Creature From Jekyll Island by G. Edward

A so-called balanced-budget amendment to the Constitution is not the answer either. In fact, it is an illusion and a fraud. Some of the biggest spenders in Congress are supporters. They know that it is popular with the voters but would not cramp their spending style in the least. If they were not permitted to spend more than they receive in taxes, they would have a perfect excuse for raising taxes. It would be a way of punishing the voters for placing limits 1. " T h e F u t u r e o f Price Stability i n A Fiat M o n e y W o r l d , " b y Jerry L. Jordan, Durell Journal of Money and Banking, August, 1989, p. 24.

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THE CREATURE FROM JEKYLL ISLAND

on them. The voters, on the other hand, would collapse under the burden of higher taxes and demand that their Congressmen

circumvent the very amendment they previously supported. And that would be easy. Most versions of the balanced-budget amendment have an escape hatch built for just that purpose. Congress shall balance its budget "except in cases of emergency." Who decides what constitutes an emergency? Congress, of course. In other words, Congress shall balance its budget except when it doesn't want to. So what else is new?

A serious amendment would have to tackle, not balancing the budget, but limiting the spending. If that were done, the budget would take care of itself. But even that would be a waste of time considering the present composition of Congress. Instead of generating political pressure for a Constitutional amendment, we would be better off directing that same effort toward throwing the big spenders out of office. As long as the spenders are allowed to stay in there, they will find a way to get around any law—including the Constitution itself.

Another flaw in most versions of the balanced-budget amendment is that it would not affect the off-budget expenditures called entitlements. They now represent 52% of all federal outlays and are growing by 12% each year. A strategy that ignores that back-breaking load is not worth even considering. Furthermore, even if Congress could be forced to stop deficit spending, the balanced-budget amendment would not solve the problem of inflation or paying off the national debt. The Federal Reserve can now inflate our money supply by using literally any debt in the world. It does not have to come from Congress. Unless we zero in on the Fed itself, we will just be playing political games with no chance of winning.

Every year, a few concerned Congressmen submit a bill to

investigate or audit the Federal Reserve System. They are to be commended for their effort, but the process has been an exercise in futility. Their bills receive little or no publicity and never get out of committee for a vote. Even if they did receive serious attention, however, they could actually be counterproductive.

On the surface, it would appear that there is nothing wrong with a Congressional investigation or an audit, but what is there to investigate? We must assume the Fed is doing exactly what it says and is in total compliance with the law. A few minor improprieties A REALISTIC SCENARIO

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probably would be discovered involving personal abuse of funds or insider profiteering, but that would be minor compared to the gigantic fraud that already is out in the open for all to see. The Federal Reserve is the world's largest and most successful scam.

Anyone who understands the nature of money can see that without a team of investigators and auditors.

The danger in a proposal to audit the Fed is that it would provide an excuse to delay serious action for several years while the audit is going on. It would give the public a false impression that Congress is doing something. It also would give the monetary technicians an opportunity to lay down a smoke screen of verbiage and confusing statistics. The public would expect that all the answers will be forthcoming from the investigation, but the very groups and combines that need to be investigated would be conducting, or at least confounding, the investigation. By the time fourteen volumes of testimony, charts, tables, and exhibits finally appear, the public would be intimidated and fatigued. The bottom line is that we do not need a bill to audit the Fed. We need one to abolish it.

A PLAN FOR ELIMINATING THE FED