Thursday, February 12, 2009

End the Fed!

The movement is gaining so much steam it's even piqued Sullivan's interest.

Good god. Could this be the cracked opening of the door to allow us to flood liberals with common sense? Is that even possible?

Anyway, Sullivan links to a fantastic article by Tom Woods that addresses the issue of the harm central banking causes, and the general phenomenon that has become the movement to End the Fed. The article is very interesting, straightforward, and a brisk read on a subject that is usually anything but, and hits directly at the root of the problem:

If lower interest rates are the result of increased saving by the public, those greater saved resources provide the means with which to see the additional investment through to completion. But the situation is very different when lower interest rates result from the Fed’s creation of new money out of thin air. In that case, lower rates do not reflect an increase in the pool of savings from which investors can draw. Fed tinkering, in other words, does not increase the real stuff in the economy. The additional investment that the lower rates encourage therefore leads the economy down a path that is not sustainable.

That is how the Austrians knew the present bust was coming. The preceding boom had been based not on real factors but on bubble conditions created by the Fed’s artificial credit expansion. It had to end in a bust, as Mises and Hayek said. That’s also what they said in 1928 and 1929, as respectable opinion hastened to assure everyone that business cycles were a thing of the past.

The movement is gaining a head of steam in the face of the worldwide monetary disaster we now face, caused, at the very root, by overactive central banking everywhere. Ron Paul has even entered into the House a bill to Abolish the Federal Reserve, which is now in committee, and is scheduled to have country-wide demonstrations in its support over the next few months.

As our central bank combines with our President and our Congress to continue doing the same things wrong, only bigger, it would seem unsurprising that one of the few countries that has handled itself responsibly in its banking priniciples now sits atop the entire world as the most economically sound, and poised, to become the most powerful nation around if it wants to.

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