I hear this argument in most critiques of the Federal Reserve, so it definitely needs to be addressed.
Talking to an anti-Fed person, you may have heard something like “The Fed is terrible, it controls all our money. And did you know it’s private?!”
The implied or stated proposal being that government should take over the money-printing. But it’s not the fact that the Fed is partially private that’s the problem – it’s the fact that it’s partially government! What’s bad about it is that we’re all forced by law to use their currency. It is a legal monopoly on money, for which there is no ethical justification.
From a voluntary ethics standpoint, no one should be forced to use or not use any money, or prohibited or compelled to issue money. But even from a utilitarian view, a government takeover of money would not be a very good safeguard against monetary inflation. Historically, governments have debased their currencies as a means to finance their grand schemes, variations of bombs or bread. Can you imagine what Congress would do without the admittedly weak restraint of the Fed? They’d spend into oblivion, even more than now, and destroy the dollar in the process!
The real answer is – eliminate the Fed’s legal monopoly on money. Let them be a private bank competing in a free market. Of course, they probably would go out of business, but hey, that’s free market capitalism!
