Thursday, March 19, 2009

Why the Fed sucks

Headline from The Wall Street Journal: Fed in Buy-Bond Binge to Spur Growth. The first sentence: The Federal Reserve announces it will buy hundreds of billions of U.S. securities and other mortgage-backed securities. I have a question for Ben Bernanke: On what do authority do you do this? The Constitution says: "All bills for raising Revenue shall originate in the House of Representatives" (Article I, section 7). There is no clause saying "Except when the Fed determines it's a good idea." When did a constitutional republic become a banking oligrachy?

Even if you don't care about the Constitution, you should care about inflation. The Fed overall has added 1.5 trillion into the economy to (allegedly) solve our economic crisis. When you add this sum to the two wars we're in, the "stimulus" bill, and the already massive deficit, you've got a recipe for runaway inflation. Nothing good–I say this with certainity—can come out of massive inflation. I hasten to note it didn't work well in Germany in the 1920s.

Do I have a solution to this crisis? Yes, it's simple: stop spending money that we don't have. Crazy, but it just might work. And let's abolish the Fed before it bankrupts us.

8 comments:

Rodolfo said...

is it really that simple? the way i see it there's nothing wrong with spending. it's like borrowing money for school. yes you will acquire debt but you're ultimately investing in yourself. why not judge each spending bill on its merit instead of having a philosophy that we should *never* spend at all?

Rod said...

Bernanke answers your question re: authority in this clip.

http://www.youtube.com/watch?v=E9DgMG-_6Ls&eurl=http://www.google.com/reader/view/&feature=player_embedded

Rod said...

the more i think about it this is a really important point. i mean if the argument by Paulites is that there's nothing in the Constitution about the Federal Reserve yet the law of the land gives Congress power to grant the Fed power then what's the issue. where in the Constitution does it explicitly state we need the FAA or NTSB?

Jack Davis said...
This comment has been removed by the author.
Jack Davis said...

Rodolfo, I'm not against all spending, just wasteful spending. Depends on what the spending is on.For example,I support national health insurance, but I do not support using taxpayer dollars to bailout corporations.


Rod, your link doesn't work. The constitution explicitly states "No money shall be drawn from the treasury, but in consequence of appropriations made by law" (Article I, Section 9). I'm not saying the Fed is unconstitutional per se. I am saying that when it creates money without authorization it is acting illegally.

Rod said...

actually i figured that's your true position but my reactionary nature gets the better of me sometimes. for all i know paul could be right about everything. but the specifics (if he has any) don't get projected out very well. at least from the clips that i see. he spouts off (and everyone is guilty of that too) principles when what i want to hear is details. i think there's a danger when you got the mindless mass recycling their favorite soundbytes without any real thought behind it.

i assume you have a greater intellect than the mainstream. i just hate for that intellect to get lost in sound bites.

rod said...

just google michelle backman questions geithner or ron paul questions geithner bernanke. it's making the rounds of most blogs so you'll prob come across it at some point.

Rod said...

i just watched an interview with paul on young turks. in it paul refuses to acknowledge that regulating certain aspects of the economy might be smart and instead insists on calling it fraud. to me there's very little difference b/w regulating the markets and creating laws against fraud. that should be what regulators are doing anyway isn't it?

most of the developing technology that will propel the world in the future will require credit. paul proposes (if i understand correctly) that spending on research is wasteful spending. this seems to be the position of most prominent repubs like when jindal mocked volcano research. i suspect paul and most free market fundamentalists would have a hard time igniting innovation when they refuse to release *counterfeit* money to society.