What can be done to realistically make the FED vanish?

The free market of the 19th century with its lacks of control on the money supply was notorious for far worse and more frequent bubbles than today.

 

You missed a post. Still waiting for a response.

 

Impossible to do, because the money supply is affected by the acts of humans, primarily the banks in lending.

 

The Fed offered money for the railroad sure, but the money supply and access to credit were still decided by the banks.

 

Your charts show that the economy grew 2x faster during equivalent periods with the Fed.

 

You fix the printing of money and the Federal Funds Rate at a constant. It's what Milton Friedman advocated.

 

If nothing else, what was really happening is, automation was replacing peoples' jobs at a fast pace from the beginning of the industrial revolution onward, thus eliminating a lot of jobs..jobs held by (*)(*)(*)(*)ing primitive beta-males. And rightfully so.

The alpha-males of society, the employers, were doing just fine.

 

Bubbles can be caused by the free market, for instance, the dot.com bubble. But they are more likely when credit is artificially easy to obtain.

 

1) That is not true, that has only been the case since the Reagan Revolution
2) you are making a simplistic causal fallacy argument.

Depends on whether the MW is raised.

Real incomes increased for all classes until the Reagan Revolution.

 

Please let me know how the employers in the horse and buggy, cooper, whale oil, and sailing ship industries are doing.

Are they just fine?

 

If there is a decrease in demand - aggregate or otherwise - then output has to decrease.

 

What if deflation harms poor people more than inflation? I don't deny that people who can not increase their wages and do not have very much disposable income for investments get harmed by inflation. But there is no perfect economic solution to solve poverty. I can make the argument that inflation helps poor people more than it harms because the flow of money creates more jobs that demand poor peoples labor giving them a income that they might necessarily not have if there was less money circulating.

You already admitted that it doesn't harm everyone. It doesn't harm the person selling the good or service at a higher price. That is people invest in stuff, create businesses, buy gold, invest in real estate, etc. Because they are hoping someone will give them more than they paid for it in the future. That is inflation, it benefits those who invest their money. You should love inflation since you are one of those wealth freaks.

 

And credit is easier to obtain when you are in a bubble, because everyone wants to cash in on the gains and are more than eager to provide capital.

 

And uncontrolled banking systems lead to "Wildcat banking" where credit is artificially easy to obtain.

We need a fixed interest rate from the Fed that the market can use a bell-weather and foundation.

 

No it doesn't. If prices decrease (including wages) but output stays the same, then no wealth is lost.

 

The Federal government centrally planned the allocation of land and the development of our railroads. That ain't a "free market".

 

But that does not result in a fixed rate of inflation.

Inflation is affected by not just the amount of money "printed" but how much that money is lent and re-lent and how fast that money moves around the economy.

That is why, even though the Fed doubled the base money supply, we haven't seen the hyperinflation so many of the Austrians were telling us we'd have.

If the Fed had not done that, we'd be experiencing sever deflation right now.

The opposite happens when the economy picks up and people start feeling confident and then greedy.

 

They owned the land. Companies bought it. How isn't that free market?

 

Yes, production will decrease. As a result, resources will be allocated elsewhere..or else just let sit there and wasted. For instance if the demand for X physical resource decreases (e.g. due to decreased demand in products which use X physical resource as a raw material, etc.), the price of that X physical resource will most likely decrease quickly. That will make it easier for capitalist innovation to use that resource for other purposes.

But there will be, or at least usually will be, a lag time between the decreased demand and said innovation. During that time, X physical resource will not be used anywhere. However, it is better to allow than to happen, than to indirectly force it to be used via artificially cheap credit etc. which allows X to be purchased and used more quickly.

 

If prices decrease yet output says the same, then the demand for that product must have decreased.

 

We haven't seen hyperinflation because while Money Supply increased, velocity decreased and on the other side of the equation output and prices increased to take up the slack.

 

Duh. That's what we are talking about.

 

Most of the recessions before the Fed can be attributed to the failure of central economic planning in some way or another.

We've spent over 21% of the time in economic recession since the Fed was created. Not a very good track record.

The rate of economic growth per capita was cut in half after we went to a fiat currency.

 

You can say correlation doesn't imply causation, but this makes a pretty good case that increasing the money supply does not lead to massive inflation causing harm to our productivity.

 

Another math fail.