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Source link: http://archive.mises.org/9026/rahn-abolish-the-fed/

Rahn: abolish the Fed

November 27, 2008 by

Good for Richard Rahn.


Ian November 27, 2008 at 8:38 am

It is inconceivable that this is not looked at as an option.

When I bring up the mismanagement of our money supply and that inflation is caused by The Fed people look at me like I am crazy. If you even mention fractional reserve banking eyes glaze over, and people either move away or again consider my sanity.

I do not know if it is the result of public education or an unwillingness to believe a radical change could actually be better for everyone. But to question how things are done when surrounded by government employees is radical and not well taken. Maybe I should hang out with people who are not part of the problem…

I do know one thing. If you even mention how bad the government is. Or if you mention collusion and mismanagement by government, regulators, and business you are immediately labeled unamerican and unpatriotic. My credentials as a former sf operator and current position be damned. I am obviously unamerican and unpatriotic since I do not want to kill, invade, and dominate everyone on the planet.

So I guess I am unamerican and unpatriotic.

I know everyone here thinks it will change eventually. As a guy who works in government with people who consider themselves the best and the brightest and absolutely necessary for the world to function, there will be no change, bank on it. It will only get worse every fresh day. Accept it for what it is, the people who feed the policy makers information and the policy makers themselves are blind and would never consider that the US is ever wrong, even when it is obvious.

Bill November 27, 2008 at 9:26 am

Fed criticism is surprisingly in vogue. Even political hacks like Dick Morris are getting into it. Though certainly not Austrian I’m pretty amazed at his grasp of the subject. He’s better than the newest Nobel Laureate in that he recognizes there’s a cost to “stimulus” in terms of inflation. Not bad for a political pundit:

“The inevitable result will be massive inflation. You cannot run a deficit of a trillion dollars as some suggest and not have double-digit inflation. The Fed will be powerless to stop it because it will not bite the bullet and raise interest rates, for that would truly bring on the mother of all depressions. And since the deficit spending will have been simply to reduce the pain of the depression and not to cure its cause, it will be a stagflation beyond anything we have ever known. A depressflation.”


William Rader November 27, 2008 at 10:25 am

In any discussion that concerns ending the Fed, we unjustly assume that the people we are talking to understand the history behind the formation of the Fed. I would venture to say that only a very small percentage of Americans have studied the economic history of the United States, nor have they read Kolko or Rothbard, both of whom lay out the politics behind the formation of the US central bank. Moreover, I doubt, also, that many Americans truly understand the workings of the Federal Reserve System. I imagine for most Americans the subject simply seems quite esoteric. (Thus, for example, you get virtually no media coverage of “End the Fed” rallies.)

I don’t know how well I stated my argument, but I suspect people here will understand where I’m going with this.

Inquisitor November 27, 2008 at 10:35 am

Yes, for most people the Fed is just another blackbox (sort of like how a firm earns profits. Just what are those? We know, but they haven’t a clue.)

William Rader November 27, 2008 at 10:44 am


True. Even more mystifying is that today some people don’t seem to understand the difference between spending and saving!

Jason November 27, 2008 at 10:56 am

Has it been explained anywhere on this site just how the Fed is currently injecting all those trillions of dollars the press is reporting the Fed has committed to? I’ve read _Mystery of Banking_ and have a pretty good sense of how it works and why the Fed exists. In the current crisis, is the Fed literally printing greenbacks? How else could it afford to buy troubled assets and bonds? How is the Fed and Treasury working together on this, and how is the taxpayer money directly involved? How is foreign debt involved? In short, where is all the money coming from?

Michael A. Clem November 27, 2008 at 11:15 am

It might seem like we’re talking down to them, but really, too many people merely assume the basics–they know what money is, but only in a very general, vague way, without actually understanding or being able to define it. Sort of a “I know it when I see it” idea. Until they’re willing to overcome that mentality, they’re hardly likely to get into the more esoteric aspects of economics, relying instead on such famed economists as (shudder) Paul Krugman.

William Rader November 27, 2008 at 11:38 am

Right, and then there are temporal aspects of money that are hard to explain.

william Rader November 27, 2008 at 11:53 am

Getting back on point, I wish Rahn had spoken about the Rockefeller, Harriman, Morgan, and other banking/railroading families who were at the center of central bank formation.

MassLibertarian August 9, 2010 at 6:48 pm

You mean the Illuminati

Robert November 27, 2008 at 2:40 pm

Michael A. Clem,

“….they know what money is, but only in a very general, vague way, without actually understanding or being able to define it.” I guess that then is part and parcel the problem. One is asked, “What is money?” A reply tentatively comes that “…it is the stuff in the bank, you know; ones, fives, tens, twenties…like that you know!” The true concept of money escapes the masses and it is fortunate since, as Henry Ford once said:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Maybe we can hope they (regular folks) begin to understand and make the charlatans in the Federal Reserve System and the Department of Treasury become fearful for their futures. Crazier things have happened.

Eric November 27, 2008 at 5:40 pm

One of my favorite questions to ask is if people think that money and wealth are the same thing.

Most say yes, some think so, but almost none say – absolutely not!

So, if we disband the FED where will all the wealth come from?

The other response is that I just am a government hater, and I am anti social since I don’t believe in the social contract. Then I’m accused of saying that I don’t even believe in traffic laws.

I don’t hold much hope for change. I feel that only a crisis bigger than the 30′s depression will get Americans to listen. Trouble is, they’ll listen to whoever has the best sounding voice, not best sounding ideas.

But on the other hand, if this bailout is really 4.6 trillion (or 7 trillion as the Baltimore Sun reports) then perhaps we might just have a big enough problem that something will have to give. Hopefully we’ll survive it. But my bet is on an Orwellian answer.

Andrew Cagle November 27, 2008 at 6:17 pm

In response to your third paragraph:

I know how you feel. As an Army cadet in my third year people are appalled and almost angry when I mention my views on Iraq and peaceful foreign policy.

I was the only student in my Mil. Science class of thirty to raise my when asked by our instructor (an SF MSG from the 10th) who among us had reservations about going into Iraq.

Even a friend in my Company laughed when I mentioned my reason for joining the Army wasn’t to kill people. He told me that I was kidding myself and that no one who is against war would sign up for the military. It is an absurd view that our nation must assert dominance upon the globe.

RWW November 27, 2008 at 7:07 pm

Out of curiosity, why did you join, then?

LMW November 27, 2008 at 7:53 pm

It seems to me that believing in a peaceful foreign policy is not a bad thing, but that a career in the Army might not be your calling. As an Army officer (when you graduate) you will be a member of the military, which is there to fight the nations battles. Whether the battle is right or wrong is not yours to question. The military is under civilian control, via the president and congress. As an officer you would be required to follow their orders, even if you don’t believe in their cause.

David Newton November 27, 2008 at 9:29 pm

Why is it, that a pretty girl on youtube – Amber Lee Ettinger aka Obama Girl – (with over 12 million viewings so far), can help Obama win an election. But there is seemingly no way to wake-up our nation to the huge financial nightmare scam we’ve been living through? Maybe we need a funny, sexy youtube video explaining how the fed/gov has taken over our wealth and freedom… ?

David C November 28, 2008 at 12:17 am

It’s one thing to say we should “abolish the Fed” (we should), but quite another to actually do it. I can’t imagine that anyone in power (especially now) would actually go along with this.

I can only see two ways. A. the people get fed up enough to elect somebody like Ron Paul. B. The people refuse to use the currency no matter what (which would also imply a tax revolt, because the US gov requires payment of taxes in dollars)

At least for the next 4 years, our only option is B.

Gil November 28, 2008 at 2:01 am

Dang! Dave C beat me to it! Indeed what does ‘abolish the Fed’ mean in the real world?

andy November 28, 2008 at 2:31 am

David and Gil,
No need to start off big…
you can begin by getting a few local businesses to accept payment in gold and silver (with a discount) as an alternative to FRNs… once it gets started it can grow very gradually and be the base from which to explode as inflation grows….

Timothy foster November 28, 2008 at 2:51 am

I’m in the navy, I joined to get away from my family, and protect them… alot of people are like that, trying to get away from something.

I don’t join to kill, intervene, be a part of a world power, not for pride, nationalism, or for the uniform. I wanted to have a purpose other than sitting on my ass like the rest of my family.

ktibuk November 28, 2008 at 5:44 am

“It might seem like we’re talking down to them, but really, too many people merely assume the basics–they know what money is, but only in a very general, vague way, without actually understanding or being able to define it. Sort of a “I know it when I see it” idea. Until they’re willing to overcome that mentality, they’re hardly likely to get into the more esoteric aspects of economics, relying instead on such famed economists as (shudder) Paul Krugman.”

Unfortunately, even “the Austrians” don’t agree on what money is.

Can the quantity of money measured, if so how?

Is money wealth or not?

They can’t even agree on if there is a deflation or an inflation going on right now regarding US dollars.

ktibuk November 28, 2008 at 5:48 am

The problem with the idea of abolishing the FED is that, it isn’t as easy at it looks.

It is not just about fiat money or gold money and how the transaction can go smoothly.

The problem is there is huge financial sector that depends on this system, and on top of that the governments deficit spending is based solely on this same financial system.

So there will have to be a total collapse, a total bankruptcy of currency and the financial system in order for a chance to get rid of the FED and fiat money.

StatusQuoJoe November 28, 2008 at 11:25 am

As to why the average American remains ignorant of the monetary policies of our society, I have but a few skewed opinions.

1) People are naturally guilty about their use of money knowing that they are not good stewards of their resources so they repress any desire to learn of the true monetary mechanisms.

2) The Federal Reserve System has spent billions in research and development of a product which like McDonalds calms and soothes as an opiate yet simultaneously induces an abhorrence at a subconscious level spurring them to rid themselves of the paper i.e. spend it baby! Nice symbols and incantations abound on the attractive yet repulsive paper. While gold and silver have an attractive attribute which induce people to hoard and value the commodity.

Stephen Grossman November 28, 2008 at 2:19 pm

David C says:

“The people refuse to use the currency no matter what (which would also imply a tax revolt, because the US gov requires payment of taxes in dollars).”

Perhaps we can take some cold comfort from the use of coo-coo clocks as (very) temporary money in the 1923 German hyperinflation. ;<)

Ian November 28, 2008 at 7:21 pm

I have no faith that we will change from the Fed without a massive collapse on a world wide scale. Like we are heading towards. Then all the governments will of course get together to “fix” what the West did by forming one giant bank centered in Europe, China/Japan, and maybe US Since we will have guns everywhere and missiles to boot. (just like the Trilateralist’s dream)

It will evolve into three currencies printed in each region at par with each other but looking regional to satisfy the local nation-states. One necessity of course will be the complete impoverishment of the Western nations to subsidize the 3rd world nations to get them on board since they did not create the problem. If you do not agree to the system you will either be invaded, frozen out and starved, or nuked.

David C November 28, 2008 at 10:03 pm

@Ian, @ktibuk, @StatusQuoJoe

Do we really even have a choice at this point? If we let them crash the global economy into the dirt first, we’ll be goners. The real question now isn’t if we should get rid of the Federal Reserve, or if even people will listen, but how? What are they doing to do about it, ruin our lives? ha! it can’t be worse than what’s coming.

Has anyone even tackled this question before? We obviously can’t do it thru military means. What about a tax revolt, or a debtors revolt, or a dollar revolt? Could an online revolt get enough momentum to spread to the real world? There are a lot of people who could benefit if the US stopped ruining the dollar. I imagine sooner or later, the threat of revolt would be more credible than the Federal Reserves ability to buy off foreign dollar holders, at that point their support would kick in and give it a life of it’s own. Just a thought.

William Rader November 28, 2008 at 10:29 pm

David C

The sad truth, I fear, is that the financial crisis in this country will have to become all-pervasive before Americans will see that the benefit of collective dissidence is greater than their egocentric “I’ve got mine, so screw you” mentality. But maybe I’m just an optimist.

Ian November 29, 2008 at 7:24 am

Well I have no faith in man to solve this problem. It is preordained and the people who are at the helms of power are just doing what they need to do to make it happen. A One World Government ruled by a version of German Rationalism to minimize and ruin free choice and liberty. Something the masses will be cheering for.

Now if there was a massive revival in this country which led people not only to sound biblical principles but through those principles to stop invading, stop going into debt, and treating people with the “Golden Rule” as they should, then things would have a chance. Barring that, the US as we know it is done.

My two cents.

StatusQuoJoe November 29, 2008 at 1:50 pm

I personally have no problem with seeing America rid herself of being the world’s super economic power. Attached with that dubious title comes the responsibility to act as the world’s police force something we have been doing since the end of WWII.

If we were to withdraw all of our troops home, abandon our military presence in some 130 countries and rebuild our industry we could have a chance. It is time to ignore NATOs insistence that we avoid isolationism and actually ignore the rest of the world for a while, except on the issue of free trade. If consumers can purchase foreign made goods that are cheaper and superior to goods produced locally it would benefit all members of society, while encouraging more efficient production of competitive goods in America. As many have stated, the initial stages would be painful, perhaps depression like but we are headed in that direction or worse with current policies in addition to risking international military engagements.

Time to stop being the beat cops and financial planners of the world and time to rebuild our infrastructure and industry.

The Vague Crusader November 30, 2008 at 1:43 pm

Greeting Folks,
As someone fairly new to this site and a first time poster let me just say Thank you to The Institute and and fellow readers for providing a haven of reason in a world gone literally mad.
Some time back in a post in The Economist.com. I was accused of Right Wing Kneejerk Ideology because I had the temerity to posit that Govt. spending and New Deal programs wont solve a basically unsound monetary system. As I’m not even close to being an economist or systems analyst, I took such criticism to heart since its source was obviously a highly educated academic.
Was my view skewed by my experience as a small business owner and investor? What exactly was my disaffection with my “guys” ?
The more I read about economic theory, it raised more questions than provided answers. So you folks can imagine my disbelief when I stumbled on a history of central banking in England and the U.S. and the genesis of Jeckel Island. Nutty conspiricy stuff, right? So loving a good chuckle I kept bouncing around the net and to my suprise I found sober annotated sources for factual research. Now I’m an avid reader of history, the more arcane,the better, but I had never heard of this fraud before.
Now I know. And I’m Mad. Further reading brought me to this site where very smart people are working on solutions to what I can only describe as the “Theft for a Century”.
Keep working to get the word out to people and I shall do the same in my meager way. The disbelief factor of this scam is so high that I almost passed it off as nutter stuff but the facts are there. People aren’t stupid if they’re uninformed.
I’ve got tons of reading to do but so far everything that I read here makes so much sense that I’ve looked for something to disagree with so I wont feel like a mindless cheerleader. I’ll keep looking.

James Jaeger November 30, 2008 at 8:23 pm

A number of years ago I read G. Edward Griffin’s book, THE CREATURE FROM JEKYLL ISLAND and my life and views of the Federal Reserve were changed forever.

I asked Mr. Griffin if I could base a movie on his book and he said yes, so I went out in 2006 an interviewed a then little-known politician named Ron Paul and put him in a movie called FIAT EMPIRE. In this movie I have tried to answer many of the questions you all have asked in this thread. If you would like to see the movie, it’s on Google Video at http://video.google.com/videoplay?docid=5232639329002339531&q=FIAT+EMPIRE&hl=en

If your friends and associates are looking at you like an alien when you try to discuss the Fed, refer them to this 59-minute movie and maybe that will help. If you want a clearer version of FIAT EMPIRE on DVD (along with the 120 minutes of uncut interviews of Dr. Paul, G. Edward Griffin, Edwin Vieira and Ted Baehr), you can get it at http://www.FiatEmpire.com

Lastly, I interviewed Dr. Paul again for my new film, ORIGINAL INTENT, which will deal with other places we are violating the U.S. Constitution other than the Fed. More info on this project, plus a clip of my latest Dr. Paul and Pat Buchanan interviews, are at http://www.FiatEmpire.com/producers

Thanks for discussing this important issue and trying to explain it to others.

James Jaeger

Troy November 30, 2008 at 9:07 pm

So many Americans still seem to have faith in our government, that is what I see as the problem.

At Thanksgiving dinner I had a conversation with my cousin:

Me: Sure, the government can promise all the money that they want to special interests because all they have to do is print the money.

My Cousin: Yeah, but they would not do that because it would cause hyper-inflation.

He knows enough to understand what hyper inflation is and what causes it, but doesn’t know enough to realize that the government is not “all knowing” and “good”. While understanding what hyper inflation is, he does not believe that the government will ever “let it happen”.

I guess that I where I am different from the rest of the country, I believe that government is full of a bunch of self serving, glory-hogs, that will continue to give the American people exactly what they want (more money and low interest rates) until the point that we get what we deserve (hyper inflation and chaos).

Politicians only look as far as the next election.


MassLibertarian August 9, 2010 at 7:54 pm


James Jaeger December 1, 2008 at 12:41 am

So many Americans still seem to have faith in our government, that is what I see as the problem.

Politicians only look as far as the next election.

Yes, I believe that people enter government to control and dominate, not to serve and enlighten. Since governments are instruments of force, and depend on force for their very existence, how could it be otherwise.

James Jaeger

eric g December 15, 2008 at 8:32 pm

Vote to do away with the Fed on Obama’s change.org:


Smagcrera July 30, 2010 at 5:29 pm

I am new here and I have been reading this forum for about month now and finally decided to join.


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