Friday, September 4, 2009

Should Congress Run Monetary Policy?

Lew Rockwell answers the question in a very provocative comment. I repeat it here in its entirety:
Congress Should Run Monetary Policy, So Long as There Is One
Posted by Lew Rockwell on September 4, 2009 12:14 PM
I appreciate congress and especially the house of representatives, and not just because Ron Paul is in it, or because I worked for it. Yes, it’s part of the state, and therefore based on violence against the innocent, and therefore fundamentally evil. And indeed, most senators and congressmen make mafia capos look good. But given the state as constituted in the US, congress is the least-evil branch. All the worst parts of the federal government are in the presidency, from the tax police to the EPA, from the CIA to the military. And the supreme court is nothing but a justifier of executive power. There is a reason that we fear dictators more than legislatures. There is a reason that bad guys from Lincoln to Wilson to FDR, and every Leader since, have sought to concentrate more and power in the fuehrership. Congress is the only branch of government that we, unlike Goldman Sachs or David Rockefeller, have a chance of influencing. See Ron’s Audit the Fed bill for an example. The neocons, like other evil forces in previous times, constantly attack the legislature to empower the presidency. We now have that nightmare of every classical liberal: an executive who can declare war on his own, and secretly imprison and torture anyone he calls a witch (sorry, terrorist). He is a dictator. So, given this, and given the fact that the constitution places monetary authority in the congress, and that it may not delegate this legally anymore than it can delegate the war-making power, should monetary decisions be made in secret by a presidential agency, the federal reserve, or in at least semi-public by the congress? Special interests would then run monetary policy, you say? They do now, in secret. There should be no monetary policy, or any other kind of policy, of course. Policy is another name for unjust coercion. But so long as we have fiat money and a central state, End the Fed and put congress in charge. Then we can work on competitive currencies.
Wow. I take this comment from Rockwell as coming from the world of realeconomik thinking rather than an ideal theoretical model. In the world of realeconomik, we have a Federal Reserve and a Congress--so Rockwell makes a proposal in this world: "Let Congress run it."

He then justifies this by a theoretical versus a realeconomik switch. Most of his argument is the theoretical one that Congress is less evil than the forces of power coming out of the executive branch. On a theoretical level, this may be generally the case. But we are talking realeconomik here, not theoretical odds. We are talking Ben Bernanke versus this Congress which is run by the likes of Nancy Pelosi and Barney Frank. A Congress that gains votes by passing out dollars.

Should we really turn the printing presses over to them? Remember, we are talking realeconomik here, Ben Bernanke versus this Congress.

Yeah, maybe if many read Ron Paul's book End the Fed, or if inflation hits 10%, the public will yell and scream, the way they are over Obamacare. But remember, many who are yelling and screaming about Obamacare are on medicare and don't see a damn thing wrong with medicare. Can we count on such an uninformed public to put the right kind of pressure on Congress, when it comes to money printing?

As I have said before, Bernanke wants to rob us by dishing out dollars to the elite, but there are elements in Big Government (and some of these elements are in Congress) who want to print and print money, they don't have to answer to Goldman Sachs, but they have to answer to the parts of the masses that think government is one big piggy bank. Goldman probably cashed in chips worth just under $20 billion, are we anywhere confident that Congress would stop anywhere near this number, if it was in charge of money printing?

Yeah, sure, if the stars are aligned properly, in the world of realeconomik the boobsie might awake to pressure Congress to stop printing money. But it is a crap shoot with about 10,000 sided dice, with only a few possible positive outcomes out of all the combinations.

Based on hardcore realeconomik evaluation, Berrnanke's actions to date (He hasn't printed any money since March), appear to be a better option than this Congress running the show.

But the fact that this discussion is even occurring between two not very good options, means that we need to find a way to, if not abolish the Fed, then at least return to some sort of gold standard. In the realm of realeconomik, agitating for a return to the gold standard, is a much better alternative than counting on a non-inflationary Congress. "Be Bold and Let's Return to Gold" should be the rallying cry, not "Give the Press to Congress."

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