The United States Should Abolish the Federal Reserve

Since Con did not define these specifically I will assume that I am free to defend my arguments from all attacks. In light of his conduct thus far, and his attacks on my character I will be responding to both his rebuttal and his defense/conclusion. First let's take a look at his plea that the voters disregard my Rebuttal 4. Con makes the argument that Round 3 was not to have new arguments and that I am lying by responding to his claims about the length and severity of the depression. For the record the rules do not state no new arguments in R3. Only R4. Secondly my response was well within the bounds of the debate because he claimed that the Gold Standard prevented the Fed from handling the depression properly. I was providing an alternate explanation to rebut his assertion that the gold standard limited the Fed's ability to respond to the crisis. My argument against the Fed stands and is valid. If his assertions about "silence is concession" are to be believed he concedes this point, and the Fed hurts the economy and caused the Great Depression. If we follow his line of reasoning then we must also strip him of his conduct point. I direct you to my use of the Monetary Base (MB) in my original argument. He rebutted by quoting Adam Hayes in relation to M0, which is not the same as MB. [2] MB=M0+Reserves. Since I didn't address M0 and he did, by his reasoning, this should be excluded because it is a "new argument. " Now I don't argue that this should be excluded, just it should be noted that he doesn't understand the difference between M0 and MB. On to other, more important topics. History is important, despite his claims to the contrary. It offers context and meaning. Half of his arguments against free market banking RELY on history. But when I use it to show the foundation of a banking cartel he claims that it is irrelevant. Let me provide some clarification. Rockefeller and Morgan were notorious historical rivals. Morgan was huge in the banking community and Rockefeller was the majority owner of Chase Manhattan Bank. Kuhn, Loeb & Co. was JP Morgan Co's primary rival as they owned many competing industries. Westinghouse for example was directly in competition to General Electric. It is important to note that these competitors gathered together to form an organization that would control the supply of money and credit. A cartel forms to control prices and increase profits. [4] The Fed is a banking cartel because it was founded by members of banking's elite to enable them to borrow money at incredibly low rates and then lend that money out at high rates and risky returns. In the end if they fail they would always be bailed out by the public, meaning they keep all profits private and spread the cost of failure out to the public. Furthermore Con does not understand the fundamentals of my argument, instead preferring to selectively read my arguments. He also says that I am silent on matters when I am not. So rather than typing a large response I will post quotes to show how he is wrong. My words in BOLD his words in ITALICS. All of these quotes can be found in the previous rounds. "Silence is concession, so Pro accepts that banks need to be able to drop the rates. " "Between 1980 and 1982 the U. S. economy experienced a deep recession, the primary cause of which was the disinflationary monetary policy adopted by the Federal Reserve. "Note, disinflationary monetary policy is part of increasing rates. My entire argument has been that manipulating interest rates sows discord in the market. "When the Fed lowers interest rates it has two effects. 1. It sends false signals to investors that future demand is high so long term investments are wise and 2. It discourages savings by consumers because the return on their savings isn't as beneficial as their short term utility. "Again, see the argument against manipulation of rates. "The Fed cushioned the fall and would have completely avoided recession, if not for the 9/11. Pro dropped this argument, and therefore conceded to it. "See for reference:"The Federal Reserve actually fueled the boom that led to the stock market crash. It stopped expanding the money supply by the end of 1928. It remained flat until June of 1929. Rothbard contends that from the end of 1928, as soon as the Fed's inflation ended, a depression was inevitable to adjust the economy. "Note, I am saying that manipulating rates doesn't "cushion" falls, but makes them inevitable. Again he tries to say that I haven't addressed this:"This also means since the next round is only for defense, he cannot attack my opening arguments again so he has accepted that the Fed’s inability to drop the rates if needed makes situation’s worse stands and Pro conceded this point. "See my point above on the "Disinflationary" policies of the Fed. When they end inflation they ensure recession. In his original argument he says:"The lack of regulation in this period was one of the main causes of it, because banks were giving out so many bad loans, which were unlikely to be paid back. "To this I replied that regulation increased leading up to the housing crisis. Then he changed his tune saying that he didn't say lack of regulation was the problem, but that they didn't have the "right" regulations. "Not all regulations are equal, if the proper regulations aren’t being pursued then it doesn’t matter how much regulations there are. "Again, I feel compelled to say that I addressed his original point that there was a "lack of regulation" by showing that regulations increased. He mentioned nothing about the "quality" of the regulations in his original statement. Simply parroting words that you have learned are "logical fallacies" doesn't discredit arguments automatically. Con failed to show that these "stess tests" are somehow better than all other regulations that currently exist. He has only said that they will magically prevent banks from abusing the system. All these stress tests do is examine the capital capabilities of the banks during times of economic turmoil. [5] They do not regulate what types of mortgages the banks can originate, or to whom the banks can loan. I did address the ineffective nature of regulations, which is what a "stress test" is supposed to be. I showed that increased regulations and regulators did nothing to prevent the housing crisis. I adequately addressed his arguments, he changed them in his R4. My opponent goes on to claim that the so called "free banking" era was a lot more volatile. A seemingly crushing argument. But he, once again, ignores history. The so called "free banking era" when banks were not regulated, never actually existed. That is to say there has never been a time in the history of the US that banking has been unregulated. [1] Getting a charter was very difficult and in 1837 starting a bank in most territories west of the Mississippi was illegal. Michigan passed a "free banking" law that allowed banks to bypass votes by state legislatures to incorporate. Every free banking law featured two common elements. They prevented the opening of branches which would have allowed thm to diversify their risk and required them to secure their notes using specific securities. [1] Free banking was over regulated and that is what caused the massive failure rates. [1] As a matter of fact:"According to Matt Jaremski, whose 2010 Vanderbilt U. dissertation is the most careful study to date, the bond-deposit requirements of antebellum free-banking laws “seem to be the underlying cause of the free banking system’s [sic] high failure rate relative to the charter banking system. While bond price declines were significantly correlated with free bank failures, they were not correlated with the failure rate of charter banks. ” Moreover, it wasn’t the general level of bond prices that mattered, but only the prices of specific securities that banks were legally obliged to purchase. "[1]Clearly it isn't as cut and dry as Con makes it out to seem. My argument was that if his assertion that the Fed's control of the economy is so important and straightforward that they SHOULD be able to end all recessions by simply fine tuning the machine. Rather than addressing that, he tries to show that the Fed has made the economy more stable. I am not arguing that it hasn't prolonged periods of expansion. In fact I am arguing that it has. That the booms are longer under the Fed. It should be no surprise that there is more time of perceived prosperity and wealth creation. Note my opponents inability to lay blame on the Fed for anything. He selectively removes recessions by blaming them on other factors such as war. Wartime spending increases GDP and economic output. [3] In Con's eyes the Fed can do no wrong. It is like his petulant little child whose actions he defends by blaming others. I have adequately shown how the Fed's policies ensure recessions by fueling the boom and bust cycle, despite his claims to the contrary. One need only to read my original arguments. ConclusionUnfortunately there are limits on what I can respond to so I have responded to Con's most egregious misrepresentations. I have adequately shown that the Fed's manipulation of rates is harmful to the economy by fueling the boom and bust cycle. I have also shown that regulation does not protect against economic ruin. I have shown the corrupt beginnings of the Fed as a banking cartel, and the fact that they have no oversight. I have shown that the Fed devalues the currency, making our money worth less. For all these reasons it is important to abolish the Federal Reserve. For these reasons you should vote Pro. Thanks for reading guys, and despite his conduct thanks to Con for the debate. Sources[1]. http://goo.gl...[2]https://en.wikipedia.org...[3]http://goo.gl...[4]https://en.wikipedia.org...[5]http://www.federalreserve.gov...