Abolish the Fed
In a 1995 interview, I asked Milton Friedman whether “it would be preferable to abolish the Fed entirely and just have government stick to a monetary growth rule?”
Friedman answered: “Yes, it’s preferable. And there’s no chance at all of it happening.”
He didn’t live to see the abolition of the Fed; perhaps no one reading this will. Still, a couple of years after Friedman’s 2006 death, a semi–mass movement calling to “End the Fed!” arose in the aftermath of Rep. Ron Paul’s first Republican presidential run in 2008. The Texas congressman found during that campaign a surprising (even to him) number of youngsters blaming the central bank, founded in 1913, for government sins from inflation to war (which is easier to wage when it can be financed by cash from a central bank summoned more or less at will).
The Fed’s performance since Paul’s campaign has not blunted the urgency of the message. From 2008 to 2011, the central bank spit out as much new money as had entered the U.S. economy in the previous century, and it grew the value of the financial instruments it bought as an instrument of this money generation by $1.35 trillion in just part of 2008.
The subsequent decade of near-zero interest rates to frantically pump more cash into the economy encouraged debt to balloon across the nation and world, and eventually helped fuel the shocking inflationary burst of 2021–22. The Fed is now widely seen as a serial blower of market balloons, from tech stocks to housing to stocks to the Consumer Price Index. And it has been the linchpin of a macroeconomy in the past decade and a half that has mostly benefited the elite financiers who owned or traded assets.
Among the Federal Reserve’s damaging policies for the nonfinancial classes were paying interest on reserves and thus encouraging banks to quietly profit by not lending capit
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