The US Central Bank Must Go

The Federal Reserve has committed another 600 billion dollars to buy government bonds. A Chinese monetary policy adviser, Xia Bin, stated in a Reuters column today, “As long as the world exercises no restraint in issuing global currencies such as the dollar – and this is not easy – then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament”.

Despite the Federal Reserve Chairman Bernanke’s assurances that the Fed would not monetize the debt that is precisely what was approved on November 3rd. This means we are giving ourselves an “IOU” to support our excessive government spending. As this gets more out of control it will lead government bureaucrats to justify taking more of our wealth and, consequently, our liberty. The time to limit government is now before it is too late.

There are three concerns with the monetization of our debt: one, it may signal that foreign lenders are reluctant to buy US bonds; two, printing more money devalues the money currently in circulation; and, three, it is the first step toward hyper-inflation. On a more sinister note, it does fit into George Soros’ view that the US dollar must undergo a controlled devaluation. None of this is good for the American citizen and is particularly harmful to those of us on fixed incomes. In the case of Soros, he is an international Progressive bent destroying the US Constitution. His recommendations for our currency do not bode well.

In the blog posting “Bread and Circuses” I pointed out:
Today the US Dollar is fiat money; it is not backed by any physical asset (collateral such as gold or silver). While a bank will not consider you or me for a loan without collateral, Congress only need pass another spending bill or increase the debt ceiling. A fiat dollar has no inherent value. In 1913 when the dollar was tied to gold, a dollar was worth a dollar. Today, a 1913 dollar worth 100 cents is only worth 4 cents. Get the picture?

With the large number of Progressives in Washington DC it is not ill-conceived that the Federal Reserve supports the Progressive agenda of a world economic order. During the TARP and stimulus bail-outs billions of US tax dollars went to companies and banks outside the United States. An important first step is for Congress to audit all of the Federal Reserve operations and remove their veil of secrecy. Currently, the Fed answers to nobody but tampers with our currency at will.

Thomas Jefferson stated, “Paper is poverty,…it is only the ghost of money, and not money itself.” In Article 1 Section 8 of the US Constitution we find that it is up to the Legislative Branch alone “to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures; to provide for the punishment of counterfeiting the securities and current coin of the United States...”. Forget the parsing of lawyers; what does common sense tell us?

A majority of our forefathers did not want a powerful central bank. Commodity money or money pegged to gold and silver would not need a central bank to control inflation and deflation. Fiat or paper money has an artificial value that is manipulated by the Federal Reserve, foreign central banks, and international currency speculators. Although an argument for another time, I maintain that when the dollar was no longer pegged to gold it became counterfeit currency as defined by the Constitution.

For now, if we want economic security and a stable dollar, we must control the Federal Reserve, reduce the size of Federal and State governments, and drastically reduce spending. Goodbye foreign military adventures, goodbye grants and aid to foreign countries, and goodbye earmarks. And that is just the necessary start. One thing is certain, the very greedy and irresponsible actions that led to our economic crisis were known to our Founders. They structured a Republic to counteract man’s worst instincts. Instead of embracing this, we have allowed the structure to be compromised and we are now witness to the effects of rampant corruption. If we have truly awakened, our civic duty has only just begun.