The Federal Reserve (And Its Problems)

On By EthanIn Government

The Federal Reserve (the Fed) is a Government Agency that is dedicated to stealing at least 2% of your cash every year. I’m not kidding. Completely serious. No joke.

So how did this Agency come about? Well, I’m glad you asked.  The Fed was created December 23, 1913. It was created to help “fix” the economy after some banking crises in the late 1800’s. It really got going though, right before the Great Depression and was one of the main things that started it (the Great Depression).

The Fed is extremely complicated and I don’t even fully understand it. One book that I would HIGHLY recommend is End the Fed by former Senator Ron Paul. In it, he explains this issue much better than I can and he does it in a really engaging way.

Some of you may have noticed that I didn’t post on Thursday. That’s because I realized that what with summer coming up and High School I decided to limit my posts to once a week. If you would like to contribute to TTE then, by all means, contact me either in the comment section or by heading over to the Contact page.

18 thoughts on “The Federal Reserve (And Its Problems)”

  1. It seems you may be coming from an acutely conservative view point based on your brief assessment of this system. I get that you think it’s a cash grab but my question is why? And what is the other side of the coin?

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    1. I wouldn’t call it acutely conservative. (My Parents: don’t have a gun, think shouldn’t be so hard on immigrants. etc)
      But the people that run it would say something along the lines of
      A: There are hoarders in the US
      B: In order to protect ourselves against cash shortages and deflation we must increase the amount of dollars in circulation.

      Their hidden agenda seems to be to provide money for the Federal Government so that they can continue spending.

      Thanks for commenting!

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      1. Well, I have a firearms acquisition license in my country so the gun thing to me isn’t really a conservative staple, but I understand in the US that’s the typical version.

        Hoarders being what you and I would call billionaires I suppose? Or collectors? Regardless, while having money removed from circulation and put into a government fund doesn’t necessarily protect against deflation –because by continuously adding money to the system without commodity value backing it, which is what most countries do, we create rapid inflation that isn’t matched by consumer wage increases (mo money to buy, less money to spend am-I-right?), and eventually all things that go up must come down– it may provide more of a safety net then some people would think as the government can continue to invest with it during lean economic times (which would reduce job losses and help the economy move forward).

        While I know the US is staunchly against any form of socialism, a relatively easy fix (if not for public opinion) for this dilemma would be to remove the fed but tax “luxury” goods at extremely high rates. This would force our “hoarders” to distribute more money into the economy and prevent stagnation and deflation.

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        1. I agree with removing the fed but I’m against any kind of thing that increases prices for the consumer. Interesting opinion though.
          You see, the whole ‘hoarder’ thing is a myth, nothing more. Unless they actually store it by themselves, the banks are using their cash to invest. Thus not hoarding. It’s a big tangled up thing and I would HIGHLY recommended any of Ron Paul’s, Ludwig Von Mises’s, or Thomas Sowell’s books on the subject.

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          1. It’s my feeling that those who can afford luxury goods can also afford to pay for the less fortunate through high taxation. If you’re going to buy your third sports car in as many years, you can help me pay my tuition while I’m at it, or the hospital bill of the poor old guy who was the victim of a hit and run and has no money to speak of. That’s me though, I have a mild socialist bent. I certainly would never advocate for high taxes on essentials, in fact I think taxes on fruits and veggies, hygiene products, and school fees boarder on criminal, but again my socialism is showing and I know the US populace would never go along with it (at least not in the near future).

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              1. A fair thought. The trouble is they will end up helping very specific niches and not all around. This means organizations receive their support (most often large ones that provide optimal positive exposure), rather than suffering or in need individuals. Theoretically, I could write a billionaire and tell them what I am going to school for, what my goals are, and ask very politely if they would like to support that out of the goodness of their hearts, but it’s easier for them to give to me and me to access if the money is processed through the government rather than on a personal level.

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                  1. You have admirable faith in the human spirit and generosity, I suppose at heart my cynicism prevents me from believing that the majority will step in. Look at United Airlines: tonnes of video of a vicious, random attack, but other than audio of people saying it was a terrible thing to do there is no video of anybody, standing up, getting in the way and saying what should have been said, “Fuck right off, leave that poor man alone and take my seat. It’s not worth hurting someone over.”

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                    2. I have and I think it shows progress but, the inherent bias in the reactions to this event is much higher than the United event because the United Airlines incident happened first (drawing attention and changing how people would perceive and react to subsequent incidents). Beyond that, while these people “stood up against the bully”, no one stood WITH her and comforted her and empathized with her while keeping a level head and pushing away the employees who were trying to minimize her feelings. The gentleman who got into a loud verbal altercation with the flight attendant may have in fact, increased her distress by drawing her assaulter back into her space and creating a more violent and scary environment for her. I would have loved to see a whole bunch of people walk off that plane, inconvenience their schedules and drive American Airlines up the wall by saying they wanted a refund or a rebooked flight because they didn’t feel safe being on that plane with that flight attendant being on board. At the end of the day though, hindsight is twenty-twenty (these people did what they felt they could) and I will likely remain a cynic.

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  2. Hi TE. About the Fed, I wonder if you’ve seen Zeitgeist. You could download the films here:
    http://www.zeitgeistmovie.com/
    1) Zeitgeist: the movie (about the problems)
    2) Zeitgeist: addendum (the cause—this is actually where the Fed fits in)
    3) Zeitgeist: moving forward (offered solution)
    Of all them three, I think the last one is the weakest (for it relies on too many assumptions), but I guess the first two do have enough substance (however debatable).
    Some warning, though: sensitive subject matters inside, ok?
    Good luck with your study, and blogging! 🙂 Cheers!

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