Tag Archives: Federal Reserve

No More Regulation!

13 Aug

There has been a lot of bogus explanations for what caused the Panic of ’08 and its ensuing recession, but the most absurd comes from a well-respected financial website, DailyFinance.com, written by Peter Cohan. He blames our current economic mess on, of all things, small government:

The idea [of small government] has influenced American politics for almost 30 years, and helped create the ineffective regulatory agencies which allowed all kinds of questionable practices to thrive in American business, especially in the world of finance. By helping create a record debt bubble, which thrived in an era of weak regulatory oversight, small government nearly ruined the global economy last fall.

There is so much to critique in this nonsense, it’s hard to know where to begin. I don’t know which America he’s been living in, but this country hasn’t seen anything but gigantic and bloated government since since at least the middle of the 20th century. Ronald Reagan and George W. Bush may have paid lip service to small government, but their Administrations vastly expanded the size and the scope of the State.

Cohan also recites that oh so popular catchphrase of “deregulation” to explain our stagnating markets. If only government regulations had been stricter, the evil bankers and businessmen would have never preyed on an innocent American public. This faith in government regulation is extremely naive, since we have had (and continue to have) miles of pages of regulations enforced by thousands of government agents. The list of regulations is exhaustive, and it’s hard to imagine any aspect of our economy that our government didn’t or doesn’t regulate.  Regulators have been nothing more than co-conspirating robots, extorting the public in the name of their interest.

Government is the only institution that when it doesn’t work, it asks for money or control (public schools, police departments, the Post Office, etc.)

Despite extensive oversight and an endless source of funds, regulators, with droning consistency, always fail in their intended goals. When they fail, there is always a demand to come up with new regulations and hire more empty suits to enforce them; a cyclical motion of corruption, residual failure, and waste.

The perfect example of this is the Federal Reserve. The Fed, a central bank operating in complete secrecy, distorts and manipulates the economy with its inflation and easy credit. The resulting effect is an endless cycle of booms and busts. When the economy does bust, like it did last September, the Fed and all of its statist partners blame “capitalism,” “free markets,” and “deregulation,” and then proceed to inflict a sickened economy with the cancers of more inflation and easy credit.

What it boils down to is that the government plays too big, not too small, of a role in the economy, and the financial sector especially. In a truly free-market capitalist economy without the government there to socialize their risks while privatizing their profits, bankers would act a great deal more prudently. They would have to; the disciplines of a free and competitive market combined with a sound currency encourages this. Currently, with our semi-fascist mix of government and private industry, we see banks creating secondary markets for IOU-backed mortgages to people who could never afford them , since the government is there to pick up the tab for these risky investments. No amount of regulations can control the reckless chaos of a Fed fiat-money economy.

For almost 100 years, the American economy has been guided by the destructive, immoral, and evil hands of the statist central planners in DC. Isn’t is time we give small and limited government a try?

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Ron Paul’s ‘Audit the Fed’ bill ‘gaining steam’

30 Jun

The Federal Reserve, the counterfeiters who inflate our money supply and whose easy-money policies have given us over 80 years of depressions, bubbles, and booms, is starting to sweat. Rep. Ron Paul (R-TX)’s “Audit the Fed” bill, HR 1207, is gathering steam, as CQ Politics notes:

He may have faded from the national political scene a year ago, after his dark-horse presidential run came to naught, but Rep. Ron Paul ’s influence is still being felt in campaigns and policy debates across the country. Indeed, the latest legislative priority of the libertarian Texas Republican — auditing the Federal Reserve — has gained support in unlikely quarters.

Paul’s legislation, popularly known as the “Audit the Fed” bill, has drawn 244 cosponsors, ranging from Ohio’s John A. Boehner , the conservative Republican floor leader, to Michigan’s John Conyers Jr. , the liberal Democratic chairman of the Judiciary Committee. Some Democrats have even picked up on Paul’s rhetoric. “It’s time to yank the shroud off the Fed and shine some light on these events,” New York Democrat Edolphus Towns , chairman of the Oversight and Government Reform Committee, said at a hearing last week about the shotgun marriage between Bank of America and Merrill Lynch last fall to stave off the latter’s collapse.

Paul’s efforts have only gained in political significance since the Obama administration unveiled its proposal to give the Fed new powers over the financial regulatory system.

It is good to see some bipartisanship in Congress that doesn’t involve arguing over which party will give more money to Obama to rain down bombs on Muslims.

Both liberal Democrats and conservative Republicans have signed on to Paul’s bill, which would force the Federal Reserve to show exactly where every penny it printed up was spent. As you can expect, the head of this criminal institution Ben Bernanke has said that this bill would mean a “takeover” by Congress and “threaten the financial system, dollar, an economy.” Let me get this straight. The Fed prints up trillions of dollars out of thin air, artificially lowers interest rates to increase poor and malinvestment of capital, and gives Americans the rope of cheap credit to hang themselves with.

Who exactly is the threat to financial stability?

Is “deregulation” to blame for our financial crisis?

27 Jun

According to conventional wisdom, our current economic woes have been caused by the “excesses of capitalism” and “deregulation.” These talking points are repeated on the major news networks, the op-ed pages on mainstream newspapers and magazines, and even by our current Administration.

Thomas DiLorenzo over at LewRockwell.com highlights these false rhetorical claims:

“Stockbroker Henry Kaufman of Henry Kaufman and Company recently wrote in the Financial Times that ‘free-market libertarian dogma led us astray.’ This absurd claim is being repeated by other Wall Street establishment mouthpieces, even including the disgraced former governor of New York, Eliot Spitzer. Spitzer recently went on MSNBC to argue that the Fed is a ‘libertarian’ institution. All of these commentators conclude that what is needed, therefore, is even more central planning and regulation by the central bank…”

It was not the failure of capitalism and the absence of proper oversight and regulation that got us into this mess. The proper blame belongs in the lap of perhaps the U.S.’s worst institution, the Federal Reserve. This central bank is neither “federal” nor possesses any “reserves,” and ever since its inception in 1913, has distorted and manipulated the American economy.

A publication entitled “The Federal Reserve: Purposes and Functions” examines the true role the Federal Reserve has over our economy. The Federal Reserve makes it easier to lend and borrow money by printing money out of thin air, which  lowers interest rates far lower than a free-market based system would allow them to be. This encourages reckless spending, malinvestment, sub-prime mortgages, and inflates (devalues) our money supply. When this Federal Reserve induced drunken spending orgy inevitably crashes, it demands more and more power to “fix” and “stabilize” it; the inmates running the asylum, if you will. You can’t have a free-market economy with a central bank pulling the levers, but capitalism makes an easy scapegoat for power-hungry politicians and nutty economists.

The Federal Reserve also has incredibly vast regulatory power over nearly every aspect of the economy. Here is a list of all the things the Federal Reserve regulates (and all of these regulations were in place during our current economic crisis):

  • Bank holding companies
  • State-chartered banks
  • Foreign branches of member banks
  • Edge and agreement corporations
  • U.S. state-licensed branches, agencies, and representative offices of foreign banks
  • Nonbanking activities of foreign banks
  • National banks
  • Savings banks
  • Nonbank subsidiaries of bank holding companies
  • Thrift holding companies
  • Financial reporting procedures
  • Accounting policies of banks
  • Business “continuity” in case of economic emergencies
  • Consumer protection laws
  • Securities dealings of banks
  • Information technology used by banks
  • Foreign investment by banks
  • Foreign lending by banks
  • Branch banking
  • Bank mergers and acquisitions
  • Who may own a bank
  • Capital “adequacy standards”
  • Extensions of credit for the purchase of securities
  • Equal opportunity lending
  • Mortgage disclosure information
  • Reserve requirements
  • Electronic funds transfers
  • Interbank liabilities
  • Community Reinvestment Act sub-prime lending demands
  • All international banking operations
  • Consumer leasing
  • Privacy of consumer financial information
  • Payments on demand deposits
  • “Fair Credit” reporting
  • Transactions between member banks and their affiliates
  • Truth in lending
  • Truth in savings

So is “deregulation” to blame? It would be hard to find something the Federal Reserve didn’t regulate. Its arrogant chairmen have also refused every attempt by Congress to audit or monitor its counterfeiting.

What the U.S. needs is not more “regulation,” but an economy based on sound money, free markets, and massive cuts in government spending. What the Federal Reserve system has given us is a boom-and-bust cycles for 90 years, the redistribution of wealth bailouts for banks and car companies, and a 95% decrease in the value of our money since 1913.

The Framers knew that a central bank leads to impoverishment, corruption, and loss of liberty, and every bailout, stimulus, and government expansion into economic affairs digs us deeper and deeper into the grave of tyranny.