End the Fed

August 31, 2009
At first glance, abolishing the Federal Reserve and returning to the gold standard seems a quaintly eccentric idea, but Texas congressman Paul presents a plan to eliminate our country's central bank, and return to a private banking system, that's both serious and plausible. The questionable aspects involve Paul's predicted results: not only will ending the Fed eliminate inflation (the government cannot print more money than it has gold reserves), but also business booms and busts, wars, income inequality, trade imbalances and the growth of government. Further, and perhaps most important, it would "disempower the secretive cartel of powerful money managers who exercise disproportionate influence over the conduct of public policy." Paul tends to gloss over those periods in history, including the Panic of 1907, in which private banking and the gold standard were law: "the bad reputation of nineteenth century American banking... is largely the result of... propaganda agitating for the creation of the Fed." With respect to "secretive cartels," Paul takes up the interesting question of whether J.P. Morgan is in fact preferable to Ben Bernanke. An engaging response to big-government solutions for the financial crisis, this knowledgeable and opinionated look at U.S. economics, from a firebrand public servant, should provoke much thought.

September 15, 2009
Paul is the self-described libertarian Republican Congressman from the state of Texas who garnered modest yet extremely vocal support in his run for the 2008 Republican presidential nomination. An outspoken critic of big government, deficit spending, and market interventions, Paul maintains that the current economic crisis is the direct result of poor monetary policy by the Federal Reserve Bank (the Fed), which caused the housing bubble by artificially manipulating interest rates. The Fed is a central banking system chartered in 1913 to contain financial risks and prevent bank panics. Paul charges that the reality is that the Fed supports a cartel of powerful bankers that inflate the money supply at will and insulate themselves from bad loans at the cost of the taxpayer without oversight or control. Rather than containing risk, he contends, the Feds activities are the root cause of booms and busts, and that there is a moral, constitutional, and economic imperative to do away with the Fed altogether. Thus the rallying cry of End the Fed has begun to gain momentum among disenfranchised citizens.(Reprinted with permission of Booklist, copyright 2009, American Library Association.)