The Fed: End it or Mend it!

 Should we follow suite with Ron Paul's slogan and "end the fed"? Hedge fund manager David Einhorn seems to think so. He recently gave a comical, yet blatantly honest and scathing review of the federal reserve regarding their zero percent interest rate policy, said to carry through until 2014,

   “A jelly donut is a yummy mid-afternoon energy boost. Two jelly donuts are an indulgent breakfast. Three jelly donuts may induce a tummy ache. Six jelly donuts, that’s an eating disorder. Twelve jelly donuts is fraternity pledge hazing” (Fox Business News, 2012).

 Einhorn goes on to explain that the low interest rate that the federal reserve implemented will be hurting us in the long run. By raising the interest rate, families are able to bring in more money through savings account interest income. The higher the interest rates, the more revenue will be generated in someones savings accounts and CDs. Bonds are also being directly affected because at a 2% interest, the income is very minimal, causing many people to suspend retirement for the present time. Ron Paul, one of the biggest advocates against the Fed, with his slogan "end the fed", also agrees that the monetary policy that is currently being implemented is hurting more then it is helping.

“The Fed’s response to the crisis suggests that it believes the current crisis is a problem of liquidity. In fact it is a problem of poorly allocated investments caused by improper pricing of money and credit, pricing which is distorted by the Fed’s inflationary actions...We live in a world that seems to have abandoned the concept of savings and investment as the source of real wealth and economic growth. Financial markets clamour for more cheap money creation on the part of central banks. Hopes of further quantitative easing from the Fed, the Bank of England, or the Bank of Japan – or further longer-term refinancing operations from the ECB – buoy markets, while decisions not to intervene can cause stocks to plummet” (Fox Business News, 2012).

 During a meeting this past Tuesday on Capitol Hill, Ron Paul, head of the House committee that oversees America's central bank, was not the only one to vehemently voice his distaste for the federal reserve. Representative Kevin Brady (R) from Texas recently introduced legislation that would eliminate the

Federal Reserve Chairman, Ben Bernanke

Fed’s directive of promoting maximum employment and price stability. Instead of putting all efforts towards stimulating the economy, Mr. Brady would rather see the Fed focus strictly on inflation. Surprisingly, Representative Barney Frank (D) even attended the meeting. His issue with the Fed is that it is spending too much time focusing on inflation and should instead be more aggressive in their efforts to  fix the economy from the recent recession. However, not surprisingly, not one current Fed worker attended the meeting. Since it would appear that the Fed does not seem eager to take constructive criticism by refusing to hear legitimate monetary policy issues, then I stand proudly in support Ron Paul's "end it or mend it" solution. 



 
                                                              Works Cited

David Einhorn and Ron Paul Tackldavid einhorn and ron paul tackle fed." Fox Business News. 5//2012, 5/9/2012. Web. 9 May 2012. <http://www.foxbusiness.com/markets/2012/05/09/david-einhorn-and-ron-paul-tackle-fed/

Yadron, Danny. "Ron Paul’s Hearing to Ask: Mend or End the Fed?." The Wall Street Journal. 5/7/2012, 5/7/2012. Web. 9 May 2012. <http://blogs.wsj.com/washwire/2012/05/07/ron-pauls-hearing-to-ask-mend-or-end-the-fed/>