Trump has indicated the Fed will come under a complete internal/audit review within the 1st 100 days of his administration. That's a good first step towards understanding their money policies and how those effect our dollar. It is needed for exposing the corruption and cronyism of the central bank in order to spur legislators to take more meaningful action.
There are 4 other critical reforms needed to end the Fed's distortions of our free enterprise economy.
Remove the Fed’s Dual Mandate Once upon a time, the Fed’s purpose was to keep the money supply stable and prevent inflation. Over time, however, that simple mission has been expanded to include fighting unemployment, a goal that is not only impossible to achieve with monetary policy, but which is fundamentally antithetical to a stable money supply. Under the pretense of fighting unemployment, the Fed has been able to engage in dangerous loose money policies that enrich banks at the expense of the rest of us, distort markets, and pave the way for major recessions like the one we saw in 2008. It’s time to end the dual mandate and relegate the Fed once more to its primary duty of stabilizing the money supply.
Enact Rule-Based Monetary Policy Currently, the Board of Governors of the Federal Reserve can pretty much do whatever they want with regard to monetary policy. They can expand the money supply, or contract it arbitrarily based on their own discretion, and are not bound by any restrictions on their authority to act as they please. This is unwise for a couple of reasons. First, due to the speed at which economic change occurs, and the time lag between the implementation of a policy and its effect, the Fed is often in the position of reacting to conditions that will have changed or disappeared by the time the policy actually happens. This mis-timing of Fed action can result in over corrections, or even the opposite of the intended effect.
Second, discretionary monetary policy introduces a high level of uncertainty for investors, making it more difficult for them to use their money productively. If you have no idea what the money supply will be tomorrow, it makes it hard to calculate interest rates, or determine whether a particular investment is a good one, and that uncertainty ends up harming the economy as a whole. It would be better to set a simple rule such as “increase the money supply by 1 percent each year” (or better yet, don’t increase it at all) than to allow capricious policies at the whims of the Governors.
Repeal Legal Tender Laws and Legalize Competition If you look at the dollar bills in your wallet, you will note that they bear the inscription “This note is legal tender for all debts public or private.” This means that, if you operate a business, you are legally required to accept U.S. dollars in payment for your goods or services. We know that competition makes everything better, but it’s hard to compete with a product that people are legally compelled to use.
The repeal of legal tender laws would allow competing currencies like Bitcoin or even gold and silver to flourish. It’s entirely possible that many of these currencies would fail, but at least it would give people an option to back away from the dollar when bad policy decisions shake the confidence in its value and stability. Want your money backed by a commodity like gold? That'd be an option for you. Prefer an entirely digital encripted currency? Come on in, there’s room for you too. A free market in currency would let the people decide which payment system works best, instead of the Government dictating it to them.
End the Fed Once we have a functioning market for competing currencies, we can and should get rid of the Federal Reserve altogether. It’s hard to imagine now, but before the creation of the Federal Reserve in 1913, it was common for private banks to issue their own currencies, without having to be told to by their government overlords. Somehow, people found a way to conduct transactions and do business, during perhaps the most rapid expansion of innovation and prosperity in history I might add, without the need for a central bank.
It's encouraging that auditing the Fed remains a popular subject for discussion on the Hill, but it needs to be stressed that this is only the first step down a long road to create a truly free market in currency, and a money system that is truly sound because it is backed by solid currency.
(Author is noted Economist Logan Albright who is an economics researcher and serves as Director of Research for Free the People).
See more at: https://www.conservativereview.com/...form-the-federal-reserve#sthash.PRc8yI84.dpuf
There are 4 other critical reforms needed to end the Fed's distortions of our free enterprise economy.
Remove the Fed’s Dual Mandate Once upon a time, the Fed’s purpose was to keep the money supply stable and prevent inflation. Over time, however, that simple mission has been expanded to include fighting unemployment, a goal that is not only impossible to achieve with monetary policy, but which is fundamentally antithetical to a stable money supply. Under the pretense of fighting unemployment, the Fed has been able to engage in dangerous loose money policies that enrich banks at the expense of the rest of us, distort markets, and pave the way for major recessions like the one we saw in 2008. It’s time to end the dual mandate and relegate the Fed once more to its primary duty of stabilizing the money supply.
Enact Rule-Based Monetary Policy Currently, the Board of Governors of the Federal Reserve can pretty much do whatever they want with regard to monetary policy. They can expand the money supply, or contract it arbitrarily based on their own discretion, and are not bound by any restrictions on their authority to act as they please. This is unwise for a couple of reasons. First, due to the speed at which economic change occurs, and the time lag between the implementation of a policy and its effect, the Fed is often in the position of reacting to conditions that will have changed or disappeared by the time the policy actually happens. This mis-timing of Fed action can result in over corrections, or even the opposite of the intended effect.
Second, discretionary monetary policy introduces a high level of uncertainty for investors, making it more difficult for them to use their money productively. If you have no idea what the money supply will be tomorrow, it makes it hard to calculate interest rates, or determine whether a particular investment is a good one, and that uncertainty ends up harming the economy as a whole. It would be better to set a simple rule such as “increase the money supply by 1 percent each year” (or better yet, don’t increase it at all) than to allow capricious policies at the whims of the Governors.
Repeal Legal Tender Laws and Legalize Competition If you look at the dollar bills in your wallet, you will note that they bear the inscription “This note is legal tender for all debts public or private.” This means that, if you operate a business, you are legally required to accept U.S. dollars in payment for your goods or services. We know that competition makes everything better, but it’s hard to compete with a product that people are legally compelled to use.
The repeal of legal tender laws would allow competing currencies like Bitcoin or even gold and silver to flourish. It’s entirely possible that many of these currencies would fail, but at least it would give people an option to back away from the dollar when bad policy decisions shake the confidence in its value and stability. Want your money backed by a commodity like gold? That'd be an option for you. Prefer an entirely digital encripted currency? Come on in, there’s room for you too. A free market in currency would let the people decide which payment system works best, instead of the Government dictating it to them.
End the Fed Once we have a functioning market for competing currencies, we can and should get rid of the Federal Reserve altogether. It’s hard to imagine now, but before the creation of the Federal Reserve in 1913, it was common for private banks to issue their own currencies, without having to be told to by their government overlords. Somehow, people found a way to conduct transactions and do business, during perhaps the most rapid expansion of innovation and prosperity in history I might add, without the need for a central bank.
It's encouraging that auditing the Fed remains a popular subject for discussion on the Hill, but it needs to be stressed that this is only the first step down a long road to create a truly free market in currency, and a money system that is truly sound because it is backed by solid currency.
(Author is noted Economist Logan Albright who is an economics researcher and serves as Director of Research for Free the People).
See more at: https://www.conservativereview.com/...form-the-federal-reserve#sthash.PRc8yI84.dpuf
