Following revelations that Federal Reserve officials made trades in financial assets while the Fed was taking extraordinary efforts to “stimulate” the economy, Federal Reserve Chairman Jerome Powell ordered a review of the Fed’s ethics rules. While these trades appear problematic, they pale in comparison to the biggest Fed scandal — the Fed’s impoverishment of ordinary Americans, enrichment of the elites, and facilitation of government debt and deficits.
The depression induced by coronavirus, though really caused by so-called public health actions government took in response, was the official reason for the Fed’s increased asset purchases last year. However, the Fed actually started ramping up its money creating activities in September of 2019, when it began pouring billions a day into the repo markets, which banks use to make short-term loans to each other, in order to keep repo market interest rates low.
Coronavirus was just a convenient excuse for the Fed to do more of what it was already doing. Now, the Fed is using the limited reopening as a scapegoat for rising prices. Of course, anyone who understands Austrian economics understands that rising prices are a symptom, not a cause, of inflation. Inflation is the very act of money creation by the Fed.
Rising prices that diminish the average American’s standard of living are not the only result of the Fed’s manipulation of the money supply. The manipulation distorts economic signals, producing results including booms, bubbles, and busts.
Inflation has always benefited the well-connected elites who receive the Fed’s newly created money before the new money causes widespread price increases. The true motivation behind Fed policies was revealed by former Fed official Andrew Huszar in 2013. Huszar, writing for the Wall Street Journal, confirmed that quantitative easing kept stock prices high, instead of helping Americans struggling with the aftereffects of the 2008 meltdown.
Other beneficiaries of the Fed are big-spending politicians. The Federal Reserve’s purchase of federal debt instruments keeps the federal government’s debt servicing costs manageable. This is why, despite Chairman Powell’s recent suggestion that the Fed will soon begin “tapering” its purchases of Treasuries, the Fed is unlikely to significantly reduce its purchase of Treasuries or allow interest rates to significantly increase.
Powell is also unlikely to upset President Biden and Biden’s congressional allies as long as progressives are urging Biden not to reappoint Powell. Progressives want to replace Powell with someone more committed to fighting climate change and systemic racism, two boogeymen routinely bought out as excuses for vast expansions in government spending and power.
Another major scandal involving the Fed is Congress’ refusal to pass the Audit the Fed bill and let the American people know the truth about the Fed’s operations. Audit the Fed authorizes a Government Accountability Office (GAO) audit of the Fed’s dealing with foreign governments and central banks, the Fed’s discount window operations, reserves of member banks, securities credit, interest on deposits, and open market transactions. Audit the Fed would finally reveal the truth about the Fed’s operations.
A limited audit authorized by the Dodd-Frank Act found that between 2007 and 2010, the Federal Reserve committed over 16 trillion dollars to foreign central banks and politically influential private companies. Imagine what a full audit would find. It is time to end the scandal of allowing a secretive central bank to have so much power over the economy and our liberty. It is time to audit, and end, the Fed.
Oil is the big news, prices up because contracts cannot be met.
This is the real reason for scamdemic…we are running out of oil.
This is a big change as we will not be able to feed the world, wars are inevitable.
The biggest Fed scandal is the way they break the law and nothing is done about it.
Way back in 2013 they were openly shorting gold to bring it back down to $1,750. Now look at the last year where no matter how many times gold rises it goes straight back to $1,750 on the knocker.
Manipulation of the bullion market is illegal, just like insider trading among the Fed.
You can audit the Fed all you want, Dr. Paul. It’s still not going away.
Jefferson warned of a central bank, saying it was “very dangerous.” I’ve hated the bastards ever since they ruined (probably forever) CD rates, extremely important for us seniors.
A few years back, when Saudi Arabia begun investing into nuclear power stations, some of us got a bit suspicious.
I like Ron Paul.
But we have much bigger things to worry about than the Federal Reserve.
If the Fed can manipulate the price of gold like that, then clearly the Misesian sort of argument against the possibility of running an entire country’s economy through central planning is wrong.
I contend that the ability of a small group of people to issue fiat currency, directly or indirectly, is the single most important fraud perpetrated on the people. It is also the root of many of the distortions created during the 20th century that have led and will continue to lead to the corruption of the moral and social fabric of this once vibrant society. For the mechanics of it, you can find Rothbard’s very readable “The mystery of banking” freely available online.
Why does this thing even exist? I understand the rational behind it, however, just how much theatre is it, that the so-called ceiling is raised/ignored every fiscal cycle? Judging by the ‘ceiling’, this building evolved to stand taller than the Towers did.
The US is a joke. It’s economy is a joke. Politicians wringing their hands over the debt ceiling is a joke.
And none of them are very funny.
Agree 100 percent!
I’m guessing the reason for the 2 [Disagree]s (plus this one) on your comment go something like this. A private, or otherwise, bank that can create currency out of thin air is an organization that has a license to steal portions of the lives of the citizens.
Let me explain: When you create more currency, you dilute the value of the existing currency. That is stealing the value of any savings that people have. These savings represent the storing of the value of one’s labor of the years of his paid working life. Therefore, the FED is enabling the stealing of years of Americans’ lives.
That’s no small thing, Neuromancer.
Now, whether most Americans would agree with you and roll their eyes any time Ron Paul talks about the FED is another story. Most do, because they are too lazy to go learn what I have just explained.
PS: That’s not to argue with you on something like “massive immigration is the existential issue” and must come first. I would agree on that.