November 20, 2025
"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
- 12 U.S. Code § 225a (emphases added)
Maximum employment, stable labor prices, and minimum risk premiums on long-term interest rates each actually require maintaining zero growth of the money quantity - that is, holding the money quantity constant.
Congressmen and presidents instead push the Fed people to undercut each of their statutory mandates - first by simply existing, next by also making the money quantity increase.
The Fed is a cartel that fixes the price of money
Banking sustainably takes skill and work. Bankers collect depositors' savings and lend out these savings. In exchange for this skill and work, bankers earn interest.
The Fed is a cartel of bankers whom congressmen and presidents grant an unconstitutional privilege to instead unsustainably create government money and lend it out. Freed from doing much work to collect savings from depositors, and freed to lend out money that they just create, these bankers rake in increased revenues.
To keep this privilege, Fed cartel bankers also create and lend government money that politicians borrow to spend.
Fed cartel bankers coordinate their actions by influencing government money's prices, which are the money's interest rates.
Fed cartel bankers won't price money correctly or quickly
Fed cartel bankers set as their control setpoint that they will keep the price of government money low. Politicians like the resulting unsustainable short-term growth. Politicians also gain from the resulting crises by ratcheting up their control.
Fed cartel bankers' control accuracy is unavoidably poor. One cause is that since the bankers make the money quantity increase, prices increase. At each link along supply chains, people end up having to make prices increase. Since making prices increase will make customers seek alternatives, people tend to delay, hoping for the best, but congressmen, presidents, and the cartel bankers make sure that true relief never comes.
A second cause making the bankers' control accuracy unavoidably poor is that after inputs like prices change or outputs like sales volumes change, people not only delay before they first act but also take time to then make their actions. These lags occur in sequence along a supply chain. Lags that occur in sequence add delay before changes first begin downstream of the sequence.
Delays reduce people's solvency, making their subsequent adjustments wind up bigger, adding chaos.
So, then, the Fed cartel is unconstitutional, sets its money-price setpoints unsustainably low, and controls these setpoints poorly. Increasing the money quantity leads people to add pure delay before adjusting, and each sequence of lags along a supply chain adds additional apparent delay. People's control relies on feedback, so delay in feedback means driving blind. Control has to slow way down and gets unavoidably poor.
Until congressmen and presidents summarily repeal the unconstitutional privilege of creating government money to lend out, the sole lesser evil that a rights-securing Fed cartel could do would be to dampen the harm done creating money by modestly acting to keep the money quantity as close as possible to constant.
Instead, the Fed cartel bankers, with their lowballed prices, take away unalienable rights that congressmen and presidents were instituted and are required to secure.
Sustainable jobs create value that customers buy
When Fed cartel bankers push interest rates lower than are supported by current savings, this leads people to borrow and invest money they can't sustainably earn back. This funds jobs that aren't sustainable.
The Fed cartel bankers claim that their lowball pricing is what's needed to maximize jobs. Actually, their lowball pricing is certain to reduce jobs soon, when the unsustainable borrowing fails.
Jobs are sustainable only when they create products that customers value highly enough to spend some of their current earnings or savings on.
Product prices naturally decrease as productivity increases
To drive interest rates lower than can be sustained by current savings, Fed cartel bankers create and loan government money, loaning most to people who pay it back, although also loaning nearly as much now to government people who never pay it back.
The created money gets added to the existing money. Adding it dilutes the existing money's value, starting wherever the created money enters supply chains, and from there blowing like a weather front across supply chains, changing prices in its wake.
People keep performing tasks better and inventing ways to add more value. When bankers don't dilute money, product prices keep getting decreased.
Meanwhile, labor prices - wages - hold steady or increase (other than in avoidable crises, when bankers have created and loaned out money but then failed, destroying money).
People don't want product prices to stay the same. People want product prices to keep decreasing so that the same labor buys more products.
A level playing field for all money-users is a fundamental freedom
Money is a product. Congressmen and presidents have deprived customers of freedom to choose and use the money that provides the best value.
Future money will be stock-based. Holding it will be investing in productive businesses. Stock-based money will increase in value as stocks do, faster than any other large asset class.
In the past and up to now, the best money has been 100%-reserve gold. Holding it has been conserving value, plus sharing in the average productivity gains throughout the economy.
Anything less than these good moneys unduly deprives people of property.
Smaller deprivations have led to revolutions being fought - and won. Across the long arc of history, what has kept succeeding more and more has been freedom.
Freedom to choose and use good money is a fundamental freedom.
This article was originally published on American Thinker and was reprinted with the author's permission.