U.S. Rep. Kevin Brady (R-Texas), chairman of the U.S. Congress Joint Economic Committee, this week re-introduced the Sound Dollar Act to reform the Federal Reserve.
He also introduced the Centennial Monetary Commission Act which - on the 100th anniversary of the Federal Reserve - establishes a national bi-partisan commission to review the institution’s conduct of monetary policy over the past century and make recommendations to Congress on its future role.
Brady's intentions might be sound but his understanding of economics is flawed, resulting in a poorly designed goals of the bill.
“In order to preserve the strongest economy in the world throughout the 21st Century, we need to get the role of the Federal Reserve right,” Brady said. “A sound dollar is the best foundation for creating jobs and growing America’s economy. And, frankly, keeping prices stable over the long term is truly the only outcome that monetary policy can impact.”
As Murray Rothbard has taught, the problem with the Federal Reserve is not limited to their policies creating price inflation, but in their creation of money out of thin air in the first place. In his important book, America's Great Depression, Rothbard showed that the period leading up to the stock market crash and great depression was not a period of strong price inflation. However, the period of the 1920s was a period of strong Federal Reserve money creation. The increase in productivity during the period muted the price inflation. But the money creation distorted the capital structure and ultimately resulted in the 1929 stock market crash and start of the Great Depression.
Brady, who supports a "stable" price level, is thus calling for a policy prescription that does not strike at the heart of the problem: money creation which distorts the capital structure. Indeed, a policy of price stability ignores the very benefits of a fixed money supply, which would not distort the capital and further which would result in a general downward trend in prices that we see now in only lightly regulated, highly productive sectors such as the cell phone industry, the television industry and the personal computer industry.
We don't need a bill that calls for a study of how to keep prices stable, we need a bill that calls for studying how the capital structure of the economy is distorted by Fed money creation.
They steal from society the same way a counterfeiter steals from his community. There is just never enough discussion about the immorality of this system.
ReplyDeleteWe simply need a constitutional amendment that bans the creation of a central bank and repeals the federal reserve act. Further part 2 of that amendment needs to be a codifying of limiting banks to lending out no more than the funds they have on deposit and that the depositors have given permission to be lent on their behalf.
ReplyDeleteAnything else is a pointless waste of time and avoids the real problem: The banks are committing fraud.
Well said, Sir!!!
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