The conservative economist opines about the Federal Reserve: "Not only does the Federal Reserve System control the money supply and
regulate banks, the Fed’s willingness to keep buying hundreds of
billions of dollars’ worth of government bonds makes it easier for the
Obama administration to keep engaging in massive deficit spending that
runs up a record-breaking national debt. The reason that the Federal Reserve can afford to continue buying
huge amounts of government bonds is that the Fed is authorized to create
its own money out of thin air. They use the fancy term 'quantitative
easing,' instead of saying in plain English that they are essentially
just printing more money."
He adds: "The Federal Reserve was supposed to prevent shocks to the economy
that can come from drastic inflation or deflation, and reduce the
dangers that can come from widespread bank failures. These are all good
goals. But what is the Fed’s track record?
In the 100 years before there was a Federal Reserve System, inflation
was less than half of what it became in the 100 years after the Fed was
founded. The biggest deflation in the history of the country came after
the Fed was founded, and that deflation contributed to the Great
Depression of the 1930s. As for bank failures, after the Federal Reserve
System came into being, they reached unheard of levels.
Like so many 'progressives,' then and now, Woodrow Wilson seemed to
think that, if those who made government decisions had no financial
interest in those decisions, then they could be trusted to wield their
powers in the public interest.
But the enormous power wielded by the unelected leaders of the Fed
over the economy, unchecked by the constraints of the market, has
repeatedly turned out to be more than human beings can handle."
Thomas Sowell Op-Ed: Prophets & Losses
