Do We Need the Federal Reserve?

Ron Paul, Congressman and anti-Federal Reserve crusader, has been appointed to chair a monetary policy subcommittee—now might be a good time to ask why we need the Fed.

Let's consider two of the most important of the Fed's duties: supervision and monetary policy. As a bank supervisor, the Fed oversees a number of financial firms such as bank holding companies, state chartered banks within the Federal Reserve System, and foreign branches of member banks. Although the Fed isn't the only bank supervisor out there, it plays a key role as supervisor of these institutions. The U.S. needs some monetary policy. The government has chosen to allow the Fed conduct monetary policy with significant independence, directing it to achieve two objectives: price stability and full employment.