by Ram ben Ze'ev
Since its establishment in 1913, the Federal Reserve has wielded substantial control over the United States’ monetary policy. While it was initially created to bring stability to the financial system, the Federal Reserve’s role has come under increasing scrutiny, especially as economic challenges like inflation, ballooning debt, and financial inequality strain the economy. Critics argue that the Fed’s operations lack transparency and are often misaligned with the interests of everyday Americans. With recent crises highlighting these issues, it’s time to consider auditing the Federal Reserve with an eye toward disbanding it, thereby returning the power to print and regulate money to Congress, as the Constitution originally intended. Additionally, re-establishing the U.S. dollar’s link to the gold standard could restore intrinsic value to American currency, stabilising the dollar and rebuilding confidence in its worth.
Transparency and Accountability: The Case for Auditing the Fed
For decades, the Federal Reserve has operated with limited public oversight, making decisions that impact every American without offering much visibility into its processes. This lack of transparency allows the Fed to act with near-absolute autonomy, sidestepping congressional oversight and public accountability. An audit of the Federal Reserve would be a critical step toward transparency, offering insight into how decisions on interest rates, quantitative easing, and monetary supply are made. Such an audit would reveal whether the Fed’s actions truly align with its stated mission to “promote maximum employment, stable prices, and moderate long-term interest rates.”
Additionally, recent financial crises—including the 2008 financial meltdown and pandemic-driven inflation—have exposed the need for more robust oversight. In both instances, the Fed’s policies disproportionately benefited large financial institutions while everyday Americans bore the brunt of the economic fallout. This disparity raises essential questions about whose interests the Federal Reserve ultimately serves.
A Shadowed Past: The Fed’s Origins and Ownership Structure
The Federal Reserve’s origins and structure only add to the call for greater transparency and reform. Established in 1913 through the Federal Reserve Act, the Fed was created ostensibly to stabilise the U.S. economy. Yet, its conception involved secretive meetings on Jekyll Island, where a group of powerful bankers laid the groundwork for the institution that would grant them significant control over U.S. monetary policy. Despite its name, the Federal Reserve is not truly a “federal” entity. While it operates under federal law and its chairman is appointed by the President, it functions as an independent central bank, privately owned by its member banks, with limited government oversight.
These member banks, required by law to invest in their regional Federal Reserve Banks, cannot trade or sell this stock, nor do they “own” the Fed in a traditional sense. However, this arrangement has created a unique, quasi-private institution that lacks direct accountability to the American people. This autonomy allows the Fed to make major economic decisions without congressional approval, fostering public distrust. Given its origins and complex ownership structure, many believe the Federal Reserve prioritises the interests of powerful banking entities over those of the general public. An audit and eventual restructuring would address these longstanding concerns and reinstate a more democratically accountable approach to monetary policy.
Restoring Congressional Authority: Returning Power to Print Money to Congress
The U.S. Constitution explicitly grants Congress the power to “coin Money [and] regulate the Value thereof.” However, the establishment of the Federal Reserve transferred this authority from Congress to an independent body that lacks direct accountability to elected representatives. By restoring this responsibility to Congress, the U.S. would re-establish a more democratic, transparent form of monetary governance.
Centralising monetary policy under the Federal Reserve has created an over-reliance on its actions to stabilise the economy. This dependency has made the U.S. economy vulnerable to reactive policies that often benefit the financial sector at the expense of long-term stability. Congress, as a body directly accountable to the public, would be better positioned to weigh broader social and economic impacts, taking a longer-term approach to financial policy rather than short-term fixes.
The Gold Standard: Bringing Intrinsic Value Back to the U.S. Dollar
The U.S. dollar’s break from the gold standard in 1971 severed its connection to tangible value, making its worth dependent on government authority alone. While this shift allowed for greater flexibility in money supply, it also introduced inflationary pressures and paved the way for escalating debt. Re-establishing the dollar’s link to gold would restrain the Fed’s ability to print money freely, as each dollar in circulation would need to be backed by a corresponding amount of gold.
By tying the dollar back to a finite, universally recognised asset, the U.S. could stabilise its currency, providing predictability in its value. This link to gold would likely attract foreign investment and bolster the dollar’s position as the world’s primary reserve currency. Such a shift would instill renewed confidence in the U.S. dollar, assuring global markets that American currency holds intrinsic value rather than being subject to arbitrary monetary policy shifts.
Economic Stability and Fiscal Responsibility
The Federal Reserve’s monetary policies have created cycles of booms and busts, often driven by cheap credit and ever-growing national debt. When the Fed manipulates interest rates and increases the money supply, it inadvertently incentivises government overspending and private sector debt accumulation. Tying the dollar back to gold would impose a natural constraint on excessive spending, compelling the government to live within its means and rely less on debt-funded growth.
With a currency backed by gold, the government would be incentivised to pursue sound financial practices. This alignment with fiscal responsibility would contribute to long-term economic stability, shielding Americans from the corrosive effects of inflation and devaluation that currently plague the economy.
Strengthening Global Confidence and Reducing Inflation
As trust in fiat currencies wanes amidst surging global inflation, a return to the gold standard could reinvigorate confidence in the U.S. dollar. The gold-backed dollar would serve as a global model for sound money, providing tangible value that appeals to both consumers and businesses. The inherent limitation on inflation would stabilise prices and protect against the volatility that erodes purchasing power.
In an era where inflation is sometimes weaponised as a tool of economic control, a currency tied to gold would limit policymakers’ ability to erode the dollar’s value at the expense of savers and retirees. In this way, a gold-backed dollar offers Americans the assurance that their savings will retain value over time, free from the arbitrary inflationary practices of central banking.
Conclusion: Charting a New Course for American Monetary Policy
The Federal Reserve’s unchecked influence has contributed to economic instability, mounting national debt, and a widening divide between the financial sector and ordinary Americans. Auditing and disbanding the Fed would enable Congress to reclaim its constitutional authority over currency, restoring accountability to the public. Furthermore, a return to the gold standard would protect the U.S. dollar’s value, promoting fiscal responsibility and rebuilding global confidence in American currency.
While this transition would involve logistical and economic challenges, the potential benefits are significant. Restoring the dollar’s link to gold would offer Americans a currency with lasting value, free from the manipulative tendencies that have characterised recent decades. Now is the time to re-evaluate the Federal Reserve’s role in American life and return to a monetary system that places the power—and trust—in the hands of the people.
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Bill White (Ram ben Ze'ev) is CEO of WireNews Limited, Mayside Partners Limited, MEADHANAN Agency, Kestrel Assets Limited (developer of MAYCOINS), SpudsToGo Limited and Executive Director of Hebrew Synagogue