The Creature From Jekyll Island

November 9, 2010 10:16

They met in secret because of a long-standing public distrust of big bankers, money trusts, and Wall Street brokers.  They were known as the “First Names Club,” and another Ben—Benjamin Strong, the Fed chairman in the 1920s—later joined the First Names Club.

by Mark Skousen at Human Events


The conspirators didn’t get everything they asked for with the Federal Reserve Act.  They wanted a European-style central bank run by Wall Street; the bill that Senator Aldrich pushed through Congress never even used the term “central bank.”

Of course, the irony is that the Fed failed miserably in the 1930s in its first major test of serving as lender of last resort.  As Milton Friedman concluded, the Fed acted “ineptly,” allowing the money supply to collapse by a third.  “Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.”

Monetary economist and Fed historian Allan Meltzer, who also knew Friedman well, states it best:  “The banking system has over $1 trillion of excess reserves.  We do not need more monetary stimulus.  We need programs that get the banks to increase lending and businesses and consumers to increase spending.  Reducing uncertainty and restoring confidence are the place to start.”


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