In rebuttal: Don't end the Fed
Regarding John Stossel's column to end the Federal Reserve Board (“End the Fed,” Nov. 3): Stossel ignores what the Fed is and the good points of what it has done.
As our first Treasury secretary, Alexander Hamilton, noted, all successful countries have a central or national bank. From the time of the Civil War to the start of the Fed, Americans could expect on average two years of economic growth interspersed with two years of contraction. Roughly 50 percent of the time the nation's economy was in a downturn.
From 1913, when the Federal Reserve was put into place, to the present, that figure has changed to roughly 20 percent of the time that the economy is in contraction. Additionally, with the exception of the 2008 recession, these events are further apart and less severe as time goes on.
Runs on banks were often caused by hoarding the currency of the day, gold. Without the elastic currency that can be created with a central bank, bank runs were a common occurrence just to continue business or not lose savings.
The bank runs of the Great Depression were panic reactions of the times. While Canada did not experience bank runs, European banks, which also were on the gold exchange standard, did experience runs.
It is also not correct to place the bubble blame squarely on the Fed. It didn't buy all the stocks or invest in anything Internet related during the tech bubble. The Fed did not decide that everyone should own a house or participate in the buying, selling or combining of mortgages or their derivatives. What Bernanke at the Federal Reserve and Henry Paulson at Treasury did was to salvage the Titanic-esque economic entities before they sank, taking the world's economic engines with them.
Unfortunately, the Fed is more reactionary than proactive in some of its policies, but it is better than central planning or the economic ups and downs of the golden age of the gold standard.
Patrick R. Wallace is president of Covington Investment Advisors Inc. of Ligonier.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- NFL coaches weigh in on Polamalu’s legacy
- Hit sends Penguins’ Letang to hospital
- Tourists rush to visit Cuba before American influence felt
- Shortfalls sabotage promise of a union retiree’s pension
- Mt. Lebanon native, Iraq war hero’s action goes unrewarded
- Pirates pitchers finding success with expanded strike zone
- Starkey: Next frontier for Steelers offense
- Pirates notebook: Polanco’s power outburst a matter of timing
- Probiotic bacteria help conquer ‘superbugs’
- Alvarez latest in Pirates’ revolving door at first base
- Man rescued from sinkhole in McKeesport