The Federal Reserve Bank and the Decline of the U.S. Economy

There is perhaps no other political issue in our contemporary society that is more pertinent, pervasive, and encompassing than a nation’s economy. From the first coins used in Greece and the Asia Minor in the 7th century BCE, to the earliest uses of paper money, history has proven time and time again that the control of a region’s economy is absolutely crucial to maintaining social stability and prosperity. Yet, for over a century scholars have continued to speculate why the United States, one of the world’s strongest and most influential countries, has one of the most unstable economies. Although the causes of this economic instability can be attributed to multiple factors, nearly all economists agree that they have a common ancestor: the Federal Reserve Bank – the official central bank of the United States. Throughout the course of this paper, I will attempt to determine whether or not there is a causal relationship between the Federal Reserve Bank’s monetary policies and the decline of the U.S. economy. I will do this through a brief analysis of the history and role of this institution, in addition to the central banking system in general. In turn, I will argue that the reckless and intentional manipulation of the economy by the Federal Reserve Bank, through inflation and the abolishment of the gold standard, has led to the current economic crisis in the United States.

Before we begin our investigation, it is imperative that we understand the historical role of the central bank in the United States. Examining the traditional motives of this institution over time will help the reader observe a direct correlation between it and its ability to manipulate an economy. To start, I will examine one of its central policies...

... middle of paper ...

...iew 26.4: 683-690. JSTOR Database. Web. 18 Nov. 2010.

Sprague, O.M.W. “The Federal Reserve Act of 1913.” The MIT Press 28.2 (1914): 213-254. JSTOR Database. Web. 18 Nov. 2010.

Sproul, Allan. "The Gold Question." Vital Speeches of the Day 16.4 (1949): 108. Academic Search Complete. EBSCO. Web. 18 Nov. 2010.

United States. Federal Reserve Bank. Frequently Asked Questions. Mar. 2007. The Federal Reserve Board. Web. 13 Dec. 2010.

United States. U.S. Department of the Treasury. Historical Debt Outstanding – Annual 1791 – 1849. Aug. 2008. Treasury Direct. Web. 13 Dec. 2010.

United States Constitution. Amendment 10.

USdebtclock.org. U.S. National Debt Clock, 2010. Web. 13 Dec. 2010.