The Fed Against Everything – Including my Shoes

Column by Bob Wallace.
Exclusive to STR
When I was in college, the best salesman in the world talked me into buying a pair of Allen Edmonds shoes -- specifically the Malverns.  They cost $75.
They were the best shoes I ever had. Unfortunately, I didn't take particularly good care of them. I wore them every day, I once dried them on the heat register (the toes curled straight up), and I didn't moisturize them enough. Still, they lasted ten years.
Had I take proper care of them, and have the company rebuild them, I'd still have them. Maybe they wouldn't look so great, but I'd still have them (I wish I still had my '67 Pontiac Tempest slant-4).
Then I bought another pair of Malverns. By then they were up to $150. They lasted about 13 years. I still didn't take very good care of them, specifically wearing them every day, which is a big no-no for shoes.
A week for so ago I checked on the price of Malverns.
I blame this almost exclusively on the Federal Reserve Bank, which is not federal, has no reserves, and is not a bank. It is in fact a legal counterfeiter which has 100% control over our money supply.
Of course, the Fed is thoroughly unconstitutional. The Constitution forbids anything but gold or silver being money. On top of that, it also forbids Bills of Credit, i.e., paper money.
Central banks were tried in the U.S. in the past. Andrew Jackson, for one, swore eternal enmity against them.
"The bold effort the present (central) bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it," he once said. "You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out."
Jackson engaged in a lot of duels. Perhaps we need dueling to be legal today.
Since the creation of the Fed in 1917, the dollar has lost 99% of its value. This acceleration of this loss of value really took off in 1973, two years after Richard Nixon went completely off the gold standard in 1971.
Not surprisingly, wages stopped going up in 1973, and have been flat or declining ever since. Except, of course, for the one percent whose income has been skyrocketing -- and they accomplished this by using the State to enrich themselves at everyone else's expense.
Fortunately, Allen Edmonds is still an American company. And thank God for that. They haven't fled to China, where the workers make a dollar day, work 12 hour shifts, and live in dormitories.
Lots of American workers appear to make good money -- in nominal wages. If the Fed had never existed, the average wage might be $10,000 a year -- and houses might cost $10,000 (my parents told me they rented a two-story farmhouse in '67 for $60 a month, and they paid $141 a month for a 30-year mortgage).
American companies wouldn't be hemorrhaging jobs to foreign companies if it wasn't for this huge disparity in wages.
Sooner or later, the Fed will go. The first two American central banks had 20-year charters, and then they were gone. The current one needs to go.
Unfortunately, I expect pretty much a complete collapse of the economy before the Fed is eliminated.

Your rating: None
Bob Wallace's picture
Columns on STR: 89


brandonchristensen's picture

"Fortunately, Allen Edmonds is still an American company. And thank God for that. They haven't fled to China, where the workers make a dollar day, work 12 hour shifts, and live in dormitories."

I'm curious about this statement for two reasons (the points about the debasement of our currency are well-taken): 1) Does it really matter if a company is American or Chinese or Brazilian, so long as they produce good, cheap stuff (like Malverns)?

2) Haven't standards of living in China been skyrocketing because of the 12 hour shifts and factory work?

I know that many workers (everywhere) get the short shrift these days, don't get me wrong, but if Chinese workers didn't like the relatively low wages they get, then they would probably have stayed back on the collective farms, right?

Am I missing something?

Robert Wallace's picture

Am I missing something?

Pretty much the ability to understand basic economics.

brandonchristensen's picture

Haha! Thanks for the thoughtful response, but I am not convinced that I know nothing about about "basic economics".

What I am convinced of, however, is that this piece is nothing more than demagoguery wrapped in a nationalist flag.

Wages have indeed been stagnant since the '70's, but this has nothing to do with the "Federal Reserve" (oh boy). Wages have been stagnant because the market is telling us that, since the seventies, the purchasing power parity of the average American citizen has increased so significantly that a rise in wages in unnecessary.

In plain English: what this means is that the average American can buy more with less. This phenomena is largely due to the increase in world trade. China makes goods cheaper than we can, and these cheaper goods in turn make us richer.

Here is my favorite whopper of yours, though:

"American companies wouldn't be hemorrhaging jobs to foreign companies if it wasn't for this huge disparity in wages."

Huh? Since you know much more about basic economics than I, could please explain this sentence to me (and others who may be reading this beneficial exchange)?

Also, an explanation for my inability to "understand basic economics" in regards to how individuals living in China are not benefiting from world trade would also be useful...

For anybody that wants a more in-depth but readable explanation in regards to how free trade works here is a concise article written by an expert, I would recommend this piece: The De-Industrialization of the U.S.: A String of Enlightening Fallacies

David Calderwood's picture

One thing we don't see is that the Fed is anti-capitalist.

It seems to me that capital has a hard time existing in a system where money is unstable, i.e. where a central bank consistently enables (credit) inflation. I, as a saver (capital accumulator) must pay taxes on illusory nominal gains under an inflationary regime. In this regard my frugality is actually punished by central bank (and fractional reserve banking) activity.

If this is not anti-capitalist, I'm not sure what is.

While Karl Denninger's blog is often far from doctrinaire libertarian, his graph of GDP Q/Q growth after backing out debt growth is quite instructive. He frequently republishes it in his blog and it clearly shows that the USA's economy has not grown one bit in 30-plus years. I know economic aggregates like GDP are highly suspect, but the picture remains worth all thousand words.