I began my article on "The FED on the Defensive" with these words:
I do not recall this in my lifetime. A majority in the House of Representatives has co-signed H.R. 1207, a bill introduced by Ron Paul to have the Federal Reserve System audited by an independent government agency, the Comptroller General’s office.
A reader sent me a suggested correction.
So if my realization is typical, framing discussion of the current crisis in terms of the U.S.A. repeating its own history could greatly facilitate comprehension of the vast majority who still do not perceive the present crisis clearly and otherwise won’t until long after it has buried them. Because it is common to hear comments like "we’re in uncharted territory" and your "I do not recall in my lifetime." While undoubtedly true in a sense, the more important other truth is that the nation has traveled this territory repeatedly in the past 300 years but apparently does not recognize it: we repeatedly failed to learn from the past. Why not hammer on the point that this crisis is the old recurring problem? Nothing new here. We should know what we’ve got coming to us as we’ve been "corrected" in the past so many times for the same contest between avaricious motives and libertarian ideals.
The critic means well, but he does not understand the magnitude of what Ron Paul has accomplished.
To suggest that, once upon a time, meaning before 1913, there were criticisms of central banking is like saying that, once upon a time, before Keynes’ General Theory, there were criticisms of government budget deficits. Quaint, but irrelevant.
In the 19th century — a century of the international gold standard and free trade — there were critics of central banking. The economists debated this issue in sophisticated treatise. That, of course, is what economists do: debate. What is remarkable in retrospect is the high level of sophistication of the debates in the popular press.
Central banking was a hot topic in the Jackson era, especially in the key year of 1832, when the Whigs made it a political issue by introducing the bill to recharter the Second Bank of the United States four years before the charter would automatically expire. They did this in an election year. They thought they would win in November. Instead, they lost big.
Jackson won the bank war in 1832. The central bankers and the academic Establishment have never forgiven him for this. His position on the Second Bank is universally excoriated in economic history textbooks and monographs. This story even gets into lower division history textbooks. Students who are told about central banks only twice in the textbooks are told that Jackson was a narrow-minded bigot on central banking. The only other reference to central banking in the textbooks is the story — carefully sanitized — of the establishment of the Federal Reserve System, a victory described, though never explained, as a triumph of the American people over the political control of money. It was, of course, a triumph of the big bank cartel over competitive banks that offered greater safety. The bankers feared bank runs on overleveraged banks, meaning large New York City banks.