http://www.lewrockwell.com/orig8/whitney8.html
It’s Time to Dump the Federal Reserve
by Mike Whitney
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“Facts do not cease to exist because they are ignored.”
~ Aldous Huxley
The credit storm which began in July when two Bear Stearns hedge funds were forced to liquidate, has continued to intensify and roil the markets. Last week the noose tightened around auction-rate securities, a little-known part of the market that requires short-term funding to set rates for long-term municipal bonds. The $330 billion ARS market has dried up overnight pushing up rates as high as 20% on some bonds – a new benchmark for short-term debt. Auction-rate securities are now headed for extinction just like the other previously-vital parts of the structured finance paradigm. The $2 trillion market for collateralized debt obligations (CDOs), the multi-trillion-dollar mortgage-backed securities market (MBSs) and the $1.3 asset-backed commercial paper (ABCP) market have all shut down, draining a small ocean of capital from the financial system and pushing many of the banks and hedge funds closer to default.
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This is the poster child for a disastrous gooferment program. Created in secret in 1913, it’s just flat out unconstitutional. Andrew Jackson must be saying “I told you so!”.
Constitutionally, there is nothing that permits the Congress to create a banking cartel and turn over the nation’s money to it. If it ain’t gold or silver, it ain’t money. And, no amount of “legal tender” laws can make it so. See Huxley quote above. The Dead Old White Guys made a mistake. The SHOULD have not mentioned money in the Constitution and left it to the marketplace to figure it out. But then, they thought the Tenth Amendment would cover any omissions. Silly Dead Old White Guys!
Strategically, the FED is supposed to regulate the banking industry. We’ve seen how well that works. The Germans had National Socialism; The Russians has Communism; America has Corporatism. The gooferment regulators and the entities they regulate are in an incestuous corrupt relationship. We should end this by ending regulation. The invisible hand of the marketplace is a far more honest regulator than any gooferment agency.
Tactically, the Fed has mismanaged and misregulated the whole mess. If for no other reason alone, it should be terminated with extreme prejudice.
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