All of our appeals aren’t going to be to the intellectual circles in the country and so trying to explain the Austrian theory of the business cycle in economic jargon and going up against the Keynesian orthodoxy, which most people don't understand themselves, isn't exactly the way to go. Heck, I’m not even sure I understand it. There’s some stuff about saving being bad, spending being good, digging holes to fill them back up helping the economy and if you aren’t confused yet, wait until you get to the part about the animal spirits. No, when I talk to people about the Fed, (which I find myself doing increasingly...Jesus, I used to be cool) I explain it in simple terms by trying to create a narrative which people can understand and I try to dispel any fears they might harbor about change, by giving what seems like middle of the road options but which are quite revolutionary in truth.
My explanation of the Fed goes something like this:
The Federal Reserve is allowed by the government to create money out of nothing and to charge us interest on it. Yes, that's right; interest on nothing. But aside from the obvious injustice of that, whenever the Fed creates new money they create inflation, and as Ben Bernanke said during a Congressional hearing not too long ago, inflation is a tax! The Fed is allowed to tax the citizens through inflation without any authorization by the representatives of the United States government. Revolutions have been started over "taxation without representation".
But if that isn't enough, it's the worst sort of tax because it's highly regressive. The Fed creates the new money and gives it to the government, Wall Street and/or connected enterprises. New money in the economy creates price inflation because of increasing demand. There's more money in the economy, but the goods in the economy stay relatively constant. The result is higher prices. However, the government, Wall Street, and connected businesses get to spend the money first before the higher prices kick in. By the time the money trickles down to the middle class and the poor, that is if it ever reaches them (many people have fixed income and wages that won't likely increase to absorb the inflation) the higher prices have set in and they must now pay more of their income for the same goods. The Federal Reserve has stolen away the value of the money we work hard for and given it to its favored groups. Exasperated yet? Is this the type of trickledown economics Reagan had in mind. And people wonder why there's a growing gap between the wealthy and the poor...
The establishment Republicans like this system because it allows them to spend spend spend on foreign military excursions...and while you may believe there are arguably some valid operations that the US government takes part in around the world, no one is in disagreement that we are spending too much and doing too much in other countries while neglecting our own. But hey, the American people don't even realize they are paying much higher taxes than the amount they can visibly see going directly from their paychecks to the government’s military adventures. Is it any wonder that they’re all swooning over Ben Bernanke? It allows them to be the constant advocates of war irrespective of the economic costs. Just ask Sarah Palin—the HTIC (Head Tea Partier in Charger).
The democrats really love it too. The Federal Reserve can fund all their little pet projects to save the poor on the one end, while it makes the poor poorer on the other end, creating a populace that is increasingly reliant on the government. This solidifies a voting block for the liberal democrats who want to be all things to all people and who care little about cultivating the independence and ability that is suppressed in so many American men, women and children because of their ill-conceived policies. Where is the outcry from the Democrats about the Fed's money creation? I mean, I know many of them think it is okay to steal from the rich, but I don't know hardly anyone that thinks it is okay to steal from the poor! Well, except the Federal Reserve. You have to question what the goal of the Democrats is when an institution like this exists without challenge or at the very least...competition!
The goal of our movement is freedom and independence for all. It's the reason that former (and hopefully future) Presidential candidate Ron Paul introduced the Freedom of Currency Act. It's something we all should support. There are many people out there calling for an End to the Fed. Ending the Fed to me means ending its dominance in my life. Every business has a right to operate so long as it is non-violent, operates without fraud, and can attract patrons; so too does the Fed. But it should operate under the same conditions that you or I must. It must satisfy its customers and mustn't use the government to force people to do business with it. H.R. 4248, the Freedom of Currency Act would allow individuals to choose to do business with the Fed or not to do business with the Fed. It would allow people to protect their savings and investments and earnings by diversifying the ways in which one can save and earn money. It would allow people to protect their wealth, however small or large, from theft. Isn't that the proper role of the government?
H.R. 4248 may or may not be a solution, but the bigger point here is that we should be discussing ideas like this to introduce freedom into our economy. We have seen the results of restricting it. The Fed may not like it. We don't expect them to. It is difficult to let go of privileges, especially so great a privilege as control over the world economy, but we have outgrown it. Whatever may have been the reasons for passing the Federal Reserve Act of 1913 and handing the economy over to the private banks, we have over the past one hundred years gained enough wisdom through our experiences to know that this antiquated institution can no longer exist with such an awesome power over our lives. It simply is not the American way.
