Email Featured

The Federal Reserve’s Massive Theft Of Stability

Jim Huntzinger | On August 2, 2021

The Federal Reserve headquarters in Washington, DC

Economists George Selgin, William Lastrapes, and Lawrence White do not tell an encouraging story about the Federal Reserve[1] They noted, ”In light of the severe Great Contraction of the early 1930s under the Fed’s watch, worse than any of the pre-Fed panics, […] continuing the pre-Fed status quo would have had better results.”[2]

In fact, according to Austrian economist, Robert Wenzel, since the Federal Reserve was established, money supply has increased by 12,230 percent; consumer prices have increased by 2,242 percent; and eighteen recessions have occurred. Among these recessions is the Great Depression (1930s) and the recent Great Recession (2007 – present).[3] This is not a good track record by any standard; nor, as we will see, an improvement from the pre-Fed era.

Actually the pre-Fed economy was much better than even previously realized. Several studies reveal that the “panics” of the 1800s were much less severe and shorter in length than formerly reported. Many of the reported recessions of that time, in fact, did not exist. .

While the economy did, at times, slow down, which is a normal economic function; it did not, as previously believed, turn downward. And mitigating these downturns or panics was one of the very reasons for establishing the Federal Reserve. So, unfortunately, the very reason for the Federal Reserve did not even exist or, at a minimum, was not nearly a significant issue as to need an entity as the Federal Reserve; that is, a central banking system.

“[T]he proportion of the time that the U.S. industrial sector has spent in recession has remained fairly constant over the past two centuries. The characteristics of industrial contractions, expansions, and peak-to-peak cycles appear largely unchanged among the pre-Civil War, Civil War to World War I, and postwar periods,”[4] notes economist Joseph Davis. In fact, in 1926 economist William Thorp reported that “[t]he earliest recorded depression in America came in New England in 1640, and followed a period of ten years of rapid growth.”[5]

[1] See the entirety of George Selgin, William D. Lastrapes, and Lawrence H. White, December 2010, “Has the Fed Been a Failure?” (Washington, D.C.: Cato Institute).

[2] George Selgin, William D. Lastrapes, and Lawrence H. White, December 2010, “Has the Fed Been a Failure?” (Washington, D.C.: Cato Institute), p. 37.

[3] Robert Wenzel, April 25, 2012, “Speech delivered at the New York Federal Reserve Bank” Economic Policy Journal.com, (New York, NY: Speech delivered on April 25, 2012 in the Liberty Room of the New York Federal Reserve Bank), [http://www.economicpolicyjournal.com/2012/04/my-speech-delivered-at-new-york-federal.html]. Also see Robert Wenzel, April 30, 2012, “New York Fed: Leave the Building!” Mises Daily, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/daily/6028/New-York-Fed-Leave-the-Building].

[4] Joseph H. Davis, March 2006, “An Improved Annual Chronology of U.S. Business Cycles since the 1790s,” The Journal of Economic History, Vol. 66, No. 1, pp. 117-119.

[5] William Long Thorp, 1926, Business Annals, (New York, NY: National Bureau of Economic Research, Inc.), p. 112.

This article originally appeared on Townhall Finance.

Jim Huntzinger

Jim Huntzinger began his career as a manufacturing engineer with Aisin Seiki (a Toyota Group company and manufacturer of automotive components) when they transplanted to North America to support Toyota. Over his career he has also researched at length the evolution of manufacturing in the United States with an emphasis on lean’s influence and development. In addition to his research on TWI, he has extensively researched the history of Ford’s Highland Park plant and its direct tie to Toyota’s business model and methods of operation.

Huntzinger is the President and Founder of Lean Frontiers and a graduate from Purdue University with a B.S. in Mechanical Engineering Technology and received a M.S. in Engineering Management from the Milwaukee School of Engineering. He authored the book, Lean Cost Management: Accounting for Lean by Establishing Flow, was a contributing author to Lean Accounting: Best Practices for Sustainable Integration.

The Federal Reserve’s Massive Theft Of Stability

Join the conversation!

Right Report

What We’re Looking At Today

Follow Us

Like us on Facebook

The Affluent Mix

Biden Oblivious To Illegal Immigration Issues... August 2, 2021 | Frank Vernuccio

Rob Arnott On Bubbles, Inflation, And Once-In-A-Generation Investment Opportunit... August 2, 2021 | Jerry Bowyer