NOTE: Arg, I know this has come up often in forum topics and discussion, I also know this is a wall of text. I meant to do a short and sweet comment on another thread and it turned into all of this. To get away from people thinking it's just Libertarians and/or Ron Paul supporters who wish to end the Fed, I include a video link of Democratic Party representative Dennis Kucinich articulately addressing the House of Representatives proposing the Federal Reserve be removed.
Figured this was worthy of it's own forum topic as I feel it approaches the "end the Fed" in a way that makes general points, offers solutions, and hopefully encourages people to research/ask others/discuss and come to their own decisions. The second 2/3rds of this post is pretty much my own personal leanings and ideas on the topic. First thing's first though, two solutions are offered at the start.
I may as well re-print this here from another comment of mine (edited a bit and added much more as well).
What many folks have been wondering with the "end the fed" discussions, is not so much as why (though I get into some "whys" later on anyway), but what to do afterward. Just saying "end the Fed" is all well and good however a lot of people leave discussions on the topic or write it off as nonsense without there being any solutions brought to the table about what to replace the Federal Reserve with if it were removed. If not the Fed, then what else? Which is a very good question.
Two versions I've heard of what to do after ending the Fed that make a modicrum of sense to me:
1) Government takes control of the centralized banking system and the printing of currency as outlined in the Constitution, and how it was before the formation of the Fed in 1913 or a similar system. This view is supported and outlined straight and to the point by Dennis Kucinich in an address to the House of Representatives: http://www.youtube.com/watch?v=wjL108wA9QU
2) Disband centralized banking. Instead of the government running any banks, banks will be fully privatized. The Fed holds so much power and sway and abuses it for it's members, as it's a centralized banking system that is THEN privitized into it's shares, power still masses to the central overhead system. A fully privitized non-central system would allow banks to compete, and allow for consumers to pick which bank and banking system they wish, and indeed which currency they prefer if applicable (banks could also choose what their currency is based off of- whether gold, silver, seashells, or mickey mouse bucks whatever, in theory a commodoty might also be more conceptual (well, money IS conceptual) such as information trading or job hours, and if they base their currency on a commodity the consumer doesn't trust then the consumer does not have to bank with that bank and has others to choose from, it also allows for more people to start banks should they wish). This model would basically be what Panama has: http://mises.org/daily/2533
Kucinich's argument in that link for ending the Fed makes sense to me, as do most Libertarian's arguments as for why, among others (including Ron Paul- as far as seeing political figures argue the point, Paul and Kucinich are probably the two main guys to research on the topic, outside of political figures there's a ton of resources on the topic if web search) .
So, Kucinich gives an argument for what happens after, and Panama has shown the reverse works too (a system of non-centralized banks). Loosely these 2 solutions represented here can be categorized as:
Idea #1 is government control of the financial system with the government as the only bank in town so to speak (this is gross simplification I know). If needed, the government can print more money to pay it's debts. Edit: The government has more direct control of the economy and can pump money into, say, the nation's infrastructure, health care, education, where ever else it wishes etc, to create jobs and improve quality of life. (added this edit because I know my view outlined below is skewed towards no central bank system and wanted to add an arguement for another option, there is more than one possible fix)
Idea #2 is separation of State and the financial system and also separation of the financial system itself (no power massing around a central bank).
For my personal view (Edit: meaning all the rest is my personal opinion and thoughts regarding the matter, quick sum up: I do think the Fed is one of the root causes for the 1%'s power and influence and political corruption)
Understand first of all that the Federal Reserve is not a government institution, even though it is the central bank of the USA it's a private institution. It "gets around" being a monopoly by then splitting itself into other banks and institutions, but they are not exactly separate- all of them have a vested interest in the Fed doing well and the Fed wants them to do well (because together they are one and the same), there's no real competition and very little if any conflicts of interest.
Now keep in mind that in order to obtain money, the United States Treasury sells bonds to the Federal Reserve in exchange for Federal Reserve Notes placing the US in debt.
Both of the previous solutions for after the Fed is removed seek to end crony-capitalism. Personally, the main problem I see for having a central bank is abusing regulation for it's own ends (which is crony capitalism) - that so long as finance and government are intertwined in such a way where the central bank can influence legislation regarding itself and the financial system, then it's going to write/advise/influence that legislation as much as possible in order to give itself an edge (which is what has already happened with the Fed and the those that hold it's shares). If a large central bank has the law in it's pocket it will live in an unfair rigged system where it quickly amasses profit. This profit then translates as power, especially when directed back into the government side of things- since the central bank will want to keep it's unfair advantages which is the ability to influence legislation regarding finance and how it operates, thus it will use it's money to influence elections, politicians and legislature, just like we already have now. In fact it can also use the money to support other players in the economy to bolster it's own influence and power even further. Again, just like has already happened. Central Bank -> makes financial policy / regulation -> uses that to rig the financial system for it's own benefit -> those in the economic sector fall in line as there's not much choice -> bank loves the sugary taste of power and money and wants more -> makes friends with other economic players that support and benefit from such a scheme (for instance, defence industries . . . . basically anyone who decides to align with the rigged game stands to benefit hugely in profits) -> bank with friends in economic sector pour money into elections, politicians, bribe politicians and their families by giving them high positions in banks and corporations either through shares or a direct position (make them a CEO, etc), run for elected offices themselves, get appointed into non-elected offices: all to influence legislation to rig the system in their favor -> bank and others in financial sector use government leverage to rig legislation even more in their favor -> no rinsing -> repeat -> power, influence, and filth build up -> do not rinse -> repeat ...... -> do this indefinitely -> system ends at.... who knows? It's still going, but it ain't good. Keep in mind after the power has been attained, that power can be applied to ALL legislation (ie: buy out the political system through money corruption), with the main general aim of simply more money and more power.
This all leads into another reason why the bank bailouts were such a joke (there's other reasons than jsut this one, but as an example here's my view on one of 'em). The USA pumped all our tax money into these bailouts for banks, then turned around and BORROWED MONEY FROM THE BANKS AFTER THE BAILOUT WITH HIGH INTEREST RATES ON THE LOANS (remember: in order to obtain money, the United States Treasury sells bonds to the Federal Reserve in exchange for Federal Reserve Notes placing the US in debt). That right there f*cked us, the American people, even further. Our money was given to banks that not only f*cked up but played and swindled the American people for profit, then in turn the banks lent our tax payers' bail out money back through the Fed to our government and charged interest on the loans- they outright profited all around while incurring more costs to the rest of us. (I'm a bit cranky today and my coffee hasn't kicked in while writing this so a bit crass, my apologies)
To me, ending the Fed helps hugely in getting money's influence out of politics and ending a rigged financial institution that allowed the top 1% to become the top 1% in the first place through crony capitalist tactics, strategies, and actions (note: not through free market, not through capitalism- but through rigging the system by unifying the power of of the State and economy tightly together and funneling it all for personal gain- this is actually anti-capitalist and pretty much anti-everyone else except for those who are in the "club" and benefit). Instead of placing a patch over a symptom, ending the Fed lances one of the direct causes of today's predicament.
I need to find the exact wording of the 1913 amendment to create the Federal Reserve, as I have heard from many people and read in many places that there is supposedly a clause that the USA government can buy back the Fed at any time for 1 billion dollars (I'm guessing that since back in 1913 a billion was a hell of a lot this clause was able to be slipped in). If the USA buys the Fed, the USA will OWN ALL OF IT'S OWN DEBT that it has with the Federal Reserve. This means the USA could then basically write itself a check made out to itself, and clear out all the debt it's incurred with the Fed (only the debt with the Fed, not with other countries etc, still, it's a big slice). That in itself is, in short, pretty awesome- if such a clause truly exists that allows the USA to regain control/ownership of the Fed at such a low cost.
The argument for what to do after removing the Federal Reserve, and maybe why people haven't been pushing an agenda for afterward (or perhaps they simply have no ideas for afterward), can seem very much a partisan argument: it's pretty much either government control of a central bank or very little government control and no central bank, unless better arguments for what to do come along and take hold. We've seen what happens when the two are married together (government enforces that there be a central bank, but then leaves it alone) and it's nasty.
Four main worries *I* have for having government control of a central bank: A) plain ol' government f*cking up and governemt bureaucracy could do more hurt than good, B) trusting the government to create currency responsibly (if it can just print money to pay debts, someone in government will probably over do it and then we'll have massive inflation and bringing wheel-borrows full of cash to a store just to buy bread, this could possibly be avoided with the right laws in place but governments around the world throughout history keep stumbling into this same f*ck-up of currency making), C) A central bank could easily be argued as "too big to fail," and lastly and this is my biggest worry is that D) a central bank would be too tempting for government officials (whether elected or appointed) to utilize for centralized money making and power - leading to similar problems we already have right now.
I personally am for decentralized banking, and will also limit myself to four main reasons: A) allows for more choices by the people to bank with whom they wish and to create their own banks modeled how they want, B) the system is more flexible and adaptable to deal with different financial and currency fluctuations in a myriad of ways without forcing the entire national economy into a locked position, thus for example if inflation of a currency goes down the toilet banks could switch to a different currency or change the standard on which their currency is based without forcing the rest of us into just one bank's solution since as consumers we could simply switch banks to ones we're comfortable with (or create our own) C) since there is no single unified bank, banks would not be "too big to fail" and any failing bank would be allowed to fail and the losses absorbed by the economy with much less impact, banks compete and have much more vested interest in catering to their customers thus it would be more profitable to invest in local and community economies- it would be in many bank's interest to invest in "bottom up" style investments than in "trickle down" which is bullshit it doesn't "trickle down" much at all because with the Fed system its more profitable for them to keep it and to "invest" in hijacking the government and controlling legislature which ties in with D) no centralization of bank/financial power that can rig the both the political and financial system for profit to either a central bank, government, or both at the same time- thus disabling much of the power of the 1% and allowing our political system to more accurately represent the people due to lack of creating legislature for personal profit over profit for the people: ie helps kick money out of our political system and prevent politicians from being bought into and serving our financial sector.
I view what to do AFTER ending the Federal Reserve as a more partisan argument, that can be hashed out by the US and it's people after our system's been fixed. For example I'm for privitized banking and no central bank, however I recognize that the Constitution does state that the government shall have control and there's many arguments for this (including many from our Founding Fathers of this country, they had reasons why they set it up that way), and there are other ideas out there. (For example, no central bank but allow the government to run a bank as well: however, if the government is also writing bank/financial legislation which directly affects it's ability to gain money this again marries politics and money instead of separating them and I see no reason to trust the government to not do that and to not give itself a rigged financial system with it at the top, and on the other hand too much regulation on a government run business notoriouly leads to a bad business: ie United States Postal Service and it's current financial problems, many due to lack of an ability to act and operate competitively.)
However, I definitely see ending the Fed as part of the fix that helps the people of our nation across the political spectrum and as one of the root causes for the 1%'s power and influence and political corruption- thus worthy of discussion by Occupy in that regard.