Federal Reserve ~Why we should End The Fed,not raise the minimum wage.

 Most Americans do not understand what the Federal Reserve ,or Fractional Reserve System,is or why it is at the heart of our economic problems. When Americans get into discussions about the economy, most of them still blame either the Democrats or the Republicans for inflation, for the housing crash, for our rampant unemployment and for the national debt and the reason why everything today cost so much more than it did 10-20 years ago. But the truth is that the institution with the most power over our economic system is the Federal Reserve.
 It will be very plain to see,at the conclusion of this topic, that this control over the public and the cost of living should be stopped immediately. Not only to aid the workers making $7.50 an hour in an entry level job, but the people renting an apartment, buying a vehicle, buying groceries at a neighborhood store. All are affected by the antics of The Federal Reserve.

 The Federal reserve is not an agency of the Federal Government. Never has been. Rather, they are a privately owned banking cartel that for whatever reason or another, was granted a perpetual monopoly over our banking system by the U.S. Congress. This privately-owned central bank has been destroying the value of the U.S. dollar for decades, it has run our economy into the ground and it has driven the U.S. government to the brink of bankruptcy. The Federal Reserve operates in great secrecy, it has never been subjected to a comprehensive audit and it is not accountable to the American people.  Yet the decisions that the Federal Reserve makes have a dramatic impact on the lives of every single American citizen.

  If you really want to understand what is causing our economic problems, it is absolutely crucial that you understand exactly what the Federal Reserve system is and how it is systematically destroying our economy.  Once you understand the truth about the Federal Reserve, you will view our economic issues in this country a whole lot differently.

 President Wilson signed The Federal Reserve Act on December 23,1913 to provide the nation with a more flexible,safer and more stable monetary financial system. Coincidentally,a permanent income tax was also passed that same year. The whole idea was to transfer wealth from our pocket to the government and then the government to the bankers.
 This Act made the Federal Reserve Bank the central banking firm of the United States. We are not the only country with a central bank and we ,as Americans, were kind of late in the game. These banks are tasked with controlling interest rates, the money supply and overseeing the banking system.
 In a stranger way than most central banks of the world. There are four tiers: ~ The Board of Governors, the Federal Open Market Committee (FOMC), 12 regional banks, and smaller member banks. ~
  ~ We'll start from the top. The Board of Governors is responsible for much of the monetary policy we'll describe later. These seven people are nominated by the President, pass Senate approval, and sit in Washington making decisions.
 ~ Next we have the FOMC, a committee of seven Board of Governors members and five regional bank presidents. The FOMC runs open market operations, which we'll also get to later.
 ~ Then there are the 12 regional banks, responsible for much of the nitty gritty banking stuff (like check clearing). They are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each regional bank has a president and oversees the thousands of member banks in its region.

 So why do we even have a Federal Reserve System? 

  The U.S. didn't have a Federal Reserve bank for a long time. This meant that the late 19th Century was basically a series of uncontrollable economic panics. It wasn't until 1907, when the New York Stock Exchange fell 50% and depositors "ran on the bank" to recoup their money, that people warmed to the idea of a central bank and legislation passed. 

Read More about the panic of 1907 here: https://en.wikipedia.org/wiki/Panic_of_1907

So as a consequence to such an unstable market, the United States began to warm to the idea of a central banking system. Thus, hopefully stabilizing the economy.
   The Federal Reserve Bank, as the lender of last resort, was supposed to prevent such occurrences by providing temporary, penalty rate loans to struggling banks. Note that there is nothing that a central bank could provide that could not be provided by another private bank. In fact the banking panic of 1907 was stemmed by private bank interventions led by J. P. Morgan. However, Morgan realized that such private bailouts were very risky and presented a case of moral hazard; i.e., that bankers, confident of a bailout by the Morgan banking empire, might  book riskier, higher yielding loans. So rather than face the real cause of banking crises and lobby to outlaw fractional reserve banking, the Morgans, Rockefellers, etc.–who did not want to forego the financial benefits of lending demand deposits–lobbied instead for government to create a lender of last resort, a central bank, which we named the Federal Reserve Bank.

  Now we all know that when you deposit a check, the money doesn't just stay in your bank's vault until you need to hit the ATM because this bar is cash-only. No, banks move around and invest most of what they take in. This is how banks make money, among other ways. There are, of course, rules now about how much banks have to hold in "reserves," but the problem before the Federal Reserve was this: What happens when all the depositors want their cash back at once, a la the bank run scene in It's A Wonderful Life. As you'll recall, Jimmy Stewart's George Bailey tells the townspeople of Bedford Falls, "You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house... and in the Kennedy house, and Mrs. Macklin's house, and a hundred others.

  George Bailey was actually talking about fractional-reserve banking. Today the Federal Reserve might say, "George, if all else fails, we can step in and be the lender of last resort." The Fed kind of did say that in 2008, albeit not to George Bailey, but to nine highly-paid bank CEOs. Read more here :https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008
 

 Think of the Fed as a bank — but just for other banks. The Fed lends money to banks, which determines the rate which banks charge the rest of us for everything from car loans to mortgages to credit card rates and pretty much every other loan you can think of (and some fees only a banker can dream up.)

 By setting the rate banks can borrow from the Fed, non-ironically called "the discount rate", the Fed helps determine whether rates are high or low for the rest of us. And those rates help determine whether people want to borrow money or not.

 In addition to the discount rate, there's the fed funds rate, which is the rate you usually hear people talking about when it comes to the Fed. The fed funds rate is the rate banks charge to other banks for overnight loans, which is common practice in the world of high finance. Technically, the Fed sets a 'target' fed funds rate.

  Also the Fed uses "open market operations", through which it buys and sells bonds in the open market. If you've read news stories about the Fed buying Treasuries to help boost the economy, that's an example of 'open market operations' in action and is an example of "quantitative easing" or QE, which is not to be confused with a ship.

 When it buys bonds, the money supply increases because the banks exchange their bonds for cash and then have more money -- aka liquidity -- to lend to businesses or individuals. The opposite occurs when the Fed sells bonds to the banks, who typically can't refuse any offer from the Fed.

  In addition, the Fed controls the money supply by raising or lowering "reserve requirements," which is the amount of money banks are required to keep "on reserve" at the Fed, sort of like a rainy-day fund for the banking system. Raise those requirements and banks have less money for other stuff -- like lending; the opposite is true when the Fed lowers reserve requirements...or keeps them low as has been its recent practice.

For more detail on how this all works, see the Fed's comic book: The Story of the Federal Reserve System.

 So how does all of this affect us? 

 Why does all this mean that I have to pay more for everything I buy with my money? 

 Well,  the U.S. dollar has lost 96.2 percent of its value since 1900  Of course almost all of that decline has happened since the Federal Reserve was created in 1913.
Because the money supply is designed to expand constantly, it is guaranteed that all of our dollars will constantly lose value.
 Inflation is a “hidden tax” that continually robs us all of our wealth.  The Federal Reserve always says that it is “committed” to controlling inflation, but that never seems to work out so well.

  To put this into perspective, what used to cost 4 cents in 1900. Now cost's at least $1. So using this percentage of decrease in monetary value, if you go to the store one day and buy a loaf of bread for 25 cents, then go back the next day and that same loaf of bread that was 25 cents the day before is now $6.25. That's quite a jump in prices right? But you aren't being paid anymore money. You just have to purchase the bread at $6.25 today because your dollar today is not worth as much as yesterday due to a massive inflation hike from the Federal Reserve.
 Now this is a dramatic example but it is not untrue. Interest has increased in small increments so everything over time, isn't this much of a dramatic change, but after a while you start saying things like " Things cost so much today compared to 20 years ago!" It affects everything that costs money to own because the money we hold is not worth as much 'today' as it was 'yesterday'. So with this example it is plain to see how living at $7.50 an hour would be very unmanageable,given that this money per hour is constantly being devalued and prices for everything keep rising.

 The Fed’s mistake of slowing money growth at the onset of the Great Depression is well-known. If anyone reading this does not know there is the link: http://fee.org/freeman/detail/the-great-depression-according-to-milton-friedman And from the mid-1960s through the ’70s, the Fed intervened with discretionary go-stop changes in money growth that led to frequent recessions, high unemployment, low economic growth, and high inflation.In contrast, through much of the 1980s and ’90s and into the past decade the Fed ran a more predictable, rules-based policy with a clear price-stability goal. This eventually led to lower unemployment, lower interest rates, longer expansions, and stronger economic growth.
 Unfortunately the Fed has returned to its discretionary, unpredictable ways, and the results are not good. Starting in 2003 through 2005, it held interest rates too low for too long and thereby encouraged excessive risk-taking and the housing boom. It then overshot the needed increase in interest rates, which worsened the bust. Now, with inflation and the economy picking up, the Fed is again veering into “too low for too long” territory. Policy indicators suggest the need for higher interest rates, while the Fed signals a zero rate through 2014 and possibly beyond,as recently it was announced that interest once again would not be rising for the year 2015.

 So if we close the Federal Reserve down today, what would happen?
 Would it have any effect on our economy?
 Would the cost of living instantly be reduced by default?

 The answer to all these questions is variable and would take some time for restructuring of our system. But in all likelihood it would have an effect on our economy and the cost of living can be reduced. Many ideas have been set forth to make this happen and their results as well.
              Including but not limited to......
  ~ Many advocates of ending the Fed argue for a return to the gold standard, which President Nixon ended in 1971, due in part to growing inflation, which was itself due to the costs of the Vietnam War. Nixon was concerned that Fort Knox contained only one third of the gold needed to back the dollars in foreign hands at that time. Under this system, the dollar's value would once again be tied to the price of gold. Another option is to tie the U.S. dollar's value to a basket of commodities.
 ~ Tying the dollar's value to a commodity could very well moderate inflation. If the country moved to a strict gold standard, for example, the money supply would be bound to the supply of gold, so printing more dollars would require acquiring more bullion to back them, a big disincentive. This notion, of course, pleases proponents of controlled government spending. Though there might be short-term bouts of inflation and deflation, in the long run, prices could easily remain stable. There are, of course, caveats. For example, massive borrowing could spark inflation. And the country would also be forced to periodically deal with the relatively unfamiliar territory of deflation. Returning to the gold standard in particular could make these problems worse. "The gold market can have very large movements within a day," says Randall Kroszner, an economics professor at the Booth School of Business at the University of Chicago and a former governor of the Federal Reserve System. He adds that during recent times of economic uncertainty, this added volatility would likely not have been helpful.
 ~  A change to the U.S. currency system could potentially be destabilizing to foreign economies. Kroszner says that, as many countries tie their currencies' values to the dollar, the potential deflationary effects of being linked to a gold standard would lead to more exchange-rate volatility. But advocates say the result would be more long-term stability for the global economic system. "I think it would be extremely positive, but the initial effect would be so bold as to be alarming," says Judy Shelton, a senior fellow at the Atlas Economic Research Foundation, a nonprofit organization that advocates for free markets.
 ~  Most Keynesian economists believe that expansionary monetary policy moves can boost economic growth. The U.S. has seen this at work most notably with the latest round of quantitative easing, known as QE2. The effectiveness of quantitative easing, especially balanced with associated inflation risks, have been hotly debated in recent years. But no more Fed would simply mean no more easing programs.
 ~  Shelton argues that the Fed, with its near-zero interest rates and contributions toward dollar devaluation, "makes a sucker out of a saver." "You save money, you've got zero interest for saving it, and by the time you get it back out, it's worth less," she says. Without the Fed pushing interest rates low in hopes of stimulating the economy, says Shelton, saving money could be much more rewarding.
 ~  This is how Ron Paul put it in his 2009 book, End the Fed. According to Paul and the Austrian school of economics, the booms, bubbles, and busts of business cycles are the result of meddling by central banks. But Shelton moderates this slightly, saying that the Fed has worsened the cycle's negative effects: "Instead of smoothing out that cycle, [the Fed has] tended to exacerbate it," generally providing too much credit. Ultimately, she says, this can lead to irrational exuberance. Whether or not this would be universally true, many economists do blame former Federal Reserve Chairman Alan Greenspan's policies for encouraging the housing bubble that sparked the economic crisis.
 ~  The Fed does much more than determine the monetary base; its chief functions also include supervising and regulating banks—arguably very important functions, especially post-financial-crisis. Without the Fed in place, a new entity would have to perform these functions. In Shelton's opinion, this could be done either privately or federally.
 ~  The Fed has been around since 1913, so it seems difficult to envision exactly how a Fed-free monetary system would look. According to Kroszner, without a central bank, the U.S. might revert to the system in place before the creation of the Fed: one of private clearinghouses that would determine short-term liquidity, altering short-term interest rates. However, Kroszner points out, longer-term rates are already largely determined by supply and demand.
 ~  "Fairness" is, of course, subjective, but Fed critics argue that two of the Federal Reserve's chief functions—selling bonds and regulating banks—are at cross purposes and make for an unfair market. "If [the Fed] goes into a community bank and says, 'We're very uncomfortable with your loans to entrepreneurs...but we won't penalize you at all if you buy U.S. Treasury bonds,' that's a huge conflict of interest. That makes me uncomfortable, that the Fed has the inside track on the financial resources of the country," says Shelton.

  But I tend to agree with those who wish to End The Fed. This program has not been a successful  partnership. For these 10 reasons listed here : http://www.freedomworks.org/content/top-10-reasons-end-federal-reserve I feel that any competent plan with solid backing of our dollar would be a step above what we have in this day. Unfortunately no concrete,solid plan exists today to replace the Fed that would actually be a definite benefit to our economy. No tried and true system that would enable a truly free market to operate on U.S.  soil.
 Raising the minimum wage is a terrible idea and will only result in goods and services costing more out of our already devalued dollar to the point of $15 an hour being the same as $7.50 today in this market. Not to mention the cutting of hours and loss of jobs due to companies, particularly small companies, not being able to pay for the substantial raise in cost.  Obviously, the answer to this problem is not a minimum wage hike but to reign in the inflation and possibly reduce the inflation, that causes the $7.50 an hour job to be a tragically unlivable wage.
 Recently, politicians have tried to pass legislation to Audit the Federal Reserve as a way to try to reign in the debt and spending caused by this system, but because of how this banking system was established, being 'above the law' so to speak, nothing has passed the voting stage.
 Something needs to be done to reign in this outrageous spending and financing of debt that has a direct correlation on every Americans everyday lives in what we spend on everything from dog food to apples to toilet paper to automobiles. We,in this country, need to build a free market system that enables the citizens working not only at minimum wage,but also the people buying goods and renting apartments and so on, to make the cost of living ease up on the backs of our citizens. It can be done and I am hopeful that in the future we can do so.