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Ron Paul: Respect The Fed? No, End The Fed – OpEd

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President Joe Biden has unveiled a three-part plan to fight inflation — or at least make people think he is fighting inflation. One part of the plan involves having government agencies “fix” the supply chain problems that have led to shortages of numerous products. Of course, any attempt by the government to solve the supply chain problems (which were caused by prior government interventions such as shutting down the economy for over a year) will not just fail to solve the supply shortages but will create new problems.

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Deficit reduction is another part of Biden’s anti-inflation plan. However, Biden is not proposing cutting welfare or warfare spending. Instead, his deficit reduction plan consists of “tax reforms to increase revenue,” which is DC-speak for tax increases. History shows that tax increases unaccompanied by spending cuts end up increasing the deficit.

The last and most important part of Biden’s inflation plan is recognizing that the Federal Reserve “has the primary responsibility to control inflation.” President Biden has pledged to “respect the Fed’s independence,” unlike former President Trump, who Biden accused of “demeaning the Fed” by subjecting the central bank to mean Tweets.

It is hard to believe that someone who has been in DC as long as Joe Biden really thinks Donald Trump was the first President to try to influence the Fed’s conduct of monetary policy. Since the Fed’s creation, Presidents have used public and private pressure to “convince” the Fed to tailor monetary policy to advance their policy and political goals. When it comes to “demeaning” the Fed, Trump has nothing on Lyndon Johnson, who, frustrated over the Fed’s refusal to tailor monetary policy to finance the Great Society and Vietnam war, threw the Fed chairman against a wall.

By “passing the buck” on inflation, Biden no doubt hopes to deflect blame from himself and his party before the midterm elections. Unlike Biden’s previous inflation scapegoats — greedy corporations and Vladimir Putin — the Fed actually is responsible for creating and controlling inflation.

Price increases in specific sectors of the economy may be caused by a variety of factors, but economy-wide price increases are always the result of the Federal Reserve’s easy money policies. Inflation is actually the act of money-creation by the central bank. Widespread price increases are a symptom, not a cause, of inflation.

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Federal Reserve Chairman Jerome Powell remains committed to more rate increases this year. However, even if the Fed follows through on all its projected rate increases, rates will still be at historic lows. While there are those on the Fed board who want more and bigger rate increases, others worry that going too far too fast in increasing rates will cause a recession. Already many economic experts are saying America should be prepared for increase in unemployment caused by the Fed’s efforts to vanquish inflation. This “tradeoff” between high prices and high unemployment illustrates the insanity for our monetary policy.

Treasury Secretary and former Fed Chair Janet Yellen and Chairman Powell have both admitted they were wrong to publicly dismiss inflation as “transitory.” The fact that the two most recent Fed chairs made such a huge blunder (or purposely refused to admit what was clear to many people for over a year), shows the folly of relying on a secretive central bank to manage monetary policy. Instead of “respecting the Fed’s independence,” President Biden should work with Congress to audit, then end the Fed.


This article was published by RonPaul Institute. 

Ron Paul

Ronald Ernest "Ron" Paul (born August 20, 1935) is an American physician, author, and politician who served for many years as a U.S. Representative for Texas. He was a three-time candidate for President of the United States, as a Libertarian in 1988 and as a Republican in 2008 and 2012.

One thought on “Ron Paul: Respect The Fed? No, End The Fed – OpEd

  • June 7, 2022 at 1:12 am
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    Sooooo.. What I read here is pretty much what I expected of tired old Ron Paul trotting out the same BS he’s pedaled for decades..

    (1) The ‘gummint’ can’t help… Except that the GOP is whining that the ‘gummint’ isn’t helping.. (Republicans whine so they don’t have to provide solutions or work with the administration to fix issues.. Should Biden ignore the supply chain issues generated by the prior administration? Should Biden not fly formula into our country pending the Abbott factory cranking up again? of course he should. If anything can be done to alleviate supply chain issues (and lately provide formula for infants), it should be done. Clearly, he can’t train and hire thousands of truck drivers.. We acctually live in a Capitalist society… And all my life I heard that tired old GOP dog “free-market capitalism is the best in the world because it’s self-regulating and where there’s a need and profit it will fill that gap!’ .. in fact.. That’s BS.. But Biden has done thinsg to try to alleviate the backlog: (… new supply chain policies focused on rebuilding domestic production and innovation, supporting workers, leveraging federal spending, strengthening trade rules and enforcement, and collaborating with allies …Feb 28, 2022).

    (2) Deficit Reduction.. Is Ron saying that we should once again stiff retirees and people on welfare and NOT tax the 1% or Corporations after decades of Republican tax cuts? (Reagan, Bush Jr. and Trump)? Seriously? Well isn’t that special! … Taxing to reduce the deficit is just as effective as slicing the throats of the poor and retirees… In fact, in a free-market capitalist society, the wealthy hoard their tax cuts.. The poor spend their money.. Spending generates a healthy economy and is good for everybody.. Even the wealthy! I get it… After decades of Ron babbling that old ‘Trickle-Down’ mantra, it’s really hard to let go!

    (3) The Fed rasing interest rates is how we always ‘solve’ our inflation… Again.. The Right-Wing are babbling about inflation and demanding interest rate hikes.. Reagan did it and we paid 15% home loans for years.. It is the only real tool the Fed has.. Should they be cautious? Damned straight! And many of us are concerned that over-eager interest rate hikes will just send us into another recession…. From what I’ve read, the Fed is concerned about this as well.. Who else can we use? Nobody! Whining about what might happen is simply BS!

    Did we need this ‘opinion’ from Ron? Nope.. Where’s Ron’s solution? Nowhere.. Just another Right-Wing whiner.. FOX Nooz, Breitbart and InfoWars are chock-a-block with whiners with no plan… And that goes for the GOP.. McConnell stated he isn’t planning on providing a MidTerm platform.. Why offer suggestions when you can gripe? Right?

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