Ken Silber offers a negative review of Ron Paul's new book "End the Fed," but succeeds to only make a fool of himself. Let's take a closer look ...
Ron Paul’s New Book: More Exaggeration and Conspiracy-Mongering:
The title alone proves his ignorance, but it goes along perfectly with today's "anti-conspiracy" creed. Does Silber honestly believe that government is pure? Does he honestly believe hundreds of millions of dollars, spent on political campaigns, don't come with strings attached? Does anyone really believe this nonsense?
No, the Illuminati, Masons, nor even lizard-men space aliens are acting as puppet-masters who secretly control the world, but to believe no conspiracies exist, is to believe Lord Acton was but a fool, when he said:
Power corrupts, and absolute power corrupts absolutely.
Taking it a step further ... Not believing in any government conspiracy, is a rejection of God too.
For all have sinned, and come short of the glory of God. - Romans 3:23.
Maybe Silber's an athiest. So, what about Thomas Jefferson then?
In matters of Power, let no more be heard of confidence in men, but bind him down from mischief by the chains of the Constitution.
Oh, but nevermind ... Silber's "wisdom" is far superior to that of Acton, Jefferson, or the Bible.
Paul is right to be concerned about the Fed’s capacity to expand the money supply and generate inflation. (Incidentally, he defines inflation not as a general rise in prices but as any expansion of the money supply, a neologism that produces nothing but confusion.) But his audit bill, by making the Fed more susceptible to political manipulation, will only increase such inflationary proclivities. The record is clear that central banks with some insulation from political pressure are better at curtailing inflation.
In this paragraph, Silber puts his economic illiteracy on full display! For one, it's his definition of inflation (a general rise in prices) that is the "neologism that produces nothing but confusion." Milton Friedman taught us that "inflation is always and everywhere a monetary phenomenon," to which current Federal Reserve Chairman Ben Bernanke confirms "is universally accepted today by monetary economists."
Progressive hero Lord Maynard Keynes wrote about inflation in his book, "The Economic Consequences of the Peace," saying:
Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens ... Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
But again, Silber wants us to believe he knows better.
Financial crises occurred in America long before the Fed was created in 1913. The 19th century was rife with severe crises, most of which occurred long after the Fed’s precursors, the First and Second Banks of the United States, had been driven out of existence by the anti-financial populists of their day. Paul shrugs off this significant counterevidence to his argument, and seems to have ruled out on a priori grounds the possibility that financial crises can occur without government causing them in some way.
Nevermind that F.A. Hayek won the Noble Prize in 1974 by proving that the Federal Reserve was responsible for the boom-bust cycle, but let's address the pre-Fed crises he brings up.
The Panic of 1819 resulted from the excessive issuance of papr money by the banks. The money was issued without any corresponding gold in their vaults (nor even savings for that matter). If the banks had not artificially expanded the money supply, the bust would have never happened.
The result of this inflation was that it pushed up prices, encouraged more Americans to buy goods from abroad, and foreigners to demand gold from the banks in exchange for their paper notes. This outfolw of gold, forced banks to reduce their loans, but of course, the federal government "bailed them out" by allowing banks to suspend gold payments.
In the 1830's, the Second Bank of the United States coordinated another inflationary boom, that as always, resulted in a bust. The Panic of 1857 was again the result of a 5-year boom created by the rapid expansion of credit (not backed by equal reserves). Following this same pattern, so too happened the Panic of 1873 ... same as it ever was ...
On page 150 of End the Fed, Paul describes the Fed itself as a “private bank,” a false description that is a staple of conspiracy literature. In reality, the Fed’s Board of Governors, which has the final word on policy, is a clear-cut government agency, with members appointed by the President of the United States ...
The most interesting thing I find about Silber's statement here, is that he previously told us that H.R.1207 would make "the Fed more susceptible to political manipulation." Am I the only one who sees the contradicition here?
What he wants us to believe here, is that "members appointed by the President of the United States" are apolitical. Um, Silber ... ANYONE appointed by a politician, is political!
As far as who owns the Fed, just look at the individual shareholders. For example, the Ford family owns the majority of shares of Ford Motor Company. Should we believe that the Ford's don't actually own Ford too?
Extolling the gold standard, Paul argues that it would bolster the dollar’s credibility while restraining government spending ... For one thing, a commodity standard may require high interest rates to maintain, damaging economic growth.
Commodity-based currencies have proved successful over thousands of years, while paper currencies have failed for thousands of years. Aren't "conservatives" supposed to support the tried and true?
And interest rates are real prices that reflect real savings. To believe anything other than this, is to believe in the Tooth Fairy, Santa Claus, and the omnipotence of Government Planning!
Current reform efforts should focus on strengthening, not weakening, the Fed’s ability to constrain inflation.
Silber simply doesn't get it at all ... The Federal Reserve creates inflation (see Hayek's Nobel Prize), it does not constrain it.
Summary:
Under any honest analysis, the Federal Reserve is a criminal banking cartel. In fact, to believe in the neccessity of the Federal Reserve at all, is to believe in the omnipotence of central planning.
But silly me ... I thought "conservatives" were against central planning.
When did "conservatives" learn to love the State?
