End the Fed: Book Summary (Chapters 1-3)

End the Fed By: Ron Paul More Chapters to come. Quotes Chapter One: Why you should care

“Ending the Fed would be the single greatest step we could take to restoring American prosperity and freedom and guaranteeing that they both have a future.”

Page 5

“The fact the Fed can create trillions of dollars and distribute them to its cronies without congressional oversight should shock us all.”

Page 10

“I’ve written this book to explain hy I think the system of the Fed domination myst come to an end.”

Page 4

Any discussion of our economy world be ineffective without a serious discussion about money policy and the Fed’s role in manipulating our money and economy. The Fed claims o stabilize the business cycle, control inflation, maintain a solvent banking system and regulate the financial system. I disagree on each point.

The past meltdown was due in part to ‘illusory wealth” in the words of Barack Obama, an illusion the Fed is helping create. Nations rise and fall on the quality of their currency. Everyone should be interested in their money, it is necessary for survival and a free society. Ending the Fed may be seen as radical, but it is in fact deeply rooted in our history, with patriots like Thomas Jefferson leading the charge against the Feds predecessor.

Ending the fed would remove the money monopoly from the government, forcing them to live within their means. It would prevent them from financial trickery, waging wars they can’t afford, and passing the costs on to future generations. Our very freedom is at stake.

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This was a good first chapter. Lots of doom and gloom, which is a great start to a book calling for an end to the Central banking America has used for decades. Hell, he even calls for an end to paper money. He addresses the radical nature of the proposal a bit, and he defends himself well. The tone of the chapter isn’t really conversational, for some reason I can almost see him reading from this book as a campaign speech, or perhaps more aptly, a post-victory political speech. Not sure if I like the tone yet. Overall, a good start.

Quotes Chapter Two: The Origin and Nature of the Fed

In this way, fractional reserves create new money, pyramiding it on top o f a fraction of old deposits. Page 16

The Fed [was] “the most tragic blunder ever committed by Congress the day it was passed, old America died and a new era began. Page 23

That phony money creates a false boom is not an unknown fact in history. Page 30

Some may imagine that the Fed has always been around. This is not the case. It was established only in 1913, and since it’s founding secrecy has been its method of operation. At the time, banks were upset about not having a lender of last resort, but for our economy, the risk of failure is an important regulator of decision making.

Fractional reserves allows banks to loan money that is currently being spent as cash or deposited in another bank. This system is inherently unstable, it’s a sinking boat and our entire modern history of banking reform has been an attempt to patch up this leaky ship.

The story of the Fed starts in 1775 when American first created the Continental, a failure that lead to generations insisting on a gold standard. America flirted with centralized banking several times, first in 1811 and the closing of the Second Bank in 1836. By 1906 people were again trying to bring about a Central Bank. The panic of 1907 solidified in many peoples minds the idea of a depositor of last resort, though it was in actuality the act of fractional reserves that was to blame. The bill, written in 1910 promised to end make the panics seen in the past mathematically impossible. In reality, the US dollar has fallen in value to only 5% what it was worth when the Fed was established, with Fed having effectively stolen 95% of each dollar we have.

In a free market system, interest rates wouldn’t lower until there was an excess in deposits, signaling that enough short term sacrifice has been made to invite future investment. By the Fed decreasing the interest on a whim, it creates the illusion that there in an excess of deposited cash. This is an illusion, an illusion that gives way to bust and boom cycles. The Fed hasn’t given us stability, it has given us instability.

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A (long) series of (very good) videos explaining our banking system.

Part 1

Part 2

Part 3

Part 4

Part 5

The Fed (Wiki)

Ron Paul Music Video (Awesome? Totally!)

This was a very good chapter. The author, after setting up the problem in the first chapter, jumps right into the meat in this one. There are several charts and figures that might be tedious to some readers, but which I find interesting and well used. The chart showing the falling value of the US dollar was particularly impressive. Additionally, the way the author throws around dates shows he’s done his research. More importantly, the way he breaks down really complicated monetary policy concepts shows he’s more than qualified to write a book on the subject.

It’s clear the man knows what he’s talking about. Don’t read that as an endorsement for ending the Fed, it’s only chapter 2 and I’m not sold. But it’s clear from the way he write about such “boring” subject matter as practical reserves and interest rates that the guy is talking about what he knows and is beginning to build (I think) a solid foundation for later arguments.

Quotes Chapter Three: My Intellectual Influences

I have no problem with those who say education is the most important thing, but eventually a theoretical philosophy has to be translated into political actions. Page 56

Transfer of wealth through government force is self-limited. The appearance of wealth through borrowing and inflation always leads to heartache and suffering. Page 57

I was… convinced that a philosophy that embraced personal liberty, private property, and sound money was the only political philosophy worth championing. Page 62

His childhood taught him the tough lessons of saving and hard work. His father taught him the value of money and theft of dilution. His grandmother taught him the fears of hyper inflation.

As an adult he began reading books on economics and monetary policy. He studied both modern and older economists, both American and foreign, finding many impressive economic theories originating from Austria. America rejected much of the economic theories Ron Paul embraced. Rather than remaining with the gold standard, America borrowed and devalued our cash vastly below the value of gold. Roosevelt went so far as to confiscate all gold in 1933, attaching a $400,000(inflation adjusted)/10-year penalty to the crime. Much harm has ensued.

It is the anti-gold theory that has lead us to our current economic turmoil, and if we get out of this one, it will lead us to the next. Socialism, welfare, and government intrusion are easier theories to sell, but ultimately, when people realize those are only short term fixes, they will become more open to the suggestion that freedom offers more.

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Like books about monetary policy? Try this one! (The End of Prosperity)

This chapter was a bit odd in that in kinda mixed with the previous chapter. It starts with his family, and at several points along the way goes back to his family life and people he knew personally and books he personally read, but interspaced throughout he also argues for the gold standard and against the government attempts to both devalue money and keep down the price of gold. The argument, that government intervention is an affront to personal freedom is throughout. There’s a lot of information, but the organization isn’t as good as the previous one. Still, a solid chapter.

The information about how Roosevelt outlawed owning gold and no president after him fixed that (clearly) tyrannical act I found particularly compelling. That that action was just the first of many actions the US government took to control gold all while allowing the dollar to collapse in value is of particular interest.

[Via http://politicalbooks.us]