The Federal Reserve was created in 1913 with one purpose, one directive: Protect the value of the US Dollar. In other words, control inflation to prevent deflation (devaluation) of the buying power of the dollar. The other directives, like sustain full employment, are artificial, illusionary.
Since the Feds creation 110 years ago, the value of the dollar (it’s buying power) has declined over 95%. In other words what cost $1 in 1913 now costs $100. That is devaluation in the buying power of the dollar. Since personal income is relatively fixed, the net savings retention, after paying many more dollars for a commodity, is diminished. Inflation is a hidden and highly corrosive tax on the citizen.
The Federal Reserve goes to great lengths to avoid responsibility. Fed Monetary Policy, in particular the number of US Dollars in circulation, is the Fed’s doing. No other entity can print dollars, legally.
Inflation is caused by a decline in buying power of the dollar. The decline is each dollar’s value is caused by two events: Weakness in the private economy, less freedom from interference and second but most importantly, dollar devaluation is the result of printing too many dollars. The second item is strictly the purview of the FOMC a subset of the Federal Reserve. When the Fed began printing $8 Trillion new dollars in 2008, called QE, they set us on the current path of inflation, which is devaluation of the dollar’s buying power.
In fairness the Fed is not the only guilty party to destruction of the dollar’s value. Throughout the intervening 100 years since the Feds creation, Congress and Presidents demanded more federal spending and thereby compelled the Fed to print more US Dollars solely to buy Treasury Bonds and thereby fund the profligate spending of our elected representatives. Printing these dollar bills is highly inflationary. In fact, excess dollars in circulation is the cause of inflation and devaluation of the dollar.
The free market solution to improving the dollar’s value and reducing the corrosion of inflation, is a 180-degree change in Fiscal Policy so that restricts federal intervention in free and private markets, and that means fewer regulations and less taxation. This the heart of the repeal of the Chevron Doctrine.
The next very important solution to reducing inflation and improving the buying power of our money, is to reduce the supply of money in circulation. But that means the Treasury Department will need to redeem its outstanding debt and retire their bonds when matured. Most significantly, inflation reduction requires, mandates, that Congress will have to reduce federal spending. The solution is either more taxation or less federal spending. The first destroys our freedom, the latter promotes perpetual success in private business and jobs.
Our nation was founded on the concept of individual sovereignty. Our Constitution and Declaration codified this revelation. A government that oppresses the individual through taxation, regulation, debt and excessive spending is antithetic to our nation’s principles.
The machine is massive, bureaucrats control most aspects of our lives now. But we individuals outnumber them by a wide margin. We were granted the ability to vote for legislators and the president. Our mandate is to advocate for our individual freedom by selecting those rare politicians who will reduce the intervention of government in our lives. We are blessed with a representative government. Lets not waste it on infighting, but focus on the real problems.
Jay Davidson is founder and CEO of a commercial bank. He is a student of the Austrian School of Economics and a dedicated capitalist. He believes there is a direct connection between individual right and responsibility, our Constitution, capitalism, and the intent of our Creator.