In one of his essays published in the "Washington Post" during the past two years, Robert J. Samuelson stated, "The Fed (Federal Reserve) creates inflation, and it can control inflation." Though he made this astounding statement as an apologist for the Federal Reserve, he neglected to define inflation for his readers and to explain why he thinks that the purely political devaluation process of inflation is necessary. On Monday, December 12, 2011, Mr. Samuelson, again, published another one of his apologetic articles in the "Washington Post," entitled "Fed Bashing Slander" without accurately defining his terms and properly representing the facts about the Federal Reserve Act and its off-spring, the Federal Reserve System.
While most U.S. voters don't know anything at all about Keynesian economic theory, Samuelson obviously believes that most adult Americans blindly accept that Keynesian economic processes and rules are essential to a market economy, and that the Federal Reserve is essential to a preservation of Keynesian laws and policies that govern the political economy of the United States. I personally believe, however, that, given the opportunity to make an informed choice, nearly all Americans would show utter disdain for the current governing economic dynamics represented by the Federal Reserve. Unfortunately, though, nearly all high school U.S. government courses mention neither Keynesian economic theory nor the Federal Reserve in their curriculum content. So, most 18 year-old adolescents graduating from high school leave secondary education without knowing anything about the prevailing economic theory that surreptitiously replaced, in 1934, the concepts of natural law, free market capitalism, and liberty established and taught by Adam Smith in the 18th Century, upon which the American republic and its original economy were established. In fact, most high school graduates strangely proceed into full-time employment or post-secondary education erroneously believing that the free market and liberty still exist in the American economy and, stranger still, that the U.S. Congress presides over the American economy as required in the U.S. Constitution's Article 1, Section 8., which clearly states that Congress has the (only) power to coin money and to determine its value.
As a proponent for the Federal Reserve Act, and the Federal Reserve Board, Mr. Samuelson has never cared to mention anywhere in his apologies for the current state of the economy the tainted history of the Fed or its dismal success rate since its inception. It seems that Samuelson wants the American public to believe that it (the Fed) has optimally fulfilled its congressional legislative mandate of 1913, in the passage of the Federal Reserve Act. Nonetheless, according to G. Edward Griffin, in his well-documented and long-standing history of the Fed, "The Creature from Jekyll Island,"
"The accepted version of history is that the Federal Reserve was created in 1913 to stabilize our economy. Yet one of the most widely-used textbooks on this subject, "Economics 8th ed.," by Paul A. Samuelson, says: "It (the Federal Reserve) sprang from the panic of 1907 with its alarming epidemic of bank failures: the country was fed up once and for all with the anarchy of unstable private banking." Mr. Griffin continues to assert that, "the most naïve student must sense a grave contradiction between this cherished view and the System's actual performance. Since its advent, it (the Fed) has presided over the crashes of 1921 and 29; the great Depression of '29 to '39; the recessions in'53,'57, '69, '75, and '81; a stock market 'Black Monday" in '87; and a 1,000 percent inflation that has destroyed 90% of the dollar's purchasing power."
In essence, then, the Federal Reserve has had a zero success rate in presiding over the economy to prevent any of the economic debacles that have occurred since 1913. G. Edward Griffin also said, in his book, that,
"If an institution (such as the Federal Reserve) is incapable of achieving its objectives, there is no reason to preserve it-unless it can be altered in some way to change its capability. That leads to the question: why is the Federal Reserve incapable of achieving its stated objectives? The painful answer is: those legislative mandates were never its true objectives. When one realizes the circumstances under which it was created, when one contemplates the identities of those who authored it, and when one studies its actual performance over the years, it becomes quite obvious that the Federal Reserve System is merely a cartel with a government façade."
You see, all American citizens fifty-years of age, and older, would very much like to know why the cost of ordinary chocolate bars (Hersheys, Snickers, Mars, etc) was stable at 10 cents-or-less from 1900 until around 1969, and since 1970, in only 42 years, have increased in price 1,500 percent to well-over a dollar. Mr. Samuelson has not bothered to explain this egregious occurrence and its deleterious effect, which applies as well to the unnecessarily inflated prices of all staple foods and commodities currently essential to the U.S. population. You see, since around 1934 the implemented theories of Brit John Maynard Keynes (which purport that government regulation and federal manipulation of economic markets is superior to a free market, natural law, and entrepreneurial liberty) have replaced, almost surreptitiously, the libertarian principles that were the substrate of the American republic from 1781 until around 1900. With FDR's New Deal, sometimes referred to as the raw deal, federal regulatory laws, which were thrice declared unconstitutional by the U.S. Supreme Court from 1932-33, were sanctioned as constitutional in 1934 by a politicized Supreme Court of Roosevelt-supporting justices, who were appointed by the pragmatic President only to ensure that his National Recovery Act was declared legal.
These unnatural laws, predicated on dictatorial principles eschewed by Nature's God, were the means whereby the Federal Reserve was enabled to incrementally do what it has heinously done to the American economy with its regulatory powers. Though the gold and silver standards were still viable in the 1930's, FDR led the way and opened the door to Richard Nixon's eventual dismantling of the republic's gold standard by confiscating much of the gold held by private citizens. Both FDR and Nixon were Keynesian pragmatists through and through, and it was a goal of the Fed to ultimately replace paper silver certificates, which held the intrinsic value of its stated amount in silver coinage, with paper Federal Reserve notes, which held, and currently hold, no value whatsoever. That is why all silver coinage was ultimately replaced, during the early 1970s, by coins having no precious metal in their composition. This was also the time when political inflation was allowed by the Federal Reserve to deliberately decimate the value of the American dollar.
In 1944, just ten years after the introduction of his bureaucratic regulatory government, Franklin Roosevelt cursed the nation again with the formal sponsoring of the international conferences at Bretton-Woods, New Hampshire, which produced foreign policy agreements that were the forerunners of the World Trade organization, and officially established, by U.S. Senate fiat, the preeminence of Keynesian economic policy as the guiding force behind the economy underlying the United States government. These closed conferences, and their resulting agreements, at Bretton-Woods, were deliberately kept away from American public scrutiny, and proclaimed very quietly that a global economy and its international success were more important than the overall success of a sovereign American economy, for the social and financial benefit of all American citizens. Had those words appeared on the front page of the "New York Times in 1944," there probably would have been an instant revolution against the federal government and an outcry from the people for canceling the agreements, but information about the conferences was kept under-wraps and distorted by the media at the behest of the feds. The Federal Reserve's increased power, the International Monetary Fund's transmutation of American money, and the rabid devaluation of U.S. dollar, according to the value of foreign monetary exchanges, were the end results of the Bretton-Woods agreements, and subsequently of its successor, the World Trade Organization. Supporting laws have been incrementally passed by Congress, from 1950 until the present day, in order to sustain the global economy and the Keynesian economic foundations. In a conversation between economist John Maynard Keynes and Harry Dexter White, a senior U.S. Treasury Department bureaucrat, at the Bretton-woods Conferences in 1944, which was overheard by political journalist, Walter Lippman, Keynes said the following. "The American people are like greedy children, and we, the wiser adults, are their caretakers. An economy can't be trusted to them to keep and maintain." According to Lippman, Harry D. White was in total agreement with Keynes.
You see, a government, any government, will pragmatically pass laws to sustain the prevailing economic theory that supports its current economy. By this process, the U.S. government has inexorably gone from libertarian principles and natural law to an almost fascist regulatory system of government that federalizes everything in the name of pragmatism. That's the very simple reason why the American dollar is worth less than 20 cents, and a candy bar is currently priced at nearly 1,500 percent above its proper value. It's certainly not because a chocolate bar is worth more than 10 cents, and the miserable predicament is only going to get worse unless there is a restoration of constitutional government with a reinstatement of gold and silver standards. Until the Legislative branch, the U.S. Congress, is again in control of coining money and determining its value, as the Founding Fathers wisely determined, the Federal Reserve will only continue to destroy the little that remains of the much-less-than sovereign American economy. I sincerely hope that Robert J. Samuelson will carefully peruse this essay and seek to confine his future commentary to the historical facts and the stark reality regarding the Federal Reserve.
Norton R. Nowlin took M.A. and B.A. degrees in the social and behavioral sciences from the University of Texas at Tyler, studied law for one full year at Thomas Jefferson School of Law, in San Diego, California, and earned an ABA-approved advanced paralegal certification from Edmonds Community College, in Lynnwood, Washington. Mr. Nowlin has attended LaJolla, California's National University and Malibu's Pepperdine University to attain additional graduate credits in business management and economics. Mr. Nowlin also attained a Texas State Teaching Certification, in social studies, psychology, and government from the University of Texas at Tyler. A paralegal, published essayist, poet, and free-lance fiction writer, Mr. Nowlin resides in Northern Virginia with his wife, the renown math tutor, Diane C. Nowlin, and their two very intelligent cats.
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