posted on Jul, 19 2018 @ 11:55 AM
The Op has asked about what would happen if the current sitting president was to eliminate the Fed. And it should be carefully thought about.
The first thing I would say look back at history, at before and after such an institution was put in place:
During the American Revolution, the Continental Congress, printed the nations first paper money. They printed it in a large quantity, leaving to
inflation, mild at first though it grew, eventually it was deemed worthless, as people lost faith in the notes.
This led to the first attempt to a centralized banking, as proposed by Hamilton, that was found to be unpopular and people did not trust such. It was
expired in 1811, as congress refused to renew it. This led to a second centralized bank, and then Jackson, ran against it and once again in 1836, it
was shut down. This started the era of the Free Banking, where states chartered their own banks, printing and issuing their own currency, and
offering various services. This would give rise to a Clearinghouse Association, to where the banks in New York could work and settle accounts with
In 1863 the National Banking Act was passed, allowing for national chartered banks to be backed by US governmental securities. And it created a
uniform currency, and it was popular. The following years, from 1873 to 1907, there was a problem with the stability of the currency, that would
cause panics with banks, and the economy would become unstable. This would result in the 1907 panic, where the entire thing would collapse and there
was differing opinions in how the banks should be run and regulated. Conservatives were more in favor of Trusts, and was opposed by progressives. If
anything the general thought was that a central banking system was needed to ensure a healthy banking system, to provide for a stable currency.
The Aldrich-Vreeland Act of 1908 passed as a response of the panic of 1907, this would allow for emergency currency during a crisis. It also
established a national Monetary Commission to search for long term solutions to the nations banking and financial problems. However, there were
problems and controversies, where the leadership of such was debated on whose control it should be under, the bankers or the public. With the
election of Wilson, the plan that had been in the works was killed and set the stage for the emergence of a decentralized central bank.
With the decentralized banks, the new Federal Reserve system was created, where it was suppose to balance the interests of the private banks and the
populist sentiments. This would allow for the US to aid in times of both National and World crisis, like World War I, where money and loans could be
lent out to European countries, the allies. Banks and the economy would expand and retract, as there were very little in the way of controls.
Now in 1929, the market crashed, this caused widespread panic and the world to go into a depression. The result of this, nearly 10,000 banks failed
and the newly inaugurated President Roosevelt, declared a bank holiday, closing all banks, giving the government a chance to grapple with and remedy
the natiionsl banking system. This lead to the Glass-Steagall Act, to prevent this from happening again, in short separating the Banks from the
commercial and investments. It also established the Federal Deposit Insurance Corporation, to require banks to carry Insurance, to prevent runs on
the banks. It was also then that there would be massive reforms and ended the use of metallic standards and gold for backing of a banks currency.
Now to the question:
If Trump were to eliminate the fed, it would be a disaster and chaos. It would cause far more problems, and cause far greater economic issues than
what is now. Many of the protections that are in place, the laws and regulations would no longer be there, as such requires a centralized
institution, like the Fed to ensure the remedy is present. With no centralized backing, the banks would engage in more risky ventures. We have all
seen firsthand and heard about what the end results in some of those risky ventures, where the economy takes a hit or a bubble bursts, and then the
public is either left holding an empty note or is left footing a bill, many of whom had nothing to do with it.
And each time, after each of the bubbles burst, the bill seems to get bigger and bigger that we are having to pay. Along with many of the industries
that are affected, tend to tighten up policies, that lead to problems down the road for future generations, caused by well meaning intentions that end