Dear Chuck,

Like so many others, I have a great deal of respect for what you have accomplished in your life. You are the epitome of the American Dream; rising from a troubled childhood to the heights of international celebrity. While you and I may not agree on many political issues, I believe that you are sincere in your concern for the future of the American republic.

However, I think you miss the mark with your support of the Fair Tax. Yes, the current federal income tax system is immoral, invasive, and represents a form of slavery (resting on the premise that individuals are not entitled to the fruit of their labor), but eliminating one tax and replacing it with another is never a good idea.

Besides, we have bigger fish to fry. While taxes are certainly an important issue, it is not the taxes we see that are our greatest worry at this point. The tax we should be concerned about is the one that we don't see.

As long as the Federal Reserve System retains the monopoly power to issue currency, it really doesn't matter what the tax system is. Theoretically, the Fed can print all the money the government needs and we will be taxed through the loss of purchasing power of the dollar. This is going to become more and more evident as the federal government grows to unprecedented proportions. The crisis that we are witnessing now pales when compared to the unfunded liabilities of Social Security and Medicare. The only way for the government to deal with them is to inflate the debt away.

The Fed is an unconstitutional institution. According to Article 1, Section 8, Clause 5 of the U.S. Constitution, Congress is empowered to "coin money and regulate the value thereof." In 1913, Congress delegated that authority to the Fed. This action in itself is questionable as it would seem that a constitutional amendment would be required for Congress to delegate authority with which it is specifically vested.

The issue, however, is even bigger than that. It is no accident that these powers were included in a clause which grants Congress the authority to "fix the standard of weights and measures." That is because the dollar itself is not money; it is a measure of money. Money, according to the Framers, was gold and silver. Congress is simply empowered to standardize the dollar as a measure of precious metal  traditionally, 1/20 of an ounce of gold.

In other words, the Constitution does not grant Congress the power to create money or to regulate the value of the dollar by manipulating the money supply. The power which the Fed claims to posses under congressional mandate  the power to create money  never existed in the first place.

As Thomas Jefferson predicted, the Fed's monopoly on the issuance of currency is enslaving America. Most insidiously of all, we are being enslaved with our own productivity. The law has been perverted into an instrument of plunder. All these bailouts are really reverse wealth redistribution as taxpayer money is lavished on political capitalists. In addition, the Fed is backstopping trillions of dollars of losses in the commercial banking sector. Where are the Fed and the government getting all this money? What the government cannot expropriate or borrow will be created out of thin air by the Fed, expanding the money supply and ultimately causing price inflation.

Inflation is most pernicious tax of all. It destroys savings by devaluing the monetary unit. It distorts the price signals on which entrepreneurs rely to make decisions about how best to meet customer demand, choking the economy with waste and inefficiencies. It punishes the poor since they receive the new money only after prices have already risen, if they receive the new money at all. And worst of all, very few realize who is to blame for these problems.

Inflation is the politician's best friend. It allows him to promise his constituents all sorts of goodies seemingly for free. When the bill comes due in the form of higher prices, the politician can blame greedy businessmen or OPEC sheiks. In reality, the trail leads back to the government profligacy.

Some will say that the Fed is an independent agency and is therefore not subject to political caprice. Balderdash. The Fed works closely with the President to implement monetary policy. In addition, the folks at the Fed are people just like you and me. Who wants to take the blame when the economy takes a downturn as it inevitably will if the Fed contracts the money supply? Why not just keep the printing presses cranking and let your successor deal with the consequences? That is what Alan Greenspan did and he was heralded as a god; don't you think that that may have gone to his head?

The problem with central banking is not whether the central bank is run by private interests or the government. The problem is that it is controlled by people, people who answer to political pressure and not market forces. For this reason (as well as many others), central planning never works. The Fed  America's central bank  is simply central planning under a different name.

The only way for the American people to restore their freedom is to take back control over their money. We must eliminate legal tender laws and break the Fed's monopoly on currency. If the government is going to be involved in monetary affairs at all, we must reinstate a gold standard in order to limit its ability to inflate.

Chuck, you have never backed down from a fight, and this fight will be an epic. The people who think that they run this country are not just going to give up. Just like Nicholas Biddle, they will do everything possible to stay in power, even threatening to destroy the economy. The truth is that the economy is being destroyed right now and the only way to save it is to allow the free market to work.

There is a movement in America which, although it is still in its nascent stages, is causing the Establishment to tremble. It is a movement which promises to smash the shackles of the central bank and liberate Americans from the clutches of power-mad politicians and their corporate cronies.

Chuck, forget about the Fair Tax and add your voice to our battle cry.

END THE FED!!

March 21, 2009

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