End the Fed
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- ISBN13: 9780446549196
- Condition: NEW
- Notes: Brand New from Publisher. No Remainder Mark.
Product Description
In the post-meltdown world, it is irresponsible, ineffective, and ultimately useless to have a serious economic debate lacking considering and challenging the role of the Federal Set aside.
Most people reflect of the Fed as an indispensable institution lacking which the country’s economy could not properly function. But in END THE FED, Ron Paul draws on American history, economics, and fascinating tales from his own long political life to argue that the Fed is both corrupt and unconstitutional. It is inflating currency today at nearly a Weimar or Zimbabwe level, a practice that threatens to place us into an inflationary depression where $100 bills are worthless. What most people don’t realize is that the Fed — made by the Morgans and Rockefellers at a private club off the coast of Georgia — is really effective against their own personal interests. Congressman Paul’s urgent appeal to all citizens and officials tells us where we went incorrect and what we need to do fix America’s economic policy for future generations.
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Where to start? First of all, it is mindbogglingly naive to assume that there is one magic bullet that would solve all of our problems. Second, closing the Fed would simply result in the Fed’s power be handed to the Treasury or some additional agency. Third, if you reflect Government is a problem, wait until the ‘for profit’ sector really gets their hands around our throats. The world is just not as simple as liberterians want to judge. One star for the prose. No stars for the thoughts.
Reader’s Rating: 1 / 5
Never got the book. The seller did credit my payment but I would have rather gotten Ron Paul’s “End the Fed.”
Reader’s Rating: 1 / 5
Ron Paul believes that inflation is caused by the Fed “printing more money”. I don’t reflect evidence supports that position. First of all, the increasingly floating exchange excise since 1970 coincide with financial deregulation and erosion of the Bretton Woods system. You can’t simply focus on the Fed. Secondly, money supply, rather than being set by the central bank or the state, is a function of the demand for credit, which is itself a function of economic activity.
Central Banks accommodate to the activity of the banks. They do not and cannot force them to make credit. Alan Holmes, a senior vice president at the NY Federal set aside place the process this way:
“In the real world, banks extend credit, making deposits in the process, and look for the reserves later. The question then becomes one of whether and how the Federal Set aside will accommodate the demand for reserves. In the very fleeting run, the Federal Set aside has small or no choice about accommodating that demand, over time, its influence can obviously be felt.”
The experience of the more deregulative Thatcher and Reagan regimes indicates this well. The Thatcher government, for example, could not meet the money controls it set. It took until 1986 before the Tory government stopped announcing monetary targets, persuaded no doubt by the embarrassment caused by its inability to hit them. If we follow Ron Paul’s logic, inflation in this period would have been caused by the money supply increasing quicker than the economy, yet inflation fell as the money supply increased. Between 1979 and 1981-2, money supply rose and was still privileged in 1982-3 than it had been in 1978-9 yet inflation was down to 4.6% in 1983. In the US, the amount of money the fed prints is minuscule as compared to the amount of debt in the economy. We live in a debt-driven credit economy with a tiny (and subservient) amount of fiat money attached to it. Of course, inflation has many contributing factors, but of the most vital ones that Ron Paul doesn’t chat about is simple privileged-fee setting by capitalists–who pass costs onto patrons–(and who try to lower wages) leading to inflation (as well as a cyclical lack of aggregate demand by workers–who are also patrons). This is regularly linked to a struggle between labor and capital–which is in turn a strong factor in the business cycle. But don’t expect Paul to touch that one with a ten foot pole. Paul doesn’t tell you about the Federal Set aside’s beige book, which surveys employers around the country to know whether or not the effective class is getting too strong due to high employment or unionization. This is because by manipulating interest excise and stimulating of discouraging investment the Fed can do the bidding of the capitalists and maintain employment levels and wage levels that will favor the business class and discipline the workforce. In additional words, it’s not that the Fed is an enemy of capitalism. The Fed is a weapon of the capitalists. Furthermore, the creation of a central bank like the Federal Set aside with a monopoly to issue notes, is something that the capitalist class establish necessary, because in the past the notes issued by some banks were establish more acceptable than persons of others, and this gave rise to periodic payments crisis and uncertainties. And in places like 19th century America, lacking a central bank, this left a financial system lacking a lender of last resort, but during booms all kinds of amusing money passed. This led to thousands of decentralized banks hoarding reserves and starving the system of liquidity precisely at the moment it was most terribly needed. All of this while the up cycles were powered by loose credit and kinky privately issued banknotes. It’s also vital to note that no ruling class wants this kind of economic instability to undermine its wealth and income generating ability. And of course they wouldn’t want simple credit undermining their power over the effective class by holding down unemployment too long or allowing effective-class people to make their own financial institutions.
Paul’s account of the The Fantastic Depression is flawed as well. There is no evidence that money caused the depression after the stock market crash. Real money balances increased between 1929 and 1931 from between 1 and 18% (depending on choice of money aggregate used and how it was deflated). Overall, the money supply not only did not decline but really increased 5% between August 1929 and August 1931. Ron Paul argues that the Federal Set aside really caused the Fantastic Depression–a demonstration of the evils of government intervention. In his view, the US monetary authorities followed highly deflationary policies and so the money supply fell because they forced or permitted a sharp reduction in the monetary base. In additional words, because they failed to exercise the responsibilities assigned to them. Yet it is vital to stress that by this Ron Paul did not, in fact, mean that it happened because the government had intervened in the market. Ironically, Paul argues it happened precisely because the government did NOT intervene quick or far enough–thus building a terrible situation much worse. In additional words, it was not interventionist enough! This self-contradictory argument arises because Ron Paul is an ideologue for capitalism and so seeks to show that it’s a stable system– to exempt capitalism from any systemic responsibility for recessions. In Paul’s world, the business cycle is not an intrinsic trait of capitalism, and a competitive capitalist environment with investors greedily withholding information from each additional somehow leads to collective knowledge and well-organized allocation and outcomes. And of course, Paul doesn’t seem bothered by market externalities like pollution or additional individual decisions that bust the whole system.
The same can be said of blaming our current financial crisis on the Fed. The privileged economic growth and effective class share of wages (which kept up with rising productivity) in the Keynesian period from 1945-70 (coupled with a process of 3rd world decolonization) led to rebelliousness and a capitalist loss of power. This led to a counter-attack that granted more power to the financial sector–with its ability to make a highly coercive international “virtual senate” of lenders and investors and substitute low wages for debt in the context of the profitable and manipulative mechanisms of consumerism. Ron Paul doesn’t tell you about the lower excise of growth under financial liberalization, nor does he mention the highly protectionist policies followed by every single country which historically managed to become an manufacturing power–or the state subsidized R&D at the core of successful corporate production (university research, computers, container ships, airplanes lasers, chips etc). Amazingly, Paul attributes US wealth to the “free market”–forget state R&D, forget the fact that the US is the most protectionist country in history, forget slavery, forget the theft of land from Mexico (and the natives), forget third world exploitation (& Chomsky & Herman’s correlation between favorable investment climate and anti-labor human rights violations) and of course, forget the sweatshop misery of countries that are much more “free market capitalist” than the US, like Haiti, Bangladesh or Indonesia.
In the current crisis, the Fed (just like in the Fantastic depression) functioned as a captured arm of the banks. The main role of governmental institutions in capitalist societies is to manage the collective interests of competing blocs of businesses e.g. persons which are more or less protectionist, or more or less labor-intensive, more or less linked to the financial sector etc. For example, what we call “left” and “right” parties are nothing more than blocs of investors with some conflicting interests; which allow them different levels of compromise with a relatively weak labor movement. E.g. in the 19th century, nearly all businesses were very labor-intensive; the change from coal to oil made a technological revolution which allowed many businesses to produce with fewer workers (in technical terms, less wages as a percentage of value-added). Although this meant job loss at one level, these new or renovated capital-intensive businesses (many of them also less protectionist) had a greater tolerance for labor unions. A union in a labor-intensive industry (i.e. w/more workers) is very expensive for the owner. This clarifies why capital intensive industries were more in favor of the social democratic “New Deal” of the 1930s (e.g. oil, paper, international banks) while older labor-intensive industries (e.g. textiles, rubber, steel etc.) were against it. Of course, Ron Paul calls this period “socialism”.
Paul blames “the government” lacking looking at what’s behind it (e.g. the chance 500). He denies the collective dynamics of capitalism, such as its trend toward oligopoly, it’s governmental dynamics, and its broader class imposition of an exploitative “work for a boss or else” status quo (AKA wage slavery). That’s by the way, another reason why Paul (and his tea party supporters) calls the Obama policies “socialist,” even though it’s the financial sector that bought the election and has Obama in their pocket. Needless to say, Paul doesn’t attribute the economic motivations behind US wars to any intrinsic collective dynamics of capitalism. It’s the Evil Fed–the Evil government alone. Yet Paul is mostly apprehensive about what’s excellent about government–not what’s terrible.
The government’s role as collective regulator of elite interests allows an organized population the potential to fight back and wield some solidarity based, democratic influence (progressive taxation, labor laws, universal healthcare). These are things that are unavailable in the the utterly undemocratic business structures we live in — which only allow influence through the highly manipulative and destructive one-dollar-one-vote system of consumerism. That’s also why he wants to transfer power from the Federal to the state governments, where even medium sized businesses will be able to manipulate policy to their advantage. The “freedom” of choosing a boss or if you’re lucky “opening up your own business” is the only workplace “freedom” Paul seems to offer. But of course, chattel slaves in colonial Brazil could also buy their own freedom and become business owners–does Paul reflect the “work for a boss or else” of chattel slavery was therefore justified? Paul doesn’t acknowledge wage slavery entails theft and coercion. On the additional hand, if we try, through progressive taxation, to get back some of what was stolen from us, that is “theft and coercion”. Just incredible. Ron Paul doesn’t tell you that, like in anything, the structure of the huge reflects the structure of the tiny. If you have authoritarian tiny units (businesses/wage slavery) as a replacement for of participatory ones (workers’ self-management) you get authoritarian government. And yes, this includes the wage slavery in stalinist (monopoly state capitalist) countries–whose leaders’ claims about “workers’ democracy” should be taken as seriously as Hitler’s about “freedom and peace”. Contrary to what Paul would have you judge, the only anti-statist possibilities lie in a strong anarcho-syndicalist labor movement filled with all-purpose strikes and effective class consciousness–with a prior maximum democratization of the state that will reveal its democratic limits and elite scenery. Hierarchical, non-democratic economic institutions (tyranny of the minority) lead to a herd mentality (tyranny of the majority) that erodes minority and individual rights. Ron Paul’s federalism is a excellent thought, but not when you got private tyrannies around. As the Trilateral Commission–the elite itself—said after their most despised decade (60s):
“The impulse of democracy makes government less powerful and more active; increasing its functions and decreasing its power.”
Reader’s Rating: 1 / 5
Ron Paul does a excellent job of building his straw man by which to prey on people’s fears with dark, cynical ruminations of imminent imperil brought on by the socialist forces behind the Fed. A friend read the book and insisted that I read it too. So I did. I permanently considered myself reasonably ignorant on this topic, but what a shocker to find out that a name even more ignorant than I am can write a book about it and twists facts to his own convenience in a writing tone fit for a sixth grade text book. I encourage anyone who gave this book four stars and is now convinced the fed is leading us down a socialist road to ruin to go out and buy books and study the theme. You might learn, for example, that Andrew Jackson, who the leader praises, brought about a depression because of his destruction of the central bank that was worse than in the 1930’s and lasted until the Civil War when the country started spending and borrowing. Moreover, the 1800’s were constantly being imperiled by near economic collapse, a fact that bellies Paul’s central aver that lacking the US backstop, banks would regulate themselves. Simply not right. Another distressing consequence of not having a fed is exactly what happened during TR’s Presidency when the country had to be bailed out by JP Morgan. I question, who would you rather have government and banks beholden to, the tax payer? or JP Morgan? You don’t reflect an industrialist like JP Morgan gave that money lacking some strings attached? Is that the “freedom and jingoism” that Paul wants? Yeah, fantastic. Smells like oligarchy to me. Another point the book white washes over is what brought about the steep cycles in the first place. During the 19th century we were an agrarian country. Our number one export was cotton. The problem was that crops are very unpredictable. Banks would loan money out to farmers and see their returns around harvest time. Some years crops would fail. This had the potential to crash the whole market – as it did several times. If, like Jackson, Hoover and Paul, you judge in a laissez faire approach to the economy, then the ensuing depression would be a excellent thing. But for persons of us who, like Keynes, judge that this is really unnecessary – then you set up a central bank to manage the cycles. Finally, the book completely contradicts itself. On the one hand it claims that the Fed can be easily manipulated by politicians to goose the economy for the purpose of elections. It then argues that the Fed is isolated, insolated and so secretive that even politicians have no understanding of its inner workings or have any influence over it. Well, which is it? Clearly when it serves his purpose to suggest cynical, socialistic forces are behind it – then it secretive. When it serves his purpose to argue the contrary, then it basically is beholden to the president.
Another problem for Paul is inflation – the huge monster in the closet. Inflation assumes monetary, population and manufacturing growth. The theory is that the money supply grows along with the demand for capital. Money is not in itself of real intrinsic value. It represents value which is measured by the issuer’s ability to support it with goods, resources or services. The basis for wealth is growth. Managing this growth becomes central to how one manages an economy. This is what the fed does. Paul would have it that we return to a gold standard and let things run themselves. Two problems. How does the money supply grow when there is a restricted supply of capital? It can’t, artificially deflating values and choking growth. Why gold? Who knows. It’s just a metal Paul prefers even though there are several far more valuable.
Here is my suggestion – turn off the AM radio and the crazy conspiracy theorists and pick up a book – a real book. Learn stuff for yourself, not get it second hand through the lens of crazy paranoia. Returning to a gold standard and laissez honest policies is not the answer to the world’s problems but just a recipe for a whole set of different ones.
Reader’s Rating: 1 / 5
In his new book, the Republican congressman Ron Paul tells the tale of a helicopter ride he took with Ronald Reagan when Reagan was president. The president told him, “Ron, no fantastic nation that abandoned the gold standard has remained a fantastic nation.”
Writes Mr. Paul: “Despite his sympathy for the gold standard, Reagan did nothing about the issue. His advisers successfully kept him silent on this issue, fearing that he would be seen as crazy or kooky.”
Mr. Paul rumor has it that has no such inhibitions, which makes this book, a no-holds-barred attack on the Federal Set aside, an entertaining read. “Reflect of the Soviet system applied to the banking industry and you have the Fed,” Mr. Paul writes, blaming it for “our current financial crisis” and for “the century of total war.” The Fed, he writes, “did more hurt to American economic prosperity than the attacks of 9/11.”
“Freedom and central banking are incompatible,” he writes, predicting that if the Federal Set aside is allowed to continue, “we should be prepared for hyperinflation and a fantastic deal of poverty with a depression and possibly street violence as well.”
If, on the additional hand, the Federal Set aside is abolished and replaced with “a competitive market in which the best monies would emerge over time to compete directly with the federal government’s dollar,” well, then, get ready for a veritable utopia.
The whole tale – of a single, super-powerful villain, the elimination of which would lead to a kind of paradise — fits together a small too well, enough to sound familiar to many of persons who share Mr. Paul’s lack of sympathy to fascism and communism, enough perhaps even to make them a bit nervous. They are unlikely to be reassured by Mr. Paul’s wan disavowal of conspiracy theorists.
Mr. Paul’s views may seem shockingly out of the mainstream. But one of the illuminating things about this book is that it shows how holey is the boundary between what Mr. Paul says may be seen as “crazy or kooky” and the American establishment. Mr. Paul is seen in the book not only riding a helicopter with President Reagan, but also questioning various chairmen of the Federal Set aside in private meetings or at congressional hearings. At one meeting, he confronts Alan Greenspan with an article, “Gold and Economic Freedom,” that Mr. Greenspan had written in 1966 for a newsletter published by Objectivists, followers of the philosophy of Ayn Rand.
Wrote Mr. Greenspan: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation…This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
Mr. Paul reports that he showed it to Fed Chairman Greenspan, who autographed it for him and said “that he had just recently reread it and wouldn’t change a word of it.”
Reader’s Rating: 3 / 5