Framed by Freedom

August 12, 2014 – A recent column in the local newspaper posed two very important questions. First, “what is the economy?” And second, “why has Wall Street recovered from the 2008 Great Recession while Main Street has not?”
The column’s given answers to both were as complex as they were contradictory. But in reality, the answers are quite simple. Understanding why is vital. The economy is the one issue we all share. It does not solely affect specific individuals, groups, or voting blocs. We6193957872_b8eebbf9d6_z are all bound to the economy.
First, what is the economy? We make choices and act on our choices through the economy. The true measure of an economy is the degree of freedom we have in our choices and actions. What we freely save and produce is what fuels a healthy, sustainable economy, as opposed to what we consume (many measurements of economic “strength” and “growth” focus on consumption, which is both misleading and unsustainable). Most important though, is the fact that the more free the economy, the more peace and prosperity for everyone in the economy.
Second, why has Wall Street recovered while Main Street—the American taxpayer—has not? The answer to this question again hinges on freedom. The problem for Main Street is that the U.S. economy does not have a great degree of freedom. The primary reason why, and why Wall Street has prospered at the expense of Main Street, is the Federal Reserve (the Fed). The Fed is the central bank of the U.S. It is part public and private, holds monopoly control over the dollar, and in essence, is unaccountable.
The Fed controls the economy by manipulating the money supply and interest rates. This distorts prices, which are the signals we act on in the economy. When prices and interest rates are distorted by the Fed, our choices and actions are distorted. When money is “cheap” (when the Fed artificially expands the money supply and interest rates are held artificially low) what do we do? We “demand” and consume more. A greater desire and ability to buy and consume is “stimulated.” This is, in part, why U.S. culture has morphed over time into a culture characterized by rampant, unsustainable consumption.
Now, what does all of this this mean for Main Street? The Fed’s distortion of prices and interest rates has been the root cause of the 18 recessions since the Fed’s inception in 1913, including the 2008 Great Recession.
Over the past 100 years, the Fed has increased the money supply by 12,230 percent. The Fed has increased prices at the consumer level by 2,241 percent (an excellent characterization of this, including a real-time analysis of the Fed’s triggering of the Great Recession, can be found here).
Increases in the money supply, and the subsequent increase in prices, punish savings and savers. This is inflationary. It harms the middle class and the poor, especially those on fixed incomes such as retirees. How does the Fed increase the money supply? In part, it directly gives money to a small handful of big banks. By the time that money trickles down to Main Street and the poor, it is worth less, as prices and the cost of living rises.
Furthermore, the Fed funds our government’s perpetual, catastrophic wars and unsustainable domestic programs. And remember, the Fed also facilitated the bank bailouts of 2008. These are the primary reasons why Mains Street will be forced to pay the $17 trillion-plus-and-counting national debt, along with an additional some $200 trillion in unfunded liabilities. This is why Wall Street has recovered from the Great Recession and Main Street has not.
Simply, at the core, this is redistribution. This is inequality. This is economic slavery. This is war on the poor and middle class. All of this is unsustainable. And it is all due to a lack of economic freedom.
Naturally then, the next question is: “what can be done?” The Fed, through our elected representatives, must be held accountable. But first, the people must properly understand the Fed and the economy—particularly the virtue and purpose of sound and sustainable money and sound and sustainable banking. Understanding such is only possible if framed by freedom—the freedom of the poor and Main Street from The Fed.
Fighting for freedom is the most important challenge facing all Americans, and the world, today. All issues then, must be framed by freedom.

Wenzel, Robert. The Fed Flunks, 2014.