NY Times dishes out economic fallacies in its defense of the Federal Reserve

Thursday, May 05, 2011 by: J. D. Heyes
Tags: economic fallacies, Federal Reserve, health news

eTrust Pro Certified

Delicious Pin It
(NaturalNews) - In a recent piece singing the praises of the Federal Reserve and what its creation has meant for U.S. monetary policy for nearly a century, columnist Roger Lowenstein of The New York Times looks into the origins of this institution and the true impact it has had on our Republic.

In criticizing those like Rep. Ron Paul, R-Texas, who has called for the Fed to be disbanded and for the country to return to the gold standard - so our currency is actually based on something of value - Lowenstein lectures about who is controlling our money supply.

"We have, indeed, fiat money, convertible into foreign exchange and regulated, not always successfully, with the intent of maintaining (or not too quickly depreciating) the dollar's purchasing power," Mr. Lowenstein admits. "And if money is a unit of value, it is hard to conceive of a yardstick better than purchasing power. ... [I]n any monetary system, some authority must fix either the price of money or the supply (my emphasis)."

Mr. Lowenstein writes that the Fed was created "to be a banker to the nation's banks, controlling the money supply and, thus, the value of the currency." He goes on to ask, rhetorically, just who else could regulate the value of our money save a powerful central bank designed just for that role.

Let's examine that, and other, questions raised by the Times article.

For starters, it was never the founder's intent that a central bank be in charge of something as important as the nation's money supply and monetary policy. That power was vested in Congress. Per Article I, Section 8: "Congress shall have the power ... to coin money, regulate the value thereof..."

And what an awesome power that is to have. Consider thoughts on this by Murray N. Rothbard, once an economist and academic advisor for the libertarian Ludwig von Mises Institute: "The Federal Reserve System virtually controls the nation's monetary system, yet it is accountable to no one. It has no budget; it is subject to no audit; and no congressional committee knows of, or can truly supervise, its operations."

That doesn't sound like Congress has much to say about it these days, does it?

There is also this. The Fed's actions have increasingly led to a lowering in value of our dollar, which means it takes more of them to buy things. That's Inflation 101, isn't it? Yet isn't one of the Fed's primary roles, according to Mr. Lowenstein, to raise our purchasing power and control inflation? So what gives? Why would an institute specifically established to keep our currency valuable and stable implement measures that would cause the opposite affect?

David Gordon, a book reviewer with the Ludwig von Mises Institute and a student of Austrian economics expert Murray N. Rothbard, explains it this way:

"An increase in the supply of money does not increase real wealth, since money is used only in exchange. ... If an increase in the supply of money does not increase real wealth, why have governments continually resorted to inflation? Rothbard's response involves another fundamental insight of Austrian economics.

Inflation does not affect everyone equally; quite the contrary, those who first obtain new money gain a great advantage, since they can purchase goods and services before most people become aware that the purchasing power of money has fallen.

Inflation is thus a form of counterfeiting. If Rothbard is correct, the entire basis of modern deposit banking, the fractional-reserve system, is a type of counterfeiting that must be abolished. Under present arrangements, 'the Fed has the well-nigh absolute power to determine the money supply if it so wishes.'"

Mr. Lowenestein waxes poetic about the Fed's role as the appropriate gatekeeper of the nation's money supply, as well as sole arbiter of its value. But such a system is capricious and arbitrary; without anything tangible, like gold and silver, in which to base the value of our money, it essentially is what the Fed says it is.

Who's benefitting from that? Wouldn't it have to be the Fed?

It sure isn't the average American, who has seen his wealth decline over the past decade as the dollar has waned.

Get breaking news alerts on GMOs, fluoride, superfoods, natural cures and more...
Join over four million monthly readers. Email privacy 100% protected. Unsubscribe at any time.

Have comments on this article? Post them here:

comments powered by Disqus

Take Action: Support

Email this article to a friend

Permalink to this article:

Reprinting this article: Non-commercial use OK, cite with clickable link.

Embed article link: (copy HTML code below):
Most Popular
Today | Week | Month | Year

See all Top Headlines...


Now Available at

O3 Essentials OraJuvenate™
A powerful, cleansing dental cream for maximum oral/dental health.
New Cancer Solutions
Over 3 hours of content covering today’s best cancer tests, how to kill cancer cells and the best diets and exercise routines.
Freeze-Dried 100% Organic Whole Corn
Our freeze-drying method preserves taste, texture and nutrients better than any other food preservation method ever invented.
Fenix TK35 Flashlight
Tough, waterproof, extremely bright and it’s touted to throw an 800+ lumen beam more than 1,000 feet into the night.
Inca Treasure Smoothie Pack
This pack of our four most popular superfoods from South America is the perfect combo pack for smoothie lovers.
Pink Himalayan Salt
This salt delivers significant levels of magnesium, zinc and selenium, with trace levels of dozens of other elements.
Pinhole Glasses - Aviator Style
Pinhole glasses are becoming famous for helping people improve their vision without the risks of laser surgery.
Oxy-Rich Facial Serum
O3 Essentials Jojoba Oxy-Rich Facial Serum is cellular nourishment for your skin. Helps smooth fine lines while enhancing tissue elasticity.
Freeze-Dried 100% Blackberry Halves
Our freeze-dried blackberry halves are grown in Serbia under strict organic standards.

Also on NaturalNews:

Health Ranger Videos
Activist music
CounterThink Cartoons
Food documentaries
FREE Special Reports
Colloidal Silver

Advertise with NaturalNews...

Support NaturalNews Sponsors:

Advertise with NaturalNews...

Most Popular Stories

Flu shot kills 19-year-old, but vaccine industry still has total immunity against lawsuits
Here's a nutty fact: Eating more tree nuts lowers the risk of all-cause death by up to 20 percent
Six important facts you're not being told about lost Malaysia Airlines Flight 370
Malaysia Airlines Flight 370 now clearly a government cover-up: All evidence contradicts official story
10 other companies that use the same Subway yoga mat chemical in their buns
BLM fracking racket exposed! Armed siege and cattle theft from Bundy ranch really about fracking leases
High-dose vitamin C injections shown to annihilate cancer
U.S. treating meat with ammonia, bleach and antibiotics to kill the '24-hour sickness'
USDA to allow U.S. to be overrun with contaminated chicken from China
Vaccine fraud exposed: Measles and mumps making a huge comeback because vaccines are designed to fail, say Merck virologists
Battle for humanity nearly lost: global food supply deliberately engineered to end life, not nourish it
Diet soda, aspartame linked to premature deaths in women

25 Amazing Facts About Food

This FREE downloadable report unveils a collection of astonishing and little-known facts about the food we eat very day. Click here to read it now...


Resveratrol and its Effects on Human Health and Longevity - Myth or Miracle.

Unlock the secrets of cellular health with the "miracle" nutrient Resveratrol Click here to read it now...


Nutrition Can Save America

FREE online report shows how we can save America through a nutrition health care revolution. "Eating healthy is patriotic!" Click here to read it now...

The Healing Power of Sunlight and Vitamin D

In this exclusive interview, Dr. Michael Holick reveals fascinating facts on how vitamin D is created and used in the human body to ward off chronic diseases like cancer, osteoporosis, mental disorders and more. Click here to read it now...

Vaccines: Get the Full Story

The International Medical Council on Vaccination has released, exclusively through, a groundbreaking document containing the signatures of physicians, brain surgeons and professors, all of which have signed on to a document stating that vaccines pose a significant risk of harm to the health of children. Click here to read it now...

Health Ranger Storable Organics

GMO-free, chemical-free foods and superfoods for long-term storage and preparedness. See selection at

Recommended Resources On:

Natural News trends
Health Ranger news
Natural News GMOs
Mike Adams tracker
Natural News photos
Natural News Global
Natural News in focus
Natural News connect
Natural News shocking stories
Natural News radar
Health freedom
Dr. Paul Offit

This site is part of the Natural News Network © 2014 All Rights Reserved. Privacy | Terms All content posted on this site is commentary or opinion and is protected under Free Speech. Truth Publishing International, LTD. is not responsible for content written by contributing authors. The information on this site is provided for educational and entertainment purposes only. It is not intended as a substitute for professional advice of any kind. Truth Publishing assumes no responsibility for the use or misuse of this material. Your use of this website indicates your agreement to these terms and those published here. All trademarks, registered trademarks and servicemarks mentioned on this site are the property of their respective owners.

eTrust Pro Certified Android app on Google Play

Sign up for the FREE Natural News Email Newsletter

Receive breaking news on GMOs, vaccines, fluoride, radiation protection, natural cures, food safety alerts and interviews with the world's top experts on natural health and more.

Join over 7 million monthly readers of, the internet's No. 1 natural health news site. (Source:

Your email address *

Please enter the code you see above*

No Thanks

Already have it and love it!

Natural News supports and helps fund these organizations:

* Required. Once you click submit, we will send you an email asking you to confirm your free registration. Your privacy is assured and your information is kept confidential. You may unsubscribe at anytime.