The Illusion of Control: Unmasking the Federal Reserve with Alex J. Pollock
Hosted by The Rational Egoist.
In this compelling episode of "The Rational Egoist," host Michael Leibowitz sits down with Alex J. Pollock, a senior fellow at The Mises Institute and former Principal Deputy Director of the Office of Financial Research in the U.S. Treasury Dept. Together, they delve into the fascinating yet fraught world of the Federal Reserve, an institution often misconceived as a central economic manager.
The Federal Reserve, in its simplest form, comprises 12 regional banks attempting to regulate the U.S. economy. Its original mandate was to inject liquidity into the financial system during times of crisis. However, as Michael and Alex point out, the persistent and unrestrained expansion of money supply even after crises have been resolved has converted this mechanism into an ongoing problem, rather than a solution.
The conversation takes a historical turn when they discuss the U.S. government's suppression of the gold standard and its unilateral ban on citizens owning gold. Remarkably, while American civilians were barred from gold ownership, the U.S. government continued to accumulate large reserves of gold by purchasing it overseas.But the real kicker comes when our experts examine the ramifications of divorcing the U.S. dollar from gold in 1971. This shift has led to a monetary system with virtually no constraints on the amount of currency that can be printed, setting the stage for escalating inflation and subsequently, complex political challenges.
Despite its numerous failings, the power of the Federal Reserve continues to grow, becoming increasingly centralised. The paradox is as disconcerting as it is true: the more mistakes the Federal Reserve makes, the more potent it becomes.
Join Michael and Alex as they unravel these complicated threads, offering keen insights into an institution whose influence stretches far and wide but whose true impact remains poorly understood. This episode is not just an analysis but a cautionary tale, highlighting the perils of placing too much power in the hands of a single entity.