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<End the Federal Reserve System>

Nam Woong Kim

04/18/16

It is very upsetting to people when their property gets stolen by a thief,

but in that case, they have law and police to protect them from a thief.
What if there is a thief whom police cant arrest? That would be more
upsetting. However, this is happening right now in the United States of
America. A thief is called the Federal Reserve System, which is the
central bank of the United States that has the power to issue and print
money. Why is the Federal Reserve Board a thief? It is because the
Federal Reserve inflates the currency by printing money as much as it
wants to print, and inflation is a decrease in value of money that
people hold (Rockwell). What people usually do when they face a thief?
They punish a thief. That is why the Federal Reserve System should be
punished so individuals in this country can protect themselves from the
further theft of their property, and the best way to punish them is to
abolish the Federal Reserve System in this country by adopting the
gold standard system.
The problem with the Federal Reserve starts with its monopoly of the
currency market. People dont like the monopoly because it always
makes a quality of commodity go down and its price to go up, but why
dont they care about monopolization of currency? Believe or not,
currency is also a product in the market, which means that currency
also has supply and demand like other commodities have in the market

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(Mises). Money is one of the essential commodities in the economy,
but people ironically dont even worry about the monopoly of currency
because they spend too much time worrying about the monopoly of
other goods in the market. Monopoly means that monopolist of the
market can do whatever he or she wants to do in the market;
therefore, the Federal Reserve is free to print money as much as it
wants, and this leads to an oversupply of money, which leads to
decrease in quality of money. This decline in quality of money
automatically causes inflation problem.
Inflation has occurred very radically since the Federal Reserve was
established in 1914, which means that purchasing power of a dollar
has been dramatically weakened by the Federal Reserve. A good that
people could buy for $1 in 1913 would cost approximately $21 in 2009.
$1 of 2009 is $0.05 of 1913, which means that other $0.95 had stolen
from 1913 to 2009 (Paul).
Inflation is not the scariest part of the Federal Reserve System. The
most frightening part of the Federal Reserve is its secrecy. Whenever
people think about the secret agency, they might think of FBI or CIA.
However, both of FBI and CIA are under the control of Congress since
Congress has

control over their budgets

and supervises their

operations. Surprisingly enough, the most secret institution in the

United States is the Federal Reserve. Compare to FBI and CIA,

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Congress has no control over budgets of the Federal Reserve, cannot
supervise it, and cannot oversee it (Rothbard).
The Federal Reserve System isn't also constitutional. Section 10 of
Article I in the Constitution explicitly states that state cannot issue the
money other than gold and silver (US Const. Article. I, sec. 10). If the
Federal Reserve System is not constitutional, politicians should abolish
the Federal Reserve since all politicians in the United States should
obey their supreme law of the land.
These special unique characteristics of the Federal Reserve System
prove why it is solemn problem in this country. The Federal Reserve
System, which monopolizes the currency market and inflates the
currency, cannot be controlled by anything. This might be the one of
the most serious problems that the United States has nowadays.
However, if this is the significant problem, how people can fix this
issue?
There are several solutions that different people have proposed. There
have been politicians who argued that passing the bill that gives
Congress ability to audit the Federal Reserve System might solve the
problems associated with the Federal Reserve. One of prominent
economists and Nobel Prize-winning economist, Friedrich Hayek argued
that competing for currency might solve problems. Finally, free market
economist, Murray Rothbard proposed returning dollar back to gold
currency as a solution to this issue.

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Auditing the Federal Reserve has been tried couple times in Congress,
but it has never been passed In Congress. Democratic Chairman of the
House Banking Committee, Henry B. Gonzalez, introduced a bill to
open up the Fed to public. However, this bill was not passed (H.R. 28).
This attempt to audit the Federal Reserve has not been stopped. In
2015, Republican Senator from Kentucky, Rand Paul, introduced a bill
to audit the Federal Reserve and make the Federal Reserve to report
findings and conclusions to Congress. However, the Senate also has
rejected this bill (S.264). Although their attempts to audit the Federal
Reserve System alert public to be aware of secrecy of Federal Reserve
System, auditing the Federal Reserve cannot solve entire problems
that Fed has even If the bill auditing the Federal Reserve has passed
because opening up the Federal Reserve cannot end its monopoly of
the currency market.
The second solution was proposed by Nobel Prize-winning economist,
Friedrich Hayek. He argued that privatization of money, like other
commodities in the market, would solve this problem regard to the
Federal Reserve System. He said that if competition in the market
always increases the quality of commodity and decreases the price of
the commodity, what if currency market becomes private? The quality
of money will go up while the price of it will go down. This solution
might end the monopoly of the Federal Reserve System, give people
various choices of currency, and prevent the inflation by competing

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with each other (Hayek). Although his plan for privatization of money
sounds good, Murray N. Rothbard, prominent Austrian Economist, said
that Hayek's plan is very unrealistic because nobody will choose new
private money other than dollar since Americans get used to using
dollar as their currency for a century, and people would continue using
dollar printed by the Federal Reserve as their prominent currency
(Rockwell).
If neither auditing the Federal Reserve nor the privatization of money
cannot solve this problem, how can people solve this issue? Murray
Rothbard argued that returning to gold and silver standard by
abolishing the Federal Reserve can address this issue. What is gold and
silver standard? It is a way to evaluate the value of dollar-based on a
particular weight of gold and silver. Rothbard argued that gold and
silver are highly stable because their supply is very limited to be
deflated but not scarce enough to be inflated as well. Also, any types
of government but the free market itself can determine the value of
gold. In this way, the Federal Reserve System has nothing to do but to
disappear since the Federal Reserve cannot determine the value of
gold and silver (Rothbard). Obviously, there is no such thing as a
perfect system. Even gold standard has its flaw since the value of gold
and silver is not always as stable as people want it to be. Over the past
100 years, the value of gold went up and down several times, and this
shows that the value of gold is not entirely stable (Rojas). However, the

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value of gold and silver has been much stable than that of paper
money because the value of paper money under the Federal Reserve
System hasnt been increased since the 1940s (Paul). That is why
returning gold and silver standard is the best, and efficient solution
among others since this solution ends the endless inflation by
abolishing the Federal Reserve System while preserving the dollar
system at the same.
If returning to gold and silver standard of is the best and efficient
solution, is this a feasible solution as well? Yes, the currency of the
United States of America was used to be based on the value of gold. It
was on June 5, 1933, when the United States completely abolished the
Gold Standard (History.com). This means that American people have
lived under the gold standard for over 100 years. Returning to the gold
standard is not something that hasn't happened before.
If this solution is feasible as well, how can the people get done this
solution? There is only one-way: passing the legislative bill that ends
the Federal Reserve System and adopts the gold standard. Actions of
politicians usually reflect public consent, and more than half of
American people feel like the Federal Reserve should be either curbed
or ended (Zumburn). This poll proves that politicians should take
problems regarding the Federal Reserve seriously.
This solution is not biased to particular political ideology. Many
politicians from both major parties of the United States think that the

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Federal Reserve System is the somber problem since several members
from both Republican and Democratic parties have proposed bills that
limit the power of the Federal Reserve. The interesting fact is that
when Republican Congressman from Texas, Ron Paul tried to pass a bill
that audits the Federal Reserve, Democratic Senator from Vermont,
Bernie

Sanders

also

supported

Congressman

Paul

(Schroeder).

Although both of them did not try to end the Federal Reserve System
directly, Congressman Ron Paul believed that auditing the Federal
Reserve should be the first step of many steps to end the Federal
Reserve (Reddy). Also, Bernie Sanders also showed his fear about
central bank several times during his long political career, and many of
his supporters believe that he is passionate about ending the Federal
Reserve System although he didnt directly mention it (Harris). Since
Ron Paul and Bernie Sanders are from opposite political spectrum, the
problems with the Federal Reserve are not something either bipartisan
or ideological.
No matter people support Republican party or Democratic party, they
all should take problems that the Federal Reserve has caused very
seriously since the Federal Reserve is violating one of the founding
principles of this country: the right to property. Ending the Federal
Reserve System might not be fair to people who are in charge in the
Federal Reserve, but this unconstitutional institution should be
abolished because every American has right to protect their property.

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John Locke, a British philosopher who greatly influenced the founding
principles of the US, once said, All people have natural rights to life,
liberty, and property. Government was to protect these, if it didnt,
overthrow it(Locke). People should overthrow government institution if
it is not protecting their natural rights, and the Federal Reserve
continuously steals peoples money by inflating the currency. It is time
to abolish the Federal Reserve and preserve the value of money of this
country.

Works Cited
Harris, Larry, Jr. "Will Bernie Sanders End the Fed?" The Huffington
Post.
TheHuffingtonPost.com, 17 Feb. 2016. Web. 01 Apr. 2016
Hayek, Friedrich A. Von. Denationalization of Money: The Argument
Refined. 3rd ed.
London: Inst. of Economic Affairs, 1978. Print.
History.com. "FDR Takes United States off Gold Standard." FDR Takes
United States off
Gold Standard. A&E Television Networks, 2009. Web. 1 Apr. 2016.
<http://www.history.com/this-day-in-history/fdr-takes-unitedstates-off-gold-standard>.
H.R. 28 103rd Congress: Federal Reserve System Accountability Act
of 1993.
www.GovTrack.us. 1993. April 3, 2016
https://www.govtrack.us/congress/bills/103/hr28
Locke, John. Second Treatise on Government. New York: Liberal Arts,
1952. Print.
Mises, Ludwig Von. The Theory of Money and Credit. New Haven: Yale
UP, 1953.
Print.
Paul, Ron. End the Fed. New York: Grand Central Pub., 2009. Print.
Reddy, Sudeep. "Ron Paul Q&A: Audit the Fed, Then End It." WSJ. Wall
Street Journal,
16 Sept. 2009. Web. 01 Apr. 2016.
Rockwell, Llewellyn H. The Gold Standard: Perspectives in the Austrian
School.
Auburn, Ala.: Ludwig Von Mises Institute, Auburn U, 1992. Print.
Rojas, Rod. "Inflation and the Value of Gold Explained." Mises Institute.
Mises Institute,

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2 Mar. 2012. Web. 30 Mar. 2016.
Rothbard, Murray N. The Case against the Fed. Auburn, Ala.: Ludwig
Von Mises
Institute, 1994. Print.
S. 264 114th Congress: Federal Reserve Transparency Act of 2015.
www.GovTrack.us. 2015. April 3, 2016
https://www.govtrack.us/congress/bills/114/s264
Schroeder, Peter. Sanders to Vote for Pauls Audit the Fed Bill. The
Hill. The
Hill, 12 Jan. 2016. Web. 01 Apr. 2016.
US Const. Art. I. sec. 10. Print.
Zumburn, Joshua. "More Than Half of U.S. Wants Fed Curbed or
Abolished."
Bloomberg.com. Bloomberg, 9 Dec. 2010. Web. 30 Mar. 2016.