Does the US need the Federal Reserve?

Question

Our money is a "fiat " currency (look it up if need be) and has no inherent worth. Our income tax is illegal (visit truthmove.org for details) and we get no services only payment on interest for the trillion dollar plus vacuum a year. Wouldn't the country be better off with real currency and a lawful taxing system? We were fine without the FR all along prior to 1913. Dr. Ben Bernake (the current chairman) has admitted that the FR caused the depression and is the cause for inflation. Economsists assure us that the current system will lead to a collapse--it's mathematically inevitable. Shouldn't we change now? If you are not familiar with the specifics, go to youtube.com and search for "Freedom to Fascism by Aaron Russo" then watch it before commenting. I hope all Americans get the message here and weigh in on this issue.

Answer 1

The federal reserve system is based on fiat currency and supports the ethics/politics of collectivism/socialism. Socialist economic propaganda aside, freedom can only be maintained by the protection of individual rights, which means property rights, and politically, this means economic freedom which implies an objective standard of values; an objective currency.

For demonstrations of rational economic theory read, von Mises and an essay by Alan Greenspan - Gold and Economic Freedom, Capitalism the Unknown Ideal, by Ayn Rand.

But, the only cause of inflation is deficit spending, and this is the purview of the government.

Answer 2

The world was a very different place prior to 1913, and is once again a different place now. I'll spare you using reductio ad absurdum to demonstrate how saying "we were fine without the FR all along prior to 1913" is a silly argument.

There are several reasons why I disagree with your opinion, but I will provide you with the least convoluted:

The United States runs a huge trade deficit. There is something called the Current Account and it must balance. (The Fed is, in fact, responsible for making certain that it does.) If the United States runs a trade deficit, it must have an approximately equal outflow in the Capital Account to offset this.

Backing the currency with a precious metal or using some form of fixed exchange rate is an entirely untenable plan for the United States, unless it manages to balance its trade deficit or run an actual surplus. (There is a reason, after all, that Mercantilism was so popular for centuries.) Without doing so, we would quickly run out of International Reserves and be forced to devaluate our currency in order to print more money to settle the Current Account. This would have all kinds of nasty repercussions on the US Economy, not least of which is that inflation would spiral entirely out of control!

Think of the Federal Reserve as the lesser of evils.

Answer 3

You are correct. We don't need the Fed, we could use a better currency system, and the petrodollar is the only thing between the US and rack and ruin.

As soon as other countries start buying oil with euros instead of dollars, our currency will take a long-term, irrevocable nosedive.

It makes better sense to become responsible and work out the problems now, before it is too late.

Good luck generating interest, though; there's no sports, sex or celebrities involved in this issue.