The Federal Reserve Bank of the United States ought to be abolished

"And it is not a good idea to stimulate the economy by just throwing more money into it. It never works. Which is a major flaw in Keynesian economics."That is an incredibly broad and sweeping claim. You're not going to convince anyone here, no matter how fanatically-devoted to Ron Paul they are, that Keynesian economics is wrong by dismissing out of hand their monetary prescriptions. The empirical evidence (unemployment in all sectors and yet very little change in nominal wages shows that sticky prices and wages, combined with a fall in investment and consumption spending are responsible for our woes) shows, strongly, that the recession was caused by a fall in aggregate demand, which was caused by a fall in investment spending thanks to the financial sector. Now it is true that short-term interest rates are close to zero, but long-term interest rates are not. 10-year treasury bonds currently 2%, which means that monetary stimulus, if the Fed can convince the bond markets that it will aim for a larger inflation target (say 4% instead of the usual 2%) can work even when short-term quantitative easing can't. "The government says it is at 3.1%."There are several measures of inflation, the CPI being one among many. There's the GDP deflator, which shows strong deflation since 2008, there's the employment cost index, the fisher index, the billion price index, etc. which show that, since 2008, prices have fallen. "But the formula they use to calculate it is by using products that people rarely buy, like cars, and houses."And so what if an individual does not buy cars or houses very often? Millions are being sold every year, and the quantity and velocity of money will be reflected in the prices that are charged for such services. "The real inflation rate is actually above a whopping 8%. This includes all products that you buy everyday like milk and cereal. This formula is called the EPI (Everyday Price Index)"The so-called EPI is fatally flawed, especially when using it to judge monetary policy, because the factors which are responsible for the increases in the price of gas (and, thus, food) are real supply side factors, not demand-side factors in America. "And, there’s really no way of telling whether Congress taxes more than the FED because there’s no real straight story on how much the FED creates a year"You can check the Fed balance sheet any time. "and there’s also not a straight story on how much the government receives in taxes per year."The IRS publishes the amount it collects in taxes every year. "Also the FED creates money depending on the economy. Of course it does. That's how the FOMC works. It sets a short-term interest rate target by buying or selling assets on the open market. When the interest rate is below the target rate, the FOMC sells assets, the most popular being short-term treasury bonds. If interest rates are too high, the federal reserve buys assets. "In 2008, the FED gave the government 7.7 trillion dollars for the bailout." Eh, no. The Federal Reserve loaned several trillion dollars to private investment banks and other depository institutions and other central banks. It didn't give money to the federal government. "And that was in secret."Then how do you know about it?"That is way more than the government takes in with taxes, which from what I’ve seen, averages around 2 trillion a year. There is really no way of telling how much money they pump into the economy." Again, the Federal Reserve injects money into the economy by buying assets. Loans are last-resort by banks. "But another problem is that the government spends way more than it takes in. The Federal Reserve creates most of its money from debt."Sure, most of the assets that the Federal Reserve buys are treasury bonds, but it has also bought other assets. "This means that our money is basically backed by debt."We do not have a fixed exchange rate monetary policy, which means that our money isn't backed by anything. Money is just a convenient, universal medium of exchange. But treasury bills are an asset. You really can have treasury bills in your portfolio and then sell them and use the money to buy stuff, as in output. Money really does create output in the economy. "It might seem good at some points, but that’s only because all of this money is just credit. Bad credit."That doesn't follow at all. "And the reason that Austrian economics sometimes use examples from hundreds and hundreds of thousands of years ago, is because, there’s only so many variations of government."That definitely does not follow at all. Variations of government, therefore we need to use data points which are hundreds of years old and shrouded in obscurity? You're seriously going to tell me that inflation caused the downfall of the Roman Empire when we have absolutely no GDP figures with which to tell our stories? The Byzantines didn't have an IRS or Bureau of Labour Statistics. "Every school of thought has to base its knowledge from somewhere, and most of the time, its from hundreds of years ago."Really? You're REALLY going to claim that every school, even the Neo-Keynesian school's models are based on data points which are hundreds of years old? You really think that Keynesian econometricians use data from the recent past?