Customer Reviews

The Case Against the Fed

5 star:		(37)
4 star:		(15)
3 star:		(1)
2 star:		(5)
1 star:		(2)

 

 

This book, written by Murray Rothbard, an economist and historian of fairly well known repute, is a scathing attack on not only the Federal Reserve, but the interests that created this institution. Rothbard is an adept writer, as he takes a concept that can be fairly daunting and makes it accessible to the those readers without an economics background. I considered trying to earn a degree in Economics, but abandoned it when I found out that most of it is tied to higher mathematics. I'm more interested in the conceptual side. Rothbard cuts out math and focuses on the real meat of the issue, the concepts that govern money supply and inflation.

The book starts by discussing the biggest problem with the Federal Reserve system, which is fractional reserve banking. Rothbard explains how this system is only functioning because people believe that it works. If there was a run on banks tomorrow, the entire financial system would collapse, because there isn't enough "real" money in reserve to cover all of the bank notes in circulation. Rothbard believes that it is the Fed that causes inflation, and that the Fed is the sole source of inflation in society. It can be a confusing issue to explain, but Rothbard makes it easy.

The rest of the book is a detailed history of the creation of the central banking system. This part can be confusing due to the numerous names that Rothbard flies through as he traces the events leading up to the creation of the Fed at Jekyll Island in 1911. Several interesting points are made during this history. Rothbard says that the Progressive movement in American history was essentially engineered by the money interests to help destroy competition. The little guy couldn't afford to put up with all the regulatory laws passed by the government. This opened the way for the giants, such as Morgan and Rockefeller to monopolize industry. Another point that Rothbard makes is that the history of the United States from after the Civil War to World War Two has essentially been controlled by two financial camps, Morgan and Rockefeller. In this way, he supports views held by many that the big money trust controls the country and owns all of the politicians, an issue that is very much in vogue today, and can be seen in the minor success of Ralph Nader's run for the White House. The book winds up by saying that the only way to restore sanity is to go back to the gold standard, where all money is backed up by an equivalent amount of either gold or silver.

I'd recommend this book to anyone with an interest in finance and economics. This book is good for anyone who just wants to understand what fractional reserve banking is and how it works. Rothbard died in 1995, but he has left a good account of himself behind for all to enjoy.

Ever since the creation of the Federal Reserve Board ("the Fed"), the American economy has been subject to a cycle of boom and bust. Most recently, we saw a bubble in technology stocks in general and telecommunication stocks in particular, fueled by the creation of credit. But no one wants to blame the culprit -- the Fed. Why has an institution that was created allegedly to bring stability to the economy caused such havoc? Equally importantly, why is an institution that has so much power so unaccountable?

Murray Rothbard (1926-1995) provides in this book an outstanding discussion of money, banking, the Fed, and U.S. monetary policy. As usual, Rothbard sees the "big picture." There was no need for a central bank, however the Banksters  in combination with Big Business and Big Intellectuals -- pushed for the creation of the Fed. Rothbard's discussion of the battles between the Rockefellers and the House of Morgan is fascinating. (See his Wall Street, Banks and American Foreign Policy for a more elaborate discussion of this great "conspiracy" in U.S. history.)

The foundation for this work is Austrian economic theory. Through fractional reserve banking  which is little more than legal counterfeiting  banks are permitted to print new money, thus creating inflation. Yet the central insight of Austrian theory is that this creation of money doesn't simply increase prices, but distorts the cycle of production as it works its way through the economy. This creates the boom and bust cycles that have plagued our economy.

For a more detailed discussion of many of the issues raised in this book, the interested reader should consult Rothbard's The Mystery of Banking.

Murray Rothbard writes a scathing indictment of the Federal Reserve System and the book is worth reading if you want to understand your how money comes into existence. According to Rothbard the money in our economy and our personal accounts is created out of thin air by the Federal Reserve, which credits accounts of the Federal Government and member banks with deposits that can then be spent.

Rothbard explains how and why the Federal Reserve and our personal banks do this. The bottom line is that the Federal Government privatized the monetary system of the United States when it created the Federal Reserve early in the last century. Rothbard tells this history and the politics behind that privatization. The results of those politics are that the very organizations the Federal Reserve is designed to control and regulate, banks, actually control the Federal Reserve. The interests of those banks and our interests as consumers of bank services or users of money are not typically the same. Rothbard's point is that the fox has been put in charge of the hen house.

In short the value of our money is a matter of trust. After reading this book the question to ask yourself is, "Do you trust your banker and the Federal Reserve System?" If you do you have nothing to worry about. If you don't, the ultimate consequence of the Federal Reserve will be financial chaos for the United States and the rest of the world and you should probably be buying gold. Rothbard has no trust in the current system. And, Rothbard lays the blame for the Great Depression and the high level of inflation during the 20th Century at the door of the Federal Reserve.

I strongly urge you to read this book and then drop in on your local branch manager and discuss the conclusions Rothbard reaches. You may find you know more about the Fed then the manager. In any case it should be an interesting conversation.

The Federal Reserve Corporation has always been a favorite topic of mine. I once thought it a fine and needed organization but like Rothbard, I too, have discovered that it has outlived its usefulness, levies secret taxes on the people, and builds huge wealth for NY Bankers from the sweat, blood, and tears of the average American. It ought to be abolished.

Why does it take two wage earners to acheive the same standard of living as one used to earn? Why do 90% of all Americans end up broke at 65 (retirement)? Why is the middle class dwindling? Why are the number of those in poverty increasing? Where is the money of hard-working Americans going? Read this book and find out.

I too, believe in the goodness of man but I'm not so gullible as to believe that all men are good. Evil men do plot and deceive in order to gain wealth for themselves -- The Federal Reserve System is one such device.

Rothbard did a fine job putting the complicated banking system into easily understandable, plain English. I recommend this book to anyone that wants their eyes opened. But beware, you might not like what you see!

Murray Rothbard once again cuts through the popular dogma and conventional knowledge which government would prefer we all simply take on faith. In this case, the subject is money and the creation of it. Rothbard, an exceptional economist, showcases his ability to set aside the technical jargon and higher mathematics of the profession in favor of language accessible to everyone. In "The Case Against the Fed," Professor Rothbard examines the roots of money, as a commodity with subjective value which, because of wide-spread acceptance and other desireable qualities, becomes a medium of exchange for a people. Furthermore, he exposes the government's, via the Federal Reserve, monopolization of money. Rothbard shows how the Fed uses the power of the printing press to tax the people via inflation, to redistribute income, and to artificailly lower the interest rate leading to the infamous "business cycle" and the roller coaster of depressions and booms which our eceonomy is regualraly subjected to. Anyone who is concerned about the purchasing power of their income and about the unemployment which the business cycle regularly brings should read this book. Professor Rothbard portrays the federal government as what it is: the self-proclaimed, legitimate counterfeiter

The majority of Americans assume that the Federal Reserve Bank is a Federal institution operated by the government.
The reality is that the Federal Reserve is a pseudo-public entity that is privately operated and owned by 5 to 6 private banks in Europe and the United States. The creation of the Federal Reserve marked the beginning of the privatization of our political institutions, national resources and money. The Government borrows money from the Federal Reserve and in return the Federal Reserve banks receive government bonds. In other words, the Federal Reserve Bank and its owners possess the Federal Government and the American public through the trillions of dollars we borrow from them yearly. The deeper in debt our government becomes, the more ownership the Federal Reserve will have over our lives.
Murray Rothbard is an opponent of the Federal Reserve system, and in his book "The Case Against The Fed" he discusses his economic views and makes his case against them. His book will give the reader a basic ecconomic review, and a historical perspective of the Federal reserve and its creation, as well its impact on our lives and its modus operandi. It's a book worth reading....

Fantastic. Many Fed 'apologists' have spent lots of ink and paper labeling people like Rothbard, and others critical of state institutions in America, as conspiracy theorists. Reading Rothbard shows that what we have in the Federal Reserve is in fact worse than a conspiracy: like the myriad unneeded, wrong-headed and expensive state beaurocracies, its simply a mindlessly self-perpetuating fixture of government. Oh! if only this horrid insitutition could be exposed for the anti-freemarket enabler that it really is. Unfortunately, its too embedded in our economic and political system. The best we can do is keep looking for the sound and impartial truth from guys like Rothbard.

Written a year before Rothbard's death, The Case Against the Fed embodies a lifetime of his wisdom and scholarship. Rothbard was a gifted historian and each paragraph is packed with valuable information that truly explains the motives behind the creation of the Fed. Clear, concise, and witty at times, the book is easy to read and comprehend, and is relatively short as well.

Rothbard demonstrates that it was the bankers themselves who lobbied for the creation of a central bank in the US, as the cartelization of commercial banks was to allow for even greater inflation of money and credit. Fractional reserve banking, which is nothing more than embezzlement, causes not only inflation, but a redistribution of wealth from society to the bankers, as Rothbard explains.

This book not only succinctly explains the operations of the Federal Reserve System, but is probably also the simplest available introduction to the theory of the origin of money, the differences between 100% reserve and fractional reserve banking, the ills of central banking, the absurdity of deposit insurance, and the Cantillon Effect. The book concludes with a simple plan for liquidating the Fed and reestablishing the gold standard in the US.

Some people give negative ratings for a book if it doesn't match their political/economical philosophy. Just to be clear, I believe my overall political/economical philosophy is pretty similar to the author's, although Rothbard is more of an anarchist and I'm more of a classic Friedman-libertarian. But we're in the same ballpark, at least. So just to be clear, my rating of this book is not a disagreement with the author's premise, but really a rating on the quality of the writing, how well the author supported his logical conclusions, etc.

I give the book two stars primarily because I don't think Rothbard ever clearly stated the "case" against the Fed. Well over half of the book was merely a history lesson describing how the Fed came to be and who the major players were--but which contributed nothing to his overall "case" except that the Fed emanated from big-banking interests. Instead of spending time on the history lesson, I would've preferred to spend more time on the pros/cons of FDIC and a more thorough treatment of the discount window (which was literally just a footnote in this book). For instance, the author rails on FDIC, but it's hard to argue that bank runs are a thing of the past since FDIC--so if FDIC is abolished, and the Fed is abolished, how do we stop bank runs, which have been academically proven to cause real damage to an economy. I was hoping this book offered real alternatives that would still help protect the economy from bank runs, but I'm afraid that was never covered. The conclusion of the book was to abolish the Fed and FDIC, but the ramifications of this were made to seem negligible, discussed only over a page or two that over-simplified what abolishing the Fed and FDIC and going back to the gold standard would really mean.

In summary, I never felt like the author made the logical connections required to say conclusively that the Fed should be ended. And I really don't think he offered realistic alternatives. He basically called for a return to the gold standard, an abolition of the Fed and of FDIC, but with no discussion of how we can avoid damaging bank runs and cyclical confidence in banking without those institutions (which I believe is possible, but was simply never covered by the author).

This book makes a great companion piece to "What Has Government Done To Our Money?", also by Rothbard. Though some of the information is duplicated between the two volumes, "The Case Against the Fed" is still well-worth reading. Am I wrong, or does Alan Greenspan seem more like some kind of Dictator for Life, everytime he makes a new interest rate hike. If you should read this book, you will see how ridiculous it is for Greenspan to talk about controlling inflation as if it were some outside force! Since the Fed controls the money supply, only they can create inflation! Someday, if enough of us become aware of the full truth, we will light our torches and go storm the monster's castle together, pull the castle down to the last brick and have the monster's head on a pike! In the meantime, read this book and then maybe pass it around to your friends (the ones with an open and curious mind).