The United States has just experienced its most prolific national election scandal in modern history. Yet strangely, the story has failed to make headline news outside of financial publications. Imagine if the following statement was given by a Chinese trade official or a Russian intelligence officer:
“Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election.
There’s even an argument that the election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020”.
These are the words of former President of the New York Federal Reserve Bank, Bill Dudley. The statement is extraordinary and extraordinarily scandalous on multiple levels. First of all, Dudley suggests that the Fed should use its power as the chief manipulator of the world’s reserve currency to meddle in the 2020 presidential election in a manner that is unfavourable to Donald Trump.
Dudley is in effect suggesting that the Fed should blackmail Trump by making him an offer he can’t refuse. The offer goes something like this: either stop criticising the Fed and enacting trade policies which run contrary to the currency Fed Chair’s apparent judgement, or else the Fed will play its part in ruining the economy so as to make a Trump 2020 election victory much more difficult.
If such a suggestion were made by an important former or current official of a foreign regime, one could imagine Washington levelling sanctions against such a country straight away whilst the expulsion of diplomats would likely also swiftly follow. But Bill Dudley is not an official from China, Russia, Iran or Venezuela. He was a powerful part of a highly secretive Federal Reserve cabal whose meddling in the US economy has always been foolish but as Dudley accidentally revealed, is also far less than benign.
By suggesting in public that the Fed should flex its political muscle with an aim to meddle in the 2020 US presidential election, something which even defenders of the Fed’s position in the US and world economy would normally decry, Dudley has in the words of lifelong Fed opponent Ron Paul, actually done the wider public a favour by stating openly what Fed officials previously only said in private.
Those who adhere to the principles of Austrian economics and value economic liberty have long warned that the Fed does a great deal of harm to the economy by attempting to centrally control trends which irrespective of what one does, says or tries to do are ultimately controlled by the market itself. The Fed’s addiction to debt creation makes the US poorer, creates global tensions through its manipulation of the dollar’s value and creates artificial bubbles which benefit the super rich. These bubbles inevitably lead to large scale busts/corrections which hurt the poor the hardest and often cause long term recessions.
Yet even if one is not moved by these straightforward and empirically derived arguments for abolishing the Federal Reserve, now that Bill Dudley has shone a light on the Fed’s ability and apparent willingness to meddle in the democratic process in the United States, one can see that the Federal Reserve is doing to America what the CIA has done to multiple foreign lands and what some in the US believe that Russia did to America in 2016.
Dudley’s statement is the textbook definition of a powerful fifth column operating inside the United States and what’s more is that this fifth column has control over the monetary supply.
One would have to be asleep not to realise that this is the mother of all scandals. Even if one finds economic issues un-interesting, the Fed’s latest scandal is one that is about electoral politics, election meddling and trampling on democracy in an entirely unconstitutional manner.
Move over Russiagate – say hello to Fedgate.