The Federal Reserve should be abolished

I had to rush this argument due to time restraints, so sorry if it seems rushed.R1-Fed Punishes Innocent People/R2-Fed Rewards Irresponsibility/C1-Interest Rates I’m going to start off by addressing Pro’s claim of the Fed slowing successful businesses down by raising interest rates. Since 1990, the only times interest rates have significantly been raised were after stable economic growth began in the 1990s at the end of the early 1990s recession, to lessen the burst of the dot-com bubble, and the housing bubble. They are also expected to rise again once economic growth stabilizes again after the 2008 recession: In Pro’s example it sounds as if a bubble was forming. The bursting of bubbles are only made worse if businesses are benefiting off relatively low interest rates. If the interest rates are raised and economic growth continues at a fairly fast rate (like when they were rose in the early 90s) then the economic growth was not forming a bubble. Pro then mentions companies that are facing hard economic times, so the Fed lowers interest rates. As already shown lowering interest rates can end many recessions. Even if this is “rewarding irresponsibility” it is necessary for the economy to function. The economy is intertwined. Simply, as companies hire people who take their salaries and purchase things so other companies can hire people. Therefore, a strong economy is needed for businesses as a whole to be successful. Pro then creates an example of families not keeping their money in banks, so the Fed lowers interest and undergoes QE. For the same reason as above, people need to spend or get investment/loans from banks to keep the economy functioning. Pro blames the Fed for forming the Dotcom bubble. Although the Fed is not the only factor, it obviously was one due to low interest rates. However, since the global economy is intertwined, specifically through trade, if the economy didn’t get to benefit from low interest rates, the Asian Financial Crisis could have had a negative effect in America. An example of other countries suffering from one country’s economic problems was when other countries such as Canada and the UK suffered from the collapse of the New York Stock Exchange. Also, since the Fed raised interest rates prior to the bubble bursting the recession from the burst of the Dotcom Bubble were really minor and other factors such as 9/11 helped cause it. (5) Finally, Pro seems to think that lower interest rates will eventually lead to an economic downturn. In certain cases this is true, but Pro ignores the facts interests rate were typically dropped when the economy was already in a recession and the economy was not acting at its full capacity. Therefore, the Fed is needed to help stimulate and prevent overheating of the economy. R3-Fed Distorts Markets/C2-Inflation Targeting: Pro asserts that inflation is forcing people onto more risk than they desire and therefore is immoral. However, one does not have to keep their savings in dollars. For example, many people suggest gold as an alternative to fiat money and as a safe investment. The problem is, keeping savings in gold is not necessarily any better than dollars. In 2011 gold reached $1889.70 per ounce, but today (5/3/15) gold is at $1174.50 per ounce. (1) Relative to the Dollar, gold has lost approximately 38% of his value from its 5 year high. Therefore, keeping one’s money in dollars should not be seen as, nor is it, a large risk. Pro also asserts that inflation is theft. Although the purchasing power of a dollar has decreased, that is meaningless without context. In 1950 a pound of butter cost $0.74 and in 1990 it cost $2.10. Clearly, inflation occurred. However, the average yearly income of all industries was $3180 in 1950 and $23602 in 1990. (2) So, the average person in 1950 could purchase 4297lbs of butter annually, but the average person in 1990 could purchase 11239lbs of butter annually. Therefore, on balance, inflation should not be classified as theft. Pro then asserts that deflation is a good thing. Although in some industries it occurs naturally and occasional deflation is bound to happen, on balance deflation is very dangerous. First off, Krugman said when people expect falling prices, they’re less willing to spend or borrow. This is obvious, because if people think things will be cheaper in the future, they will wait for the future. This is observed every year after Christmas. Many stores have markdowns after Christmas, so people want to take advantage of the product that just underwent deflation. Pro also assert that having less debt is good for people. That is obvious, but one of the biggest reason people have a problem with deflation is because it raises the value of debt on individuals. This was Krugman’s second point that Pro provided. If dollars are worth more, then obviously debt, which is in dollars, will be worth more. Pro doesn’t even deny this when addressing Krugman’s point. Instead, he says that it makes it harder for the US government to pay back interest on its debt and make future borrowing more expensive. This actually helps prove my point. The US government gets it money from tax payers and spends its money primarily on services which employ people. Therefore, in order to keep up with interest programs would need to be cut or taxes raised, both which hurt the economy. However, that is not even the main way deflation hurts people. As can be seen, many American households are in debt. (3) (3) With all this debt suddenly increasing in value, it makes it harder for them to pay back their debt and will lead to less spending in the economy. Finally, to address Pro’s rebuttals to my previous arguments. P1-Pro asserts that if the value of debt increases, it encourages “real wealth building”. That doesn’t mean anything. Also, Pro mentions that during deflation money in saving accounts is earning a good interest rate. This still doesn’t address what I said in this premise and it is not even true during major deflation. A nation’s central bank will drop interest rates during deflation to encourage spending, in the case of Japan to near 0%. P2-Only rebuttal here is “See P1”, so nothing else needs to be said for this. P3/P4-Profits are decreasing in total because there is less spending in the economy, as discussed above. This causes layoffs and/or decreased wages because by observing the deflation cycle: (4) We can see that less spending in businesses will lead to unemployment. I’ve already discussed reasons why deflation would lead to less spending above. C3-Bank Supervision and Regulation I won’t go into why fractional reserve banking is necessary, but instead say that it exists without a central bank (since that was Pro's rebuttals). For example, after the Second Bank of the United States closed, banks began keeping less in reserves. This was cited in my previous round.R4-Macroeconomics is PseudoscienceAlthough it is not a natural science, the things I've mentioned have been shown to work because of the sound logic behind them, such as lowering interest rates to stimulate growth. 1-http://goldprice.org...2-http://usa.usembassy.de... 3-http://www.fool.com...4-http://snbchf.snbchfcom.netdna-cdn.com...5-http://en.wikipedia.org...;