The case for abolishing the Federal Reserve
In the turbulent waters of American economic policy, one institution remains at the center of every storm: the Federal Reserve. Rep. Thomas Massie (R-KY) recently introduced H.R. 8421, the Federal Reserve Board Abolition Act, advocating the dismantling of this century-old institution.
Massie’s argument has merit, as the Federal Reserve’s history is rife with monetary mismanagement and economic instability. Abolishing the Federal Reserve could mitigate inflation, reduce economic inequality, and pave the way for a more stable, prosperous future.
Established in 1913 to stabilize the American economy, the Federal Reserve has often had the opposite effect. During the COVID-19 pandemic, the Fed created trillions of dollars to support record deficit spending, significantly increasing the money supply. A major factor behind the current inflation crisis, this action has devalued the dollar, eroded savings, and harmed retiree portfolios while enabling unchecked government spending.
The Federal Reserve has been implicated in several major economic crashes throughout history. The Heritage Foundation highlights the Fed’s role in inducing repeated boom-bust cycles. Low-interest policies in the 1990s fueled the dot-com bubble, similar actions in the 2000s inflated the housing market, and the 2008 financial crisis ensued. Currently, the “everything bubble” stems from the Fed’s pandemic-era policies.
Historical central banking, exemplified by the Bank of England, created inflationary booms followed by busts to finance wars and government spending. America’s early central banks followed this pattern and were ultimately dismantled for their destabilizing effects. The Federal Reserve has been no different.
As Milton Friedman said, “Inflation is the one form of taxation that can be imposed without legislation.” Inflation erodes the value of money held by the public. Since 1913, the dollar has lost 98% of its purchasing power, benefiting the federal government and wealthy borrowers while harming ordinary Americans. The Fed’s money creation enables government spending without immediate tax increases, deferring the damage to future generations through inflation.
Federal Reserve policies favor the rich and well-connected. Easy money and low rates inflate the prices of assets held by stock and real estate owners, leaving wage earners behind. This exacerbates economic inequality and undermines middle-class financial stability. A symbiotic relationship has developed between the Fed, Wall Street, and big banks, creating an elite financial ecosystem at the expense of the general public. The middle class should support the end of the Fed because its policies exacerbate the loss of savings through inflation and create financial instability.
Ending the Federal Reserve would mean a return to sound monetary policy, where the value of money is not dictated by a central authority. Without the Fed, monetary policy would be subject to market discipline, reducing inflation and stabilizing economic growth. Historical evidence suggests that periods without central banking, such as the era between the Second Bank of the United States and the Federal Reserve, see significant economic expansion and innovation.
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The call to “end the Fed” is not a radical outcry but a reasoned response to over a century of monetary mismanagement and economic instability. Massie’s Federal Reserve Board Abolition Act offers a chance to reconsider our reliance on an institution that has repeatedly failed to deliver on its promises. Abolishing the Federal Reserve could mitigate inflation, reduce economic inequality, and pave the way for a more stable, prosperous future.
It’s time to put the Fed on the ash heap of history and usher in a new era of economic stability and sound money. If you support ending the Fed, contact your elected representatives and voice your desire for them to support this bill.
Parker McCumber is a doctoral student, entrepreneur, commissioned officer in the National Guard, and a contributor to the Washington Examiner’s Beltway Confidential blog. Follow him on X @Parker_McCumber.