Economics Analysis Essay
How the Federal Reserve has overstepped Biblical Principles
Thomas Truitt
Liberty University
GOVT200
Darryll Dowell
12/11/2023
The Federal Reserve
A century before the Federal Reserve, Alexander Hamilton would help establish the first
central bank in the United States. “Many agrarian minded Americans uncomfortable with the
idea of a large and powerful bank opposed it.” (1) After the charter expired, congress would
refuse to renew it, leaving the United States without a central bank. The Federal Reserve Act was
signed into law on December 23, 1913, by President Woodrow Wilson and would be the start of
the Federal Reserve. Help balance the flow of money throughout the country and provide a safe
and stable financial system for the nation.
The Board of Governors, which offers direction and manages the twelve Reserve Banks,
the Reserve banks and the Federal Open Marlet Committee comprise the Federal Reserve. The
main functions of the Federal Reserve are to promote consumer protection, foster payment, and
settlement systems safely, promote sound individual financial institutions, minimize, and contain
systemic risks, and conduct the nations monetary policy. (2) From the outside looking in, it
would seem that the Federal Reserve has all of our best interest at hand, willing to keep prices
stable and promote consumer protection. If that were to be true, then how could the Federal
Reserve overstep Biblical principles?
Overstepping by the Federal Reserve
The Federal Reserve was meant to help Americans and keep to Biblical principles, right?
A dollar today isn’t worth the same as it was in 1913 when the Federal Reserve was established.
“Prices for consumer goods increased by over 2100% since 1914. What one could buy for $1.00
in 1914 takes approximately $22.22 today.” (3) What may cause our dollar to be worth less today
than it was 100 years ago? The American dollar is a not backed by anything tangible such as gold
or silver, known as fiat currency. The Fed can print off as much as they want, thus decreasing the
value of the dollar. But how does this overstep Biblical principles? Proverbs 11:1 “Dishonest
scales are detestable to the Lord, but an accurate weight is his delight.” (4) The Federal Reserve
sets interest rates to help control inflation and keep the economy stable for the consumer, so they
say.
Raising interest rates and increasing the money supply may help curb inflation on the
front end, but it also causes the cost of goods to increase as the demand increases. Unfortunately,
not all cash will increase at the same time. Early recipients will benefit more than those who
receive the money later. Someone buys a car, that person buys an atv, that person buys a tv, and
the last person buys groceries. The person who bought the car will get full potential for their
dollar, while the person buying groceries with must contend with inflation. “As the new money
percolates through the economy, though, prices of goods begin to rise, so that at the same point
the increase in cash balances for some people just enough to offset the general increase in
prices.” (3) A person’s wages do not increase or decrease based on the rate of inflation, and those
who are less wealthy will feel the effects of the all mighty dollar.
Conclusion
At its conception, I believe that the Federal Reserve may have had the average US citizen
at heart, and some may think they still do. Leviticus 19:35-36 reminds us that we are to have
honest balances and not to be unfair. “The Federal Reserve and the inflation it produces violate
the basic right of private property on many levels and, therefore, cannot be considered an ethical
economic policy.” (3) Money created by the government can take from the ones who actually
need it and give it to those who would do well the share as God intended. The Federal Reserve
and the US government have created a monopoly but having to ability to create and distribute
money however and whenever they see fit.
Bibliography
1. History of the Federal Reserve. (n.d.). Localhost.
https://www.federalreserveeducation.org/about-the-fed/archive-history/
#:~:text=1913%3A%20The%20Federal%20Reserve%20System%20is
%20Born&text=By%20December%2023%2C%201913%2C%20when
2. Federal Reserve. (2019). . Federal Reserve Board - About the Fed
Federalreserve.gov. https://www.federalreserve.gov/aboutthefed.htm
3. Ritenour, S. (2018, April 23). The Federal Reserve: An Economic and Ethical
Disaster | IPS Essay. Institute for Principle Studies (IPS).
https://principlestudies.org/essays/the-federal-reserve-an-economic-and-
ethical-disaster/
4. Christian Standard Bible
5.
