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The Case Against the Fed Paperback – September 4, 2007
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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.Read more ›
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.
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.
Most Recent Customer Reviews
Great book that gives true insight into how the Fed operates. Cuts straight to the meat of the issue without filler.Published 22 days ago by Josh
This book helped me understand how the Fed creates inflation (which funds unnecessary wars and the growth of government through the welfare state) and the boom/bust cycle. Read morePublished 2 months ago by Colin P. Kelley
This book is highly educational on the US monetary system and in particular how government-sanctioned counterfeiting (effectively) by the Federal Reserve has diminished the value... Read morePublished 7 months ago by N. E. Spencer
Although published in 1994, this book is as relevant today as it was then. In fact, if the author's recommendations had been followed then it is likely that the 2008 recession... Read morePublished 8 months ago by systemguy
Never has there been a better case made against fractional reserve banking.
Rothbard very clearly reasons against the evils of an elastic money supply. Read more
A straightforward and we'll laid out case for why we are in the fiscal mess we are today. Much simpler than the Jekyll Island book (which is good in itself) but this is for those... Read morePublished 10 months ago by Frank E
His main argument seems to be that since bankers were the main force behind the creation of the Fed then the Fed must be bad. Read morePublished 13 months ago by Clifford Collins