Monetary Policy: Where the Candidates Stand

On January 12th, the United States Senate is scheduled to vote on a bill that would expand Congressional oversight of the Federal Reserve by allowing the Government Accountability Office to review Fed decisions on monetary policy (http://www.wsj.com/articles/senate-to-vote-on-audit-the-fed-bill-in-january-1450483894). During a GOP Presidential Primary Debate back in November, the Federal Reserve was a hot topic, with several candidates weighing in on the topic. As with any issue, we as Christians should first look to what God’s Word says…

The Bible makes it clear that deceptively manipulating/ changing the value of an item of trade (including money) is abominable to God (Leviticus 19:35–36; Proverbs 20:10, 23). It also likens diluting the value of money (silver) to the diluting of a society’s morality (Isaiah 1:22). From these passages we can conclude that God’s design is that governments refrain from inflating their currencies as a short-term remedy for deficits since this practice defrauds the citizens by paying them for their goods and services with money that is actually worth less than advertised. It is a lie enforced as if it were truth.

In today’s economy, the most prevalent methods of enforcing this lie are through quantitative easing and fractional reserve banking. Quantitative easing is the practice central banks (such as the Federal Reserve) often use to lower interest rates and increase the money supply by providing financial institutions with large amounts of additional capital in an attempt to increase economic activity. Fractional reserve banking is a banking system in which a bank keeps only a fraction of its deposits backed by cash-on hand and loans out the rest. This system effectively creates new money because the money that is loaned out is not directly tied to a corresponding amount of deposited money. When these two practices are combined, the money supply rapidly increases, leading to inflation.

Though this practice is heralded by many economists today as fostering economic growth, especially during periods of recession, it actually makes our problems worse by rewarding poor banking practices. This leads to malinvestment and misallocation of capital, resulting in economic bubbles and the boom-bust cycle. More importantly, these practices are immoral because they result in a dishonest inflationary tax, are a form of counterfeiting, unjustly favor a few at the expense of the many, are done in secrecy and by force, violate our right to property (inflation reduces the value of our savings), promote the philosophy of instant gratification (easy credit and low interest rates encourage spending rather than saving), encourage corruption in politics (the ability of a government’s central bank to give money away to specific organizations encourages the practice of bribing politicians), hurt savers and those on fixed incomes (including retirees), and violate the Constitution (which gives no authority for the creation of a central bank, much less the creation of fiat currency).

The Founding Fathers realized that the issue of money is extremely important to the well-being of any society. George Washington advised, “We should avoid…the depreciation of our currency; but I conceive this end would be answered, as far as might be necessary, by stipulating that all money payments should be made in gold and silver, being the common medium of commerce among nations.” German banker Mayer Rothschild succinctly stated the incredible power of money over society when he announced, “Permit me to issue and control the money of a nation and I care not who makes its laws.” Lenin, always looking for methods to advance communism, observed that the best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation,
governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler or surer means of overturning the existing basis of society than to debauch the currency.

President Obama is opposed to the current legislation to Audit the Federal Reserve…so where do the current Presidential Candidates stand on this extremely important issue?

Candidate Monetary Policy
Jeb Bush Quiet on the Fed; Top donors are affiliated with Goldman Sachs
Ben Carson Quiet on the Fed; Defensive of Janet Yellen
Chris Christie Minor campaign issue; Says he wants the Fed audited
Hillary Clinton Minor campaign issue; Pro Fed
Ted Cruz Minor campaign issue; Says he wants the Fed audited and supports Rand Paul’s Audit the Fed bill but is pro-bailout and sees a role for the Fed; Wife is a high ranking official with Goldman Sachs since 2005; Worked on Bush’s economic advisory staff which was pro-stimulus and bailout
Carly Fiorina Minor campaign issue; Opposed to recent Fed monetary policy
Jim Gilmore Minor campaign issue; Opposed to recent Fed monetary policy
Mike Huckabee Minor campaign issue; Critical of Janet Yellen but supported 2008 stimulus by the Fed
John Kasich Minor campaign issue; Believes in a role for the Fed
Martin O’Malley Minor campaign issue; More government oversight, but believes it has a role
Rand Paul Major campaign issue; Introduced legislation for the Fed to be audited; Anti-central bank; Wants the Fed abolished eventually
Marco Rubio Minor campaign issue; Says he wants the Fed audited and supports Rand Paul’s Audit the Fed bill
Bernie Sanders Major campaign issue; Opposed to Fed corruption; Wants major reforms and an audit of the Fed but believes it still has a role
Rick Santorum Minor campaign issue; Wants Fed audited but believes it has a role
Donald Trump Minor campaign issue; Opposed to recent Fed monetary policy

Please share your thoughts with us!

In Christ – Samuel and Lydia

 

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