Nothing compares to the depth and substance of Professor George Selgin’s scholarly take-down of the Federal Reserve, but this video by a local libertarian has a very authentic feel.
Julie lists 10 reasons to dislike the Fed.
1. The Fed has too much power.
2. The Fed has devalued the currency.
3. The Fed hurts the poor and middle class.
4. The Fed is unaccountable.
5. The Fed destabilizes the economy.
6. The Fed is too secretive.
7. The Fed benefits special interests.
8. The Fed is unconstitutional.
9. The Fed facilitates bailouts.
10. The Fed encourages deficit spending.
If I want to nit-pick, I’m not sure that I agree with number 8 since the Constitution gives the federal government the power to coin money. I guess it depends how one interprets that particular power.
Also, I suspect politicians would waste just as much money even if the Fed didn’t exist, so number 10 may be a bit superfluous.
The main argument against the Fed is number 5. Looking at the economic chaos of the 1930s and 1970s, as well as the recent economic crisis, it is no exaggeration to say that the Federal Reserve deserves the lion’s share of the blame.
For those that like monetary policy, here’s my video that looks at the origin of central banking.
And I can’t resist including a link to the famous “Ben Bernank” QE2 video that was a viral smash.
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[…] https://danieljmitchell.wordpress.com/2012/02/24/ten-reasons-to-dislike-the-federal-reserve/ […]
was going to clear up #8 but it looks like several have already done a good job of doing so. Good job Jon Fry, Vince and Talon.
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#8 is correct. The Federal Reserve is not Federal, it’s private. The authorization to coin (or print) money is not an authorization to incur unconstitutional debt, and most of our debt being frivolous doesn’t meet the standard.
The Constitution prohibits states from coining money but allows them to make “gold and silver Coin a Tender in Payment of Debts.” By prohibiting everything except “gold and silver Coin” the Constitution clearly considers gold and silver coinage to be legitimate, no matter who issues it.
Dan, the constitution specifically denies to the States the power to coin money, the power to emit bills of credit (that’s paper money which the founders had experience with because of the continental dollar), and the power to make legal tender laws for anything except gold or silver. Of those three powers denied to the state, only one, the power to coin money is granted to the Congress (which power they delegate to the US Mint). Thus, by the 10th amendment – the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people – only people in the private sector is allowed to issue bills of credit. Congress cannot delegate a power they do not have to the Federal Reserve. Thus, it is unconstitutional for the Federal Reserve to issue paper money and it is unconstitutional for the Congress to make Federal Reserve Notes legal tender.
I don’t think I have engaged in any kind of “interpretation”, the plain language of the Constitution is clear.
Totally agree with Jon Fye here, Dan. Article 1, Section 10, Clause 5 of the Constitution states that the only things that can be used as legal tender are gold and silver. On every Federal Reserve Note, the Federal Reserve slaps a statement reading something like “this note is legal tender for all debts, public and private.” Well, there you go: unconstitutional. I don’t recall any amendment clearing that up. The Treasury is supposed to coin money and regulate the value thereof. The biggest benefit of putting back into the hands of the government is because then we would automatically get a full audit and they couldn’t do so much harm. Logically, a system that allows for competing currencies would make the most sense, but that might necessitate an amendment (fine by me) and certainly would include a more painful transition process than just putting the power of the Federal Reserve under the Treasury and then waning down said power. I believe this could be done within a couple of years. We’d probably have to grant the Fed operators amnesty, however 😀
Hi Dan,
In response to your concerns on number 8. The Constitution gives the U.S. CONGRESS the power to coin money, not the federal reserve. The U.S. Congress is accountable to the people, the federal reserve is accountable to no one.
Hope this helps clear up the confusion 🙂