The Federal Reserve Problem

The Federal Reserve Act was passed in 1913 without an Amendment.  The Federal Income Tax Act was passed in 1913 and ratified as the 16^th Amendment that states:

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states and without regard to any census or enumeration.”

With these and further actions, Congress abandoned the free market system, the laws of economics, including the law of supply and demand and established a centrally planned managed economy. Their further actions included nationalizing entire industries like mortgage lending, funding subsidies to corporations and entire industries and funding education and healthcare.  These Socialist actions have destroyed US citizen’s ability to control prices.

Prior to 1913, Banks were independent corporations subject to bankruptcy if they became insolvent.

The Federal Reserve sets interest rates. Prior to its existence, the market set interest rates.  The Fed can set interest rates above market to raise capital costs and lower economic activity.  The Fed can also set interest rates below market to lower capital costs and raise economic activity.

The Fed controls the money supply and will increase it based on federal deficit spending and liquidity needs. 

Government debt is never repaid, it is absorbed by the citizens in the form of higher prices through inflation. This is referred to as “debasing the currency”.

The 1913 US dollar is now worth 13 cents.

Congress has abdicated its responsibility to “coin money” to the Federal Reserve System. US Voters have no control over the US economy. Congress is funded by special interests. Campaign contributions need to be restricted to “voters only”.

Congress likes to be able to blame the Fed for its mistakes and likes to ignore big issues and let the Supreme Court set policy on unpopular issues.  Congress likes the federal agencies to write the regulations, so they can avoid blame for bad laws. It’s a game voters can’t win and it needs to stop.

Norb Leahy, Dunwoody GA Tea Party Leader