Why the Federal Reserve must die | Hacker News Reader

Why the Federal Reserve must die

theburningplatform.com

15 pointscwan17 comments

I agree that the fed should be abolished, but this article is so terribly written (and presented) that it hurts its cause more than it helps.

This thing is thirteen pages of somewhat irrelevant and nitpicky history, ad hominem attacks on dead guys ("George Miller ... sounds like an early version of Al Gore") and CCR lyrics.

Why not start with a well-written, focused argument that fits on printed page?

Yeah. I'm a libertarian and even I think that this article doesn't fit with HN, nor is it a good representation of the scholarly arguments for abolishing the Fed.

Just by abolishing legal tender, you just killed the federal reserve's power on the economy. Some sort of market currency will naturally arise to be the gold standard of the economy.

Personally, I am betting on gold. If people used gold in the past, than it is probably still a good currency in the modern age.

What is gained by abolishing legal tender since, as you state, another standard will rise in its place?

Abuses and deficiencies of any one currency would be kept in check by competition, even if one currency dominated. An issuing authority couldn't abuse their position because everyone would just flee the currency.

"Mr. Bernanke must have felt like his head was spinning like a top while Ron Paul gave him a tutorial in basic economics."

Yeah, I'm sure the world's foremost economist just took a lesson on economics from a doctor.

This is really just another hack job article.

Wait a minute, isn't this an appeal to authority?

Maybe you could substantiate how Ron Paul is wrong?

Ron Paul conflates two things (1) short-term Fed lending designed to ensure liquidity in the banking sector, and (2) the socialization of private debt that took place through the bailouts.

The Federal Reserve's major function is adjusting the money supply to balance employment and inflation. Yes, it expanded the money supply quickly in response to a collapse in credit in the private market. This is not a problem. It can remove liquidity from the markets just as quickly when and if inflation returns.

The second issue (saddling the government with large amounts of private debt) is a real problem, because it involves the redistribution of wealth. That has nothing to do with whether Central Banks should follow inflation targeting. Here as elsewhere, Ron Paul is marking an argument about whether banks or miners should control the money supply by making a moral claim about the unsustainability and unfairness of public debt (issue two).

I'd say both matt's comment as well as the quote he was pulling from have similar logic problems.

Indeed, an appeal to authority. Moreover, "Helicopter Ben" Bernanke's claim to authority comes from his various clever extensions and justifications to Alan Greenspan's financial regime. His most notably justification was his promise to fight deflation with Helicopters full of dollars (most of which seem to have landed on Goldman Sach's roof).

But even Bernanke's "fundamental research" was basically fleshing out the claim that sufficient Fed accommodation could solve even a problem as extreme as the Great Depression. We are clearly getting a chance to see whether this is true and I'm with Paul Krugman in calling bullshit on it.

So, "World's Greatest Economist" or fraud? The proof will be in the pudding and the pudding is certainly not done.

You say that like the "world's foremost economist" knows everything there is to know about economics, so it's a waste of his time to debate on them with others.

Also, Ron Paul is pretty frequently put on cable business news networks (FOX Business, CNBC, Bloomberg, etc.) to discuss things...I doubt they would ask him to come on if he wasn't knowledgeable about the economy.

I wonder when the time will come that someone treats money and this crisis as technical problem and analyses them as such. Reading all these smear pamphlets blaming certain people, institutions, political parties, secret associations, or even just races is boring.

   Homer: Listen, Flanders, you still have that store?
   Ned:   For two more days. [sniff] It becomes Libertarian Party headquarters. 
          I hope they have better luck than I did.

Economies where the currency was on the gold standard have also had speculative bubbles - from the tulip craze to the South Sea Bubble.

The Federal Reserve has sometimes actually served its purpose of maintaining a stable currency - notably 1935-1970 and 1980-1990.

The article does well to evoke Minsky but it should be remembered that Minsky wasn't a gold-bug but a partisan of regulated capitalism. Unlike "Austrians" and libertarians, Minsky analyzed markets as being unstable and advocated regulation. Of course, the problem is regulators can become, accommodating and corrupt as easily as markets can become unstable, rigged and speculative. That's why we have democracy - except that citizens can also become fat, lazy and stupid. So, well, you can't win. Perhaps, that's why we have cycles of dominance between nations...

There is more to the tulipmania than meet the eyes: http://mises.org/story/2564

Uh, this article is a fine example of "austro-gymnastics".

"In Garber's view, tulipmania was not a mania at all, but is explainable by market fundamentals."

Rationality is a slippery concept. A speculator who can "rationally" expect his neighbor to be the bigger fool can "rational" buy inflated items and "rationally" profit from his gullible neighbor. Whether the folks who traded acres of land for single tulips were acting in this "rational" fashion or not, speculative bubbles are clearly damaging for a society as a whole.

Similarly, perhaps these folks were acting on "market fundamentals" but this simply a humorous disproof of the claim that market fundamentals automatically produce social good.

I am not aware of any bubbles that happened without government policy. There is always a state driven monetary or fiscal component.

> maintaining a stable currency - notably 1935-1970 and 1980-1990.

By stable you mean inexorably lose value through inflation? The dollar in real terms is down something like 98% since the establishment of the Fed. Flat or falling prices was the pre-Fed norm.

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