The Federal Reserve

To most Americans, it seems that "Federal Reserve" is just a name on the dollar bill.

Most Americans have no idea what the central bank does to the economy or to their own financial lives. Most of us do not understand why it was founded or how it operates. We also do not realize that sound money and banking could end the rampant inflation and business cycles, which the Federal Reserve (aka "The Fed") generates.

Yes, I fully realize that this sounds like a conspiracy theory. I can only ask you to truly open your eyes and ears to how the Fed works. I studied economics in college, and at that time, I was taught that the Federal Reserve was a necessary tool in managing the money supply. I was instructed that the Federal Reserve takes appropriate actions to "even out" the business cycle.

I know from my own research and experience that none of the above is accurate. In fact, it is just the opposite. We do not need the Federal Reserve to manage the money supply. It's actions do not "even out" the business cycle -- the Fed's actions CAUSE the business cycle.

Under Fed Chairman Alan Greenspan, the Federal Reserve played a major role in generating the housing boom by setting interest rates too low for too long. The Fed creates these wide swings in interest rates, which induces a violent "boom-bust" type of economy. Right now, they are playing with interest rates (and the money supply) once again.

The Fed is the reason that oil hit $ 100 barrel, gold is closing in on $ 1,000/ounce, and wheat is up over 300% in a few years. The Fed is attempting to inflate it's way out of the current financial/housing disaster, and commodities (real assets) have enjoyed the ride. It is not that oil, gold, and wheat became worth so much more -- the big problem is that our dollar has become worth so much less.

The Federal Reserve is destroying the value of the dollar. If you have worked hard to save dollars, they are effectively robbing you every single day. Personally, I am tired of being robbed. I do not want the Federal Reserve to exist.

Please do yourself and every American a favor -- educate yourself.
http://en.wikipedia.org/wiki/Federal_Reserve_System<BR>
Money, Banking, and the Federal Reserve
http://video.google.com/videoplay?docid=-466210540567002553 (41 min)

Congressman Ron Paul on the Federal Reserve (5 min)

"Is there actually as much money printed or in circulation as there is earned money in the world/country?"

Probably without really realizing it, you are getting to the root of the problem.

The simple answer is No. The reason is that banks and the Federal Reserve can create money out of thin air, by creating debt. You don't need to print money. Using a system (known as fractional reserve banking) you can create a loan, enter the loan amount in an account -- and boom, you have "money." Our money is not backed by gold. If it was, the banking system wouldn't be able to play all these games with money.

Americans and especially the US government are living way beyond their means. We are, in fact, spending money we have not earned. The reason for this is Americans are carrying a massive amount of debt. This money, created out of nothing, has dramatically increased the money supply and contributed to our high rates of inflation.

Why do you think the US Dollar has declined against every major currency (except the Mexican Peso, I believe)? I sometimes hate it when people say "Basic Supply and Demand," but that is the case here. We created such a large supply of US dollars, that we are flooded the world with them. Each dollar becomes worth less, compared to other country's money.

That is why everything constantly gets more expensive, in dollar terms. We accept it as "Well, that's just inflation!" Unfortunately, most of us do not realize WHAT ACTUALLY CAUSES INFLATION. Until we do, the federal reserve and the banking system will try to keep playing the game.

Money can be created by the Banking System -- not just the US Mint.
http://video.google.com/videoplay?docid=-9050474362583451279

How about this:

"We created such a large supply of US dollars, that we are floodING the world with them."

"the fed isnt perfect but there is no better system in practice that is better"

Does this make implementing a better system impossible? By this logic, because no better system currently exists, it cannot exist. That is a logical fallacy. Moving on.


"a central bank is a good thing"

This is clearly your opinion. Duly noted.


"deflation is worse than inflation, even in extremes, like we are experiencing now"

You find our current situation to be extreme inflation? Hyperinflation will involve oil at $ 150 or more in my view. It's possible, but only with the help of the Fed.


"socialism works with closed borders, a nationalistic pride, and a relatively small population."

I'm not talking about socialism. You are. And I have no idea why.


"We are credit hungry hungry capitalists, and if you really want to blame someone for any credit crunch begin by looking in the mirror. Every time you you 'expect' govt to take care fo something its you who gives them more power"

I don't want government to "take care" of much at all. The government that governs the best, governs the least. I think you misread something, or didn't read it at all. I want government to do less...much less. The Fed declares the interest rate. I don't think it should. No group should have that much power.

Clearly I'm wasting my time here...Good day.