The Freeman 1972 - The Ludwig von Mises Institute

250 THE FREEMAN Aprilreject the Federal Reserve System.He will condemn it as thecontrolling body of an importantindustry. He will blame it forhaving shattered the Americandollar; for having caused booms,busts, recessions, and depressions;and for having made the fifty-sixyears of its existence a period ofunprecedented economic instability.In the opinion of this writer,this instability has fostered thegrowth of ideologies that are hostileto individual liberty. The FederalReserve, through its policiesof "boom and bust," helped tousher in the New Deal. And itnow acts as midwife to ever moreextensive government controls.Since it began operating in1914, the Federal Reserve Systemhas put some $55 billion in circulation,has extended some $65 billionin credit, and thereby hasdepreciated the .dollar by almostthree-fourths. And it continues toinflate the money supply at anaccelerating rate.First, the economic' planners inWashington clamor for an expansionof the volume of money andcredit, in order to bring aboutorsustain - a boom, prosperity,and full employment. They rejoiceover wage boosts, but dislike theparallel price rises and the hardshipswrought upon those withfixed incomes. They approve ofadditional housing construction,but disapprove of higher pricesfor houses. They like one set ofinflationary effects, but decry theinevitable twin set. And the economicplanners are always mostanxious indeed to do somethingabout these undesired effects. Inorder to "fight" inflation, theywant to curb economic actionswith credit controls, price controls,wage controls, and all· kindsof other government controls overour economic lives. They wantsocialism. In my opinion, an accelerationof the present longrangecredit expansion will leadus rapidly into the controlled economythey desire.Under these conditions, the F'ederalReserve System, is the mosti,mportant tool in the armory ofec'onomic interventionism. In theGovernors' own words, it is thesystem's objective "to help counteractinflationary and deflationarymovements, and to sha.re increating conditions favorable tosustain high employment, stablevalues, growth of the country, anda rising level of consumption."This is plain interventionism,with all of the planner's usualassumption of benevolent omniscience.An institution which wasestablished as a, cooperative undertakingby the banks of thecountry to pool their resources hasdeveloped into the right hand of