I listen to political documentaries rather than background music to make paperwork move faster. Shaken out of an administrative stupor recently, I heard Comedy Central's John Stewart interviewing retired Federal Reserve Chairman Alan Greenspan. The world's most powerful central banker for nearly 20 years said we don't have a free market. Americans not free? Whoa, I had to put my American Express report aside and do a rewind.
I was listening to the documentary I.O.U.S.A, which features an excerpt of a Daily Show interview of Greenspan by Stewart. The part of their conversation that hit me like a pot of coffee goes like this:
Greenspan: The more money you have relative to the amount of goods, the more inflation you have and that's not good.
Stewart: So we're not a free market then. There's a benevolent hand that touches us.
Greenspan: Absolutely, you're quite correct to the extent there's a central bank governing the amount of money in the system, that is not a free market and most people call it regulation.
It's stunning that an American leader who wielded so much power over the economy admitted that his office hinders freedom. Greenspan's candid conversation is tantamount to President Obama telling Stewart that his role is to constrain the freedom of all Americans. Can you imagine the outrage expressed at Tea Parties if that were to happen?
We don't have public demonstrations over Federal Reserve policy because central banking is a mystery to most Americans. Yet there is a quiet revolution going on: The price of gold broke through $1,300 an ounce last week. Investors are tiring of the Federal Reserve messing with their money and they're dumping dollars for gold. And it looks like there's no end to the Fed's meddling.
As long as we have the Federal Reserve, Americans will not have a free market. What can we do?
Short of abolishing the Fed-which Americans may call for if our economy collapses-we can rein it in through congressional action. As gold was setting new highs last week, Pat Toomey, a Republican U.S. Senate candidate from Pennsylvania, told me that he'd like to see Americans call for reform in the Fed's dual mission to keep inflation and unemployment low. If the Fed were to focus solely on keeping inflation low and leave job creation to the American people, Toomey thinks we'd be better off even if we don't achieve a truly free market in terms of our money.
If the Nov. 2 election leads to reform in the Federal Reserve's mission, I'd feel better . . . but not good. A Federal Reserve chairman admitting that American money is in bondage to the federal government is cause for reform as our economic problems multiply with Fed complicity.