Category Archives: Regulation

Abolish the Federal Reserve

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I am often impressed to see the power that some Americans have to influence the lives of the rest of us. Look at the recent strike at the GM plant in Dayton. Here was a single facility making only one of hundreds of different parts for GM cars. The union workers at that facility went on strike, and the whole nation’s industry began to slow down for lack of those parts. Now that’s leverage.

There is one little understood institution in America whose power over our economy dwarfs that of the autoworkers in Dayton: The Federal Reserve System. Whenever the czars at the Fed have a meeting, Presidents, industrial giants, investors, home buyers, everyone with an interest in our economy awaits their verdict with bated breath. If they decide to raise interest rates, politicians and industries could fall, homes will not be purchased, jobs will be lost. If they decide to lower the rates, officeholders, industries and consumers may prosper, but the inflation rate may increase. That’s a lot of power and responsibility for a handful of people whose names would not be recognized by one in 10,000 Americans. Too much by far.

The Federal Reserve System was conceived in 1910 by a group of notorious robber barons at a then-secret meeting at J. P. Morgan’s estate on Jekyl Island, Georgia. After three years of political machinations, Congress passed the Federal Reserve Act in 1913. The bill was promoted publicly as a plan to reform the nation’s monetary system and stabilize the currency by taking control of it out of the hands of big bankers. In reality, of course, the Act was written by the bankers for the purpose of solidifying their control over our currency.

The people of the United States granted to Congress the power “to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” in Article I, Section 8 of the Constitution. Wisely, we never gave them the constitutional power to delegate this money-creating and regulating responsibility to any private group. Yet this is exactly what the Federal Reserve Act did. It created a cartel of private banks, managed by a Board appointed for long terms of office by the president. This group of banks became the sole issuer of U.S. money, with full control over its quantity and thus its value.

How has the Federal Reserve performed in its stated purpose of stabilizing our currency? Soon after its formation, the management of the Fed created the conditions that led to the depression of the 1930s. It has presided over the loss of the gold backing of our money, and the consequent loss of about 90% of the value of the dollar. Booms and busts have been worse after the advent of the Fed than before.

If the system hasn’t accomplished its stated goals, what then has it been able to do? It has been the tool used by the major bankers to gain control over the smaller banks. It has been able to bail out many international banks when their reckless overseas lending policies brought them to the brink of bankruptcy. It has been the financing agency for Congress’ unprecedented deficit spending on the welfare state and war. Many people believe that it has intentionally manipulated the economy in order to influence the results of our presidential elections.

Our government doesn’t need the help of any private banking cartel to manage money. We need to repeal the Federal Reserve Act and return control of our currency to Congress. Then we need a serious national discussion about how real currency reform can be achieved, giving consideration to restoring the gold backing to our money. As long as the Federal Reserve has control over our nation’s money, Congress’ control of the purse-strings will not have the benefits the Founders intended.

Evangelical Environmentalists are Wrong

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A group called the Evangelical Environmental Network hit the news recently when they came out strongly against reforming the Endangered Species Act. Positioning themselves opposite the “Christian right,” they plan to spend $1 million on advertising their views.

According to a recent AP story, their view is that man poses as great a danger to the various occupants of the earth as did the Flood in Noah’s time. God’s protection of creation from the Flood took the form of the ark built by Noah. The Evangelical Environmentalists believe that protection from man’s depredations comes in the form of the Endangered Species Act. Thus, they regard attempts to reform the Act as “Congress and special interests … trying to sink the Noah’s Ark of our day…”

There are some real problems with this view. First, the threat to life on earth is exaggerated. The Flood had the potential to extinguish all human and animal life on the earth. Noah’s ark really did save the animal kingdom from annihilation. After all, it was God, with the absolute power of creation and destruction in His hands, who brought on the Flood. Man’s “flood of pollution and habitat destruction,” on the other hand, has at the most a relatively subtle effect on the earth’s life forms. According to the fossil record, extinction of plant and animal species has been going on since the beginning of time. There is no reason to expect that man can or should try to stop it now.

The Evangelical Environmentalists urge conservative Christians to “re-examine what they said were the Bible’s teachings on the environment.” Presumably they are referring to God’s instructions to man to “go forth and multiply” and to “subdue the earth.” Environmentalists have ridiculed these Biblical teachings since the beginning of their movement. I remember that it was a big joke in environmental circles when I was at Purdue in the mid-1970s. What is new is to hear “conservative” Christians talking about “re-evaluating” Scripture.

No Christians that I know of have ever advocated subduing the earth by wanton destruction of the natural world. Christians have traditionally interpreted these passages as saying that God created the earth and its various species for man’s benefit. These gifts of God ought to be respected as such, and used wisely for the greater glory of God, and for the benefit of our fellow humans. They should not be set up on a pedestal as sacred and an end in themselves.

The Evangelical Environmentalists are ignoring the very real violations of God’s law that the Endangered Species Act has brought about. Every opponent of the Act cites primarily its attack on private property rights. “Takings” of property or of the right to use one’s property are the primary weapon that the Act puts in the hands of environmentalists. The right to own property is granted by God to each of us, and placed under His protection in the Seventh Commandment: “Thou shalt not steal,” and in the Ninth and Tenth Commandments prohibiting coveting. Property rights are rendered null and void when an owner is not permitted to use his property.

Any Christian who gets on the Endangered Species Act bandwagon will find himself in some strange company. The hard-core supporters of this Act are notorious for their low regard for humanity, and for their “end justifies the means” approach. Typical of their attitude toward human life is this comment from David M. Graber of the National Park Service: a particular species or a free-flowing river is of “more value — to me — than another human body, or a billion of them…Until such time as Homo Sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.”

As for what they are willing to do to accomplish their ends, consider the spotted owl controversy. Andy Stahl of the Sierra Club Legal Defense Fund bragged in 1988 that the spotted owl was merely a pawn in the bigger game: “The northern spotted owl is the wildlife species of choice to act as a surrogate for old growth protection, and I’ve often thought that thank goodness the spotted owl evolved in the northwest, or we would have had to genetically engineer it.” Truth is of no consequence to these people. Christians have no business allying themselves with them.

Abolish the Regulatory Branch

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“He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.” No, this doesn’t refer to President Clinton. With these words of the Declaration of Independence, the Continental Congress included regulatory tyranny among the many offenses of George III. They propelled us into a costly war intended to free us from this and other forms of tyranny.

Fast forward about two centuries. Americans are once again in need of relief from regulatory tyranny; this time from the coils of the EPA, OSHA, HUD, EEOC, BLM, and a hundred other acronymic agencies. Last November, we sent a wake-up call to our complacent Senators and Representatives. Now that we have their attention, what should we expect of them? What should we urge them to do about the growing regulatory tyranny?

To start, the House of Representatives recently passed a bill that would establish a temporary moratorium on new federal regulations. Faced with the threat of severe weakening in the Senate, and of a veto by President Clinton, the future of the moratorium is doubtful at best. Even if it were to surmount all of the obstacles in its path, the bill would affect only new regulations; and even those for only a short time. Not much relief in sight, I’d say. Even so, those who thrive on federal regulation are positively panicked about this bill. Perhaps they are afraid that once the American people wake up to the true power of their control over Congress, they will reject the whole regulatory structure. Here’s some food for thought concerning just that.

Let’s leave aside for the time being the fact that most of the objects of federal regulation are outside the scope of activities authorized by the Constitution. A more urgent problem today is the way regulatory agencies are set up. Congress grants legislative, executive, and judicial power to each regulatory agency over its area of interest. The agency uses its legislative power to make whatever regulations it deems appropriate. It uses its executive power to administer the regulations: investigating, prosecuting, and in general attacking those it suspects of violating the regulations. It uses its judicial power to judge each case of alleged violation of regulations. The officials who wield this latter power are actually called “administrative law judges,” showing that the agencies recognize the power to be a judicial one.

The executive power of the regulatory agencies is legitimately derived: they are part of the executive branch of government. This does not excuse their rampant abuse of that power, but at least the lodging of executive power in them is legitimate. The same cannot be said for either the legislative or the judicial powers. Article I, Section 1 of the Constitution decrees that “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” Later, in Article III, Section 1, “The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” Neither legislative nor judicial power is to be placed in the executive branch.

This “separation of powers” among the three branches of government was a deliberate attempt by the Founders to withhold from the hands of any one person or group the full gamut of federal powers. The principle is discussed at length in The Federalist Papers and in other writings of the authors of the Constitution. James Madison, for example, in Federalist Paper No. 47, states that “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.”

These wise words of Madison certainly apply to our situation today, and call for reforms to stamp out the growing tyranny. If we are to have regulatory agencies, their responsibilities should be strictly administrative, as befits executive branch offices. Any regulations should be made by Congress and called laws, not regulations. Any resulting judicial activity should occur in the courts of the judicial branch, not in special executive branch kangaroo courts. Let’s urge our Representatives and Senators to rethink the whole idea of federal regulatory agencies.