Johnny Ordille, March 2, 2017
I recently read a USA Today article where it listed the top 20 presidents in our history. Despite feelings as to the individuals themselves, Washington, Jefferson, Adams and Lincoln were all on the list as were recent presidents Clinton, Bush 41 and Obama. The surprising choice of Woodrow Wilson was one that would leave most scratching their heads.
Wilson is best known, for better or worse, for creating the third reincarnation of the central bank known as the Fed. The original intent of creating a central bank was a noble one. However, like most noble causes they have no business in government and were soon dissolved due to corruption and incompetence…sound familiar?
The current Fed was established in 1913 and was most recently renewed in 2013. The Fed received its first real test during the 1920’s, a time of great prosperity; but bearish monetary policy lead to a decreasing of the money supply that ended up being one of the chief causes that lead to the stock market crash and following great depression. Smartly, things were changed after that, mainly FDIC insurance and Glass-Stegall.
Fast forward to the present.
Today’s Fed has little to no accountability. In the last 10 years, the Fed’s bullish monetary policy has resulted in a more than doubling of the M1 from just under $1,500B to just under $3,500B with little to no inflation. In comparison, the M1 increased from $1,000B to $1500B over the 20 years before that.
While this may seem like a dream come true on the surface, we need to ask: “Where is this money going?” If it were going towards purchases of tangible goods, then inflation would be rampant. It’s not going to the government as evidenced by an astounding $20T debt.
Let’s look at the stock market. From a recent low of 6,600 in 2008 to today’s high of 21,000, the stock market has become a hiding place for the new money; a hiding place for money hidden by businesses unsure of what to expect during an Obama presidency and really unsure now in a Trump presidency.
But businesses will do what businesses will do. A better question is why would the Fed continue to increase the money supply when it is obvious that the money was creating a bubble in the stock market? This is incompetence at best and criminal at worst in the fact that so many people will be hurt when this bubble bursts.
It is time that the Libertarian Party and the American public demand an audit of the Fed and a full accountability as to why this problem has been allowed to continue and get worse.
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