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.Without the Fed, Keynesian-style macroeconomic planning that has done so much harm would be no more.(Idiscuss this at greater length in the final chapter.)Such are the benefits.But people still worry how banking might work.It would work like any other private enterprise system.Walmart mightenter the market, as it wanted to but was prohibited from doing.It would be a truly competitive system that any entrepreneur would enter.But wouldthis be  wildcat banking of the sort that is frequently condemned from the nineteenth century? No more so than we have  wildcat restaurants or wildcat shoe companies. Markets are self-regulating, responding to the wishes of consumers.It would be the same in banking.In any case, most of the tales of nineteenth-century banking are mythical.The problems of that century s monetary and banking system wereimposed by government.There were periodic suspensions of payment, inflationary wars, crazy price-fixing rules under the bimetallism system, andother forms of debt finance.These were problems with government, not the free market.The free-market system worked rather well.In researchpublished by the Minneapolis Fed, two scholars have looked closely at the banking system from 1830 to 1860 and found that it was remarkablystable and safe, with no wide-spread fraud.Bank failures were fewer than people believe, and importantly, there was no  contagion effect, that is, afailure of one bank didn t spread to other banks.2This is not entirely unexpected.The bad reputation of nineteenth-century American banking which existed during what was then the mostexplosive increase in prosperity ever seen in any country in the history of the world is largely the result of turn-of-the-century propaganda agitatingfor the creation of the Fed.We need to look at the facts.And the facts do not surprise us, once we consider that money and banking in a freemarket would operate like any other normal business enterprise, subject to profit and loss tests and punished or rewarded in the market based onconsumer behavior.We no more need to worry about banking in a post-Fed era than we worry about groceries, shoes, or software now.They are provided by themarket and not some distant central-planning apparatus that possesses neither the knowledge nor the incentive to do it well.To save ourselves from economic and political disaster, a dramatic change in the conventional wisdom of economic policy by our leaders isvital.Fortunately, our numbers are growing and more people than ever, especially young people, are now aware of the menace we face from theFederal Reserve and understand the importance of sound money.CHAPTER 14THE LIBERTARIAN CASESo I believe that there is no more economic or constitutional justification for the existence of the Federal Reserve.When honesty prevails, thereare only economic arguments against the Federal Reserve.There are no benefits except to some undeserving special interests.There is anultimate downside to ignoring all the arguments against its existence, one that cannot be tolerated by anyone who is concerned about protectingliberty, and that is the expansive growth of government that inevitably results.There s always a trade-off.When government grows, liberty suffers.This happens no matter what justification is given for the government programs being financed.Those who (possibly unconsciously) seek socialism, fascism, interventionism, or corporatism always support central banking.Some sincerelyseek a central bank as a tool in economic planning to make up for the perceived shortcomings of the free market.Although many who support acentral bank will claim that growth of government is not their goal, the result is otherwise.It s the nature of the beast.Remember that the people who run the Fed are just regular people, as flawed as anyone else.The only difference is that they have massivepower to break civilization.Any institution that can do this is by nature tyrannical and is specifically what the Constitution was trying to prevent.Authority to create money gives credibility to legalized counterfeiting.Some supporters of this power believe that the money managers should andwill be restrained in creating money for any reason other than for humanitarian purposes.This expectation of self-restraint never works out in theend.As we have seen time and time again, central bankers have big egos and quickly adapt to the potential power they wield.Then there is also thepolitical pressure to accommodate the deficits that politicians thrive on.Talk about moral hazard.This corrupt method of paying the bills andavoiding direct taxation only serves to institutionalize a system that breeds contempt for liberty and self-reliance, while feeding the growth of biggovernment.In the early years of an inflationary bubble, the benefits of central banking exceed the costs.When the bills come due, it s hard to identify thevictims [ Pobierz całość w formacie PDF ]