I'm past the blame stage and eager to completely pay off the national debt within a two-to-three year period before introducing U.S. Notes. End the Fed is prerequisite reading for all Americans willing to start fresh in our lifetimes. The book is not a personal attack on Fed Chairman Ben Bernanke, a polished and well-mannered central banker helping big banks while fulfilling mandates essentially to create low-wage jobs.
End the Fed is the story of how we got into too much debt as a country and individually. Top bankers generally benefit from a system that requires ever-increasing debt to get economic growth and stave off financial collapse. Dr. Paul is telling us it doesn't have to be this way.
In its first response to the global financial crisis, the Fed disbursed trillions in a secret manner. That money bought fire sale assets from individuals obliged to keep current with debt payments. That money saved Wall Street's bonus system. Since then we have witnessed a great struggle over whether the Fed should tell us where the trillions went.
(Recommended reading:
Declare Independence from Party Affiliation)
The Federal Reserve Act delegates money power to a private banking monopoly. Ron Paul introduced H.R. 833 to abolish the Federal Reserve System. This book reveals several consequences of the Federal Reserve System, many unintended and unforeseen.
The main counter argument to ending the Fed is that it would be a terrible mistake to give total money power to politicians. The late Milton Friedman offered an alternative to the current system which "might" satisfy a broader constituency. The U.S. in theory could have its own currency called U.S. Notes (instead of Federal Reserve Notes).
Friedman thought U.S. Notes could work if they were printed only to match population increase or else align increases of money supply to a price index. The system that Friedman talked about would leave physical money creation independent of political control if it could be implemented. Currently, physical money is created through Treasury debt. When a dollar is created, it's an asset and also a liability that generates interest.
Friedman acknowledged that it may not be politically possible to take money power away from the Fed. Nothing has changed that - yet. At this point, the rest of us are getting educated about money power, leading to healthy debates and disagreements.
Under President Abraham Lincoln, money power was vested in the Treasury Department. If money power were returned to the Treasury, perhaps under Friedman's plan, the federal deficit could be COMPLETELY PAID OFF with physical Federal Reserve Notes, and then debt-free U.S. Notes could be introduced as the new money. This would favor debtors at the expense of creditors, and therefore no politician is going to support it.
End the Fed cites interesting consequences of our monetary policy and fractional reserve banking. In this system, money comes into existence only through debt and is then used to create more debt. There is overreliance on debt which can benefit some but is bad for society and the nation. We need a way out of this.
The Fed makes funds available for government spending far in excess of what could sustainably be raised through direct taxation. Paul posits that our military engagements would not play out as they do if government had to pay by raising taxes. Also, our elected officials make these choices, not just the Fed.
Fed-led credit creation helped create a mortgage bubble. Then Fed Chairman Greenspan denied the mortgage bubble and encouraged mortgage equity withdrawals by homeowners. This turned out to be a trap for homeowners. Our system has cyclic financial bubbles, and the little guy always loses.
Paul wrote about conflicts of interests between the powers behind the Federal Reserve and the American people. This is not a partisan issue. Even Chairman Ben Bernanke blames the severity and duration of the Great Depression on the Federal Reserve. But blame doesn't get us anywhere. We need to rid ourselves of all that debt and we should resolve ourselves to pay it all off within two years.
Like Paul, I got interested in coins since they seem to have intrinsic value. I used to collect nickels. Some from the 1920s are circulating. They last because they're 75% copper and 25% nickel - very durable.
The aesthetics of holding coins is lost when you think about the debt created as a condition for their creation. So instead of assigning blame, we should focus on very quickly paying off or forgiving the debt itself, including the national debt.
I have an affinity for Paul and would take a bullet for him. At the same time, Dr. Paul is only one person facing an enormous set of major issues.
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