When I think back to 2007, a memory that stings a bit is having blogged here at LRC that Ron Paul shouldn’t emphasize the Federal Reserve System so much. It’s too technical for most people, I said, so he should stick for more natural crowd-pleasing topics.
Not my finest moment, to be sure.
I sounded like that producer who, in rejecting the Beatles, told them that groups with guitars were on their way out.
The Fed had managed to stay out of American political life for nearly one hundred years until Dr. Paul announced his candidacy. Then, suddenly, the institution the bipartisan establishment loves to love found itself on the hot seat.
Donald Trump has been criticizing the Fed lately, and that’s a good first step, but he hasn’t been doing so for the right reasons.
The Politically Incorr…
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Ron Paul sure did. Among them:
(1) The Fed has destroyed the value of the dollar, which has lost 95 percent of its value since the Fed’s creation.
(2) The Fed gives rise to moral hazard, since financial institutions know that they can always be bailed out with Fed-created money if things should go terribly wrong.
(3) The Fed forces ordinary people into the stock market, where they don’t necessarily belong, because simply accumulating dollar bills is a suicidal retirement strategy thanks to the Fed’s ongoing inflation.
(4) By artificially lowering interest rates, the Fed creates the conditions for the business cycle, the boom-and-bust pattern of economic activity that creates economic misallocation followed by a crash that devastates countless people.
These arguments are generally ignored. Instead, Fed supporters come back with…