A powerful combination of people has finally come together to present a real challenge to the Federal Reserve’s death grip over monetary policy. Every year, the Federal Reserve holds an annual conference in ritzy Jackson Hole, Wyoming. This year, the American Principles Project decided to challenge the Fed on its own turf. Hundreds of top economists, lawmakers, policy analysts and members of the media interested in monetary reform descended on the elite little Western town — perfect for the elitists at the Fed — this past weekend to come up with an agenda and make real plans to reform and cut back the horrendous problem that is the Fed.
Part of the problem with reforming the Fed is that monetary reform is a complex issue which doesn’t grab people’s attention, making it hard to generate enough interest to get anything done. By bringing together the brightest economic minds with journalists however, and not just any journalists but also bloggers and opinion columnists for top conservative news sites, the goal of reforming the Fed is finally on its way to becoming a mainstream issue. The somber reality is the Fed’s awful policies affect everyone throughout every facet of our lives, from employment and consumer prices to housing and credit cards. It is much more serious than people realize, and besides creating a stagnant economy, is slowly destroying vast segments of society.
Millennials are helping generate this increase in interest. Unable to make a living and support themselves as young adults like previous generations, Millennials are fed up and ready for reform. More Millennials than Generation Xers say they want a change from Obama’s policies. Speaker Julie Borowski, a leading spokesperson for Millennials on YouTube, pointed out that Ron Paul fills stadiums of her generation demanding “End the Fed,” and noted that the youthful Occupy Wall Street movement was a direct reaction to the big banks — which make up the Fed. Constantly lowering interest rates increases the income divide. There is common ground for OWS to join forces with the right in reforming — if not ending — the Fed.
The problem with the Fed in a nutshell is that it arbitrarily meddles with interest rates by periodically and unpredictably increasing the printing of paper money. Historian and economist Brian Domitrovic explained how this hurts the economy, “There is monetary regime uncertainty in the world because of the Fed. No one has any idea of the dollar's stability, so capital stays on the side lines. It results in stagflation, stagnant wages and low economic growth. This wouldn’t happen with a gold standard.”
Leaving the gold standard in the 1970s was never meant to be a permanent move, Domitrovic said. A study group was assigned ten years later to assess how well a floating currency was working, and when it became clear the “Gold Commission” was going to report negatively on the experiment, the newly entrenched bureaucrats at the Fed put pressure on the group to change its assessment. But it scared the Fed enough to return to a “de facto” gold standard for the next 18 years, targeting the price of gold, which created the economic boom of the 1980s.
Today, the Fed runs rampant, Rep. Scott Garrett (R-NJ) observed, with zero transparency or accountability. It doesn’t bother performing a cost-benefit analysis of its work. Garrett also lambasted other disastrous financial regulations, such as The Dodd-Frank Act, which picks winners and losers. He said it should have been called The Frank-Dodd Act, so the acronym would be FRAUD. Conservative author John Fund said the Fed has basically become a fourth branch of government, since none of the three branches of government will interfere with it. Yet it is not government; the Fed is a private entity, basically a monopoly sanctioned by the government unaccountable to anyone but the banks that run them, a corporatocracy.
Another way to combat the Fed came up at the summit, using the new alternative bitcoin currency for financial transactions, bypassing the entire dominant monetary system altogether. After a panel of top economic experts discussing bitcoin ended, the session was opened up for questions. Humorously, a regular looking guy stood up and asked, “What exactly is bitcoin?” George Gilder, one of the most respected and brilliant conservative economists in the country, who was quoted by Ronald Reagan more than anyone else, attempted to answer his question. Ten minutes later, the guy said he still didn’t understand what bitcoin was.
Sadly, this demonstrates why reforming the monetary system has been so difficult; the bureaucrats at the Fed have deliberately insulated themselves so well behind vague, complex economic terms, never relating them to real life so the average American does not understand the havoc they are wreaking. Even a genius like Gilder has a colossal task trying to bring the average American up to speed on the increasingly confounding economic jargon.
The support for a return to the gold standard by so many top conservative economists and policymakers was frankly surprising and shows a shift is occurring. Economist Steve Moore and former U.S. Senator and Heritage Foundation President Jim DeMint, no fringe conservatives, were keynote speakers. Benn Steil, Senior Fellow and Director of International Economics for the Council on Foreign Relations, not exactly a bastion of right wing conservatism, was one of the most prominent speakers at the summit, as were Rep. Garrett and John Fund.
Rep. Garrett has proposed two bills to begin dealing with the Fed. One would limit the Fed’s bailout authority, and the other would create a pathway to audit the Fed. Although they have little chance of being passed into law under the Obama administration, once a Republican president is in office, the chances significantly increase.
The 2016 presidential candidates are being challenged to champion a return to the gold standard. Representatives from Ted Cruz’s campaign were prevalent at the summit, and Rand Paul has been a strong advocate of auditing the Fed. Considering American Principles Project has finally figured out how to bring together a broad, diverse group of people to push this issue at a time when people are the most fed up economically since the 1970s, a Republican candidate for president would be smart to jump on this now.