I know, just the very words, "Monetary Policy" make my brain hurt and my eyes glaze over... however, this area is a fundamentally important area of politics to understand. Ron Paul breaks it down and makes it easily digestible.
He states, "The Constitution is clear about the monetary powers of the federal government. Congress has a constitutional responsibility to maintain the value of the dollar by making only gold and silver legal tender and not to 'emit bills of credit.'"
Throughout most of American history, the value of the dollar has been tied to gold - the value of $20 was one ounce of gold. Contrast that today, when we have paper money not tied to any commodity and one ounce of gold will cost you $1537.82. That's some serious inflation. If your great-grandfather had worked very hard for almost 4 days and managed to make $20 in 1930 and then shoved it under a mattress, you can see how devalued that money is when your find it after flipping his mattress 81 years later. What took him 4 days to earn, most people make in an hour. So inflation has stolen 3 days and 7 hours of labor from your great-grandfather. It's insidious and allowing it to happen or worse, causing it to happen, is theft - plain and simple.
So how does inflation happen? Why can't we still buy gold for $20 an ounce? or a Coke for a nickel like our grandparents did? When we untied the dollar from the price of gold and created the Federal Reserve Bank in 1913, inflation was inevitable. At this point in time, the Fed can create money, literally out of thin air, it doesn't even need a printing press. In fact, no one knows how much money the Fed has actually created. We literally have no idea how many dollars are out there! It then loans this newly created money to banks that eventually loan it to us. The more money in existence, the less valuable each dollar is. Consider this, if you have the only $30,000,000 winning Lotto ticket, your ticket is worth $30,000,000. But if 30,000,000 other people have one, yours is worth $1. The Fed is printing winning lotto tickets each time it creates money from nothing, devaluing the dollar you have in your pocket.
Inflation may seem somewhat harmless if wages rise with prices, but they don't. Wages lag behind prices. Also, the money goes to the banks and investment house first. So they and their cronys get the money before prices rise. For those at the top, wages rise before prices, but for the rest of us, the opposite is true. Also, consider the destructive effect inflation has on savings. If you put a dollar in the bank, even with the measly interest the bank may pay you, by the time you withdraw the $1 it will no longer be able to buy what it did when you deposited it. That's why inflation is theft.
The Fed decreases interest rates to create money. In doing so, it distorts the market forces and tells everyone participating in the economy that now would be a good time to borrow and spend, not save. So everyone, acting in their own best interest, borrows and spends. To save money at a time of very low interest rates makes no sense at all. All this borrowing and spending adds up and creates an artificial "boom" which eventually "busts" when the cheap money runs out. So not only does the Fed create inflation, therefore stealing, it also creates boom and bust cycles, destroying even more of people's hard earned wealth.
It's time to "End the Fed" and let the market set interest rates. Banks know how much money they have to lend. When they need more, they will raise interest rates so you'll deposit more. When they have too much, they'll decrease interest rates so you'll stop depositing and start borrowing. They will give clear and truthful signals to all the people participating in the economy as to whether it's a good time to borrow and invest in the future, or save and wait for another day to build that new factory. We would escape the damaging boom and bust cycles and people would be treated like grown-ups and given accurate information as to how to proceed.
The Bible says, "Let your 'yes' be 'yes' and your 'no' be 'no.'" This means, above all, be honest! Give people the dignity they deserve and tell them the truth. Do not try to mislead them or insult their intelligence with a vapid, "Trust us, we know what we're doing." Give people correct information and let them have the dignity of making their own decisions based on facts. The Fed distorts this basic principle when it distorts the market. It lies to people, so they make decisions based on bad information and eventually the whole house of cards comes crashing down. The poorest are always hurt the worst and the rich, who got theirs first, go on their merry way. This is the perfect example of the rich oppressing the poor and it is wrong.
End the Fed!
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