The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

I’m 9.5 On Julie Borowski’s 10 Reasons To End The Fed

Posted on | February 2, 2012 | 5 Comments

by Smitty

I don’t fully agree with #8, “The Federal Reserve is Unconstitutional”. The Federal Reserve Act followed the usual course of legislation, and was signed into law by Woodrow “Effing” Wilson. In my opinion, the Federal Reserve urinates all over the spirit of the Constitution, for reasons Julie well and truly elaborates.

However, just as it’s not explicitly illegal to sit down with a case of whiskey and drink yourself to death, I wouldn’t argue that the Federal Reserve is strictly un-Constitutional. Plenty of other nonsense afoot today is, but Bicycle Pump Ben is not.


5 Responses to “I’m 9.5 On Julie Borowski’s 10 Reasons To End The Fed”

  1. Adjoran
    February 3rd, 2012 @ 2:54 am

    It isn’t necessary to believe the Fed is unconstitutional to recognize that Bernanke and the FRB have repeatedly exceeded their authority and engaged in disastrous policies which must be damaging in the long term.

    The default alternative to the Fed is Congress, which is woefully incapable of addressing the nation’s money supply needs.  The money supply has to be adjusted several times a year due to economic growth and the retirement of perishable paper currency.  The Senate hasn’t even voted on a budget in nearly three years, how do we expect a quarterly order for the Mint could be reached?

    Beyond the structural inability, Congress realized it is impossible for it to divorce the currency from political considerations.  In the last century, how many things has Congress admitted it is unable to do?  We only have the FRB in the first place because Congress realizes it is completely incompetent to perform the necessary function. 

    “End the Fed” is not only practically impossible but operationally dysfunctional.  “Reform and regulate the Fed” is sensible and required.  In the spirit of compromise, I suggest we hang Bernanke publicly – everybody wins!

  2. Adjoran
    February 3rd, 2012 @ 3:04 am

    On another blog one lefty bragged about Obama’s performance, claiming the deficits don’t matter since we are seeing no inflation from the “quantitative easings” used to pump up the supply to pay for them (we can’t sell that many bonds, even to China).

    The Fed is the reason we see no inflation because they have artificially kept the interest rate at near zero and the dollar ever weakening.  This subsidizes the export sector, which has led us out of every recession since the ’70s, provides a theoretical stimulus to housing with low mortgage rates, and prevents inflation.  Does this sound familiar to anyone?

    It is precisely the policy followed by the Japanese central bank to address their banking crisis of the late ’80s/early ’90s.  They kept interest close to zero for years, but suffered miniscule growth along with it.  Now it is called “the lost decade.” 

    Bernanke is one of the leading authorities on the banking practices which contributed to the Great Depression, and is known to be determined above all else to avoid that happening again.  In that he has been successful, but only at the cost of postponing much of the creative destruction of capitalism which reallocates resources more efficiently and stimulates growth.  In his mind, he has been successful.

  3. smitty
    February 3rd, 2012 @ 4:44 am

    I’m not advocating violence against anyone.
    Ending the Fed in its current form is essential.

  4. smitty
    February 3rd, 2012 @ 4:45 am

    With all of the borrowing, and the American ignorance of the problem, can one argue we effectively have a ‘disinterest’ rate?

  5. Quartermaster
    February 3rd, 2012 @ 8:29 am

    The Fed as currently established is, without doubt, unconstitutional. Congress is charged with coining and regulating the value of teh currency, which has been abdicated to the Fed, which is a private organization. If it were a part of the FedGov, as an adjunct to, and directly responsible to Congress, then it would be legal.

    The legal functions of the Fed, frankly, will always be political. But, it was established as a private organization, and allowing FedGov to appoint the head of the Bank does not ameliorate the illegality of the bank.