Economic Analysis

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200-B13

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Economics

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May 4, 2024

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docx

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1 Economic Analysis Mikayla Buttenhoff Liberty University C08:Gov200 Professor Myles 11/6/2023
2 Economic Analysis The Federal Reserve act, signed in 1913, was supposed to implement itself as a decentralized central bank that balanced the competing interests of private banks and populist sentiments (Federal Reserve Education Staff, 2023 ). Considered to be the most powerful economic institution in the U.S., its key roles were setting interest rates, managing the money supply, and regulating financial markets (McBride et al., 2023). In reality though, all this did for us was go from a market-oriented economy to an extremely planned economy. Consequences to the state becoming the dominant force in, well, everything, alluded towards a corrupt currency (Martin, 2006). So why was the Federal Reserve Act set into place? Let’s get into it. For most of the 19 th century, there was no central bank to fall back on as a lender of last resort. With banking systems still fragile, the nation would consistently be swept with financial crises and panic leading people to run and withdraw their money out of fear. This led to a domino effect as people heard this and immediately withdrew from other banks even when there was no danger of them failing (Federal Reserve Bank Staff, 2023). In 1907, a crisis again set off through bad banking decisions which gave, again , another domino effect of mistrust that ultimately led to a huge realization that banks needed a source of emergency reserves to prevent the panics and runs from driving them out of business (Federal Reserve Bank Staff, 2023). In layman’s terms, this was a great way to save the economy, but ultimately can provide tons of corruption. The Federal Reserve, still part of the U.S Government, is still considered to be its own independent office. What does this mean though? This means that it is able to make decisions without the approval of congress or even the president (Zucchi,2023). Firstly, they conduct monetary policy. Monetary policy is a set of actions available to the central bank to
3 achieve sustainable economic growth by adjusting the money supply. This means that it can create State-manipulated currency. This fake, debauched currency is then no longer backed by any valuable commodity for which it can be exchanged (Martin, 2006). Glenn R. Martin states that this state-manipulated currency that can end to inflation, is really just the government taking control over an unbacked currency to devalue the currency in order to repay its debts with less than it owes. Therefore, the government systematically “rips off” its debtors and we have institutionalized inflation (Martin, 2006). This is how the government has overstepped bible principles in economic policy, because it is considered institutionalized theft. Martin goes on by saying that “The state institutes systematic theft as a way of life (or, to be more accurate, as a way of death) and the greatest thief becomes the government. Consequently, evil and corruption become pervasive, for how can a state which institutionalizes crime and thrives on theft effectively oppose crime or pursue justice?” (Martin, 2006). He could not have said it better. The bible says “Do not steal, do not lie, do not deceive one another”, Leviticus 19:11 (NIV, 2011). And also, in 1 Timoty 6:10, “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs” (NIV, 2011). To conclude, if limited government and consistent elections sustain corruption, why shouldn’t this be the same case for the Federal Reserve? We have given so much power to a form of government that does not even answer to any other form of congress, so for that corruption is almost begging to exist.
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