Federal reserve encourages growth of national debt
Our country is running out of money. No, really, the well has run dry. Today, the United States Federal Government has a debt totaling more than $18 trillion. But not to worry — it’s actually those damn Republicans who want to cut entitlement spending that will destroy the economy. Their minor cuts in projected increases in spending will surely be the catalyst for financial disaster here at home. There is no way the costly policies of the Federal Reserve negatively impact the marketplace, right? Well, newsflash: We’re broke, and they do. The United States has not been this financially unstable since World War II and the Great Depression.
Let me paint a picture for you: When George W. Bush took office, the federal government was not up to its neck in debt. In fact, there was a surplus in the budget, and therefore, our country’s debt was financeable. This surplus is a result of relative peacetime, the beginning of the government-sponsored housing bubble and the success of the Internet. In 2014, it is a much different story. When Bush exited the Oval Office in 2009, he left the taxpayers to foot a bill about $5 trillion strong. Since President Barack Obama’s inauguration, the spender-in-chief has increased the total national debt even more substantially than his predecessor. Now, the total national debt leaves each citizen to pay $56,369, or each taxpayer an astonishing $153,729. This debt was accumulated due to spending on police militarization, lavish presidential golfing trips, endless war, detainment centers and insolvent social services. If families or businesses spent like our government does, they would not survive past their first grocery, mortgage or Internet bills.
Although our lovely friends on the left cried about spending under the Bush administration, they are essentially silent under the current regime. As a junior senator, Obama railed against then President Bush for his desire to raise the debt ceiling — an issue Obama has clearly flip-flopped on, as he ridicules Republicans for doing the same under his rule. The President even stated he didn’t deserve a second term if he was not able to control the debt before then. In 2006, the firebrand junior senator from Illinois even rightfully claimed, “Increasing America’s debt weakens us domestically and internationally.” It is clear the desire to belligerently spend taxpayer dollars is one bipartisan issue our government does not have an issue tackling.
If individuals and businesses eventually run out of money, you may be wondering why our government does not. The answer is three words: The Federal Reserve. Essentially a fourth branch of the federal government not explicitly outlined in the Constitution, this banking system has an interesting track record, to say the least. The beginning of the Federal Reserve has sketchy ties to names such as J. P. Morgan, Rockefeller and Vanderlip — men who at the time owned a large portion of the world’s wealth. After successfully orchestrating, lobbying and passing the new fractional reserve banking system, the Federal Reserve Act of 1913 was signed into law by the progressive President Woodrow Wilson. This system established an economic environment unfriendly to sound money and competing marketplace currencies. The Federal Reserve can print money, inject it into the economic via quantitative easing, buy and sell bonds and change interest rates. These mechanisms enable our government to exacerbate the business cycle. These monetary policies, which come under the auspices of economic stability, have achieved the opposite, with the housing bubble and new higher education bubble to cite. The easy credit enabled by the Fed fuels the extreme boom and bust nature of artificial economies.
Is this information about the Federal Reserve System of grave concern, or is it some crazy Libertarian conspiracy? You decide. Bloomberg News reported in 2011 that through the Federal Reserve, some of the world’s largest financial institutions received an additional $1.2 trillion in undisclosed loans from the national banking system. This includes institutions such as Citigroup, Bank of America, JPMorgan Chase, Royal Bank of Scotland, Deutsche Bank, Goldman Sachs, Bank of America and many more. To be clear, these loans are financially separate from the $18 trillion disclosed national debt. To illustrate the bigger picture, this spending is of relevance because such fiscally irresponsible policies devalue the dollar. Since our current dollar was officially turned into fiat currency, the paper currency has no tangible value. This makes the currency remarkably easy to collapse. Since 1913, the value of the dollar has plummeted. What would cost you $5 in 1913 costs $119.92 today. This is what true injustice looks like.
Republicans and Democrats alike will continue to bicker about which programs to only cut increased spending in, and the media will continue to divisively cover all the wrong issues. With little-to-no coverage surrounding the conspicuous Federal Reserve System, it is vital to follow news outlets that do. Additionally, as the total national debt approaches $20 trillion, be sure to support those initiatives and politicians that wish to bring transparency to the Federal Reserve. As those on the left blame Wall Street and those on the right blame big government politicians, know that they should truly be blaming the mother of the beast: The Federal Reserve.
Matthew Boyer is a School of Arts and Sciences junior majoring in political science. He is the NJ State Chair and Rutgers Chapter President of Young Americans for Liberty. His column, “Legalizing Life,” runs on alternate Wednesdays. Follow him on Twitter @MattJBoyer.