Friday, September 23, 2005

The time has come

The Federal Reserve, under the leadership of Alan Greenspan, raised short-term rates again this week, under the guise of fighting inflation. Of course, this action will slow an already sluggish economy, but Greenspan and his fellow central bankers simply don't care. Republican Senator Jim Bunning blasted Greenspan as being insensitive to working families. The senator is correct, but he doesn't go far enough. It is time for Congress to abolish the Federal Reserve System.

This sounds like a extreme step, but it isn't. The Fed's ostensible purpose, combatting inflation, is an absolute farce. The Fed causes inflation, it does not prevent it. If federal policy makers really wanted to fight inflation, they would abolish the Fed and return America to a gold standard. Incidentally, as an economist prior to assuming control of the Fed, Alan Greenspan favored a return to the gold standard, so the idea is hardly radical.

Thomas Jefferson, were he alive today, would be horrified at the power the Fed has over the country. He once said:

A private bank (which is what the Fed is) with the power to issue unlimited currency is a greater threat to the liberties of the people than a standing army. We must not let our rulers load us with perpetual debt.

This is exactly what has happened, as spendthrift Congressmen and Senators have used the Fed to cover their spending by "monetizing" the debt; basically the Fed simply adds money to the existing money supply to cover the spending, increasing inflation in the process. This practice must end, and it will end if the American people demand accountability from their elected officials.

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