The Federal Reserve is rightly a bit of a hobgoblin for us less government types:
“The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.”
Yes. Because when I think of government – “a safer, more flexible and more stable” anything leaps to mind.
The Fed is also a hobgoblin because – as with all things government:
“Over the years, its role in banking and the economy has expanded.”
When you have government – you have mission creep. Because – the entirety of human history.
The Fed is ultimately a hobgoblin – because it allegedly exists in some quasi-independent “Fourth Branch of Government” nether world:
“The Federal Reserve, like many other central banks, is an independent government agency….”
Which means…The Fed doesn’t seem to actually be constitutional.
The Constitution creates – three branches of government. The Executive, the Legislative and the Judicial.
Which means one of two things:
Someone in one of those three branches – has to have direct oversight over The Fed…and can directly order it to do things.
The Fed is unconstitutional.
Congress cannot create an independent fourth branch. You have to amend the Constitution to do that.
Attempts by less government types to at least rein in The Fed are always welcome – and have occasionally occurred.
Meet Kentucky Republican Senator Rand Paul.
“S. 148 would require the nonpartisan, independent Government Accountability Office (GAO) to conduct a thorough audit of the Federal Reserve’s Board of Governors and reserve banks….”
Because – speaking of The Fed’s “role in banking and the economy” expanding….
“The Federal Reserve announced Monday it would create and implement a system that would allow consumers and businesses to send and receive money instantaneously by 2023.”
Well that certainly sounds like something the private sector – not the government – should be doing.
Oh look – the private sector is doing it.
Meet North Carolina Republican Congressman Ted Budd. Who recently, rightly penned:
“In 2015, the Federal Reserve realized this problem needed to be addressed, and to their credit, they encouraged the private sector to develop a solution to the deposit/access time gap.
“Four years later, through American innovation, a real time payments (RTP) system came to fruition and currently reaches over 51 percent of the demand deposit accounts in the country. This allows immediate payment and withdrawal for consumers.”
The United States’ international banking system – is what we’re talking about here. Because the US banking system – is international.
It ain’t easy to get an entire international banking system – fully online with instantaneous coin availability.
Yet here the private sector is – doing it.
Let’s extrapolate this time frame, shall we?
In four years, the private sector has delivered instantaneous money availability – to half of us.
Which means in another four years – give or take – the private sector will have delivered it…to all of us.
Four years from now – is 2023.
Just as the private sector has finished solving the problem, The Fed – in the name of “solving” a problem already solved by the private sector – will begin creating a whole slew of new problems.
Because that’s what government does.
Government-expanding Obamacare was supposed to increase health insurance access – and reduce premiums and deductibles.
Obamacare killed insurance for ten-plus million Americans – and doubled premiums and tripled deductibles.
The Fed’s plan – is Obamacare for the banking industry.
For yet another reason: Obamacare was designed – to kill the private health insurance sector.
The Fed’s RTP system – could very well kill the private sector RTP system.
In reality, there can be only one RTP system. For the real time payments to actually be real time payments – every bank will have to be on the same system.
And as we’ve seen since time immemorial – when government and the private sector butt heads…government wins.
And as we’ve seen since time immemorial – that’s an awful outcome.
The government competing with the private sector – is like having a baseball umpire…also pitch for the opposing team.
You have the guy calling balls and strikes – calling balls and strikes for himself.
Guess how all judgement calls going forward will go?
For those too young to remember, we used to have phone books – in which you looked up phone numbers.
The White Pages contained residential numbers – the Yellow Pages business numbers.
We less government types have long had The Yellow Pages Rule:
“If you can find it in the Yellow Pages – government shouldn’t be doing it.”
Economist Steve Moore – is a really bright dude. He gets all of this – and highlights yet another huge problem with the concept….
“No private firm can safely charge as low a price as the Fed or absorb high costs.
“The Fed has an obvious advantage in any venturing into activities now conducted by private lenders: It has effectively the lowest borrowing costs in the world because the full faith and credit of the U.S. government stands behind it.
“The Fed can’t go bankrupt and by its enormous size and stature is the behemoth in the banking universe.”
It’s like competing with Communist China.
The Fed can obnoxiously warp the marketplace to its advantage – in about a million different ways.
Congressman Budd’s bill – doesn’t prevent The Fed from doing getting into the RTP business.
What Budd’s bill does do – is require The Fed to examine how much private sector damage they’ll do if they do this.
Which is certainly a very good idea (for the entirety of government).
“It…could cost Americans who are already struggling to live paycheck to paycheck approximately $100 billion over the next five to seven years in unnecessary overdraft and penalty fees.”
But while we’re waiting for Congress to not be Congress and pass Budd’s bill….
President Donald Trump and his Office of Management and Budget (OMB) – can likely require The Fed to do for what Budd’s bill calls.
That is – if we’re going to thankfully, finally end the unconstitutional charade of The Fed’s alleged independence.
For me, I’ll take whatever oversight I can get – any constitutional way I can get it.
So here’s to Budd’s bill.
And here’s to President Trump – trumping Budd’s bill.