Keeping The Federal Reserve

Capitol (sic) refers to goods that are used in the production of goods and services. Capital does not result from an increase in the money supply, as my opponent alleges, but rather from individual savings. These savings are invested in corporations and they use the funds to purchase capital. It is true that booms and busts preceded the federal reserve; both Hume and Ricardo wrote on the subject (Keynes arrogantly and falsely argued that he was the first to study this phenomenon). What you will not see, however, is a boom bust cycle without the phenomenon of monetary inflation. For example the panic of 1819 had it's origin in the war of 1812. The war brought with it monetary inflation as the government needed to borrow money in order to finance this endeavour. It is precisely this monetary inflation that the federal reserve and other central banks use - ostensibly to fight employment, but really to help finance wars. That is the most important reason to abolish central banking. It's used to finance wars. Virtually every armed conflict has seen with it the state debasing the money supply. In the olden days, kings would clip coins. Today they just print new money, devaluing the currency individuals hold. Inflation is a tax, a secret tax, which robs everyone who owns wealth. It's immoral and without a central bank and fiat money there would be no inflation, and it would be very difficult for governments to afford the type of wars that are all too common these days. The keynesian explanation that recessions result from a failure of aggregate demand is false. If this was the case then why are the problems not located in consumption goods industries? Keynes' theories are not integrated with general economic doctrine. They do not build on the edifice of Ricardo, Turgot, Augustine, the Scholastics and other economists who preceded him - instead his macroeconomic theories are simply his own flights of fancy, not grounded in general economic knowledge. Instead of refuting the Austrians Keynes simply ignored their explanations. Keynesianism was adopted in the similar style of a new fashion of clothes, just put on, without any reference to that which proceeded it. The reason for the success of Keynesianism is simple - it gives license to the state to do anything it wants to do. Today economists are mostly apologists for state power - there are no government actions, no matter how egregiously bad for the economy, that modern economists will not shill for. If you want to solve the unemployment issue it's simple, and the answer isn't printing a bunch of money. All you have to do is get the government out of the way. Eliminate labour regulations - especially the minimum wage - and taxes on businesses, and you will have full employment in no time. While I agree that banks should separate into two different tasks, that of warehousing money and that of investing it, and that money which is stored in a bank for the purposes of safekeeping should not be loaned out and invested, pro is mistaken if he thinks this was not occurring prior to 1990 and the repeal of Glass-Steagall. There is no need to increase the money supply. Inflation is a tax and it's harmful. Any amount of money supply is enough. Any amount of gold is enough. Indeed, the fact that there is a finite amount of gold and that it is difficult to obtain more is precisely the main argument in favour of a gold standard. It would end the evil that is inflation and usher into a new era of unprecedented prosperity. Some of us believe that it would better if it was more difficult for the government to steal all the wealth that we create.