100 Years Later, The Federal Reserve Has Failed At Everything It's Tried
The U.S. Federal Reserve is more than a hundred years old and has, effectively, failed at everything it has ever tried to do.
Created on the 23rd of December, 1913, by President Woodrow Wilson as part of the Owen Glass Act, the Federal Reserve’s original purpose (its founding principle) was to protect the integrity of the country’s currency and its banking institutions.
Furthermore, the Federal Reserve was also intended to stabilise market cycles, softening the severity of economic downturns and, thus, safeguard the interests of ordinary Americans.
However, under the Federal Reserve’s “careful” supervision, boom and bust cycles have continued… becoming much more severe in nature. The Federal Reserve did little to prevent the Great Depression of 1929 and, perhaps even worse, allowed the crisis to continue unchecked for an entire decade. In the 1970s, the Federal Reserve failed to respond to stagflationary threats. The Fed continued its disappointing track record in the 2008 Great Recession, as it’s monetary policies directly favoured banks and large cooperations over ordinary citizens. Still, banks failed and the economic recovery was lacklustre.
Arguably, it was the Federal Reserve’s reckless pandemic spending and money printing that led us to the economic hardships that we find ourselves in today.
So, what has the Fed accomplished during its century of existence?
Well, it has become adept at bailing out our mismanaged banks and our mismanaged economy — adding to our piles of pre-existing debt. The United States will probably never default on its debt as it borrows this debt in its own currency. If the U.S. ever doesn’t have the money to pay its creditors, it will just print more money… decreasing the value of the U.S. dollar and eroding the wealth of ordinary people.
This probably explains why the dollar has lost between 95 and 98 percent of its domestic purchasing power in the last 110 years of the Federal Reserve’s mismanagement of the U.S. and world economies.
This is in spite of the fact that one of the Federal Reserve’s missions is to stabilise prices.
That’s because the Federal Reserve seems to think that to stabilise prices, it must tinker with interest rates at will… this, unfortunately, could not be further from the truth as it’s this tampering that screws our economy in the long run.
If the Federal Reserve really wants to fix our economy and come close to achieving its goals, it must do the following three things:
Do away with fiat currencies altogether
Abolish fractional reserve banking
Allow markets to determine prices