MILLENNIAL ECONOMICS

Another exhortation to dismantle the Federal Reserve System.

Opposition to central banking predates the nation’s founding. After financial panics, as in 2008, calls to repeal the 1913 Federal Reserve Act intensify. Shane (In God We Trust, 2007, etc.) offers a highly readable, plain-language explanation of our arcane monetary system but a rather breezily argued proposal to cure the national debt. He would replace the current system of lending new money into circulation through the issuance of corresponding public debt (Treasury bonds) with a debt-free system in which Congress creates money directly and the government spends it into circulation to pay its bills. Unlike former U.S. representative and presidential candidate Ron Paul, author of End the Fed, Shane does not favor restoring the gold standard as an external constraint on inflation, arguing instead that “the same trust, confidence, power and authority (fiat) that made the bond ‘good’ will make the bill ‘good’ as well.” He does not explain how Congress, locked in partisan wrangling with a 17 percent approval rating, will more effectively manage the money supply or serve the public interest, other than repeatedly intoning that it’s responsible to “We the People.” Like most Fed opponents, he criticizes its ownership structure and bankers’ inherent incentives to perpetuate debt, but he never mentions the statutory requirement that the Federal Reserve remit all profits above 6 percent to the U.S. Treasury (a record $88.9 billion in 2012). He lists numerous historical examples of direct money introduction but sidesteps how such systems have failed. Shane’s writing displays considerable acumen, but the book cites no sources and offers no bibliography. While formal credentials are not a prerequisite for writing about the subject (the cover describes him as a sailor, author, entrepreneur, business owner, trader and explorer), the gravity and scope of the changes he advocates beg for authority and intellectual context, rendering his argument more of a book-length op-ed than a solid advancement of the cause.

Well written, but sympathetic readers will find sounder footing elsewhere.