The Federal Reserve
The Influence of the Super-Rich
Security and Money as a Store of Value
by: Thomas Lee Abshier, ND

—– Original Message —– From: John
To: “Thomas Lee Abshier”
Sent: Monday, June 01, 2009 3:07 PMSubject: Fractional Reserve Banking as fraud

Tom, I thought you might enjoy my dialog below with my lefty friend who keeps thinking that socialism is the only way.  You might want to start by watching the video he references.

– John

—–Original Message—–
From: Pat
Sent: Monday, June 01, 2009 1:57 PM
To:  John
Subject: Fractional Reserve Banking as fraud

Tell me if you agree with this “Money” explanation. I’m working thru the whole 5 parts, but the first part explained to me how this mess has occurred. I still fail to see how your explanation of money could possibly create the wealthy individuals and corporations that we have. This series makes more sense to me, please watch and see if you agree with any or all.
Money as Debt:  5 part Video

Money as Debt: Promises Unleashed: Full-Length Documentary

—–Original Message—–
From: John
Sent: Monday, June 01, 2009 2:55 PM
To: Pat
Subject: RE: Fractional Reserve Banking as fraud

Pat, I just watched part 1 of this series.  What makes you think I would disagree with any of that?  I completely agree with all of it.  The bankers became crooks when they lent what they did not have — as shown at the end of the video.
The free market answer is that depositors must be astute enough to realize there is always a risk associated with having money.  They can put it in their mattress and have the risk of theft and not earn interest.  They can put it in stocks and watch it go up or down.  Or they can take it to a bank, or split it among several banks, and take a chance that their money will still be there. Diversification and diligent follow-up is the answer.  Don’t trust anybody completely!  If the banker becomes a crook and lends more than he has, and if the bank has a RUN (which will undoubtedly be a big part of “Part 2 video”) then you better get there first to pull your money out or have such a small amount of money in any one bank that the failure of one crooked bank won’t hurt you.
THE PROBLEM… Is that the bankers got together and sold the government and the public a bill of goods… Which I am sure the next videos will present…  STABILITY FOR THE LITTLE GUY with bank guarantees, etc., and risk-free returns for the bankers because the taxpayer will bail them out.

The politicians could sell it as a “public safety” measure and stay in office.  The crook bankers can pay the politician’s re-election campaigns, make their windfall profits, and the public believes the whole scheme is there to protect THEM.  So, everybody is happy until the whole house of cards comes crashing down. I completely blame our problems on the super-wealthy.  We agree on that. THE ANSWER… In my view is to get the government out of it… Take away the *illusion* that money anywhere is safe.  (Money inherently is not safe anywhere.)  Make the public aware of their own risk and let them make their own risk decisions accordingly.  If somebody loses his shirt, he can appeal to charity.  But failures are almost necessary to teach the rest of us numbskulls that risks are out there.  Just as occasional bloody crashes on the road remind us to put on our seatbelts and not take corners on two wheels.  There should be thousands of banks instead of a few dozen, and they should all compete and provide a backdrop so consumers can diversify the risk of picking a loser.  The consumer does not have to visit 1000 banks because there are mutual funds that will invest in 1000 banks and you invest in them only once, and there are thousands of competing mutual funds.  So, true diversification of risk is a real possibility. Then there are the derivatives and complex financial instruments that nobody understands.  That’s no big deal either.  That’s just an extension of the snake oil salesman.  Buyer beware!  Don’t buy what you don’t understand even if everybody else is buying it.  Snake oil salesmen are not just peddlers preying on naïve farmers.  They can be brilliant dishonest bankers who prey on other less intelligent bankers who don’t want to be left in the dust on the next “brilliant investment”.  It’s the same “greater fool” theory taken to a higher level.  There’s always somebody dumber than you if you are crooked enough to screw them over.  That will never change. The answer is that people have to learn to recognize their responsibility and not abuse others.  That’s a simple principle, but it is insanely difficult because it must be enforced by each of us on ourselves.  Nobody else, no government no matter how powerful, can enforce morality on every action of others.  Honesty has to come from within. How do we solve it?  Beats me.  Education maybe?  Setting an example?  Help stupid people with ways to protect themselves from the cruel people who are smarter?  That’s the human dilemma.  It’s not just bad bankers but child abuse and everything else.  The best we can do is try to protect ourselves, try to help others, and hope for the best.


—–Original Message—–
From: Thomas Lee Abshier, ND
Sent: Monday, June 01, 2009 8:13 PM
To: John
Subject: Re: Fractional Reserve Banking as Fraud…

John,  I’ve thought a lot about this topic and this has given me another piece of the puzzle.  I’ll see what I can come up with to help solve the mystery.T.

—– Original Message —– From: John
To: “Thomas Lee Abshier”
Sent: Monday, June 01, 2009 10:07 PM
Subject: Fractional Reserve Banking as Fraud

I think I already know that your answer is to embrace Christianity, and then the self-imposed honesty I spoke about will come as a by-product. Perhaps you are right.


—–Original Message—–
From: Thomas Lee Abshier, ND
Sent: Thursday, June 11, 2009 10:13 PM
To: John
Subject: Re: My dialog with a lefty…

Axioms re: economics, government, corporations, society, individuals and God:
 Individuals have free will, passions, and a desire to minimize pain and maximize pleasure.
 Individuals act within a larger economic, social, and natural environment that places barriers to their allowable degrees of freedom.
 The general social-economic limitation to freedom is the competition to maximize happiness in an environment where others seek to maximize their happiness.
 Individuals function within a system of natural and psychological laws, established by God.  These laws form the natural terrain of relationship, with its barriers and thoroughfares which encourage and inhibit action.
 The barriers of interpersonal relationship can be circumvented by using compensations and alternative paths.  Likewise, the physical laws that prevent action can be bypassed by applying alternative methods (e.g. Overcoming gravity can be accomplished by rocketry and airfoils.)
 The complexity seen in the physical and psychological universe is probably created by a relatively small number of fundamental laws and structures.  Together, these basic laws are the alphabet that is used to combine to create a plethora of words seen as manifested behaviors and natural phenomena.  Knowing the alphabet of natural and psychological law facilitates the understanding of life experiences, the resolution of the roadblocks to relationship and the construction of social policy that maximizes productivity and felicity.
 Each individual and social situation requires a minimization of cost and maximization of benefit with regard to a near-infinite number of variables.  Thus, social mini-max problems are situation and individual-dependent, and their solution will only be approximate.  The differential between perfection and reality must be bridged by forgiveness and faith in the good intentions of leaders and actors.  Course corrections must be continuously applied as deviations from the desired perfection are noted.  Eternal vigilance must be applied to manage and adapt to current physical, individual, and group conditions.
 Government and corporations function as independent entities governed by a psychology somewhat similar to the individual.  Action should be best taken after holistic examination of the relevant forces and laws, the environment of their action, and the short and long term effect to produce the best current approximate solution.
 Individuals in general desire to consume the most, and work the least.  Individuals are motivated by pleasure and satisfaction of desires.
 Pain and punishment produce barriers to behavior.
 The good of the whole is only good if it accommodates the good of the individuals.  There is no such entity as the group, there is only the good of the individuals.

Fractional Reserve Banking:
The Bankers Cartoon caused me to think about the issue of the morality of Fractional Reserve Banking, the Federal Reserve System, and the effect of the super-rich on the economy.

I believe the crux of your criticism of the banking system was:

1. The bankers became crooks by lending money that they didn’t have on deposit.
2. This “crooked” activity enabled them to become super-wealthy.
3. The super-wealthy were able to manipulate the entire economic-political-governmental system to their advantage by bribes, lobbying, and financial pressure of various sorts.

The morally questionable aspects of these banking practices are:
1. Bankers lending money which they do not have on deposit
2. The Federal Reserve collecting, keeping, and using the interest they collect on the fiat money they issued/printed/generated out of nothing.
3. The distortion of the market and social order by the decrees of government and the influence of the super-wealthy.

The morality of fractional reserve banking (FRB):
Despite the origin and sordid past of Fractional Reserve Banking, the current system of fiat money and loaning money based on the amount on deposit and debts on account is neither fraudulent nor unreasonable.  For the sake of argument (i.e. without solid proof other than the story and assertions of the “Money as Debt” cartoon) let us assume that it is true that the bankers lend money based on assets that are another man’s debt.  The real question is whether this policy and method of banking have unwanted social, political, and/or economic implications.

Are we outraged at FRB for its apparent immorality or do we fear the economic disaster it has caused or will cause?  I submit that any moral (i.e. Right and Godly) system, whether it be economic, social, or political will bear excellent results.  I believe FRB can be administered morally.  But, there are flaws in the current execution of the Central Bank-FRB-Treasury-Government complex in the method of increasing the money supply as evidenced by the fact that the system has produced inflation, which is immoral.  By the Fed setting “a target rate of 2% inflation” they have institutionalized theft as an acceptable and desirable goal for managing the money supply.   A system that has institutionalized theft will eventually produce bad fruit.

Many call for a return to the gold standard as a solution to the steady devaluation of our currency.  While this would effectively limit the rate of expansion of the Money Supply, a return to the gold standard is not the only solution to the problem of inflation, nor is money supply the only cause of inflation.  Backing money with precious metals is not necessary to give money its value, and consumption outpacing production will naturally inflate prices.

Gold and silver are a type of wealth based upon their esthetic appeal, sensory satisfaction, and functional utility.  But, there are many other stores and types of wealth, such as 1) production, 2) productivity, 3) promise of future production, 4) promise of future productivity, 5) goodwill, 6) talent, 7) beauty, and 8) patents.  These more utilitarian, dynamic, and intangible types of value can also be used as the valuable backing to give money its underlying value.

Clearly, intangibles have value, despite not having QMS: 1) a Quantity, 2) being Measurable, or 3) having Substance.  Still intangibles have value, and are often exchanged for money, but are not well suited for “being” money.  This minor paradox  is resolved by recognizing that symbols actually used as money must meet the criteria of having QMS since money is a common denominator symbol established for the larger economy.

Despite the fact that intangible value is subjective and varies extremely widely, the fact remains that there is a market for intangible value.  Likewise, the “thinly traded” and large “bid-ask spread” aspect of intangible value should not exclude it from being included in the ledger sheets as an asset.  And further, intangible value should be included as a type of asset against which loans can be made.  And ultimately, intangibles should be included in the pool of value against which the Money Supply is backed.

This analysis is relevant to the issue of FRB because one of the most controversial aspects of FRB is the practice of loaning money against the pool of assets that are owned by the banks.  In particular, money issued as loans is now an asset, against which more loans can be made.  Thus, the value underlying the loan is not a standard QMS asset, but rather the subjective value of a house, company, or research project, etc.

This aspect of banking is not well known by the public, is considered controversial, and even immoral, among those critical of the fiat money, central banking system.  Keeping a small amount of reserve cash/currency in the bank is not the controversial aspect of the system since we all realize that banks must make money and that they do so by loaning funds.  Thus, because of the fact that the majority of the assets (10:1) have been loaned, those assets are in the form of loans to a potpourri of tangible and intangible assets.

The controversial aspect of the banking practice is being able to then use those assets to secure loans for more borrowing of money, which can then be lent, and those assets can then be used as collateral for more loans.

Granted, that assets accumulated as loans to business and consumers are not easily quantified, measured, nor necessarily comprised of substance.  But, this does not mean that the do not have value.  It is to narrow a perspective to say there is no “money in banks” because the money has been loaned.  This is not fraud, it is an agreement that the depositor should be aware of when he puts his money in the bank for safe-keeping.

It is reasonable to regard “commitment to producing value” as an asset, and an asset against which to borrow wealth.  Intangibles can be a valid component of the pool of wealth, and should be included in the wealth of nations.  And as such, both tangible and intangible value should be included as valid components of a potential surety.

The intangibles, such as future production, ideas, current stores of consumable value, and potential future production of consumable value, are more functional measures of value than are currency/fiat money.  And, these functional assets can reasonably be considered “money” in a less strict sense than the QMS definition would demand, since obtaining these items is the reason why the consuming public ultimately desires to have and use money.  In short, value can be stored in goods and services, either tangible or intangible, currently manifest or committed to be produced.  Any item (tangible or intangible) that is perceived to make life more pleasant can be money in the broader sense that money and value are interchangeable.  Money in the strict sense of the word must meet the criteria of QMS, while value of any sort is the ultimate underlying wealth or utility that gives money its true value.  Gold and silver are only needed as a symbol of money to the extent that there is not sufficient trust in the society that the exchange of fiat money will be honored and redeemable for utility value.

The bank with a note, contract, promise, or commitment from a reliable, trusted, hard working person to produce wealth/utility in return for money owns a true measure of wealth.  The FRB system is not a deceptive system as long as the depositors are informed of the practice.  The system is not unreasonable as long as the debtors are creditworthy, productive, and capable of repayment of value plus interest.

FRB can be abused and cause the collapse of an entire economy if the bankers lend money to clients who are unworthy credit risks.  The Subprime Mortgage Crisis was caused by the government’s attempt to put unproductive people in homes they could not afford.  The CRA (Community Reinvestment Act) forced banks by law to loan to unworthy creditors.  Eventually, the system collapsed because those who had been loaned money were not able to produce the required value plus interest.

Summary of the considerations regarding the Fractional Reserve Banking system:
 Fractional Reserve Banking allows a bank to loan all of the money on deposit, except a small fraction which it must keep in reserve.  After the bank has made a loan, it may then through a complex system of deposits involving a commercial bank, may then make a loan on the assets represented by the first loan, with the same a small percentage withheld in reserve.
 The Federal Reserve can use the banks as a vehicle to expand the money supply.  If an original deposit of  $100 was made by the Federal Reserve into the local bank, and the local bank had to keep 10% of that amount in reserve, then the local bank can loan out 90% of that money.  But, once that money is loaned, that money is now an asset, and that asset can be used to secure a loan from another lender (such as a bondholder).  This money is borrowed at a low rate and loaned at a higher rate.  That loan is now an asset.
 The Fed can use the cash reserve requirement as a tool of expanding or contracting the money supply, but this is an extreme measure.  We have seen that done in China as they have attempted to control inflation.  This is a poor method of inflation control.  Inflation indicates the presence of too much demand and too little production.  The banks should focus on loans for consumer production when inflation begins to rise.
 The cash reserves that must be held by law are only 10% of the total deposits made by customers, and the bank must likewise hold in reserve that same percentage of the amount of money now represented by loans it has made.  Banks borrow money from the Fed as a last resort, as the interest rate they charge is usually higher than they can get from other lenders.  Thus, the theoretical limit of the amount of money a bank can loan is limited by the amount of money the bank has in deposit.  In practice, banks are limited to loaning amounts dictated by the number of creditworthy customers they can attract and contract to repay.
 Because of the regulation requiring banks to hold a percentage of cash to meet the withdrawal demands of depositors, if the cash reserve fell short, then the Federal Reserve can be called upon to make loans banks to meet the cash reserve and the withdrawal needs of the depositors.  The required minimum reserve percentage may be chosen according to its intent to create monetary multiplication, or simply to reflect a realistic requirement a bank should have on deposit at any time to meet the demands of depositors.
 The system of calling a loan an asset is not immoral because there is actually value associated with a borrowers commitment to repay with value.  The loan, while it is an asset, is not as liquid as cash.  Nevertheless, it represents value because of the commitment by people to produce value.
 The creation of wealth associated with the loan proceeds as follows: the debtors have been given cash, and have contracted to repay that value.  The contract to repay a loan has with it a complex of elements that motivate the production of new wealth.
 1) The contract gives value to the borrower in the form of a cash loan  (Note: the money loaned is considered valuable because of the faith placed in those notes by the market),
 2) The loan contract includes the specified amounts and times of repayment,
 3) The loan contract elaborates the terms of enforcement in the case of breach of contract,
 4) The loan is made on the condition of the trustworthiness, character, and reasonable judgment and expectation of his willingness and ability to produce value in repayment of the loan.
 The work exerted by the borrower over time results in the production of wealth, value, and utility, which are ultimately available for consumption by the market.  Thus, effort by people to produce service and value is the essence and source of wealth.  Production of value is ultimately dependent upon people and evaluated as valuable by people.
 Note: real estate, which is created by God, acquires value and ownership by the original process of claiming, defending, and improving it.  Likewise, the tools of production and automation have a value associated with the effort exerted by the owners and the value they provide as determined by the market in comparison to alternative solutions.
 If the terms of the contract of the banking industry were concealed from the depositor, and the depositor was given the assurance that all his money would be left untouched awaiting his withdrawal, then the Fractional Reserve Banking system (FRB) would be deceptive and hence immoral.  But, the contract of Fractional Reserve Banking is open knowledge, even though the typical depositor is not given a detailed description of the theory and details of its methods and macroeconomic implications.  Possibly there is an element of deception in the fact that these details are not proactively disclosed.  But, being realistic, this level of deception is the same as most contracts which contain a large number of fine print qualifiers.  Thus, while the level of being informed is small compared to a graduate education or seminar on the disposition of bank deposits, it is nevertheless open knowledge and available for examination for those who choose to exercise that due diligence.  The level of deception in Fractional Reserve Banking is somewhat similar to that used by the typical salesman extolling the virtues of a product while glossing over its limitations.  The remedy to such ignorance depends only on the vigilance of the consumer, hence Caveat Emptor (buyer beware).  The bottom line is that the Fractional Reserve Banking System is not immoral, nor beneficial to only the bankers or financial elite.  The public wants a secure economic platform, as they should, and if properly administered, the system can provide a method of introducing new goods and services into the market and expand the money supply to provide a purchasing medium for the consumer.
 The more important issue is whether the bank by the practice of Fractional Reserve Banking is in some way creating an inflationary dilution of the value of the money supply.  If this system was, in fact, inflating the money supply, and inflating prices, it would be violating the very essence of the trust the depositor has placed in the bank – keeping his money (and the value it represents) in safe storage for retrieval of identical value upon demand with interest.  The purchasing value of the dollars deposited should correspond exactly to the value the dollars will purchase upon withdrawal.  But, a casual examination of the prices 50 years ago compared to the prices today reveals that we have experienced a steady and significant inflationary devaluation of our currency over time.
 I do not believe we should blame the Fractional Reserve Banking practice for the inflation of prices.  As explained above, the bank/lender has engaged in a compact to give value, and the borrower to repay value plus interest.  Such a contract with vetted borrowers is at worst a time delay problem where the rate of consumption has not yet equalized with the repayment.  If the system is large and the process ongoing, the worst disparity between money created by loans, and value repaid is the rate of growth of the loans.  If the economy is to expand via this method, then an incremental increase in money supply over the production is unavoidable.  The time gap between loan issuance and production of consumable goods should be filled by consumers who save a percentage of their income and thus prevent the consumption pressure caused because of the deficiency in goods compared to the money supply.
 Thus, given that the banking system has within it an equalized contract between money loaned and value produced, a more likely culprit for the inflation of prices is the gross differential between taxation and government spending.
 Governmental deficit spending results in the purchase of goods from the economy with fiat currency, without a corresponding contract by government itself to engage in actual productive enterprise to produce value to pay for its consumption.  Thus, governmental spending may be the cause of the increase in the money supply that results in inflation.  The corresponding decrease in available goods and increase in cash put into circulation by its fiat injection, leads inevitably to inflation.  Such causes the normal price changes in a market with more dollars chasing fewer products.
 Returning to the issue of the bank loan and the contract by the borrower to repay, there will be a time lag between borrowing and repayment.  The more rapidly loans are made, the more rapidly the money supply will expand.  If the differential is large, with a much larger money supply than production, this could cause inflation.  Realizing this, the Federal Reserve manipulates the prime interest rate, which theoretically ripples through the entire monetary system, so as to produce a greater or lesser rate of borrowing.  Theory dictates that borrowers will borrow less when they are required to pay higher interest rates.  And, such is probably true since everyone uses the cost of money in their analysis of profitability prior to engaging in new productive enterprise.  The problem is that there are other factors besides interest rate that determine whether a business borrows for new expansion.  In particular, the regulatory climate has a great influence on the assessment of profitability, since meeting requirements costs money, which influences the marketability of a new product.
 The system is fairly stable and predictable, within limits.  We do not expect massive withdrawals or purchases outside of a statistical norm.  It would be easy to overtake the productive capacity and banking reserves of the system if everyone decided to withdraw or consume at the same time.  But, in a stable society, people engage in habitual rituals and the overall economy displays a predictable rhythmic flow of various parameters.
 Again, the policy of lending more than is in deposit is open knowledge.  Individuals can be aware of this practice by due diligence in research.  There are alternative instruments for saving and investment and it is incumbent upon each investor to do his own research and evaluate the various risks and rewards.  The market, at least today, does not coerce investment other than through taxation.
 Possibly the addition of a competitive Central Banking system would moderate the excesses or foolishness of the Fed in their attempts to manipulate the economy by monetary policy.  This is probably not workable, but in some way the wisdom of the Central Bankers should be held to account by the market.
 As long as the environment for consumption, production, and trade is free, and the prices are free to float to reflect supply and demand, the Fractional Reserve Banking system is simply a means of facilitating the creation of contracts to produce value.

The Federal Reserve:
 The Federal Reserve has been impugned as being at the center of the cabal to transfer wealth, and remake society in the image of the European bankers.  This all may be true, but I can neither verify nor deny it.  Rather, I shall choose to note that the Federal Reserve provides a valuable role in stabilizing the economy against bank panics.  But, the problem with any insurance system that prevents failure is that it can support sub-optimal productivity and encourage unwise investment because of an artificial shielding from risk.  Government subsidy and rescue from failure, can shield a person, business, or institution from the cost of their own poor judgment.  The major concern with government intervention in financial rescue is the perpetuation and reward of unprofitable ventures and policies.  (Note the GM-Teamster’s pension, health, and unemployment fund.  The economy should have been protected by reverse tariffs if we really want to support workers having such benefits.  As a moral people, we should not patronize a country, with a worker protection policy which does not value life at the same level as we claim.)
 The extreme free market Libertarian perspective is to allow businesses and individuals to fail and thus learn from their failure.  The extreme Liberal/Socialist/Communist approach is to rescue everyone from poverty and failure, and for the State to own all businesses and set all prices.  Neither of these extreme poles are without their associated cost.
 The socialistic malaise of government insured stability produces stagnation and a regimented society inspiring little initiative or risk taking behavior because of the lack of reward.
 The totally free market, without regulation or governmental guidelines of any sort can be perverted through monopolistic forces and create the attendant worker’s dystopia.  Advocates of the free market argue that all social and economic ills will be eventually considered and properly resolved by the invisible hand of the market.
 I choose to stand in the middle between a totally free and totally regulated economy.  The economy and government could function together in a dynamic balance that always searches for creating a market that manifests as the best possible solution for a given environment.
 Such an excellent outcome could arise if the Constitution were actually implemented with a limited Federal government, and the States exercised their power to establish laws governing commerce, environment, morality, and education, and the market were left largely to regulate itself by supply and demand.  Such a nation would function best if the people were educated and committed to the principles and spirit of Christian relationship.  Such was the vision of the Founders, but it has been perverted.  Currently the Supreme Court and its Federal Bench subordinates have taken the authority of law into their rulings and now create public policy by their adjudications.  The courts now dictate and rule over the legislature and the will of the people regarding the moral direction of the nation.
 The result of government regulation in every aspect of production, consumption, and contracts, is that little freedom is left in the market by which to exercise the initiative of risk, invention, entrepreneurship, and market leadership.  Government has shackled business with regulations that are probably made with good intent, but are stifling to production and more situation-appropriate regulation.  The result of the increasing detail of government regulation is the production of a de facto near-socialist governmental-economic system.
 I believe the central bank of the United States (The Federal Reserve), serves a valuable purpose, but its function and power can be abused.  The free market solution is to let banks fail, the liberal solution is to rescue and then manage.  There are times when risk has been improperly assessed by banks, and such flagrant disregard for exercising proper judgment in loaning is cause for allowing a bank to fail.  But, there are times when the larger economic entity, the general economy changes direction, and a run could occur because of the external context of the economy, rather than the misjudgment of risk by the bankers.  In such a situation, allowing a responsible bank to fail is an unnecessary lesson delivered to a victim.
 My concern is that the Federal Reserve may be using the money it collects in interest for influencing social policy.  I cannot prove or disprove such accusations, but the mere presence of doubt, and the apparent lack of transparency in such a central function of the government justifies the calls for an audit of the Fed.  In its defense, the Fed can help stabilize the economy and banking industry if it is managed with accountability and transparency.
 If managed improperly, the Fed can make decisions to support unwise banking, fiscal, monetary, and produce inflationary economic policy.  If the Fed actually chooses to use money from its coffers to shape the social order in its desired image, it could do so by using the interest gathered from its lending functions to support the creation of its social vision.  A move to call into public account the Fed’s transactions reflects this concern.  If this conspiratorial fear is true, the Fed could be the agent by which its considerable wealth could be used to influence government, industry, and media.  It is possible that the Fed may be an/the instigating agent behind the socialization and secularization of our society.  Thus, to resolve this problem, I fully support an audit of the Fed.
 Returning the assumption that the Fed is behaving in a responsible manner, and staying within its bounds as a servant of the established order, I believe that interest gathered by the Fed from its lending activities should be used as another income source to State and local governments via a rebate from the Regional Federal Reserve Banks.  The funds so generated should be directed to fund local projects deemed worthy by the elected representatives.  The projects should be broadly beneficial, rather than used as de facto campaign contributions from the elected officials to gain reelection.
 If the public is informed about the activities of the Fed, and if governmental officials were actually held accountable for their decisions, and if the people actually lived by a True standard of Christian Righteousness, then the Fed could be one tool used in a well regulated stabilization of economic expansion.  The problem with the Fed directing monetary policy and the expansion of the money supply is that men cannot integrate the near-infinite variables that together balance and produce price and economic trends.  Thus, men often misjudge the market and establish policy that seems foolish or counterproductive when viewed in hindsight.
 But, the market is not infallible either.  The forces that produced the Sub-Prime Mortgage Crisis were initiated by Jimmy Carter, given full power and force of law by Bill Clinton.  The full insanity of the government-demanded requirement to loan money to unqualified lenders came to full fruition only in the later years of George W. Bush’s administration.  If the market were the all-wise, fully integrating force of the Libertarian’s faith, then it should have been able to compute something so entirely destructive as this policy.  But, it was not able to do so.  Instead, the unthinking market simply collapsed one day rather than looking ahead and responding with a proactive warning.
 We could simply say that government is the problem, and that the market would have never engaged in such suicidal financial irresponsibility if they were given autonomous control.  This is almost certainly true.  Still, the market has not shown itself to be an excellent judge of future trends and dangers, and to assume that we will avoid financial pain by simply allowing the market to correct itself is probably incorrect.  Thus, we are pitting the issue of freedom vs. Stability when considering the market vs. State solution to regulating economic activity.  I suspect the proper solution and balance will come between these competing forces by combining a wise and subtle guidance from local government, with a largely free and moral market self-governing itself.  Part of this solution should be only occasional intervention in the change of law, and that only because of a change in the structure of the economy due to changes in technology or the political atmosphere.  Stability in the realm of rule of law is extremely important in the context of making contracts for investment, thus government should avoid micro-management of the economy.
 If each individual was contributing his best, if the people were moderated by conscience and wisdom, if the market were allowed to set price and provide products and services demanded by the public, if government legislated only the broad principles of Righteous moral tone with its regulations and policies, then the society would expand in its felicity and we would be one more step closer to manifesting the Kingdom of Heaven on Earth.

The Super Wealthy:
The Super Wealthy are those who have attained the pinnacle of achievement of the free market system.  This statement integrates the concept of inheritance which is merely the overflow of riches from a previous generation’s efforts in the market.  They have won the trophy for the game of capitalism, the place of honor and achievement promised as the prize for running the economic rat race.  But, as noted, these winners can become the masters and lords of the land with all others becoming their serfs in this economic feudal kingdom.  The Super Wealthy can overtake the machinery of government to restrict the competition, and give competitive advantage and tax advantage to themselves.  The coalition of the government and the Super Wealthy is akin to establishing a monopoly in the market.  In response to the excessive advantage gained by the Super Wealthy, the general public or the remnant of the competition may attempt to use government to restrict the scope and influence of the Super Wealthy.  Thus begins the battle to restrict the monopolistic control of the market by erecting legal barriers that limit business.  The ultimate end of such restriction becomes a de facto government-run semi-socialistic market.

The Libertarian solution to monopoly is to let the market adjudicate the benefit or harm being caused by a monopoly and to patronize them or not.   But obviously, the very nature of monopoly is the lack of competition, and the consuming public will patronize a monopoly if they supply a necessary product regardless of their level of service, product quality, ecological impact, or employee care.

The Libertarian notes that monopoly can only exist in perpetuity with the help of governmental protections since no economic stranglehold is sufficiently great to erect a barrier to competition for all time.  The Libertarian response to regulating monopolistic abuse is to allow the market to adjudicate the price, quality, ecological, and social impact of each corporate entity, and allow competitors to arise to offer an alternative.  And, over the grand play of history, the competitive forces will probably produce the desired effect of moderating the abuses, and the economic freedom inherent to the free market will be reflected in the general society.

The disadvantage of the free market solution is the length of time required for the response to monopoly.  The disadvantage of the governmental solution is the blunt and unthinking intervention that will necessarily be applied by law, and the unavoidable unintended consequence of laws.

Thus, as usual, the solution is a combination of the two extremes.  Government should pass only laws that embody general principles of goodness and excellence for group and individual conduct.  Law should not be a prescription for specific behavior in all circumstances for all people.  Rather, government should attempt to codify the best vision a society has for itself in the various fields of public and private life as a generality.

The judging of compliance with this vision should be left to the wisdom and discernment of the courts.  Those who have complaints should bring them against individuals or corporate entities, and the arguments for and against the complaint should be heard, weighed, and judged by a wise counselor.  The field of law should be the most respected and those who practice it should be the most accomplished in life.  Each case should be heard in depth, the specifics should be argued and judged on its merits and the associated moral code.

The enforcement of the sentence should be carried out by the executive branch.  The administrators of justice should, in essence, be the managers, the overlords that check and test and ensure that the sentence and remedy are carried out as prescribed.  These are the managers of managers who bias the productive machine by slight interventions and subtle pressures.

As envisioned, the market will function at its best and most beneficially when the corporate entities of commerce are self-governed with the goal of providing good service, and compensating its employees with a wage considered fair by comparison with the larger economy, and whose business practices are open, honoring of the environment, appeal to the general mean of the social esthetic, and provide products which enhance the general health and welfare of the constituent public.

The system of government and economy will thus function together, not as warring factions, but as complementary aspects of the same tool of society and mankind.  The goal is the enjoyment of life, and given that life has unavoidable pain and hardship embedded within it, the goal of an economy, and the law that governs it is to optimize the excellence of function of that duo of society-directing tools.

Embedded within this vision of a governmental-economic partnership is the implicit standard of Right which must govern the establishment of law, the judgment of circumstance in relation to that law, and the commitment to enforce and act in a Right manner.  Which brings to bear the question of, “What is right law?”

And of course, the religious philosophical precepts of the people, the general morality of We the People will govern and self impose its standards upon Law, Justice, and Action.  I propose that the standard of justice from which to judge the goodness of men’s actions, and one to another is best elaborated in the Holy Bible.  I believe that a nation whose measure of Right is based upon that standard will always be correcting its present position as it considers the standard of perfection as presented in the metaphor of Holy Scripture.

Some may object that operating the government under the standards of a specific religion violates the right of each man to choose his own religion.  This may be true it the sense that the individual will not be able to force the government to impose standards which reflect his particular religious bent.  The fact is, that all law is legislated morality, and it is law the dictates the patterns by which a society shall follow.  The goal of law is to produce the standard which directs the society in the best and highest behavior as regards the individual and the group.  As envisioned, there is no national religion in the sense of prescribing a form of worship or belief for the individual.  But, there is a moral standard by which government chooses to establish the patterns of law.  I propose that we use the same standard upon which this country was founded and establish law based upon the scripture and God of our Judeo-Christian heritage.

This solution would resolve the dilemma of libertarian vs socialistic government.  The market would remain free to execute the form of service it found best, whether monopoly or unallied craftsmen.  The courts would then take their proper and honored place of making decisions based upon the principles of righteousness as dictated by the individual circumstances of business and personal taste.  The people will, in turn, be constantly watched as adults by benevolent and righteous governmental parents and will be both accountable for their actions to the God of heaven, and the law of the land and its officers.

In this holistic vision arises the freedom of individual rights, the restriction of righteous law, and the judgment of men of comprehensive vision.  As children and adults we continue to grow in wisdom and perspective.  As such, our passage from adolescence to adulthood does not mark the time of restriction by the rules of parents to a place of unfettered expression in the fields of society.  Rather, adulthood is the time when adults should have put on the wisdom of Solomon, and self-regulated their behavior to conform to righteous standards without the watchful and dictatorial eye of parents judging and enforcing their view of right standards.

Thus, this vision of a refinement of the Constitutional vision of the Founders incorporates more precisely the execution of their intent.  By giving government the charge to pass law which is only general, by giving the judiciary and its cohort of lawyers the domain of right judgment and counsel, and by giving the executive the domain of enforcement through upper management, the government becomes a trusted and welcomed partner in the process of producing the greatest value in the market, and thus providing the tools and substance by which men can achieve the most happiness that can be achieved by effort and consumption in the material world.