Guest Post by Ron Paul
President Joe Biden has unveiled a three-part plan to fight inflation — or at least make people think he is fighting inflation. One part of the plan involves having government agencies “fix” the supply chain problems that have led to shortages of numerous products. Of course, any attempt by the government to solve the supply chain problems (which were caused by prior government interventions such as shutting down the economy for over a year) will not just fail to solve the supply shortages but will create new problems.
Deficit reduction is another part of Biden’s anti-inflation plan. However, Biden is not proposing cutting welfare or warfare spending. Instead, his deficit reduction plan consists of “tax reforms to increase revenue,” which is DC-speak for tax increases. History shows that tax increases unaccompanied by spending cuts end up increasing the deficit.
The last and most important part of Biden’s inflation plan is recognizing that the Federal Reserve “has the primary responsibility to control inflation.” President Biden has pledged to “respect the Fed’s independence,” unlike former President Trump, who Biden accused of “demeaning the Fed” by subjecting the central bank to mean Tweets.
It is hard to believe that someone who has been in DC as long as Joe Biden really thinks Donald Trump was the first President to try to influence the Fed’s conduct of monetary policy. Since the Fed’s creation, Presidents have used public and private pressure to “convince” the Fed to tailor monetary policy to advance their policy and political goals. When it comes to “demeaning” the Fed, Trump has nothing on Lyndon Johnson, who, frustrated over the Fed’s refusal to tailor monetary policy to finance the Great Society and Vietnam war, threw the Fed chairman against a wall.
By “passing the buck” on inflation, Biden no doubt hopes to deflect blame from himself and his party before the midterm elections. Unlike Biden’s previous inflation scapegoats — greedy corporations and Vladimir Putin — the Fed actually is responsible for creating and controlling inflation.
Price increases in specific sectors of the economy may be caused by a variety of factors, but economy-wide price increases are always the result of the Federal Reserve’s easy money policies. Inflation is actually the act of money-creation by the central bank. Widespread price increases are a symptom, not a cause, of inflation.
Federal Reserve Chairman Jerome Powell remains committed to more rate increases this year. However, even if the Fed follows through on all its projected rate increases, rates will still be at historic lows. While there are those on the Fed board who want more and bigger rate increases, others worry that going too far too fast in increasing rates will cause a recession. Already many economic experts are saying America should be prepared for increase in unemployment caused by the Fed’s efforts to vanquish inflation. This “tradeoff” between high prices and high unemployment illustrates the insanity for our monetary policy.
Treasury Secretary and former Fed Chair Janet Yellen and Chairman Powell have both admitted they were wrong to publicly dismiss inflation as “transitory.” The fact that the two most recent Fed chairs made such a huge blunder (or purposely refused to admit what was clear to many people for over a year), shows the folly of relying on a secretive central bank to manage monetary policy. Instead of “respecting the Fed’s independence,” President Biden should work with Congress to audit, then end the Fed.
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The Fed was born in 1913. The story of How is worth the time to learn. Who was involved. The Creature from Jekyll Island is a great book by G.Edward Griffin, or watch him on YouTube. I’m surprised Ron Paul doesn’t mention that.
.Neither Griffin nor Paul attempt to trace the funds from the auctions of Treasury securities, 90% goes to roll over the maturing Treasury securities. The remaining 10% disappears in what TreasuryDirect calls ‘new cash.’ If it bought securities, it would eliminate any increase in the National Debt and would negate inflation; i.e., it cannot go to government. Where does it go ?? The accounts are controlled exclusively by the FRBNY and have never been audited. Ref. 31 CFR 375.3. Ref.
THIS IS OUR BANKING SYSTEM.
Powell and Yelen weren’t “wrong”, they were lying through their teeth, even those fiscal morons know printing trillions of dollars in a few years would be catastrophic, and the Fed’s response of hiking a few basis points is also a poor joke which will have no measurable effect
think we’re having fun yet? they’ve barely gotten started
the fed created $16 trillion book entry value in QE’s to save the owners of the Fed. Ref.
THIS IS OUR BANKING SYSTEM.
actually it’s THEIR banking system, we’re just the expendable resources that power it.
depends on whether we are talking about ownership or being ‘subject to’ it.
“End the Fed”
fine. just understand that that will collapse the western world’s economy and leave the united states looking like dresden.
Hmm, that or enslavement. Which should I choose?
when you see what happens, you may seriously wonder.
We are Dresden bound–with or without the Fed.
Federal Reserve designed by thieves designed to legitimize their theft while hood winking all who should be approaching those involved and profiting from it with guns drawn prepared to kill !
you know who they are.
so. begin.
For your information,
The FED is audited EVERY YEAR!
The Fed posts its Comprehensive Annual Financial Report (CAFR) for all to read.
It is a nightmare to read because of accounting terms of art.
It is easier to believe Ron Paul than to search sources that may contradict ones beliefs.
There are many “Independent” agencies of Government like the FED.
The Post Office/Postal service is one such.
Congress farms out to Agencies because it is too much work for 535 people in Congress to handle.
The FED like other Agencies make policy to carry out its duties.
The FED can not make Law or violate Governments Laws.
Once I learned about the CAFRs, I questioned everything Ron Paul claimed.
As long as the congress continues giving itself raises and cutting its work days, yes, they’re not likely to get work done. I think we need Andrew Jackson.
Tax increases? OK, if every dollar of tax increase is matched with a dollar of spending cut.
..The auction of Treasury securities, exclusively handled by the FRBNY [ref. 31 CFR 375,3] which has never been audited and currently runs to $15 trillion annually, conceal the value of deficit spending T securities forwarded by the Treasury Dept. If the funds went to the govt, there would be no inflation nor any increase in the National Debt. To where do the funds disappear ?? The owners of the FRBOG, Inc, ?
The FED created WW2.
They left the punch bowl out in the roaring 20’s which created the stock market bubble which popped in 1929.
The Great Depression after affected Germany badly, the electorate swung to the right and voted in Hitler.