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 "Real patriotism is a willingness to challenge the government when it is
doing wrong." – Ron Paul
Many people have a delusion the Federal Reserve is a federal agency that
controls our money. Yet the Federal Reserve is a private corporation run by
bankers. And it operates in the best interests of bankers not the American
people. The age old question is: Why is the corporation that controls our money,
one run by bankers appointed by a president, not accountable to Congress or the
people?
The U.S. did not have a central bank until the 19th century. Our founders were
opposed to central banks since the British had tried to force the colonies to
allow the Bank of England to manage their money. Therefore they gave the
Treasury Department the authority to manage our money supply.
Since Jesus expelled the money changers from the Temple, the efficacy of central
banks has been tested. They were created to protect a nation's money from
politicians when the value of currency was tied to precious metals. The flaw
with the system will always be isolating them from politicians.
In reaction to the panic of 1907, J.P. Morgan petitioned Congress to pass the
Federal Reserve Act and establish a central bank for America. But the caveat was
its chairman would be chosen by the president. And the Fed fiscal policies today
reflect the policies of the party in control of Washington.
During WWI, countries threw caution to the wind and abandoned the "gold
standard" to print more money to fight the war. And in doing so, this devalued
and inflated the currency.
"Without the gold standard, there is no way to protect savings from confiscation
through inflation." – Alan Greenspan
Once politicians learned to use central banks to finance their political
wish-lists, the banks became fiscal political whips for aggressive politicians.
When Franklin Roosevelt needed money to finance his New Deal, he turned to the
Federal Reserve. By the end of WWII, the Federal Reserve became dependent and
reactionary to political influence instead of steadfast guardians of money
supplies.
This was blatantly obvious in 2013 when Barack Obama picked Janet Yellen as
Chair of the Fed. Yellen supported liberal economic policies financed with low
interest rates. With his recovery going in reverse, Obama needed a chairman
who'd keep interest rates artificially low until he left office.
I give myself an "A-" for the economic decisions I made during my first four
years." – Barack Obama
By keeping interest rates too low too long, Yellen devalued the U.S. dollar
compared to those of nations like China and Japan. This increased our trade
deficit and made it less feasible for foreign nations to do business with us.
Yellen had the Obama economy on life support for four long years.
President Donald Trump replaced Janet Yellen with Jerome Powell when her term
was up. With a robust economy, high wages and the lowest unemployment in 60
years, for the first time in a decade the Fed ditched their politically
motivated low interest rate policy, raising rates four times under Trump.
During the onset of the pandemic, with no help from the Fed, Trump passed
legislation to keep the economy afloat. Powell remained out of sight and out of
mind when he was needed most.
"The Fed can destroy the economy simply because they don't like the president."
– Donald Trump
Biden inherited an economy in recovery, and all he had to do was count his
blessings. Instead, he appointed progressive Janet Yellen to run the Treasury
and influence Powell to return the U.S. to the Obama "easy money" years. This
enabled Biden to grow government without increasing taxes.
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After a year in office, with the Fed financing his out of control spending,
Biden has painted himself into an economic corner. The Fed has stood idly by
while America has a 9.2% Jimmy Carter style inflation rate. Energy prices have
doubled since Biden took office. Consumer goods, if you can find them, are up
44%. Biden also created a labor shortage making it more profitable not to work
at all.
When currencies were pegged to precious metals, there was little inflation since
politicians could not print money. This protected a nation's currency from
disingenuous politicians and it allowed consumers and the markets to control the
nation's money supply through supply versus demand.
"Politicians are never satisfied simply allowing the supply to meet the demand."
– David Graeber
Through evolution, a central banking system that once protected the people's
money from greedy politicians morphed into a financial vehicle to regulate the
economy to satisfy political economic policies. Central bankers today act more
like politicians than watchdogs monitoring our currency.
After the 2008 financial collapse, the Government Accountability Office (GAO)
got a rare chance to peek behind the iron curtain at the Federal Reserve.
Although the review was limited, the GAO was able to audit the agency’s
emergency loan programs. And what GAO auditors found was troubling.
It revealed that the Fed loaned $16 trillion in bailouts to businesses and banks
with zero input from Congress. As soon as the GAO report was released, the Fed
refused to allow a scheduled audit on how they make interest rate decisions.
They claimed that the audits would be politically motivated.
Brad Lumas wrote, "Money is a politician's best friend." Politicians have proven
they are addicted to money long before they file papers to run for office. If
the purpose of the Federal Reserve is to protect our money supply from political
influence, then why are its president and members chosen by the president? What
employee is going to ultimately risk getting their boss "P-Oed" at them?
Chairman Powell claims he walks a tight rope between low unemployment, and a hot
economy and inflation. But he stood by as Biden spent our nation into double
digit inflation and didn't do a thing.
”This inflation is transitory. It will improve as the economy improves, just
wait and see." – Joe Biden
The way to limit political influence on the Fed is with annual GAO audits. The
Fed's objection that this would compromise their independence and subject its
actions to political scrutiny is ludicrous. The Fed was created by Congress and
its charter is governed by Congress. The Fed must prove they act independently
and that their decisions are based on factual data with no political influence.
Any company that does business with the government is audited by the GAO to
insure its integrity. Why is the Fed treated differently? Annual GAO audits of
the Fed would help Congress and people understand the decisions the Fed makes
and those that they don't make. This would also help the public understand why
the Fed does nothing while Biden is destroying the value of our currency.
"Corruption and fraud are characteristics which exist everywhere. It is
regrettably the way human nature functions. What successful economies do is keep
it to a minimum." – Allen Greenspan
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