The Federal Reserve Should Be abolished:

It is true that the Federal Reserve may have pro-business bias due to its 100-year-old structure. However, abolishing the entire federal reserve or the central bank system is likely do more harm than good to America and to the rest of the world. There are two sides to every coin and it is important for us to focus on the big picture in order to prevent any dire consequence. it is true that the Fed is far from perfect and should have a significant reform; however, abolishing what is known as the the Federal Reserve today solves no real problems we face today. If history is any guide, it shows that having some sort of central bank may have been better than none. Out of 100 years of the Fed control, the U.S. has had 22 recessional years, including one depression. The 100 years before the Fed saw 44 recessions and six depressions(1). Throughout history, rulers have debased the currency to enrich themselves and their political allies at the expense of the common people. It"s hard to find an instance where the state has not taken advantage of its control over money to benefit itself. Looking at the Article 1, Section 8 & 10 of the Constitution, some may argue that it does not mention the need for a central bank, nor does it explicitly grant the U.S. government the power to create one. However, if we were to take the meaning of these two sections of the constitution literally, it is clear that the founding fathers of America intended a national monetary system based on coin and for the power to issue money rest only with the federal government. That means that any fiat money which is not coin-base would be unconstitutional. Any money issued through state banks but not the federal government should also be forbidden. In this case, state banks are forced to print bills of credit in exchange for specie deposits instead of "official" national money. These notes bear the issuing bank's name and entitle the bearer to the note's face value in gold or silver upon presentation to the bank. However, there is one potential problem - state banks may issue notes far in excess of their specie deposits. Customers appear from time to time wanting to exchange their banknotes for specie. The banks make allowances for this by keeping some of the specie on hand at all times. If the specie/banknote ratio is too low, even a small unexpected increase in the withdrawal rate could force the bank into insolvency (bank run). Remaining depositors who had not withdrawn their specie would be left with worthless banknotes. In addition, in free banking era, there were 712 state banks in operation in the United States , each with its own currency(2). It should take little imagination to picture the difficulty for a local merchant in tracking the riskiness and value of perhaps dozens of different banknotes in addition to the other concerns of his business. Although those who adhere to a strict interpretation of the Constitution believe a central bank system is unnecessary as it was not mentioned in the Constitution, the structure of our economy advances and it is important that the Constitution advances with it. --- Footnote: (1) https://en.wikipedia.org... (2) https://www.coursehero.com...