End the Fed - explain to me

Not sure if this is the right forum for this…

Could someone please summarize for me the “End the Fed” argument put forth by Ron Paul supporters and the arguments against that? I’m hearing a lot of this from people (on Facebook, for instance), but I’ve never heard a concise description of this stance and googling it is just getting me all sorts of one-sided blogs and such (as you can probably imagine). Even the Ron Paul page on this issue uses phrases such as “usurpers of America’s future” and “magic money machine” :rolleyes:. Is there a precise breakdown of the issues and a critique of those ideas? Your thoughts or even a link to something I can read would be much appreciated.

In general, the people involved believe that hard money – gold, primarily – is the only thing that has value and should be the only basis for monetary policy. The Fed allows for control of the money supply, which to them – and to very few people who know economics – would make the currency more stable.

Basically, they want to dollar to be pegged to gold – something that was shown in the Depression to exacerbate economic problems. Getting rid of the Fed would allow this to happen.

The gold standard is a different issue, I think. The Fed existed when we were on the gold standard.

I’m not sure what Ron Paul’s issue is, but I can try and dig up some old Economics papers that are anti-Central Bank.

It’s difficult to believe or give credence to, but there are some people who lay many economic problems at the feet of fractional reserve banking as a process. And they have… a wikipedia article. Despite the fact that the article’s second sentence talks about mainstream economists, this is not a mainstream economic viewpoint.

It’s not entirely clear how anyone could get rid of fractional reserve banking without razing the economy to the ground and starting over, but eliminating the Fed would be considered a step away from fractional reserve banking.

Thanks, wevets - that’s a good introductory reading assignment for me and gives me some more useful search terms. After I posted this thread, this article popped up on my FB newsfeed.

I’m still interested in anyone else’s thoughts on this.

I think it’s extremely odd that candidates from a party whose economic policies are generally associated with Milton Friedman and Monetarism are so thoroughly in favor of concrete shoes on the feet of monetary policy. The hysteria around inflation of any sort, even the moderate levels of inflation encouraged by Bernanke’s Fed policies, is likely a better topic for GD or the Pit; I can’t really say what I’d like to about it here.

I’d suggest reading up on the Austrian School http://en.wikipedia.org/wiki/Austrian_School for reasons why people might be critical of the fed.

Have to agree with wevets that moving away from fractional reserve banking is most likely impossible at this juncture. Also, a lot of Ron Paul’s criticism of the Fed is their actions go unchecked and there is no accountability.

Apologies if my link is bad, but as you can see I’m not much of a poster.