I very much enjoyed this book and I wonder if it might make a profound contribution to humanity. I know that sounds both very lofty and improbable. But I can't help but believe that this country would change dramatically, and for the better, if the electorate were familiar with just the basic information provided in this book. Ron Paul tackles a complex subject with much success. IMO, he provides a compelling, reasonably complete overview of the role of central banks generally, their deeply flawed history and role managing money and economies, and consequences to the very nature of government and citizens' well being.
These are lofty, important topics, but Ron Paul manages to describe the Fed and it's many profound impacts on our lives, and he supports the connections he makes with compelling reasoning. Even if the book receives little attention, and so fails to build a large consensus for change, readers will benefit personally from a deeper understanding of our flawed banking system and it's likely impact on both government and the economy. These topics, so carefully addressed by Paul, truly are fundamental to our lives. They should follow math and science in school curriculum.
I'd offer a few more details of my perspective of his book:
End the Fed is very readable: I got through it on a couple cross-country flights. In my mind, the book is geared toward relative beginners, but folks with a good familiarity with the Fed and it's history, and it's basic functions, should greatly appreciate the content too. I would think some of the material he quotes from former Fed governors would interest even experts on the subject. He mostly avoids charts/math if that's a bugaboo for you, and I personally had no problem with any assumptions of basic knowledge made in the book. While I've personally never considered Ron Paul to be eloquent or particularly clear in his speech, I think this book is extraordinarily well written and edited: it is clear, concise, and compelling.
Readers unfamiliar with or wary of Paul or the topic might wonder if the book is partisan or politically biased. It's an important concern, because as Paul illustrates, the Fed is inextricably connected to government. My view on this issue was very favorable. Paul is a self-described Libertarian, and he includes a chapter entitled, The Libertarian Case <against the Fed>. Further, throughout the book, Paul is straightforward in his respect for and belief in free markets and voluntary exchange.
However, I personally found no partisan bias against Democrats or favoring Republicans in this book. Paul weaves together a fairly complete, if basic (and I swear very interesting) history of central banking and monetary policy in the U.S. He properly gives credit, good or bad, where it is due. Andrew Jackson (father of the modern Democratic party) is properly credited with terminating the charter of this country's second central bank, at great personal cost to him. And while Woodrow Wilson and a Democratic congress is credited with chartering the current Fed, Paul takes care to describe the many years of lobbying of money interests that finally resulted in passage of the act. Nixon's decision to renege on Bretton Woods and close the gold window in 1971 is well described, along with the profound negative consequences to this country.
I'm trying to be brief here, and in any case my point is simple: Paul covers a lot of ground and does so with credibility. While I'm no expert on the subject, I've read several historical books on the topic and I think Paul's treatment is accurate and unbiased. This book is not kind to Democrats or Republicans, but neither is it unfair. The book does compellingly attack our established banking system; since that system has been well developed and supported by both parties, their roles are impugned accordingly. But the emphasis of the book is more pedagogical than political, and is generally more uplifting than a simple indictment of a flawed system. Paul provides a well-reasoned voice for all citizens, liberal and conservative, Republican and Democrat, against a corrupt money system. The book is anti-establishment, but it is even handed, and importantly, it is constructive.
It's hard to conjure up a shortcoming when you're generally so impressed with a book. To complain about any single aspect improperly raises its importance. Nevertheless, I'll offer one issue where I'd like to have seen more detail. Paul provides almost no detail into structured finance, and the role it played in this current downturn. His chapter entitled, The Current Mess, is reasonable, but it is far from complete. Since he included some details while excluding others, I'm troubled by the result, but only modestly so. In his defense, the chapter really places the downturn into historic perspective, as a predictable consequence of a fatally flawed banking system. But to give mention to the Community Reinvention Act or Equal Credit Opportunity Act, while ignoring MBS's and CDO's, and the fortune Wall Street made packaging fraudulent debt, is on it's face silly. But Paul is no apologist; he states plainly that "Wall Street... wants protection from downturns and cares little about truly free markets". Further, an honest accounting of Wall Street's roles in this debacle is not damning to Paul's thesis. He makes this point over and over in his book: the moral hazard created by the Fed enables all sorts of reckless behavior, including that led by bankers.
As a final equivocation, I'd offer that a reasonable treatment of just Wall Street's role in this debacle, setting aside government, the Fed, and discussions of regulatory failure and moral hazard, etc., would fill a book itself. So my complaint becomes almost trivial: if you're going to spend a couple paragraphs describing failures of a liberal policy, be sure to write a couple more adjacent to them drawing a picture of how Wall Street profited immensely from it. As an aside, I've read only a few of the very many books available that focus on Wall Street's specific role in bringing on the credit crisis, but I can confidently recommend Charles Morris's Trillion Dollar Meltdown. It was one of the first available, and compares favorably on both readability and detail. While Paul provides a wonderful introduction into the big picture framework that underpins where we find ourselves, he stops short of some detail that I think is important to consideration of today's problems. Specific to our current unfolding debacle, Morris answers the question of "how", while Ron Paul addresses the bigger question of "why".
In summary, I think Paul has done a great service by authoring End the Fed. I hope it's widely read and that it helps to create a thirst for more knowledge in this area. The quality of our government, and more importantly of our lives, depends very much on the topics he tackles.
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About the author
Follow the money...
“Follow the money,” says the snitch to the protagonist, just before they are taken away to jail. How many times have we heard a similar line like this in the movies and watched a similar scene unfold? Countless times, of course, because it is a well-known maxim in today’s culture: Money is the base of power for the powerful.Therefore, it makes sense that when analyzing the roots of power of the government of the United States of America, we should similarly follow the money. Ostensibly, the government collects money in the form of taxes from its citizens, and uses that money to carry out the desires of those same citizens. What does the government do when it has more expenditures than income? It borrows money from the bank, the same as you or I.Banking in America (and the western world in general) has been following foolish practices for decades. A bank has two main functions: 1) to store our money safely and allow us access to it when we want/need it, and 2) to loan it out (to commercial ventures or for real estate investments, for example) in the hopes of making a profitable return. Foolishly, banks have combined these two services in a practice called ‘fractional reserve banking,’ where money that was earmarked for storage becomes the money used for lending. That newly loaned money is deposited yet again, which is then loaned out again and deposited again, “with each depositor treating the loan money as an asset on the books.” In this way, banks create new money, pyramiding new deposits on top of a fraction of old deposits. The amount of money in a bank at any given time is only a fraction of the amount they have recorded in their books.We like to think that we have access to our money whenever we want it, but we do not. If enough people try to withdraw their money at the same time, and the bank cannot provide them all with the funds, it can simply shut its doors and refuse to pay. To avoid this, and in order to keep the banking system functioning, The Federal Reserve has agreed to back up the fractional-reserve system with a promise of bailouts and money creation. Basically, if the money is ever not there (for banks that are correctly allied), the Fed will print it out of thin air. This is where the core of the problem exists: the Fed’s ability to print money.The biggest borrower of money is the federal government, and we have reached a point in history where our expenditures far outweigh our income. The solution has been to print the difference, a practice called deficit financing. Over time, the government has become fully backed by the Fed and its infinite money printing machine, and this is how we have become trillions of dollars in debt. “It is no coincidence that the century of total war coincided with the century of central banking,” Paul writes. “Imagine an irresponsible teenager with an unlimited line of credit. The parents, teachers, pastors, and authorities in his life are ultimately powerless to change his habits. Now imagine that teenager armed to the teeth and also immune even from the rule of law. This is what we have with a government backed by a central bank.”The gold standard (that America abandoned in 1971) worked like a regulator. Before they were guaranteed a bailout (and, in effect, immunity from poor investment decisions), banks had to function like every other business: they could expand and make risky loans if they desired, but when faced with bankruptcy, they had nowhere to turn. They would have to contract loans and deal with extreme financial pressures. “Risk bearing is a wonderful mechanism for regulating human decision making.” Adherence to the gold standard created a culture of banking and lending discipline. Once we moved away from commodity money to fiat currency, our money has been inflating.In addition to the century of foreign wars enveloping the world since the creation of the Fed in 1913, we have seen a colossal growth of the government in general. We must remember that there is always a trade-off, and that when government grows, liberty suffers. Democracy requires a balance in power between the people and their government, but the bigger the government grows, the more power it gobbles up for itself, and the more it becomes tyrannical. This happens no matter what justification is given for the government programs being financed; it is brought upon its citizens via its growth. And, of course, it cannot grow without being financed.The logical conclusion to our search for the collective problems of America, then, is The Federal Reserve. Money is power, and when a government is able to produce its own money, it is able to produce its own power. This is what we are seeing with the inflation of the money supply today: The elite members of society are getting richer while the purchasing power of everyone else’s dollar declines. Economist John Maynard Keynes (before he changed his tune and became a champion of inflation) wrote quite correctly of the grave danger of inflation in his book The Economic Consequences of the Peace: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”The Federal Reserve has been around for so long and has become such a fundamental tool of government use that we take its existence as mandatory. This does not have to continue, however. What would happen, as our author hopes, if we were to abolish it? The people would “enjoy all the privileges of modern economic life without the downside of business cycles, bubbles, inflation, unsustainable trade imbalances, and the explosive growth of government that the Fed has fostered.” We would also be able to disempower the secretive cartel of powerful money managers who exercise disproportionate influence over the conduct of public policy. In essence, it would hobble the ability of the government (the largest and most powerful government humanity has ever known) to do whatever it wants. If we the people ever want to hold our government accountable, we must follow one single, simple piece of advice: follow the money.
Top reviews from other countries
AmazonAddict
Great introduction to the federal reserve system!
Reviewed in Canada on July 27, 2017F. Heydwolff
Ein Buch, das nicht nur in Amerika gelesen werden sollte
Reviewed in Germany on November 28, 2012
Mr. Francois Marcognet
FED et politique monétaire
Reviewed in France on April 8, 2011
