In 1913 Congress abdicated its Constitutional responsibility over currency on behalf of the people when it created the monster called The Federal Reserve System. In creating a private joint stock entity, Congress not only surrendered jurisdiction over the dollar, it also relinquished control, oversight, and authority over the institution intended to manage the citizens’ currency. Decisions hastily made in environments of illiteracy, panic, and fear, and driven by energies with ulterior motives, rarely turn out well for those who succumb.
Section 2A of The Fed’s Monetary Policy Objectives states, “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” This ill-defined and loose agglomeration of feel-good nonsense might have tasted better if someone had appended “and preserve motherhood and apple pie,” but such addition would not have improved it. When we consider such additional elements as the fact that, as originally established, the notes issued by The Fed were obligations of the U.S. Treasury (read taxpayer) rather than that of the member banks, well, what could go wrong?
The Fed’s ‘objectives’ reads as if it was written by The Fed so that no repercussions could possibly result from its own failures. Well beyond the bounds of sanity and far from purview of effective diligence, an isolated institution was formed and exists to command and supervise the currency of the most powerful Nation on Earth. This authority reports to no one. It plays footsies with Congress and with the Administration, but it acts in its own best self interest, as all human endeavors are wont to do. As some of us strongly suspected just prior to the last Presidential election, and as we can now with hindsight confirm, Bernanke and The Fed used their capacity to print dollars in an undisguised effort to support the re-election of pro-Bernanke-pro-Fed-pro-free-money Barack Obama. There is no question that the most powerful financial institution on Earth has strayed well beyond any of the intentions which created it, regardless how unenlightened they might have been.
If America was a company and you were its CEO, would the above noted Section 2A provide sufficiently focused objectives for your currency? Not if you were capable of simultaneously walking and chewing gum it wouldn’t. Monetary policy should have One objective – Stability. Simple, clear, unambiguous, stability. And inflation? 0%. Not 1.0% or 4.5%, but zero.
Who should be in control? The people. Who represents the people? Congress. Who is in control? A small group of individuals running a small group of too-big-to-screw-up international banks. No-one could possibly mount an intellectual or intuitive argument supporting the assumption that such individuals, their desires and the desires of the institutions under their charge, hold dear the altruistic benevolence of their “fellow human beings.” I cannot say “their fellow Americans” since some of the “owners” of The Fed are not American institutions. Go figure.
Still, is this any way to run a railroad? Not if we look at the state we are in. Not if we critically assess the reality which has been created over a long process of fiscal mismanagement. Not if we understand that unprincipled individuals have too long politicized the dollar, which was easily done once it was unhooked from the hard commodity, gold. Not if we critically appraise the devastation which The Fed has rendered on a Nation with the complicit approval of self-servers in Washington.
Politicians of the Congressional and White House variety have evidently been more than enthusiastic in allowing inflation and devaluation of the dollar to proceed apace since the de-coupling of the dollar. The banks behind The Fed controlled the game and were only too eager to comply (as in, OK fine, we’ll go along with it but it’s your idea). There were hundreds of billions to be made through debt guaranteed by taxpayers. There were new illiterate and willing generations to be converted to serfdom with the help of standard wavers such as the New York Times. A bigger chicken in every pot and a larger roof over every head, all acquired through debt. The bigger the debt, the greater The Fed’s profits. And what of the savers? . . . Completely destroyed and pushed toward risky investments.
The dollar has not been stable and in fact has moved in direct opposition to the best interests of all Americans. It has steadily lost value over the long term. For example, when we are provided obfuscating rationales for the high price of oil (up 400% in a decade), we are being lied to. The truth along the vector of veracity is much closer to the reality that the dollar is dropping in value, however such realization might instill doubt of our long term trends toward prosperity.
It has been in the best interest of the banks which own The Fed and all member banks, to manipulate interest rates to their advantage. The trends of the dollar (read: your earning power) through the past half century against hard assets such as gold or oil tell a tale of unrelenting plundering and evidences the failure of misguided interventionism. Nevertheless, the worst consequence has been an acceptance of indebtedness. Indebtedness has contaminated all human enterprise. From personal debt, to corporate debt, to State debt, to National debt, the burden overwhelms current and future intents to repay. Total debt floats somewhere well North of $100 trillion.
In a country where the term “Freedom” has resonated profoundly from its very inception, and throughout its history, the citizens of The United States of America now find themselves subservient to a foreign entity they have no control over. Without economic freedom, freedom is simply an ephemeral concept promoted and repeated as a feel-good mantra mesmerizing the population. Awaking to overwhelming indebtedness is tantamount to waking up to enslavement.
As we wait for the moment when it becomes widely evident that The Fed has become completely ineffective and we are forced to confront the unavoidable crisis of debt yields rising significantly, some alternatives should and must be considered.
The ubiquitous nature of today’s technologies, software, computers, phones, and networks, present us with possibilities which brilliant economic minds of the past could not dream of, and too many current ones refuse to. We should no longer regard the current monetary system as the sacred and hallowed domain of a few bankers. Congress should immediately mount a full frontal attack on The Fed and retrieve the control it long ago held. Once Congress has recuperated full jurisdiction and authority over the Nation’s currency, it should then enact laws allowing for the formation of competing bank notes including digital currency to be issued by private entities in an open and fee market. But first, let’s get back mastery over that most critical instrument so pervasive in all human activity – our currency. America should not be the only developed country in the world without sovereignty over its currency.