Posted on 12/23/2013 3:22:13 PM PST by BfloGuy
It is little wonder that early Democrats garnered such popular support and would demand Andrew Jackson end America’s experiment with central banking. Jackson called it “dangerous to the liberty of the American people because it represented a fantastic centralization of economic and political power under private control.”
It’s hard to believe that guy who said that is now on the $20 bill.
Jackson also warned that the Bank of the United States was “a vast electioneering engine” that could “control the Government and change its character.” These sentiments were echoed by Roger Taney, Jackson’s Treasury Secretary, who talked of the Bank's “corrupting influence” and ability to “influence elections.” (The Whigs would later get revenge on this future chief justice when Abraham Lincoln, in response to a written opinion with which he disagreed, issued his arrest warrant.)
But the courtship between the political classes and their cronies would continue in the decades following Lincoln’s assassination. Those politically well-connected groups that benefited from early central banking continued to benefit from government finance, especially off of “internal improvements,” which is the nineteenth-century term for pork. National banking would appear during the War Between the States, setting in place a banking system in which individual banks would be chartered by the federal government. The government itself would use regulations backed by a new armed U.S. Treasury police force to encourage the banks’ inflation and protect them from the market penalties that inflation would otherwise bring them, such as the loss of specie and the occurrence of bank runs.
The boom and bust cycle, explained by the Austrian School in such detail, became worse and worse in the period leading up to 1913. And with the rise of Progressive Era spending on war and welfare, and with the pressure on banks to inflate to finance this activity, the boom and bust cycles worsened even more. If there was one saving grace about this period it would be that banks were forced to internalize their losses. When banks faced runs on their currencies, private financiers would bail them out. But this arrangement didn’t last, so when the losses grew, those financiers would secretly organize to reintroduce central banking to America, thus engineering an urgent need for a new “lender of last resort.” The result was the Federal Reserve.
This was the implicit socialization of the banking industry in the United States. People called the Federal Reserve Act the Currency Bill, because it was to create a bureaucracy that would assume the currency-creating duties of member banks.
It was like the Patriot Act, in that both were centralizing bills that were written years in advance by people who were waiting for the appropriate political environment in which to introduce them. It was like our current health care bills, in which cartelized firms in private industry wrote chunks of the legislation behind closed doors long before they were introduced in Congress.
It was unnecessary. If banks were simply held to similar standards as other more efficient industries were held to — the rule of law at the very least — then far fewer fraudulent banks would ever come about. There were market institutions that would penalize those banks that over-issued currencies, brought about bank runs, and financial crises. As Mises would later write:
What is needed to prevent further credit expansion is to place the banking business under the general rules of commercial and civil laws compelling each individual and firm to fulfill all obligations in full compliance with the terms of contract.
The bill was passed fairly easily, in part because the Democrats had a larger majority in both Houses than they do today. There were significant differences that were resolved in conference, with one compromise resulting in the requirement that only 40 percent of the gold reserve back the new currency. So instead of a 1-to-1 relationship between gold and currency issued — a ratio that defined sound market banking since the time of Renaissance Italy — the new Federal Reserve notes would be inflated, by law, at a ratio of 1-to-2.5.
The bill that was first drawn up at Jekyll Island was signed by Woodrow Wilson in the Oval Office shortly after the Senate approved it. At one point during the signing ceremony, as he reached for a gold pen to finish signing the bill, he jokingly declared “I’m drawing on the gold reserve.”
Truer words were never spoken.
Central banks always result in feeding those forces that centralize and expand the nation-state. The Fed’s policies in the 1920s, so well documented by Rothbard, would provoke the Great Depression, which, in the end, wrenched political power from cities and state governments to the swampland in Washington. Today people take seriously the claim that there can be a viable federal solution to every problem thanks to the money printed up by the Fed, while each decade has seen a larger proportion of the population become dependent on its inflation.
And yet Andrew Jackson’s beliefs about the perniciousness of the Second Bank of the United States are just as applicable to the Federal Reserve today.
Here’s to hoping we’ll see Jackson’s hawkish nose and unkempt hair on a gold-backed, privately issued currency in the not–too-distant future.
I suggest you expand on that a bit. Congress has the power to pass laws it is empowered to pass.
Article. I.
Section. 1. All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.
The Congress is empowered to enact legislation only within the enumerated powers.
Congress has no other constitutional powers.
Well that's the whole point! A fixed supply of currency is stultifying. That's the theory, but a convincing one, I think.
No banker is in the business to be poor because they prey on people and governments.Didn’t your mother teach your that?
LOL!Your logic defies common sense.
http://www.silverdoctors.com/100-reasons-to-shut-down-the-fed-forever/#more-36553
It makes sense to me that if the value of money soars, the holders of money are encouraged, to say the least, to hold on to it, and less and less money is available for circulation, until ultimately you have a handful of Scrooge McDucks lording it over an idle and destitute populace.
Right,The feds money only soars.LOL!
My mother idolized Roosevelt, and speculated in stocks.
As to poor bankers, what happened to them in the 1930's? Why did they go bust?
Since you're in a mood to teach, I'll let you tell me.
Your mother was a fool.
You should know better than to say such a thing.
“...Your mother was a fool...”
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Did your mother have any children that were normal?
>> “As the dollar inflates in value, the value of most assets also rise to match it over time.” <<
.
And all personal wealth is slowly taxed out of existence.
Inflation is the enemy of freedom and personal wealth.
When people are desperate they will do anything including getting involved in government Ponzi schemes to get out of their problems but it’s sad the government doesn’t come forward and say they created the problem along with the federal reserve to begin with.Government is the problem and will never be a solution.
As the value of money has sunken to near nothing, the bankers are lording it over an unemployed former middle class that is rapidly approaching destitution.
Theories will get you no where in the real world.
They’ll ‘open the books’ any day now for that audit by Congress fed”. Any day now. Pretty soon.
It’s all abover board. Yep.
To see the devaluation you claim, milk would be over $50 a gallon, gas over $200.
If I own a business with $X million worth of assets, then there's not likely to be eroded by inflation over time. If anything, inflation works in my favor if the business finances its capital expenditures with long-term debt by effectively reducing the debt burden over time.
Inflation affects wealth heavily, due to the way it is taxed.
Real estate is a good example. As inflation drives its imaginary value up, taxation extracts real value that will never be returned, regardless of the cycles of the economy.
You can’t possibly mean that.
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