Is There Really a Need for the Federal Reserve?

Growing Calls to End the Federal Reserve Gain Momentum Among U.S. Lawmakers

In recent months, a number of U.S. lawmakers and public figures have renewed calls to abolish the Federal Reserve, the nation’s central banking system. Proponents argue that the Federal Reserve’s policies and structure are harming the economy, concentrating power, and failing to adequately serve the American people. Here are the top five reasons behind these calls for ending the Federal Reserve, according to those pushing for reform.

What Does the Federal Reserve Do Anyways?

The Federal Reserve, often called “the Fed,” is the central bank of the United States. Its primary roles include managing the country’s money supply, setting interest rates, and overseeing the banking system to promote economic stability. By adjusting interest rates and conducting monetary policy, the Fed aims to control inflation, maximize employment, and encourage moderate long-term interest rates. The Fed also serves as a regulator for banks, ensuring they operate safely and soundly, and acts as a lender of last resort during financial crises to help maintain the stability of the financial system.

Federal Reserve Equivalent to Usury?

The Federal Reserve is sometimes criticized as a form of usury due to its role in controlling interest rates and creating money that is loaned at interest. Critics argue that by setting and influencing the rates at which banks can lend to consumers and businesses, the Fed essentially charges people and the government for using money, which some view as exploitative. In this perspective, the Fed’s practices align with traditional definitions of usury, as they involve lending money at interest in a way that critics say can lead to an endless cycle of debt. Additionally, by setting low rates that incentivize borrowing, the Fed is said to contribute to a debt-based economy, where individuals and governments are often burdened with repayment obligations.

1. Concerns Over Monetary Policy and Inflation

One of the main arguments against the Federal Reserve is its role in managing monetary policy, which critics claim has contributed to rampant inflation, reducing the purchasing power of everyday Americans. Some lawmakers argue that the Fed’s aggressive measures—such as low-interest rates and large-scale bond purchases—have inflated asset bubbles and led to rising prices. As inflation surged in recent years, the Fed has raised interest rates sharply, which some believe has stunted economic growth and increased the cost of living without adequately addressing the root causes of inflation.

“People are hurting because their dollar isn’t going as far as it used to,” said Representative Jim Grant, a vocal critic of the Fed. “The Federal Reserve’s approach to inflation has been reactive, and they’re playing catch-up with the problem they helped create.”

2. Lack of Transparency and Accountability

Critics also point to a perceived lack of transparency and accountability in the Federal Reserve’s operations. Unlike most government agencies, the Fed operates with a significant degree of independence, which was intended to shield it from political pressures. However, this independence has raised questions about who holds the institution accountable.

“The American people deserve to know how their money is managed and why decisions are made,” argued Senator Carla Thompson, who recently introduced a bill aimed at increasing Congressional oversight of the Fed. “There’s no clear way to ensure that the Fed’s actions align with the public interest.”

Advocates for reform claim that increased transparency could prevent potential conflicts of interest and hold Fed officials accountable for their economic decisions.

3. Concerns About Power Concentration in a Centralized Institution

Another argument put forth is that the Federal Reserve, as a central institution, has too much power over the national economy. Critics contend that a single entity with such significant influence over interest rates, currency supply, and financial regulation consolidates too much authority in one place. They argue that this structure contradicts the democratic principles of decentralization that underlie the American system of government.

“Central banks were never part of the founders’ vision for America,” stated Congressman Mark Jennings, who has long opposed the Fed’s role. “We’re seeing a level of economic control by the few, which could potentially harm the many.”

4. Impact on Wealth Inequality

The Federal Reserve’s policies have been criticized for widening the gap between the wealthy and the rest of the population. For example, critics argue that the Fed’s low-interest-rate policies and quantitative easing initiatives over the last decade primarily benefited corporations and investors, who profited from stock buybacks, rising asset prices, and cheap borrowing costs. Meanwhile, many working-class Americans struggled with stagnant wages and rising costs of living.

“The Federal Reserve’s policies have effectively created a system where the rich get richer and the poor remain stagnant,” said economic analyst David Lerner. “Without real reforms, the Fed is exacerbating the divide between economic classes.”

5. Failure to Prevent Financial Crises

Finally, opponents argue that the Federal Reserve has failed in its mission to stabilize the economy and prevent financial crises. Critics point to the 2008 financial crisis as a case in point, where the Fed’s oversight of major financial institutions was called into question. More recently, some argue that the Fed’s handling of the COVID-19 pandemic response—marked by emergency measures and massive market interventions—demonstrated the inherent volatility of relying on central bank policies to maintain economic stability.

“Time and again, the Federal Reserve has acted too late or taken measures that resulted in greater instability,” argued Senator Michael Lawson. “We can’t keep repeating the same mistakes and expecting different results.”

What’s Next?

While the push to end or overhaul the Federal Reserve has long been championed by a small group of lawmakers, recent economic concerns have brought the conversation into the mainstream. Several proposed reforms have been introduced in Congress, including increasing oversight, limiting the Fed’s policy influence, the Gold or silver standard, digital US dividend dollar(Not a CBDC), or even transitioning to a decentralized system of banking.

As discussions unfold, the debate over the Federal Reserve’s role in the U.S. economy is expected to intensify, sparking questions about how to ensure an economic system that is fair, stable, and accountable to the American people. Whether these recent calls will lead to real change or further debate remains to be seen.