Toward Sensible Monetary Policy

[traelin0]

Last week the 112th Congress was sworn in. I am pleased that I will be chairing the Monetary Policy Subcommittee of the Financial Services Committee, which has oversight of the Federal Reserve. Obviously, this position will facilitate my efforts to ensure the Fed provides the American people with more information about what they have been doing with and to our money. Not surprisingly, since my chairmanship was announced, apologists for the Fed have been recycling the old canard about how increased transparency threatens the Fed's so-called political independence.

By independence, they are referring to the Fed's ability to greatly impact the economy with virtually no meaningful oversight. We only recently learned that the bankers at the Fed were able to use the latest financial crisis to bail out Wall Street cronies and foreign central banks with billions of dollars that were created and wasted, instead of appropriated and voted on by representatives of the people. The Fed and its supporters in Congress vehemently fought even this small bit of transparency and without this one-time provision in the financial reform act forcing disclosure, we would still not have this information. Indeed, we are in the dark on so much of what the Fed has done. This is extremely dangerous for our country, yet this power and secrecy is defended as some kind of public good, which is patently ridiculous.

Our government is based on a system of checks and balances. With no check on the Fed, it is no surprise it has thrown the economy wildly off balance. The solution is not to re-inflate the bubbles the Fed created, or to continue to devalue the currency, or to throw billions at failing banks and corporations. The solution is to return sanity and freedom to monetary policy. Forcing the entire country to use a medium of exchange that is subject to the whims of elite bankers and their cronies on Wall Street is not sanity. Hoping that an unchecked, all-powerful, behemoth banking cartel will solve any economic problem is not sanity.

The problems the Fed was originally created to solve now look miniscule compared to the problems it has created. If "political independence" erodes the purchasing power of the currency by 98%, destabilizes the economy with radical booms and busts, all while increasing unemployment and tipping us ever closer to hyperinflation, perhaps it is time to try a little transparency and accountability instead. Better still – we should try giving the people true economic freedom.

Make no mistake: the Fed is not truly independent of political pressure. Its chair is appointed by the president, and it is a creature of Congress. Congress has a duty, albeit a neglected one, to exercise oversight of the Fed. However, even if it was politically independent, it is not independent of the influences of Wall Street. One only has to look at the revolving door between the Fed and the big banks to know that. Disclosures on TARP funds confirm this.

It is nothing short of cruel and criminal for Congress to stand idly by while the life savings of Americans are inflated away to nothing. It is high time Congress insist on getting complete information on what the Fed has been doing, and for whom. My hope is that exposing the truth will demonstrate the insanity of the status quo and more people will call for sensible changes, such as legalizing competing currencies.

Read more here.

[handyman2]

I am not sure what the competing currencies would accomplish but I do believe the independent nature of the fed should be reigned in.

[traelin0]

Jan 12, 2011 0:21:47 GMT -5 handyman2 said:

I am not sure what the competing currencies would accomplish but I do believe the independent nature of the fed should be reigned in.

People and businesses should be able to choose if they want to use a worthless piece of paper as their medium of exchange or not. Reopen private mints to the issuance of a medium of exchange and let's see how great the govt. paper is. Let Uncle Sam really see that the buck does indeed stop with them.

[handyman2]

Tre: The question is what would back the private mint paper? Secondly it is against the law for states to print paper money. I understand the point but do not see how it would work. In our early history all currency that was tradeable across the country was gold and silver coinage. There was paper but only had value in a local area called script.
Many early mining companies used this but it was only good at the company store and the railroads did this and again it was only taken at the company place of business.

[traelin0]

Jan 12, 2011 11:08:32 GMT -5 handyman2 said:

Tre: The question is what would back the private mint paper? Secondly it is against the law for states to print paper money. I understand the point but do not see how it would work. In our early history all currency that was tradeable across the country was gold and silver coinage. There was paper but only had value in a local area called script.
Many early mining companies used this but it was only good at the company store and the railroads did this and again it was only taken at the company place of business.

The private mints wouldn't be printing paper in this age of worthless paper. And you're right, states can't coin money. But privately owned mints should be able to. Give the govt. competition and watch what happens. You can't have free markets unless you have free markets in money.

[fairlycrazy23]

"In a free-market world — "Libertopia," if you like — the market would probably once again return to gold or silver (or both) as the actual money. Private-sector mints would take the metal(s) and stamp convenient and hard-to-counterfeit coins, in convenient denominations. So the average shopkeeper wouldn't need to keep scales on hand to weigh chunks of gold and silver every time a customer bought something.

Furthermore, banks would accept deposits of the commodity money (or monies) and give redemption certificates (i.e., banknotes) or checking-account deposits in return. With this innovation, customers wouldn't need to lug around pounds of gold when making a large purchase, and they wouldn't need to buy expensive vaults for their homes"

From: mises.org/daily/4956

[❤ mollymouser ❤]

. . o O (I like the phrase "Libertopia" )

[handyman2]

How would this work across state lines with competing banks?

[traelin0]

Jan 12, 2011 16:55:00 GMT -5 handyman2 said:

How would this work across state lines with competing banks?

The same way it did before the private mints disappeared. The reputable private mints' money was accepted everywhere. A one ounce gold coin struck by Bechler was recognized as honest.

[wyouser]

Is Virginia toying with challenging this currency thing right now...I read something about a bill in the virginia legislature about an emergency currency in the event of a collapse in the federal reserve currencye

[wyouser]

I think this was posted on Newsmax but I appear to have deleted the article

[fairlycrazy23]

We can still keep the dollar and eliminated the fed. The treasury could still mint/press currency, they would just be replacing worn out currency and not creating 'new money'. We just wouldn't have an entity with an infinite checkbook buying and selling stuff to control the amount of money. It seems like the greatest depressions and inflations occurred after the fed was enacted. I don't know if we would need a period of time for the fed to sell its assets (probably decades) or just hand them over to the US Government.
It should take an individual act of congress to increase the money supply.

I think the FDIC is a good idea, although it should probably be privatized.