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End the Fed (Hardcover)


Review
"Rarely has a single book not only challenged, but decisively changed my mind. "
--Arlo Guthrie

"Everyone must read this book -- Congressmen and college students, Democrats and Republicans -- all Americans. The Federal Reserve, which serves private banks, has compromised our economy and is undermining our freedom. It can and must be stopped now. Ron Paul shows us how and why we must end the Fed. Read this book!"
--Vince Vaughn

Product Description
In the post-meltdown world, it is irresponsible, ineffective, and ultimately useless to have a serious economic debate without considering and challenging the role of the Federal Reserve.

Most people think of the Fed as an indispensable institution without which the country's economy could not properly function. But in END THE FED, Ron Paul draws on American history, economics, and fascinating stories from his own long political life to argue that the Fed is both corrupt and unconstitutional. It is inflating currency today at nearly a Weimar or Zimbabwe level, a practice that threatens to put us into an inflationary depression where $100 bills are worthless. What most people don't realize is that the Fed -- created by the Morgans and Rockefellers at a private club off the coast of Georgia -- is actually working against their own personal interests. Congressman Paul's urgent appeal to all citizens and officials tells us where we went wrong and what we need to do fix America's economic policy for future generations.

Ron Paul's Long Fight and the Window of Opportunity, August 30, 2009
By Citizen John (Washington, DC)


Author Ron Paul, M.D., a medical doctor and Republican Congressman for Texas, introduced H.R. 833. This bill would abolish the Board of Governors of the Federal Reserve System and repeal the Federal Reserve Act. The majority of bills never make it out of committee, but Dr. Paul has appealed to the public through his new book, End the Fed.

Ron Paul has had some success advancing his other bill, H.R. 1207: Federal Reserve Transparency Act of 2009. H.R. 1207 has 282 co-sponsors and would reform the manner in which the Federal Reserve is audited. Paul's long term motivation for entering politics and fighting uphill all these years is his views on the nature of money. He wants money of real value, not political money. There is no other elected official like Ron Paul.

Paul is solidly on the side of the Austrian School of economics. His upbringing is inspirational and conveys the frugality and ethic of savings that used to be common in this country. Like Paul, I developed an interest in coins. I collect nickels. I first got interested in nickels when I realized that some from the 1920s are still circulating. They don't buy as much now but they're virtually indestructible. They're made of the more expensive base metals: 75% copper and 25% nickel. My nickel collection weighs a lot because it doesn't take a lot of money to own hundreds of pounds of nickels. Like Paul, I believe the U.S. Mint will make steel coins within several years.

End the Fed offers easy-to-understand solutions to our problems: live within our means, stick to the Constitution and make the legal tender of the country sound money. Because of his lifelong passion, personal integrity and courage, the bills he is sponsoring and this well-written book, I must award the maximum number of Amazon stars - 5 stars. I don't think there's a way to reform the Fed. We have to end the Fed. My personal opinion is that we need a central bank, but let's start over.

It feels good to know we have Ron Paul in Congress. Still, End the Fed provoked feelings of outrage. To consider all the abuse of monetary power and its effect on our lives captured in one book is almost overwhelming. In places I realized how naïve I had been earlier with regard to my faith in the Fed. For example, I had earlier bought into a particular idea espoused by Bill Gross, founder of PIMCO (Pacific Investment Management Company). Gross correctly predicted the crisis and prescribed a Keynesian approach, eloquently advocating that the Fed should dramatically increase the size of its balance sheet (by trillions) to counterbalance the lack of asset carrying capacity of the public. It was a beautiful theoretical approach but in practice it fell due to corruption. Ron Paul did not believe in that approach because he didn't trust the Fed. Paul turned out to be correct.

Ron Paul spent his entire professional political career fighting the secrecy of the Fed in order to prevent the collapse that occurred. His book shows that economic growth slowed after the establishment of the Federal Reserve, explains how the Fed made a depression into The Great Depression and how the Fed burdens the middle class with the stealth tax of inflation. Whenever credit cycles reach their peak and a financial accident occurs, the Fed pours out liquidity at the cost of runaway federal debt that never gets paid back. Paul convinced me that our military engagements would not have played out as they did if our government had to pay for them by raising taxes the old fashioned way rather than finance them with endless sales of Treasury bonds.

There are several arguments made against maintaining the powers of the Fed. One is that it has not performed well. Another is that it should not have authority to oversee monetary policy without any accountability. Yet another is that non-transparent financing has encouraged some political leaders to take an aggressive approach to war.

Paul's bill, H.R. 1207 would allow genuine auditing of the Federal Reserve. This would open a Pandora's Box. Auditors would find out where all the public money went, report it to Congress, and make the information public. Then investigations into the scandal would become the hallmark of the next several years and could even contribute to civil unrest if the foreclosure rate increases. I feel that Paul's arguments for ending the secrecy of the Fed are irrefutable. I believe any thinking person will arrive at the same conclusion if they read the book.

The Fed is fighting this bill on several fronts and has the means to win. If H.R. 1207 passes the House and the Senate, President Obama will almost certainly veto it. One naturally wonders if any sitting President can stand up to the Fed or even be elected without the Fed's imprimatur. The Fed is determined to never allow such a bill to go this far again. However, if the public becomes truly engaged, all bets are off and then even H.R. 833 might get co-sponsors.

Several issues will emerge if and when the Fed's disbursements of public funds get made public. Most involve the favoritism with which the Fed distributed liquidity. We know that bailout money went to where wealth was already concentrated, the big banks. Small banks were generally excluded. We know that money was routed through entities in order to pay the politically powerful investment banks, where the public made good on unregulated derivatives bets. We might even find that some well-connected hedge funds were bailed out. While money is fungible, we're likely to be surprised at the amount that ended up as executive bonuses.

H.R. 1207 is intended to audit the Fed's dealings with financial entities of all types, foreign and domestic. Ron Paul says he does not intend for the Congressional investigative arm, the Government Accountability Office (GAO), to influence monetary policy or to interfere with the Federal Open Market Committee (FOMC), which sets interest rates. The Fed has counterarguments that H.R. 1207 will subject interest rates to the political influence of Congress. The Fed doesn't want to let any outsiders in on the secrets of their transactions. As author David Wessel has warned, the Fed has become the fourth branch of government and it is not directly accountable to voters.

H.R. 833 would abolish the Fed, the subject of the book. This is the type of thing many lawmakers probably privately believe is in the best interests of the country, but will not risk their careers by co-sponsoring. Nevertheless, this is the first time a well-known person (Ron Paul) has tried to persuade Congress to end the Fed.

Recall that many people were questioning whether the pushing out of credit during the time of the Bush Administration was creating a housing bubble. Fed Chairman Alan Greenspan would only allow that in some parts of the country things were "frothy." He denied the bubble when it was obvious. Greenspan at the same time verbally encouraged mortgage equity withdrawals by homeowners. This turned out to be a trap for many trusting citizens. Homeowners trusted the Fed.

Later Mr. Greenspan insisted that one cannot spot a bubble before it bursts. However, the following is a selection of high-profile people that clearly identified the housing bubble and predicted a possible financial collapse: Ron Paul, Nouriel Roubini, David Walker, Nassim Nicholas Taleb, Joseph Stiglitz, Stephen Roach, Stephanie Pomboy, Naomi Klein, Robert D. Manning, Danny Schechter, Juliet Schor, Alf Field, Peter G. Peterson, John Rubino, Daniel A. Arnold, John R. Talbott, Park Dae-sung, Bill Gross, Jim Sinclair, John Mauldin, Fred Hickey, Robert J. Shiller, Barry Ritholtz, Marc Faber, Richard Rainwater, George Soros, Peter Schiff, Bob Bixby, Martin Weiss, Robert Prechter, David Tice, James D. Scurlock, Elizabeth Warren and Paul Krugman.

The Fed got supercharged when circumstances became unusual and exigent. That gives the Fed unlimited power to create and disburse money. The Fed with its battalions of $350K/yr economists decided that public money would be used to make good on unregulated derivatives in the case of AIG, for example. This meant more than $173 billion of public funds went to AIG and then a lot of that got routed to AIG's derivatives counterparties. We don't know how much went to which counterparties because the Fed isn't telling. We do know that this action saved the bonus system. This generosity with public funds toward financial industry leaders made a hero out of Ben Bernanke. End the Fed would stop this abuse for good.

As background, AIG derivatives traders appear to have deliberately written and sold losing derivatives. These derivatives methodically took the wrong side of the bet but matured years later, so they wouldn't be exercised for some years. In return for taking the wrong side of the bet, they received cash up-front. Goldman Sachs and many investment banks from around the world bought into the scheme, which promised enormous returns that one could never get in a normal investment, but they had to pay AIG a fee for each contract.

AIG immediately took the windfall cash receipts and paid them out as huge multi-million dollar bonuses. When the derivatives matured, AIG would owe a magnitude beyond anything any corporation on earth could pay. But the Fed could pay up if and only if circumstances were unusual and exigent. That is how the Great Panic saved the leaders of the financial industry and preserved the bonus system.

Much information about money movements continues to be withheld from Congress. The Fed strategically placed almost $2 trillion in the financial sector in addition to other financial commitments, and there is more than one way to find out where the money went. Bloomberg news service is using the Freedom of Information Act (FOIA). The Fed is resisting and this is the most famous FOIA case of our time. At the heart of the case were attempts by the Fed to benefit from being a private agency when that was beneficial and a governmental agency that was beneficial. The court ruled that the Fed must make this information public. The Fed has until September 30 to appeal the decision.

Meanwhile, H.R. 1207 is languishing in committee in the House of Representatives. US Representative Barney Frank (D), representing the Fourth Congressional District of Massachusetts is responsible for this holdup, preventing Ron Paul from calling expert witnesses to testify. By holding up the bill in committee, Frank is giving time for the Fed's lobbying effort to turn things around in the House. I fear the Fed can selectively dispense liquidity as concessions for votes.

We now know that when circumstances become unusual and exigent, the Fed is able to exercise unlimited power. Catching the nation at its most vulnerable moment, at the end of the second term of a disengaged president, the Fed distributed liquidity with incredible unfairness. Citizens know we are not beneficiaries of Fed largess. One only needs to visit a bank for a mortgage or business loan to confirm it. This has put the Fed on the defensive for the first time in its history.

In response, the Fed implemented a public relations campaign. Bernanke went on 60 minutes and made a fine appearance. Bernanke also recently starting telling the public what it wants to hear, basically that we've hit bottom and we're on the way up again. Of course, he always hedges himself by adding disclaimers such as warnings about slow growth and possible job growth lag. These pronouncements appear to be part of an extensive defense of the Fed's actions, and an effort to buy time.

Eventually new events and stories will emerge to dominate media coverage and capture the public's attention. The Fed is counting on that. Also, in a display of raw power, the Fed hired a former Enron lobbyist as its own lead lobbyist to Congress. Congressional votes are now in play, worked by top gun Fed lobbyists. Whatever the price, the Fed has "crossed the Rubicon." In other words, Ron Paul is outgunned and we have only a short window of time to get the public on board.

2 comments:

Mind / Works said...

I am glad I came across with your blog.... I have more reasons to be busy coz I want to read some of your posts..LOL! keep it up!

Edward said...

You may not like it but there is a state foia that allows government officials and others to obtain information that you may deem private that is actually considered public information.