THE FED: YOUR 2 CENTS’ WORTH (okay, maybe 4)

1383118011gm2lp1913 was a banner year.  Congress passed a law authorizing the Federal Reserve System: “It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.”

After 100 years the case is clear: our monetary and financial system is not more safe, flexible, or stable.  It’s a mess.  The law establishing and authorizing “the Fed” is a bad one and Congress should repeal it.

The facts are jarring.  Your $1 today would buy a paltry 4 cents worth in 1913. You would need $24 today to buy what would have cost you just $1 in 1913.  You can run the numbers yourself at the Bureau of Labor Statistics here:

It’s not that the stuff (called “goods” or “commodities”) has increased so much in value. It’s that the value of the money itself has decreased; each dollar is worth less and less.  Fact is, while money should represent the goods and be a valuable asset itself, it isn’t anymore.  It hasn’t been since governments began counterfeiting – or using an outfit like the Fed to do it for them – under the guise of “sound fiscal policy.”  Create more “money” out of thin air and the price of each commodity goes up.  Creating more “money” hasn’t created more commodities. There’s more “money” out there, but not more goods.  (That’s why it’s illegal for you to print more money.  While you’d be getting a visit from the Secret Service, Janet Yellen would be out discussing a “basket of currencies” with some banker friends over coffee.)

The story of the Fed’s sneaky start has become more well known in recent years. It’s worth retelling and passing along.

The Federal Reserve is not Federal.  It is not part of the United States government.  It is, essentially, private. The 12 regional Federal Reserve Banks – established by the Congress to act as the nation’s central banking system – are organized similarly to private corporations.  They issue shares of stock to their member banks. The Reserve Banks are not operated for profit, but the member banks are. Dividends on the stock are, by law, 6 percent per year. Not bad.

It is not a Reserve.  It counterfeits new “money” out of thin air to stay afloat. It claims to play the role of protector, conducting “stress” tests on smaller banks, but could not pass one itself.  By ordinary accounting standards applied to any other sector of commerce and business you could say it is bankrupt.  Despite its claim to being audited, it fights a real one.;

From a pragmatic point of view the law establishing the Fed hasn’t worked.  The financial system is teetering, trebling and tripping up at every peep out of the Fed.  From a moral point of view it has led to the massive confiscation of people’s savings through the depreciation of the dollar.  Consider a thousand dollars put away for savings in 1995, just 20 years ago. It would take you $1,560 in today’s money to buy the same amount of goods that you could have had for $1000 just 20 years ago.  $1000 of today’s money buys only $640.86 worth of 1995 goods.  In providing you with a “safer, more flexible, and more stable monetary and financial system,” Congress has cost you a big chunk of change.  And you thought you were saving your money.

Consider the following picture of the declining purchasing power of the consumer dollar under the Fed:


The destruction has occurred under both Democrat and Republican Presidents.

Inflation Dem Pres
Inflation Repub Pres


Here is a chart of how the Fed has kept the monetary system “safe” and “stable” for Americans under US Presidents since 1913:

President Year Increasing Decreasing
$ Cost $ Value
Wilson 1913   1.00 1.00
Harding 1921   1.81 0.55
Coolidge 1923   1.73 0.58
Hoover 1929   1.73 0.58
Roosevelt 1933   1.31 0.76
Truman 1945   1.82 0.55
Eisenhower 1953   2.70 0.37
Kennedy 1961   3.02 0.33
Johnson 1963   3.09 0.32
Nixon 1969   3.71 0.27
Ford 1974   4.98 0.20
Carter 1977   6.12 0.16
Reagan 1981   9.18 0.11
Bush GHW 1989 12.53 0.08
Clinton 1993 14.60 0.07
Bush GW 2001 17.89 0.06
Obama 2009 21.67 0.05
2015 24.02 0.04

By the end of Roosevelt’s presidency in 1945, the value of one dollar was cut nearly in half to .55. (Roosevelt the Democrat picked up where Wilson the Democrat left off.)

By the end of the Nixon-Ford era in 1977, that half was cut over half again to .16. The dollar was 1/5th the value of the 1913 dollar. (Can’t leave out the work of the Republicans.)

By the end of Clinton’s presidency in 2001, it was 1/18th of its 1913 value: .06. Under Obama it’s down nearly 25 to 1, or .04 to the Dollar (Maybe the Democrats will finish what they started and kill it off completely.)

1913-1945 (32 years), down 50%.  By 1977 (another 32 years), down 80%.  By 2015 (another 38 years), down 96%.

It’s difficult to miss the evidence and deny the reality of the financial carnage when it’s marked every 30-40 years.

And now, for a graphic view of the destruction of the dollar under the Fed:


Think of Congress’ program under the Fed as Trickle-Down Poverty.

Tell your congressman that the laws authorizing the Fed ought to be repealed.  Why should Congress give special power and protection to a select group of bankers to manipulate the capital markets and national economy?  It’s obvious from the last 100 years that the laws on the books authorizing the Fed have not led to a “safe, flexible and stable monetary and financial system.” The damage cause by the Panic of 1907 and the Great Depression of 1929 combined pales by comparison to that caused by the Fed since its inception in 1913.  Congress ought to eliminate it and it’s destructive effect on people’s finances.

The great Old Testament prophet Isaiah laid out simply one of God’s complaints against Israel: “Thy silver is become dross” (Is. 1:22). Junk “money.” Don’t debase the currency. It’s not good policy, no matter what the economists, bankers, politicians and professors might say.

Isn’t it time for Congress to get out of the banking business altogether?  Isn’t it about time for you to tell your congressman what you think?  Give him your 2 cents’ worth.  Go ahead and give him 4 cents’ worth while you have it.  It really will be worth only 2 cents before long if something isn’t done.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: