankers were taking in tens of billions of dollars in emergency loans. Bloomberg has calculated that the secret Fed loans helped banks net a whopping $13 billion. All of these numbers are staggering but not exactly surprising. The unelected bureaucrats at the Federal Reserve have fought to keep their dealings behind closed doors for a reason.
Fed Chairman Ben Bernanke has become desperate to protect his privileged secrecy. Bloomberg writes that he “argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis.” Helicopter Ben, a nickname he acquired by essentially stating that the government could “defeat” deflation by dropping money out of helicopter, cares more about protecting the reputation of his cronies than letting the American people know where their money is going.
Bloomberg reports that Fed officials haven’t told the truth about the bank bailouts. The news agency writes that, “while Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.” The Federal Reserve is ripping off the American people by printing money out of thin air which devalues the value of the dollar to bail out the big banks.
As Senator Rand Paul (R-Ky.) writes, “this is just one more reason why we need a full audit of the Fed.” The court ordered released documents are disturbing enough. But imagine what kind of mischief we would find out through a comprehensive audit. A real audit of the Fed would also inspect how it determines interest rates which is one of the most crucial activities of the central bank. We still need to pass a true audit of the Fed such as Sen. Rand Paul and Rep. Ron Paul Federal Reserve Transparency Act of 2011 that would require comprehensive audits on a regular basis.
An overwhelming 75% of Americans want a comprehensive audit of the Federal Reserve, according to a recent Rasmussen poll. The calls for a true audit are getting louder and stronger by the day. The fight for transparency is transcending party lines with fiscal conservatives such as Ron Paul and self-identified Democratic socialist Senator Bernie Sanders working together to remove the Fed’s cloak of secrecy. More Republican presidential candidates are starting to echo Ron Paul’s long held beliefs on the Fed.
We will win our immediate goal when the Fed is thoroughly audited. Then the next step becomes ending the Federal Reserve and finally restoring sound money in America.
Occupy Denver protests outside Federal Reserve building on 11/12/11. I am not associated with Occupy Denver. To be fair, quite a few people I asked said they didn’t know enough about it to speak on camera and others said they hadn’t formed an opinion yet.
Decided to make my post into a video:
Blog below originally posted at FreedomWorks.org.
I’ve been closely following the loosely organized Occupy Wall Street protests on social media sites over the past few weeks. Now, I’m all for citizen activism and freedom of assembly, but I’m still unconvinced that most these protesters know what exactly their protesting. They’re angry about the state of the economy and rightfully so. While I sympathize with their frustration towards our weak economy, their anger is largely misdirected. They would be better off to pick up and move their protests down a few blocks to the New York Federal Reserve building.
Many of the Wall Street protesters are holding up anti-capitalism signs that read “capitalism doesn’t work” and “capitalism oppresses love.” These posters are grossly illogical because we have never even had a capitalist system. The United States economy is better described as a mixed economy, an admixture of capitalism, corporatism and socialism. Interviews with protesters on the ground suggest that they do not comprehend the difference between capitalism and corporatism. It’s an odd sight to see a bunch of individuals in Che Guevara shirts (who was a murderer, by the way) with fancy iPads and Mac laptops protesting so-called capitalism.
Capitalism is often regarded as a dirty word for all the wrong reasons. The greatest economic system in the history of the human race has a bad rap mainly due to a fundamental misunderstanding of capitalism itself. The term essentially means economic freedom. Individuals are free to make their own choices on what to own, produce, buy or donate. Milton Friedman was correct in saying that, “underlying most arguments against the free market is a lack of belief in freedom itself.” All other economic systems are characterized by central planning and control, which rests on state coercion.
Those who equate capitalism with corporatism are making a huge mistake. Corporatism is a system where businesses are allegedly in private hands but are actually controlled by the government. In a corporatist state, the government often grants special privileges and favors to big businesses such as bailouts, tariffs and subsidies. Many top Wall Street executives like to consider themselves “capitalists” as they live off of the taxpayer’s dime. None of these sweetheart deals would exist in a pure free market capitalist system. Businesses would be forced to sink or swim on their own merits. As the famed Austrian economist Ludwig von Mises stated, “what pays under capitalism is satisfying the common man, the customer. The more people you satisfy, the better for you.”
The Occupy Wall Street website—which surely does not represent the views of all the protesters—has released a 13-point list of pro-government demands. OccupyWallSt.org demonstrates their economic illiteracy by demanding free college education for all, one trillion dollars in infrastructure and ecological spending. One little detail is missing: who is going to pay for all of this?
The government is not Santa Claus; every dime that it spends must be first forcibly taken from someone else. The movement calls itself “peaceful” while advocating that Americans surrender more money to the government under the threat of brute force. If you’re uncomfortable stealing from your neighbor, don’t demand that the government to do it for you.
Some real defenders of capitalism are hitting the streets in an attempt to educate the Wall Street protesters. They’ve got their work cut out for them. The OccupyWallSt.org wish list includes raising the minimum wage to $20 per hour and raising tariffs on all imported goods. Anyone who has passed Econ101 should hopefully know that these policies would dramatically increase the price of goods and cause a massive amount of Americans to lose their jobs. Their demands, if implemented, would disproportionally hurt the poor and increase corporatism in America.
Capitalism is not to blame for our economic woes and more government regulation is not the solution. The Federal Reserve is largely to blame for the financial crisis. Without the Fed, Washington couldn’t have bailed out Wall Street. The first ever—but one-time and limited—audit of the Fed back in July 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. Why then has the list of Occupy Wall Street demands completely ignored the Fed? No serious economic movement can overlook the Fed which literally creates unlimited amounts of money out of thin air.
Many of the Wall Street protesters may be well-intentioned but lack basic economic knowledge. Political philosopher Robert Nozick said my thoughts perfectly, “it is strange that many young people in tune with nature and hoping to go with the flow and not force things against their natural bent should be attracted to statist views and socialism, and are antagonistic to equilibrium and invisible hand processes.” The Wall Street protesters would be better off to direct their focus to the correct target: Washington and the Federal Reserve.
My newest video on why we need a true (not phony!) audit of the Fed. It’s just the first step to ending the Fed.