Tag: federal reserve

Abolish the Fed: The Root of Inflation, Debt, and the Destruction of the Dollar

In 1913, the year the Federal Reserve was established, an ice cream cone typically cost about $0.05 (a nickel), while the average American home cost around $2,500 to $3,500 to purchase or build. Today, the national average cost of an ice cream cone is about $4.00 to $5.50 for a single scoop, while the median sale price of an existing single-family home in the United States is approximately $404,300.

In 1970, the year before America went off the gold standard, gold traded at an average price of roughly $35.96 to $38.90 per troy ounce. Today, the live spot price of gold is approximately $4,320 to $4,350 per troy ounce.

The Federal Reserve, through its artificial control of interest rates, credit expansion, and increases in the money supply, is the root cause of inflation and the weakening of the U.S. dollar. In the United States, a capitalist country, we trust the market to set the price of shoes, sandwiches, movie tickets, and cars. Why do we not trust the market to set a market-driven interest rate?

If interest rates were determined by the market, they would never be artificially too high or too low, and America could avoid the cycles of boom and bust fueled by cheap money. Whether during a boom or a bust, both periods ultimately result in a weaker U.S. dollar. Eliminating the Fed would make the dollar stronger and economy more stable.

Before examining how the Fed contributes to inflation, currency devaluation, and economic instability, a few common misconceptions should be addressed.

First, it is not a hidden secret that the Federal Reserve is not a direct agency of the U.S. government. This is publicly available information. The Fed is a federally chartered, operationally independent institution. Its Board of Governors is a federal agency whose members are appointed by the President and confirmed by the Senate, while its 12 regional Reserve Banks are privately owned by member commercial banks. Congress retains the authority to alter or abolish the Fed by legislation.

Second, this arrangement is not unusual. Nearly every country has a central bank, although it may operate under a different name. Central banks exist on a spectrum from fully independent to fully government-controlled, with most operating as hybrids that combine varying degrees of operational independence with government oversight and accountability. The Federal Reserve is simply the American version of a central bank.

The Federal Reserve, created by the Federal Reserve Act of 1913, operates through three primary mechanisms: setting the federal funds rate, conducting open market operations, and regulating reserve requirements for commercial banks.

The core of its money-creation power lies in open market operations. The Fed controls the monetary base, currency in circulation plus deposit balances that depository institutions hold at the Fed, by buying or selling securities. When the Fed buys a security, it pays by crediting the bank’s reserve account. No prior savings are required. The reserves are created by accounting entry.

Those reserves flow into the broader economy through fractional reserve banking. When you deposit $1,000 in a bank, the bank keeps a fraction and lends out the rest. That money, spent and redeposited elsewhere, is lent out again. Through this money multiplier effect, banks expand the money supply well beyond the original deposit.

Since March 2020, the reserve requirement floor has been set at zero, meaning US banks face no mandatory reserve floor at all. The only remaining brake on credit expansion is the interest rate the Fed itself sets and can raise or lower at will.

The federal funds rate is the rate at which commercial banks lend and borrow excess reserves overnight. The FOMC meets eight times annually to set this target. This single administered price, set by committee rather than by markets, governs the cost of capital for the world’s largest economy.

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The Devil Neither Political Party Will Name

The widening wealth inequality gap is the political third rail nobody in power truly ever wants to touch.

Politicians will scream at each other all day over taxes, healthcare, immigration, tariffs, student loans, climate policy, or whatever outrage is currently driving engagement on cable news and social media. But the second the conversation turns toward monetary policy, toward the machinery of money creation itself, the room suddenly gets very quiet.

That’s because monetary policy has quietly become the single most powerful force reshaping wealth distribution in modern America. And unlike the endless partisan theater surrounding fiscal policy, monetary intervention oddly enjoys remarkable bipartisan support.

Republicans and Democrats may pretend to be existential enemies on television, but when it comes to flooding the financial system with dollars, both parties reliably fall into line. And that support is precisely why this topic is politically radioactive: once people understand how the system works, the illusion of two competing economic ideologies starts to collapse. Republicans want less spending, Democrats want higher taxes…but both parties want the Fed to keep printing dollars.

Since the early 2000s, and especially after 2008 and the COVID era, America has effectively entered a permanent regime of monetary intervention. Quantitative easing, near-zero interest rates, endless debt monetization, emergency lending facilities, and the mainstream acceptance of Modern Monetary Theory-adjacent thinking have fundamentally altered the structure of markets beyond recognition.

When Ben Bernanke first rolled out quantitative easing during the 2008 financial crisis, Americans were repeatedly assured it was a temporary emergency measure. Bernanke described the programs as targeted interventions designed to stabilize markets and support recovery, not permanently redefine the financial system.

QE1 was supposed to calm panic. Then came QE2. Then Operation Twist. Then QE3 became effectively open-ended, with the Fed purchasing tens of billions in bonds every month indefinitely. What began as a supposedly temporary crisis tool metastasized into a permanent feature of the modern economy. And every subsequent crisis only justified bigger interventions: larger balance sheets, lower rates, more liquidity, more market dependence on central bank support.

The Federal Reserve’s balance sheet exploded from under $1 trillion before 2008 to nearly $9 trillion after the pandemic era. Like nearly every government “emergency” program in history, the temporary measure never truly disappeared, it simply normalized, expanded, and embedded itself deeper into the system. It culminated in Neel Kashkari taking to national television to let the world know the Fed has “infinite” cash.

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Was Fed Chair Warsh Chosen For A Controlled Demolition?

Supposed monetary hawk Kevin Warsh, who was officially sworn in as the 17th Fed Chair earlier this week, will now face the dilemma of staying true to his hawkish roots or caving to his unabashed high-rate hating President. That is, of course, unless there’s a deeper plan at play…

Last night, Cornell professor Dave Collum hosted Michael Lebowitz and Stephanie Pomboy for a deep dived into ‘How F***ed Markets Are’ where Dave posited the theory that Warsh man be a demolition man for a managed crash.

Collum and co. also talked about the insane disconnect between the economy and financial markets… and why Pomboy has increasingly abandoned financial assets altogether in favor of gold and hard assets.

Dave’s Fed truther theory and other highlights from last night below:

Retail Retards

Collum warned that modern markets have become completely detached from traditional valuation discipline… but that reality will eventually set in.

“It’s my assertion that probably greater than 50% of the investors in the world don’t understand what valuation means… Everything’s a Bitcoin price now.”

Standard valuation metrics have compounded roughly 4% annually for 45 years and are now firmly in “the nosebleed section,” yet “nobody cares,” per Collum.

Classic warning indicators are now near historic extremes. Lebowitz noted that “CAPE is near its all-time high. It’s above the 1929 level and just short of the dot-com level.” He argued the bigger danger may actually be hiding in supposedly “safe” stocks like Walmart and Costco.

Pomboy has opted out of the mania altogether. How? Real assets.

“Markets can go on longer than you can remain solvent betting against it…. I finally just sort of resigned myself to buying gold… At the end of the day I have been outperforming those markets by only gold.”

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Time To End the Fed and Its Mismanagement of Our Economy

Every major economic downturn of the last 110 years bears the mark of the Federal Reserve. In fact, as long as the Fed has been around, it has swung the economy between inflation and recession. Yet Americans, surprisingly, have tolerated it.

But we shouldn’t expect that to go on forever. We had three central banks before the Fed and confined each to the ash heap of history. The problems inherent to central banking are cause to scrap the Fed as well.

Central banking dates to 1694, when the Bank of England was founded for the purpose of creating the hidden tax of inflation to provide cheap money to government—above all, for Britain’s many foreign wars. In exchange, the central bankers were paid well with interest.

Like any government-favored bank, the Bank of England lent money it didn’t have, lending far more than the silver in its vaults. The British government endorsed this fraud because the king and Parliament wanted the money. 

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Fears erupt over ‘tyrannical tool’ Washington DC is eyeing as it could control your spending

A new form of money being explored in Washington could reshape how Americans buy, sell and save, sparking warnings from lawmakers.

Known as a Central Bank Digital Currency (CBDC), or ‘digital dollar,’ the form of money would be issued and regulated by the Federal Reserve. Formal discussion regarding CBDC intensified around 2020.

The debate on the US adopting the digital dollar has been reignited online after Congressman Eric Burlison deemed it ‘the most tyrannical tool you could put in Washington’s hands.’

‘Flip a switch, you can’t buy a firearm. Flip another, you can’t donate to your church. China built that system. We are NOT building it here,’ the Missouri representative posted on X on Tuesday. 

If the US government were to adopt CBDC, critics have warned that it could directly manage money flow, monitor transactions in real-time, instantly distribute payments and enforce targeted monetary policy. 

Potential capabilities include programming money for specific uses, reducing financial privacy, and potentially enforcing negative interest rates.

Many lawmakers have been pushing to block the Federal Reserve from creating a digital currency, trying to attach a ban to several major bills.

Most recently, they attempted to include it in legislation extending a key surveillance program. However, that effort fell through when Congress passed the measure without the digital currency restriction before an April 30 deadline. 

The House voted 235-191 to extend the spy program, known as Section 702 of the Foreign Intelligence Surveillance Act (FISA).

However, a group of Republican lawmakers had hoped to include an effort to block CBDC in the bill, but the Senate resisted.

Senate Majority Leader John Thune warned that any legislation including a ban on a digital currency would be ‘dead on arrival’ in the Senate, effectively killing the proposal. 

Instead, lawmakers approved a short-term extension to keep the surveillance program in place while the debate continues. 

Burlison responded to Thune’s comments on X, saying: ‘I don’t care what Thune thinks. 

‘A Central Bank Digital Currency is a threat to all of our rights and liberties. It must be banned.’

Rep Scott Perry of Pennsylvania, a member of the House Freedom Caucus who is a supporter of the ban, said in the press conference that most of his constituents ‘don’t want the government monitoring their bank accounts, telling them what they can buy, when they can buy it, and when they’re not allowed to buy.’

More than 130 countries are researching or launching CBDCs, with full usage in the Bahamas, Jamaica and Nigeria. 

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Federal Reserve Stonewalls DOJ Prosecutors Investigating Headquarters Construction: Report

Federal prosecutors made a surprise visit Tuesday to the construction site of the Federal Reserve’s headquarters renovation project.

Workers at the site refused to admit them, saying they did not have clearance in advance of the visit, according to The Wall Street Journal.

The $2.5 billion project has been under review by the administration, and the prosecutors came from the office of U.S. Attorney Jeanine Pirro.

“Any construction project that has cost overruns of almost 80 percent over the original construction budget deserves some serious review,” Pirro said in a statement.

“And these people are in charge of monetary policy in the United States?” she asked.

Robert Hur, an attorney representing the Fed, said prosecutors Carlton Davis and Steven Vandervelden appeared “without prior notice” and sought a tour to check the work’s progress.

President Donald Trump has praised Pirro “for having the courage” to investigate the Fed.

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Sick Behavior From Financial Psychopaths

I’ve been saying this for months: despite “experts” just sounding the alarm moments ago: the private credit unwind that started months ago and has now spiraled into a very real liability for the economy wasn’t some unknowable tail risk lurking in the shadows.

It couldn’t have been clearer if it was a fucking neon sign blinking THIS ENDS BADLY hanging outside of the 4 train station on Wall Street so industry workers were forced to see it on their way into work every morning.

Not only did I call the private credit collapse, I also argued that it would experience a sharp downturn before the Fed stepped in to bail it out or provide a backstop, despite, once again, the widespread misconduct of mismarking positions and carrying opaque, low-quality assets on the books of the companies managing these funds.

And here we are, right on schedule, watching that script unfold with all the subtlety of Eric Swalwell on a date after 9 whiskey cocktails.

In the last two days alone, Bloomberg reports that the Federal Reserve has gone from politely observing to actively interrogating. Not in a press-release, “we’re monitoring conditions” sort of way, but boots-on-the-ground examiners asking major banks to cough up details about their exposure to private credit.

Translation: they’re not trying to understand the industry, they’re trying to figure out how bad the damage could get and who’s going to be holding the bag when it does.

And what are they likely finding? Exactly what anyone paying attention already knew. Private credit funds didn’t just lend money, they borrowed it, too. Because in good times, leverage makes returns look smooth and irresistible. It turns middling loans into “high-yield opportunities.” It creates the illusion of stability. But in bad times? That same leverage becomes a transmission mechanism, turning localized stress into systemic risk. It’s not a bug, it’s the design.

Meanwhile, the Treasury is now poking around insurers, because of course this nuclear dogshit being peddled as a financial opportunity didn’t stay neatly contained in some alternative-assets sandbox. It likely spread. Into insurance portfolios, retirement products, retail funds…basically anywhere someone was desperate enough for yield to believe the pitch. The industry ballooned to roughly $1.8 trillion (and depending on how you count it, more), all built on the comforting fiction that because it wasn’t traditional banking, it somehow wasn’t subject to traditional banking problems.

Just like we’re seeing with “magically” successful subprime lenders like Carvana, of course they’re still subject to reality. The better question is how they can avoid the assumption they have to face reality at some point. I think we know how Carvana has been doing it: f*cking with the numbers. And private credit is doing the same. Just with worse transparency.

And now suddenly regulators are “assessing spillover risk,” which is the bureaucratic equivalent of checking where the fire exits are while the building is already filling with smoke.

Let’s not pretend we don’t know where this goes. When the Fed starts mapping exposures like this, it’s not because they’re writing a research paper. It’s because they’re quietly preparing the intervention. Maybe it’s a backstop. Maybe it’s liquidity support. Maybe it’s some creatively named facility that sounds temporary but lingers for years (something like the “Assessment of Systemic Stress by Head Office Liquidity & Economic Support” plan, or A.S.S.H.O.L.E.S. for short).

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The Case Against Federal Reserve Independence

The independence of the Federal Reserve System has become a major source of public controversy. As political leaders signal dissatisfaction with monetary policy, officials and commentators rush to defend the central bank’s insulation from democratic pressure. We are told, as if it were self-evident, that central bank independence is a pillar of sound economic governance.

But this confidence is misplaced. The economic case for central bank independence is far weaker than its defenders suggest. And the constitutional case is weaker still.

Start with economics. The standard argument is that independent central banks deliver low and stable inflation because they are insulated from short-term political incentives. Elected officials, facing electoral pressures, might be tempted to juice the economy with artificially loose monetary policy. By contrast, independent technocrats can take the long view.

Early empirical studies did show that countries with independent central banks experienced lower inflation. Yet more recent research has cast doubt on this relationship. The correlation is sensitive to different samples and methods. In many cases, the supposed benefits of independence disappear entirely.

A more plausible explanation has emerged. Countries that enjoy low and stable inflation share deeper institutional characteristics: respect for the rule of law, stable political systems, and credible commitments to property rights. These are the real foundations of sound money. Central bank independence accompanies these basic governance norms, but its standalone effect is debatable.

This matters for a free-enterprise economy. Monetary policy is not a neutral technocratic exercise. Interest rates are prices: the price of time, risk, and capital. When insulated officials tinker with those prices at their discretion, the result is distorted market signals. Cheap credit can mislead investors, encourage unsustainable projects, and redistribute wealth in opaque ways. Independence does not eliminate politics. It simply hides politics behind a veil of expertise.

If the economic case for independence is overstated, the constitutional case is entirely bunk. The Constitution is clear: Congress holds the power “to coin Money” and “regulate the Value thereof.” Monetary authority, like all legislative power, originates with the people’s representatives. Congress may delegate certain functions to administrative bodies, including by creating a central bank. But delegation is not abdication. Those who exercise delegated authority remain accountable to the laws Congress passes and, ultimately, to the chief executive charged with enforcing them.

Yet the modern Fed operates as if our constitutional framework were irrelevant. Its leaders enjoy significant protection from removal. Its decisions (targeting interest rates, allocating credit, regulating banks, etc.) have sweeping consequences for the entire economy. If this does not constitute the exercise of executive power, it is hard to say what does.

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DOJ Opens Investigation Into the Fed

For the first time in history, a sitting Fed chair faces a DOJ criminal probe. On Friday, January 9, grand jury subpoenas from the Department of Justice landed on the desk of Federal Reserve Chairman Jerome Powell. The documents threaten criminal charges, not for market manipulation or insider trading, but for his congressional testimony on the Fed’s $2.5 billion headquarters renovation project. The probe, launched by the U.S. Attorney’s Office in Washington, D.C., centered on whether Powell’s statements to the Senate Banking Committee had been misleading about costs, timelines, or oversight.

Powell appeared unruffled in his Sunday evening statement two days later. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public,” he said, framing the investigation as an attack on the central bank’s independence. The subpoenas demanded documents, emails, and testimony related to the renovation — marble upgrades, security retrofits, and budget overruns that had ballooned amid supply-chain chaos.

Critics call it a pretext. Supporters say it’s payback for the Fed’s post-pandemic rate hikes that cooled inflation but squeezed borrowers. Behind closed doors, the story is more complicated.

Remodeling, or Monetary Policy?

The Trump administration has long chafed at the Fed’s seeming freedom from accountability (which it framed as “autonomy”). Powell, appointed by President Donald Trump during his first administration in 2017 and reappointed by Joe Biden in 2021, had resisted calls to keep rates low during the 2025 recovery. Now, with the DOJ under new leadership, the subpoenas look like a lever to pry open the black box of monetary policy.

David Malpass, a former World Bank president, weighed in on CNBC to say, “It’s worrisome. You know, the Fed has become now just a giant hedge fund. It’s lost a trillion dollars — and counting. It’s going to be a gigantic loss. What it does is borrow money at 5.4 percent from banks, and then dumps it into government bonds. So think what that does! That causes the government to think that it’s better off than it is. So that encouraged the government to be short when rates were zero.”

Was this about marble tiles, or was it a warning shot: the era of the Fed evading checks and balances drawing to a close? Republican lawmakers, usually positioning themselves as champions of the rule of law, issued guarded statements defending Fed independence. They raced to frame the situation as the president politicizing disagreements.

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Federal Reserve ‘ignored’ US attorney’s office inquiries into Powell’s congressional testimony ‘on multiple occasions’: Pirro

The Justice Department was forced to use the “legal process” to obtain information related to Federal Reserve Chairman Jerome Powell’s congressional testimony about renovations at the central bank after he “ignored” requests from prosecutors, US Attorney Jeanine Pirro said Monday. 

Pirro, the top federal prosecutor in Washington, DC, downplayed Powell’s shocking Sunday night suggestion that he was facing a criminal indictment after grand jury subpoenas were served to the Federal Reserve related to his June 2025 testimony to the Senate Banking Committee about the renovation project, which has been panned by President Trump. 

“The United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process — which is not a threat,” Pirro wrote on X. 

“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” the US attorney continued. “None of this would have happened if they had just responded to our outreach.” 

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