# Why do libertarians always want to abolish the FEDERAL RESERVE **URL:** \ **Category:** Great Debates\ **Created:** [December 14, 2018, 4:06pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124 "2018-12-14T16:06:55Z")\ **Posts on this page:** 20\ **Page:** 8
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 17, 2018, 3:19pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/141 "2018-12-17T15:19:58Z")
Some of us are capable of succinctly demonstrating an error. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [December 17, 2018, 3:49pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/142 "2018-12-17T15:49:06Z")
> [@WillFarnaby](#): > > Some of us are capable of succinctly demonstrating an error. Well okay. If you eventually manage to find an error in one of my posts, feel free to succinctly demonstrate it. But I mean a _real_ error, not some bullshit you misinterpret and falsely attribute to me like you did in Post 133. ---
**Author:** ![EscAlaMike](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/escalamike/32/4177_2.png) [@EscAlaMike](https://boards.straightdope.com/u/EscAlaMike)\ **Post date:** [December 17, 2018, 4:02pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/143 "2018-12-17T16:02:36Z")
> [@EscAlaMike](#): > > It’s also the monopoly aspect of Central Banking that libertarians take issue with. > > The Federal Reserve has a government-protected monopoly on issuing currency. > > That explains why so many libertarians have jumped onto the cryptocurrency train. > [@Mr.Nylock](#): > > Your statements contradict each other. How so? ---
**Author:** ![steronz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steronz/32/11765_2.png) [@steronz](https://boards.straightdope.com/u/steronz)\ **Post date:** [December 17, 2018, 4:19pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/144 "2018-12-17T16:19:21Z")
> [@EscAlaMike](#): > > How so? You say the government forces people to use 1 currency, but people are free to use other (crypto) currencies. ---
**Author:** ![EscAlaMike](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/escalamike/32/4177_2.png) [@EscAlaMike](https://boards.straightdope.com/u/EscAlaMike)\ **Post date:** [December 17, 2018, 4:44pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/145 "2018-12-17T16:44:27Z")
> [@steronz](#): > > You say the government forces people to use 1 currency, but people are free to use other (crypto) currencies. Ahh, I see. Well, we’ll see if that “freedom” lasts. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 17, 2018, 5:12pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/146 "2018-12-17T17:12:25Z")
It’s already been compromised. If the dollar depreciates against bitcoin or gold, the holder must pay capital gains. Make no mistake, alternatives to the Fed paper are compromised for a reason. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [December 17, 2018, 5:49pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/147 "2018-12-17T17:49:30Z")
> [@EscAlaMike](#): > > Ahh, I see. > > Well, we’ll see if that “freedom” lasts. Yeah, after the New World Order intervened to make the Fed prohibit credit cards in 1972, the Bilderbergers will stop at nothing to crush any attempt to undermine Federal reserve notes. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 17, 2018, 5:57pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/148 "2018-12-17T17:57:24Z")
No. The government confiscated gold to limit competition. Today they tax alternate currencies and throw people like Ross Ulbricht in prison for life for running a website. They also jailed a guy for coining gold a few years ago if I remember right. When you try to lampoon a point of view, it’s probably best to up the ante on the hyperbole. Any political claim can be lampooned in a lame way. For example, replace any of Obama’s or Romney’s boogeymen with “Bilderberger” or “New World Order”. Same effect. ---
**Author:** ![EscAlaMike](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/escalamike/32/4177_2.png) [@EscAlaMike](https://boards.straightdope.com/u/EscAlaMike)\ **Post date:** [December 17, 2018, 6:11pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/149 "2018-12-17T18:11:03Z")
> [@Ravenman](#): > > Yeah, after the New World Order intervened to make the Fed prohibit credit cards in 1972, the Bilderbergers will stop at nothing to crush any attempt to undermine Federal reserve notes. Um, no. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [December 17, 2018, 6:52pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/150 "2018-12-17T18:52:44Z")
> [@WillFarnaby](#): > > No. > [@EscAlaMike](#): > > Um, no. You have your “facts,” I have mine. ---
**Author:** ![steronz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steronz/32/11765_2.png) [@steronz](https://boards.straightdope.com/u/steronz)\ **Post date:** [December 17, 2018, 7:00pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/151 "2018-12-17T19:00:26Z")
> [@WillFarnaby](#): > > It’s already been compromised. If the dollar depreciates against bitcoin or gold, the holder must pay capital gains. Make no mistake, alternatives to the Fed paper are compromised for a reason. If the government adopted the gold standard and gold depreciated against bitcoin, you’d still have to pay taxes on those gains… ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [December 17, 2018, 7:03pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/152 "2018-12-17T19:03:47Z")
> [@WillFarnaby](#): > > The gold standard was abused in that it was abandoned or governments abrogated contracts during crises and allowed suspension of specie payments. This is why libertarians do no advocate for a government standard, but prefer the government simply allow gold to compete in the marketplace. Yes, but the gold market can fluctuate wildly now, by a few billionaires clicking a couple buttons. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [December 17, 2018, 7:05pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/153 "2018-12-17T19:05:25Z")
> [@WillFarnaby](#): > > It’s already been compromised. If the dollar depreciates against bitcoin or gold, the holder must pay capital gains. Make no mistake, alternatives to the Fed paper are compromised for a reason. It’s not the dollar depreciating against bitcoin or gold, it’s the wild fluctuations caused by investing in them. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [December 17, 2018, 7:09pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/154 "2018-12-17T19:09:33Z")
> [@WillFarnaby](#): > > … Today they tax alternate currencies and throw people like Ross Ulbricht in prison for life for running a website. He was convicted of money laundering, computer hacking, and conspiracy to traffic narcotics. > **[Ross Ulbricht](https://en.wikipedia.org/wiki/Ross_Ulbricht)** > > Ross William Ulbricht (born March 27, 1984) is an American serving life imprisonment for creating and operating the darknet market website Silk Road from 2011 until his arrest in 2013. The site operated as a hidden service on the Tor network and facilitated the sale of narcotics and other illegal products and services. Ulbricht ran the site under the pseudonym "Dread Pirate Roberts", after the fictional character from The Princess Bride. > In October 2013, the Federal Bureau of Investigation (FB... ---
**Author:** ![BeepKillBeep](https://avatars.discourse-cdn.com/v4/letter/b/9e8a1a/32.png) [@BeepKillBeep](https://boards.straightdope.com/u/BeepKillBeep)\ **Post date:** [December 17, 2018, 7:11pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/155 "2018-12-17T19:11:27Z")
> [@WillFarnaby](#): > > No. The government confiscated gold to limit competition. Today they tax alternate currencies and throw people like Ross Ulbricht in prison for life for running a website. They also jailed a guy for coining gold a few years ago if I remember right. > > When you try to lampoon a point of view, it’s probably best to up the ante on the hyperbole. > > Any political claim can be lampooned in a lame way. For example, replace any of Obama’s or Romney’s boogeymen with “Bilderberger” or “New World Order”. Same effect. Yeah, running a website. That’s literally all that Ross Ulbricht did. Just running a plan ol’ website with photos of his cat or something. And _boom_ life in prison. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [December 17, 2018, 7:13pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/156 "2018-12-17T19:13:32Z")
> [@WillFarnaby](#): > > It’s not only that Greece and Germany are of disparate “strength”, it’s that this is coupled with rampant crony spending by Greece. If they had Germany’s fiscal discipline, their sharing a currency with Germany would not be a problem. Well, that’s what the Germans say, in public at least. The problem right now is that Greece does not have its own central bank at this time. Hard money, like gold or Euros, isn’t just a measurement like inches or centimeters. It can flow away and be very hard to retrieve. It’s hard to pay debts when you have to borrow at interest the credit to pay the debts. As for your obnoxious insistence that I’m trying to control society by banning gold, I’m really not. I’m in favor of private citizens to be able to issue their own currencies, backed by gold or silver or pounds of flax if they want; but I also know they can’t typically compete. It’s consistent with that that I’m in favor of nation-states being able to issue their own currencies, including fiat currencies, so they can keep their local economies liquid and functional. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 17, 2018, 7:45pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/157 "2018-12-17T19:45:29Z")
> [@foolsguinea](#): > > Well, that’s what the Germans say, in public at least. > > The problem right now is that Greece does not have its own central bank at this time. Hard money, like gold or Euros, isn’t just a measurement like inches or centimeters. It can flow away and be very hard to retrieve. It’s hard to pay debts when you have to borrow at interest the credit to pay the debts. > > As for your obnoxious insistence that I’m trying to control society by banning gold, I’m really not. I’m in favor of private citizens to be able to issue their own currencies, backed by gold or silver or pounds of flax if they want; but I also know they can’t typically compete. It’s consistent with that that I’m in favor of nation-states being able to issue their own currencies, including fiat currencies, so they can keep their local economies liquid and functional. Yes it is “hard to retrieve” money when you can’t print money that anyone will accept. You actually need to do crazy stuff like produce goods and services. This is novel to nobody operating in society today. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [December 17, 2018, 8:18pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/158 "2018-12-17T20:18:43Z")
> [@etasyde](#): > > > [@Exapno\_Mapcase](#): > > > > I don’t doubt that the Fed was a contributor to the insanity of the 2000s. I do doubt that it was the main cause. I put it almost as far down the list as I do for the status of the poor. Heck, if the credit rating organizations had spent one minute doing their jobs the affair couldn’t have happened. > > Then you disagree with every non-Keynesian economist… “Every” non-Keynesian economist? Here’s Edward Prescott, New Classical economist, most emphatically not a Keynesian. > [@Edward Prescott](#): > > It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed. He won a trip to Sweden in 2006 saying stuff like this, for reasons that I still have trouble understanding. Here’s John Cochrane, [describing a Neo-Fisherian result](https://johnhcochrane.blogspot.com/2016/03/a-very-simple-neo-fisherian-model.html): > [@John Cochrane](#): > > When interest rates rise, inflation rises steadily. The Neo-Fisherians believe that inflation has been very low since 2008, _because_ interest rates have been low. They think that inflation would increase if the Fed increased interest rates. The standard joke about the Neo-Fisherians is they also recommend that everyone leave their umbrellas at home, because it rains when people take their umbrella with them. They’re not Keynesians either. Or how many monetarist economists do I need to cite here? They point out the demand-based nature of recessions, like the Keynesians so I guess you can call them Keynesian-adjacent, but they don’t have exactly the same policy prescriptions. I’m a flavor of monetarist myself, and I don’t agree with your analysis. You seem to be implying a non-Keynesian consensus that I do not believe exists. > [@etasyde](#): > > Because base money is just that, the _base_ of money. And the population _did not quadruple_ in 2008. Now, I say “base” money because you aren’t factoring in the _massive_ multiple caused by fractional reserve banking. The fed maintains an average of 0.15-01.5% reserve ratio. That means an increase of base money produces a 267x multiple in the M3 money supply (the level that actually represents your money in the bank. 267x? This is the OECD estimate of the [M3 stock of money](https://fred.stlouisfed.org/series/MABMM301USM189S) since 2008. The US monetary base is about 4 times as big as it was in 2008, yet the M3 as estimated by the OECD is only about two times bigger than it was, not “267x”. I don’t know where you’re getting the “average reserve ratio” or why you think it’s relevant. You’re citing the M3 here, which also includes repo, but repo is collateralized borrowing, not exclusively deposit-based borrowing with a legal reserve requirement. You have to post assets to borrow any cash on the repo markets, which makes it more stringent in a certain sense, than deposit-based reserve-requirement borrowing that applies to commercial banks. This is the Federal Reserve’s own calculation of [the M2 stock of money.](https://fred.stlouisfed.org/series/M2) It’s also about two times bigger than it was. This is the Federal Reserve’s calculation of the [M1 stock of money.](https://fred.stlouisfed.org/series/M1) The first derivative increased in 2008, but it’s only about 3 times bigger than it was. It’s worth pointing out that the [M1 money multiplier](https://fred.stlouisfed.org/series/MULT) (M1/MB) was about 1.6 in 2008, when it took a precipitous drop as the base was quickly expanded (the base being the denominator of that definition). The M1 multiplier only recently got back above 1.0. It’s still not close to 1.6 where it was in 2008. Reserve requirements, to the extent they exist for certain deposit accounts, are not binding. The broader money stock, from “fractional reserve banking”, is simply not showing the explosive growth you are asserting here. Money is not being “multiplied” in a “_massive_” fashion right now. Quick and Dirty Definitions M1: currency in circulation + checkable deposits. M2: currency in circulation + checking + savings + small term-depots. M3: currency in circulation + checking + savings + small term-depots + large term-deposits + repo. The Fed stopped calculating the M3 itself. When they used to keep their own M3 time series, they included eurodollar accounts along with repo, which the OECD does not. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 17, 2018, 9:12pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/159 "2018-12-17T21:12:04Z")
> [@etasyde](#): > > How does this keep flying over your head? You understand that they purchase the security, but you don’t seem to understand that the money they use to purchase the security didn’t exist before they purchased it. > > They poof that money from thin air and _then_ buy securities with it. That’s the money creation, given to banks, I’m referring to. > > It’s not a hard concept. As I understand it the fed effectively credits the private banks with a credit to their Fed account in exchange for the securities. This is how they create money out of thin air. As long as the securities maintain their value, there is no problem. If not then the fed owes more money to its constituents than it has and the fed has to be bailed out, probably with inflationary money. It was a big risk but the alternatives were pretty grim. > [@](#): > > Yes, and if you look at a chart of base money, you’ll notice they almost **never** do this to any degree that matches the expansion. > > It’s only nonsense because you reject the idea that the federal reserve is responsible for the creation of federal reserve notes. Now, I get how stupid it _sounds_ because the system **_is_ stupid** but that’s what the fed _is_. > > This would matter if the amount of expansion weren’t vastly, overwhelmingly greater than the amount of contraction. The “fault” most Austrian economists believe most undermines Keynesian policy is that _they almost never shrink the money supply_. It’s politically untenable to do so. > > [United States Money Supply M0](https://tradingeconomics.com/united-states/money-supply-m0) > > Zoom the bloody chart out to maximum. Prior to the 2008 crisis, the money supply seemed to head slowly and steadily up and AFAICT money supply is supposed to increase with the size of the economy. Then, we had the worst financial crisis since the great depression. They dropped interests rates as low as they could but it was not enough to address the financial crisis so they started buying assets to inject liquidity into the system. It worked and we are not living in Mad Max world. They have since started to raise the fed rate and sell off some of those assets and it’s not like they are done, they can still reverse all of it given time. I am not sure why because I would have thought that the selling off of the assets would naturally raise interest rates. Eventually we will either sell the assets or they will mature. Either way, the money is taken back into the Fed who can then use it to back up the IOUs. In any event, right now the problem seems to be in the deficit and debt rather than quantitative easing. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 17, 2018, 9:28pm UTC](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124/160 "2018-12-17T21:28:41Z")
> [@etasyde](#): > > We’re talking about the USD. However, there is a popular expression: the USD happens to be the fairest mare in the glue factory. Every fiat currency has been abused, this is true. > > A reduction of less than 10% does not compensate for an expansion of over 400%. And this in less than a decade. An expansion of 300% only needs a reduction of 75% to reverse itself. right? > [@](#): > > Because base money is just that, the _base_ of money. And the population _did not quadruple_ in 2008. Now, I say “base” money because you aren’t factoring in the _massive_ multiple caused by fractional reserve banking. The fed maintains an average of 0.15-01.5% reserve ratio. That means an increase of base money produces a 267x multiple in the M3 money supply (the level that actually represents your money in the bank. Now obviously that’s a range, and a range of averages at that. It’s not precise, but does 267x reflect a 60% population growth rate in your crazy world? > > Note that it starts at 68,000 and rises to ~1,000,000 by 2004. That’s not a sixty percent rise. > > GDP has two definitions, which are equivalent. The first you probably know, GDP = net exports + gross investment + government spending + consumer spending. It’s also defined as the velocity of money times the supply of money (unless you reject Keynesian theory, in which case you should be howling for the Fed’s destruction). The two values are equivalent - that is, as you grow the money supply the nominal value of all those things in the first equation also grows. GDP being up 2000%, in light of the 100+ multiple in the money supply, means that the velocity of the dollar _must_ have decreased. > > That can only happen when _less people are able to use the same volume of money_. By definition. > > And yes, inflation accounts for quite a lot of your 2000% figure. Median home prices in the 1960’s were approximately $26,000. They’re now over $250,000. That’s a ten fold increase, or fully half of your 2000%. And that’s just home prices. Average homes these days have about twice as many square feet as homes built in the 1960’s. And AFAICT, they are upgraded in almost every way from the 1960s. A 3% inflation rate over 30 years is about 580%. > [@](#): > > It’s true, there are a lot of reasons it happens. However, the largest injury suffered by the middle class in living memory was the 2008 crisis, which was directly caused by the policies of Ben Bernanke (specifically, his attempt to “save” the market from the DOT-COM crash lead to artificially low interest rates that drove aggressive malinvestment into mortgages which could safely be bundled into MBS and insured by CDS and etc etc I’m not explaining the entire 2008 crisis in this thread). You mean Alan Greenspan, right? Alan Greenspan oversaw the dot com recovery. The toxic securities started getting issued while Greenspan was still chairman of the fed. > [@](#): > > A large percentage of families in the united states have _not recovered_ from 2008. That was a fed driven bubble - they created an environment that strongly incentivized the insanity the banks did, and being driven by the same profit motive as everything else in our system, they did the thing that was most sensible for their interests - that is, screw everyone. You don’t want to get into the financial crisis but you declare that it was a fed driven bubble? Is it possible that the prohibition against regulating those securities had something to do with it? [Previous page](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124.md?page=7) [Next page](https://boards.straightdope.com/t/why-do-libertarians-always-want-to-abolish-the-federal-reserve/826124.md?page=9)