Ron Paul End the Fed: Protests at Federal Reserve Banks Across US
Ben Bernanke may be a modern-day Nicholas Biddle, but unfortunately for "End the Fed" advocates there is no modern-day Andrew Jackson to crush the nation's central bank. Although Ron Paul did his best to hold the Federal Reserve to account — achieving some small success — the Fed continues to exert tremendous influence over the U.S. and global economies. For all intents and purposes, the Federal Reserve is deeply embedded in the fabric of the economy, and its actions are generally supported by both major political parties.
But these realities did not stop thousands of "End the Fed" demonstrators from assembling at the following locations Saturday:
The Fed was established in 1913 with a dual mandate to facilitate full employment and stable prices, but has occasionally acted as a major bubble-blower. The implosion in housing prices that began in 2006 came courtesy of an overheated market brought on by lax lending standards encouraged in part by the Fed's prolonged low interest rate policy after the 9/11 attacks. (An insatiable appetite for mortgage derivatives also fuelled the housing frenzy, but that's another story altogether.)
Saturday's protests came on the heels of the Fed's announcement last week that it would initiate a third round of quantitative easing — or QE3 — since the beginning of the Great Recession. Through this mechanism, the Fed will purchase $40 billion per month in mortgage-backed securities from financial institutions. When the Fed buys these assets, it credits the accounts that banks' have with the Fed for the purchase price, which increases the money supply. Although the Fed does not "print money" as some critics like to assert, QE essentially produces the same effect.
Each round of QE has boosted asset prices virtually across the board. Stocks, commodities, precious metals, and other asset classes have seen their prices rise, as QE is an inherently inflationary monetary maneuver. Thus, QE has a tendency to weaken the currency. Coupled with the Fed's zero interest rate policy (ZIRP), confidence in the dollar has waned with each new round of monetary stimulus.
Fed Chairman Ben Bernanke was appointed to his post by George W. Bush in 2005, and was reappointed by Barack Obama, highlighting the bi-partisan approbation that Bernanke and the Fed in general enjoy. And pity the poor presidential candidate who rails against central banking as Andrew Jackson did, as he would be the subject of endless criticism for his radical position that a single and mostly unaccountable institution should not have so much power and influence over the economy.