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March 20, 2008

Five More Reasons to Criticize the Fed

Last month I posted on Ten Reasons to be Critical of the Federal Reserve. Well, here’s five more, from Bankaholic.

I’m not sure I agree with all of the criticisms, but they underscore two broad points. The first is, it is nearly impossible for the Fed to “make the right call” when reading the economy and managing the money supply, because the economy is too large and complex.

The second is, trying to prevent short-term economic downturns will lead to far more serious long-term consequences, which we are now only beginning to experience. As long as the Fed exists, it would do well to focus on controlling the money supply to prevent inflation, rather than come to the rescue whenever some segment of the economy is struggling. Markets are better off correcting themselves.

And this underscores the need for reform. We can break the Fed’s monopoly over the money supply by passing Ron Paul’s Honest Money Act and Free Competition in Currency Act. You can tell Congress to pass these bills here.

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