THIS BLOG WILL TALK ABOUT THE PROBLEM WITH THE FEDERAL RESERVE’S EXISTENCE AND THE ASSUMED NOBALITY OF THE INSTITUTION
The Reason Most Economists are Keynesian Economists…
Is not because they believe it is the form of economics that best works it is because…
From the 1940’s to the early 19080’s the most widely used textbooks used for the study of economics for universities were written by Samuelsson. All of the rest quickly made their textbooks Samuelsson-clones for the sake of their sales.
So most economic journalist and decision makers were taught in Samuelsson economics. Samuelsson was a fellow disciple of John Maynard Keynes.
The a late edition [1989] of the Samuelsson text book said this about the fed,
The Federal Reserves goals are for steady growth and national output and low-unemployment. It’s sworn enemy is inflation. If aggravate demand is excessive so that prices are being lifted up the federal reserve board-they want to slow the growth of the money supply thereby slowing aggravate demand and out-put growth.
If unemployment is high and business is languishing the fed may consider increasing the money supply thereby rising aggravate demand and augmenting output growth.
That makes the Federal Reserve sound like a independent working machine that fights for the good of the economy. And I am sure that their (the fed) hearts are in the right place but they are not independent and they are not working for the good of the economy—This blog with show that…
POLITICIZAITON OF THE FED.(Not independent)
The Federal Reserve constantly reminds the public that they are not politicized. However history, the best teacher, tells another story….
The national bank of Andrew Jackson’s day gave 100,000 to Henry Clay for his campaign against Andrew Jackson.
FDR appointed Mariner Equises as head of the Federal Reserve. This man had no experience in economics or a college degree, even. And he was also a huge advocate of deficit spending. FDR wanted deficit spending, coincidence? Mr. Equises was a political yes man.
This way by appointing this man FDR for all practical reasons ran the fed.
Eisenhower wanted slower money growth–he got it. Fed grew the money supply at 1.3% during his administration.
Kennedy came in and he wanted faster money growth–he got it. Fed grew the money supply at 2.31% during his administration.
Lyndon Johnson, for the war, of course wanted a faster rate of growth so he grew the money supply so it was at 5%. This establishes that when it comes to the Federal Reserve in power, there is no economic difference between Republicans or Democrats. Sorry Obama fans but, George Bush was a Keynesian and so is Barrack Obama. So how much change can we really expect?
This all under the same Federal Reserve chairman William Shezny Martin, by the way. The idea that all these changes happened under one Federal Reserve chairmen proves that the Fed is clearly politicized. So although the Fed claims they are independent of political influence they are clearly not.
Carter was scared he wouldn’t get re-elected for office so in fear of this he had the Federal Reserve spike the inflation rate from an already high 8% to a thundering 16.5% in just the last five months of his administration. His hope was this would create fast illusionary wealth in the country making it seem that he was in control.
It IS NOT FOR THE GOOD OF THE ECONOMY…
Price level of goods was about the same during the age of the constitution as in 1913, under the Gold Standard.
But since the Fed’s beginning in 1913 the price levels are at least 15 times more. The value of our dollar has depreciated 97% since 1913. These facts prove how the Federal Reserve discourages savings because if you had 10,000 dollars in 1999 for a college fund—you now only have 7,000 thanks to all the bailouts and cheap credit bubbles of Greenspan and Bernanke.
Multiple administrations have sought steps to remove the gold standard. And since the removal of the limiting standard we’ve had a lot more severe up and downs, like never before; We have had some sort of recession, by ratio, every 3.4 years since 1913. In the entirety of nineteenth century we had I believe 11 recessions and, that’s being generous because I remember the figure being under ten.
These items (such as the 97% decrease in value of the USD), which are of a negative value, cannot, in any respect, be the product of a “too” free market. The reason for this conclusion is that in the 19th century the market was as free as it has ever been. This is especially true in the times after Andrew Jackson’s ending of Hamilton’s central bank. Currencies competed with each other and gold was abundant(which restricts inflation.)
The time after Hamilton’s bank the country was run by gold/silver/competing bills and with no economic interventions from government. During this time there were seldom recessions, no dramatic price changes, no external wars and, the currency was something that solely had to do with the market and nothing to do with the government. Thus this chaos we now see could not have been derived from the free market that showed no negative effect on society in the 19th century. In fact the population, in the nineteenth century jumped more than ever in history. The only item that could have possibly supported this vast growing population was the gold standard because it gave the growing poor demographic more buying power because inflation was seldom, under gold. Also, if you were in the growing middle class—you were able to save you dollar without worry of it loosing buying power, under gold. Austrian Economics is what saved the growing population of the nineteenth century. There is no way our twentieth and twenty-first century form of Keynesian Economics could have supported such a population with such perpetuated inflation.
To argue otherwise is an argument that, to uphold, must ignore history.
And ignoring history is in of itself foolhardy and fallacious and it is what we are currently good at.
In all cases ignoring history has never proven wise. Like in sleep, knowledge is gained through history.
According to recession.org/history these are all of America’s notable economic declines:
Late 2000’s Recession
Early 2000’s Recession
1990’s Recession
1980’s Recession
1970’s Oil Crisis
Late 1960’s Recession
Early 1960’s Recession
Late 1950’s Recession
Early 1950’s Recession
Late 1940’s Recession
Recession of 1945
The Great Depression
Recession 1926
[RECESSION OF 1921]
Post World War I Recession
Panic of 1907
1870’s Recession
1890’s Recession
Panic of 1857
Panic of 1837
Depression of 1807
Panic of 1819
Panic of 1797
America has been around for 233 years. The Federal Reserve has been around for ninety-six years. In that time that have accounted for fourteen of America’s great recessions, being 60%.
We had truly free-market society for roughly fifty years in the mid 19th century and in the early twentieth century. In that time there were four recessions. And the Panic of 1837 was actually because people lost confidence in banks because banks were attempting a move to paper currency.
Thus if they would of held true to the commodity then really only three recessions would be under the belt of the free market society. But notice yet how even that recession was a product of the people’s s confidence but not that of the corrupt, murky, secretative, governmental organization, the Federal Reserve. So really in their recessions, at least the glass was half full.
This is the one other recession that the exists under the time of out free market society in the nineteenth century:
The Panic of 1857 lasted longer than most previous U.S. recessions had. Basically, the failure of a huge life insurance and trust company, which was called the Ohio Life Insurance and Trust Company, spurred a huge drop in European speculation for the U.S. railroads.
United States banks, which had lost much of their confidence, began a downward spiral that business began to feel the very first year of the recession. In the first year of the recession alone, over 5,000 businesses folded. Unemployment soared as people lost jobs all over the country. In fact, the labor scene was so bad that there were regular protest meetings held in urban areas after the businesses failed.
This recession helped prove that other economies, not just the U.S. economy, play huge roles as far as what happens on U.S. soil in terms of bank confidence, labor, and business survival.
This recession ended in the December of 1858; it lasted 18 months. In a free-market society when companies were going to fail they were going to fail. This makes companies more unwilling to fail as they then know that if in a free market society you fail you actually fail. There’s no one to pick you up and say “oh hey go give it another go-around.”
The consequence is fatal for capitalism if corporations no longer fear failure. The consequence is also corruption will begin to thrive like ever before. The fear of failure is what drives competitiveness in a financial market.
If those on top are profiting off of their failure and are being kept alive despite their failure then they have little incentive to get into a truly competitive nature. This nature of course is what gives people the lowest possible prices on consumer goods.
The Federal Reserve may boast that they subsidize for this lack of competitiveness by orchestrating the interest rates. Well there is two obvious things wrong with such a statement coming from the Federal Reserve.
1. False interest rates that with Greenspan and Bernanke go as low as 1% cause a ripple effect of misplaced confidence; people placing risk where they other-wise wouldn’t have placed it. E.G. our current depression.
2. The very essence of Keynesian Economics, what the Federal Reserve represents, discourages saving and encouraging mass spending and borrowing. Through their philosophy of inflation cures inflation the value of our dollar has depreciated 97% in value. Thus if you saved in a family fund in 1913 of $400,000, you would now only have $10,000….These two items are not a healthy subsidy.
In the transcripts of Congress the general consensus of the advocates for the bill that passed the Federal Reserved into existence was that they wished America to pursue something of an empire. They did not want America to be restricted to a republic of our constitution. They wanted to be an empire that would rival that of the British Empire. And they knew they needed a central bank to finance that.
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