“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
— Thomas Jefferson (sources here)
Jefferson was right. “The people” should control the banks. In other words, buyers and sellers in the marketplace — free market forces — should decide what interest rates are, what the value of money is, and everything else. Government should have nothing to say about it.
Instead, early in the 20th Century, we got the Federal Reserve. This provided a politically controlled central bank. It eventually enabled the U.S. to go off the gold standard, to inflate/deflate the currency at will, and to become the pernicious influence Jefferson predicted would be the case should private bankers be permitted to control or manage the whole economy.
The boom-bust cycle of the American economy started only after the Federal Reserve came into existence. Prior downturns, known as “panics,” were short-lived and minimal corrections. They were nothing compared to the Great Depression of the 1930s, the Great Recession of the 2010s, the many booms/busts/downturns in between, and whatever is yet to come.
Jefferson opposed the Federal Reserve system without knowing it, because it had not yet been established in the United States. Unlike most today, he grasped the inherent danger of fascism, whereby government authorities manage and influence the actions of private, profit-making actors in the pseudo-marketplace. That’s precisely what we have today, and it’s precisely why the candidacies of Donald Trump and Bernie Sanders got so far. These candidates don’t understand the problem like Jefferson did. But the problem is all too real.
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