Book Review I: End the Fed

Overall rating: 5/5


Estimated Reading Time: 5 hours (285 pages, ~1.5 minutes / page)

Why I choose to read:

• Formerly read and appreciated Ron Paul’s book The Revolution which briefly outlines libertarian principles in general, and Paul’s beliefs in particular. I was subsequently compelled to read additional works authored by Ron Paul and choose to start with End the Fed
• Watched 2012 republican primary debates and found while at times Ron Paul poorly articulated his beliefs and convictions, his reasoning resounded strongly with my intellect and life experiences
• Lots of recent news on the Federal Reserve (QE1, QE2, QE3, bond swapping) combined with my perceived ignorance of the function/role of the Federal Reserve
• Stellar Amazon Reviews

Background:

• Subject: Societal consequences of fiat money managed by a central entity, in this case the U.S. Federal Reserve
• Year written: 2009
• Cultural context -
• 2009 national debt: $11.9 trillion
• Post banking, housing, and automotive bailout
• Growing distrust surrounding government and large corporation use of federal funds
• CEOs of bailed out corporations receiving millions of dollars in salary

Author details - Texas senator for 25 years Libertarian platform Detailed Biography RonPaulChannel.com Wikipedia

Ron Paul

Reflections:

• What I liked about the book - 
• Easy to read for those with no or limited background in economics and fiscal policy.
• Efficient in its presentation, little wasted words or topics detracting from intended purpose.
• Timely message in the midst of record setting deficits (both overall and yearly).
• Compelled me to read many more economic books by Austrian economists and other books/authors recommended by Ron Paul.
• Exceeded my expectations – I now know why his followers chant “End the Fed!”
• Numerous take-aways/key messages/profound statements.

• What I didn’t like about the book -
• Although I do not have a specific example, I felt there was a time or two Dr. Paul did take an extremist view. However, as a general rule, I do defer to Dr. Paul’s 25 years experience in the federal political scene as being vastly more experienced and insightful than my limited life experiences.
• I feel pressured to present more negative reflections, but I really don’t have any! Probably the reason I gave it 5 stars ;)

Key take-a-way messages - lots... read the book for details :)

• Businesses desire privatized/protected profits and socialized losses.
• Ron Paul: “The seekers of bailouts condemn their opponents as stubborn and selfish ideologues. Of course, when those wanting the taxpayers’ bailouts were making profits, they were quite content to support the principle that the profits were theirs and they deserved to keep as much as possible as part of the free market philosophy."
• Allows for risk to be passed on to taxpayers. Business want to keep all their profits but pass their losses amongst society’s members (bailouts).
• Deflation is only a threat when you have lots of debt.
• In a deflationary environment, your savings becomes more valuable over time w/o the aid of interest rates. On the flip side, any debt you have becomes more difficult to pay off. Thus our massive debt problem both individually and corporately as a nation creates large opposition to sound fiscal policy in general, and deflation in particular.
• Savers are cheated by low interest rates and opposition to deflation.
• Central banks remove the fiscal limits on war.
• A huge barrier to initiating and maintaining wars is removed since wars no longer must be financed by direct taxation. Rather, a secret inflationary tax devaluing money through increasing the money supply can be utilized.
• Only 21% of World War I was financed by direct taxation. The rest by bond issuing with the federal government serving as lender of last resort (no risk of failing) and increased money supply.
• Politicians do not need to balance budgets because our central bank can print money. 
• They can pass their debt laden agenda through, and pay for it through increasing the money supply. This results in a hidden inflationary tax with the poor and middle class bearing the greatest burden by receiving funds the last.
• State governments cannot print money, thus we have 50 case studies of governments operating without being able to increase the money supply (some better than others). We also have all the local governments. They must sell bonds with inherent, market driven risk, to acquire debt, just like the rest of us. (more my thoughts than Dr. Paul’s)
• Although it may take time, the market always wins.
• Even if it requires the market to go underground.
• We have created a system with incentives of spending and debt accumulation as inflation rewards those with a negative networth (like me!) by making their debt cheaper to repay.
• We want the government to guarantee security not liberty.
• We have chosen vast safety nets (food assistance, subsidized housing, Medicare, Medicaid, unemployment, etc.) over the freedom to spend the fruits of our labor as we choose.
• Private banking (no FDIC or lender of last resort)
• Would create a market for private deposit insurance and individuals would spread their deposits amongst multiple banks (diversification).
• More paperwork: yes; bank bailouts and too big to fail: no
• Easier to print money then to directly tax
• People don’t like to be taxed :)
• Commodity and service prices adjust based on existing money supply, the money supply does NOT need to be adjusted to change prices.
• Allow private minters and currency systems.
• Anyone can get into the business of money production thus creating competition.
• Markets already exist for currency conversions
• Not sure why this hasn't happened yet.
• 2014 Update: Bitcoin is attempting to emerge as an alternative currency

To who would I recommend this book?

• Those interested in economic policy, who have questions about why Ben Bernake or the Federal reserve chairman is on the news, and who question the government’s role on money management.

To who would I not recommend this book?

• Those with limited time to read. There are more influential and timely books if pressed for reading. Such as Mark Driscoll’s Doctrine.

End the Fed is a book written at a literary level for the masses, not just economic professors. As such, I believe Dr. Paul delivers timely and well articulated arguments for the negative consequences of fiat money managed by the Federal Reserve. A must read by all but the most time constrained readers.

Next Week's Topic: Blog Map