The Federal Reserve

It’s time to rethink the Fed.  Their money printing has resulted in too much inflation for over 100 years. In the 1960s, a decent family income was $10,000 a year. By 2000, a decent family income was $100,000 a year. If we continue down the same path, by 2040 a decent family income would be $1 million a year.

Fed policy has discouraged savings. US consumers overspent and didn’t save, because they knew every dollar they saved would be worth less. Their control of interest rates resulted in boom-bust cycles and recessions. We can’t allow interest rates to float to market right now, but we need to do that as soon as our national debt is paid down enough to allow interest rates to rise..

The US needs to move from a managed economy to a free market economy in order to restore the law of supply and demand.  The reason is that consumers must be put in charge of determining prices. Government is now in control of prices in too many industries including healthcare, education and government itself.  All of these are overpriced and under-performing.

The Fed needs to follow Austrian Economics and cast off all forms of Keynesian Economics in order to allow this reform. Banks need to be responsible for their own survival without the need for government bail-outs. 

Large Investment Companies with Index Funds like Vanguard need to offer index funds of stocks that pay dividends. Pension Plans and 401K savers should not have to create their own portfolios. They need better options.

Glass Steagall needs to be restored to allow community banks to handle consumer loans and savings. They should not be eligible for government bailouts.  Dodd-Frank Bank regulations should not be required in community banks. These are “main-street” banks and should operate independently.

Investment Banks with hedge-fund investments in derivatives need to operate separately from community banks and should be responsible for their own survival without the benefit of government bail-outs. 

The US government needs to get out of the lending business. Fannie Mae, Freddy Mac and Sallie Mae need foreclose their failing loans and sell their remaining loans to private banks and mortgage lending companies.

Suicidal laws like the Community Reinvestment Act of 1993 and HUD anti-discrimination rules need to be repealed to allow lenders to refrain from having to give loans to unqualified buyers.

There is a case for ending the Fed, but if we can end bank bailouts and change their ideology, it may be worth keeping its role in lending money to the banks. They should not be free to increase the money supply by 450% in 8 years of QE ever again.

Norb Leahy, Dunwoody GA Tea Party Leader