Whatever the Fed is doing, it is hurting us badly. We have to stop the Fed.
The Fed is, of course, the Federal Reserve. It is a private corporation chartered by the United States. It prints money and provides the cash through loans to banks and sometimes (but lately, increasingly) to the Federal Government.
Why does the Fed have the special honor and privilege of printing our money? Why can we only obtain said money by borrowing it? This is, of course, an absurd arrangement and it needs to stop.
Let’s pause a moment to discuss what money is and what money is not. Money is an idea. Anything can be money, literally anything. Money is something that each person chooses for themselves to put value in. Because a lot of people put value in money, other people do the same. For instance, I would like dollars because other people want dollars and I can use those dollars to do things like give me food or fix my car. That makes dollars money. But suppose one day everyone stopped wanting dollars. What good would dollars be? They would be no good at all. A good example of this is the pieces of paper in the game of Monopoly. No one considers that money except for the purposes of playing the game.
Money exists because we, the people, say it does. A dollar has value because there is someone out there who gives it value. This is the basis of money. Money is really something created by and sustained by us. It is our own invention.
The Constitution of the United States gives explicit power to Congress to print money. Up until the Federal Reserve was formed, Congress held on to that power. During times of trouble, when more money was needed, Congress printed more money. When there was too much money, Congress could tax it back. In this way, Congress could control the money supply. It is the truth that for much of our history Congress was very conservative with its power, insisting on using a gold and silver standard for our money. While gold and silver are a good form of money, they are money as much as pieces of paper are money. In the ’70s, the Federal Reserve took us off of the precious metal standard and just printed as much money as it wanted.
A sane monetary policy this is not. Why do we trust a small group of people to make decisions that affects everyone? Shouldn’t everyone have a say in how much money we print and what we use to back our currency? That’s what the Founding Fathers thought, and so they kept monetary policy in the hands of Congress. If there was too little currency, the people would demand that Congress print more, or change what backed it. If there were too much money, then the people could demand that Congress limit its supply. How would the people know if there was too much or too little? They can look at the prices of the things they buy. If they are going up, we have too much money. If they are going down, too little. Prices going up are a problem in and of itself, but prices falling is the worst problem imaginable. It compels poor people to spend their money too early, and pushes all the money into the hands of those who can wait the longest. Manufacturers shut down, retailers close their doors, and the economy goes desolate. This is called deflation, and is the worst possible thing that can happen in an economy. Inflation, on the other hand, is problematic because it discourages investment and saving. It gives an advantage to those who are good at math, and leaves poor people wondering why they are earning more money but not living a better life.
I propose the following resolutions to our current economic problems.
First, abolish the Fed. Have the Federal Government take over the Fed and assume all of its assets. This is perfectly moral in my mind because the Fed is using the power of Congress to create whatever assets it has. It is, and should’ve been, a creature of the Federal Government from the beginning. In so doing, a large chunk of the Federal Debt will disappear.
Second, end fractional reserve banking. This allows banks to effectively print their own money. They do so by loaning out money they have more than once. While this should have the effect of helping the economy, it does so by making debtors out of the American people. Banks should have no more power to print money than anyone else.
Third, have congress print all the money the country needs to keep our currency stable. What should congress do with this money? Spend it, of course. What is the fairest way of all to spend it? I would say it is simply writing a check to each citizen of our country. I would perhaps expand that to each resident of our country. This can appear as a refund for taxes. How much money to create? It’s pretty easy to calculate: Take the rate of growth times our economy’s size and print that much money.
Fourth, eliminate taxes. All of them. Where will congress get money to spend? See step 3 above! Taxes have the effect of diminishing the money supply. It also diverts economic action from its most productive to its least productive. If we were living in an age where productivity didn’t increase every year, then taxes would make a lot of sense. But we aren’t. Taxes are hindering progress. It is shutting down ideas before they even start. We don’t need taxes to pay a debt we don’t have. We don’t need taxes to print money.
Some people want taxes to “hurt” the rich. Seriously consider that sentiment. Why do you want to hurt someone else? In what universe does using government’s power to hurt someone who is doing something legally and lawfully moral? You may think it is immoral to be rich, but consider yourself. You’re likely in a category of wealth that the world has never seen before, and so you suffer from whatever moral failing as any of the rich do.
Note that the net effect of the above is that the only way the money supply can increase to keep up with demand (economic growth) is to have congress print more money. Congress must print this money, and they must spend it, otherwise, our economy will experience deflation. If congress messes up and prints too much money, then we get inflation. Suppose we do get inflation. What does congress need to do? Print less money, or stop printing it altogether for a little while. If they print too little, what happens? Prices fall, and spending slows. What should congress do then? Print more money. How simple can it get?
Also note that by eliminating taxes and eliminating fractional reserve banking, the full economic power of our nation can be unleashed. If we take the additional step of reducing regulations to almost non-existence, we get the added bonus of eliminating the requirements for countless bureaucrats along with the problems they cause. This will also further unleash our full economic growth potential, which demands that congress print even more money to keep up with growth.
With the economy booming, and congress frantically looking for ways to spend the money to prevent deflation, they’re going to settle on the one obvious solution: Simply cut people checks. Whether they give the money only to the poor or the elderly or the young or all people together, it hardly matters. As long as the money gets out among the people, it will be spent, it will further boost economic growth, and it will keep the people happy, and help where it is needed the most. This is why the House of Representatives was deemed to be the one that writes budgets. Since they are elected every 2 years by the people, they are careful to consider the immediate political impact on their district. What member of the house doesn’t wish they could simply write checks to their constituents?
Imagine living in this kind of society. There are no taxes. There is little regulation. Whatever you want to do to make money, as long as it is legal, you can do. If you mess up, that’s OK, congress is going to write you a check, and maybe a handsome one.
Suppose we reach a point where we can’t print and spend money fast enough to keep up with growth. I would say we would have reached to singularity where we no longer need money at all. Anyone who wants to spend money can get a hold of as much as they need. Anyone who wants anything can get a hold of that as well. We’ll be living in an era of unprecedented wealth and growth, where words like “poor” will lose their meaning.