A Century of Money Mischief and the Rising Sea of Debt
by John Butler
Mon, 6 Dec 2010
A CENTURY OF MONEY MISCHIEF
On precisely the same weekend in November as the Republican victory parties in and around Washington, the Fed celebrated its centennial far away from its DC home at Jekyll Island, Georgia. One-hundred years ago, seven US Congressmen and bankers gathered together in secret at this highly remote location to lay the political foundations for what would become, in 1913, the Federal Reserve Act. The ostensible purpose of creating the Federal Reserve was to provide for greater financial stability in the wake of the US banking panic of 1907. So how has the Fed fared in this role?
Well the Fed has come a long way in its first hundred years, to be sure. Let’s consider for a moment this summary of the first eighty of those, by quoting G. Edward Griffin, historian and author of The Creature from Jekyll Island:
Since it was created in 1913 the Federal Reserve System has presided over the crashes of 1921 and 1929, the Great Depression of 1929-39, recessions in the years 1953, 1957, 1969, 1975 and 1981, and a stock market Black Monday in 1987. We all know that corporate debt is soaring, personal debt is greater than ever before, both business and personal bankruptcies are at an all-time high, banks and savings and loan associations have failed in greater numbers than ever before in our history, interest on the national debt now consumes half of all of our tax dollars, heavy industry has all but been replaced by overseas competition, we’re facing an international trade deficit for the first time in our history, 75% of downtown Los Angeles and other metropolitan areas are now owned by foreigners and over half of the nation now officially is in a state of recession.
That is the report card for the Federal Reserve after eighty years of stabilizing our economy. I don’t even think it’s controversial to say that it has failed to meet its stated objectives. The only controversial part is, why has it failed?