Elon Musk has long been a figure unafraid to challenge the status quo. Now, as head of the Department of Government Efficiency (DOGE)—a new presidential advisory commission—Musk is taking aim at one of the most powerful institutions in America: the Federal Reserve. With backing from former Congressman Ron Paul, a long-time critic of the Fed, Musk’s latest endeavor is sparking debate across political and financial circles.
Musk’s proposal to include Ron Paul in DOGE is no coincidence. Paul’s 2008 and 2012 presidential campaigns were defined by his “End the Fed” mantra, a rallying cry for limited government and sound money. By reigniting this movement, Musk and Paul aim to address what they see as the root cause of unchecked government spending and economic inequality.
The Federal Reserve’s Role in Government Expansion
The Federal Reserve’s ability to create money out of thin air has enabled multi-trillion-dollar federal deficits to become routine. Before 1971, when the U.S. abandoned the gold standard, federal expenditures were constrained by the amount of gold backing the dollar. In 1971, federal spending was just $195 billion, representing 18.8% of GDP. Today, adjusted for inflation, federal spending has ballooned to $829 billion, or over 24% of GDP.
The Fed’s creation in 1913 further accelerated government expansion. Before its establishment, federal spending accounted for less than 4% of GDP. The unchecked growth of government spending, coupled with the Fed’s ability to print money, has left the U.S. saddled with over $36 trillion in national debt—a figure that continues to climb at an alarming rate.
A System That Favors the Elite
Critics of the Federal Reserve argue that its policies disproportionately benefit the wealthiest Americans while burdening the middle and lower classes. A 2020 study by the Rand Corporation found that the bottom 90% of Americans have lost approximately $2.5 trillion annually in wealth to the top 10% over the past five decades. This massive transfer of wealth is fueled, in part, by the Fed’s policies.
One glaring example is the 2008 financial crisis. The Fed’s Troubled Asset Relief Program (TARP) used newly printed dollars to purchase toxic assets from failing banks at full value, effectively gifting $700 billion to large financial institutions and their shareholders. Meanwhile, average Americans bore the brunt of the crisis through job losses, foreclosures, and stagnant wages.
Accountability and Transparency: A Black Hole
Despite its immense power, the Federal Reserve has operated with little transparency for over a century. Calls for an independent audit of the Fed’s books have been consistently resisted, with officials citing the need to maintain the institution’s “independence.” However, critics argue that this lack of accountability allows the Fed to act in the interests of large banks rather than the public.
Adding to the controversy, the Fed also serves as the primary regulator for U.S. banks—a role that many see as a conflict of interest. The nation’s largest private banks, which own shares in the Federal Reserve, are effectively regulated by the institution they control. This cozy relationship has led to a lack of significant consequences for banks involved in crimes such as money laundering, market manipulation, and fraudulent practices. No major bank has ever lost its license, no matter the severity of its offenses.
The Fed’s Dual Mandate: A Record of Failure
When the Federal Reserve was established, it was tasked with two primary goals: maintaining the value of the dollar and fostering full employment. By both measures, critics say, the Fed has failed.
Since 1913, the dollar has lost over 97% of its purchasing power. While the Fed touts a “target” inflation rate of 2% as beneficial for the economy, this steady erosion of the dollar’s value has made it increasingly difficult for Americans to maintain their standard of living. Many households now rely on two incomes or government assistance just to get by.
On the employment front, the Fed’s track record is equally questionable. Recessions and financial crises have become recurring features of the modern economy, often exacerbated by the Fed’s monetary policies. For many, the Fed’s role as a stabilizing force appears increasingly dubious.
A Path Forward?
The question remains: Can the Federal Reserve be reformed, or is it time to consider alternatives? Musk’s interest in working with Ron Paul suggests a willingness to explore radical solutions. One option could be a return to the gold standard, which would impose discipline on government spending by tying the dollar to a fixed quantity of gold. Proponents argue that such a move would curb inflation, reduce national debt, and restore public trust in the monetary system.
Another possibility is increased transparency and accountability. Advocates for auditing the Fed believe that exposing its inner workings could pave the way for meaningful reform, ensuring that the institution serves the interests of all Americans—not just the financial elite.
Gold: A Hedge Against Uncertainty
As discussions about the Fed’s future intensify, many Americans are turning to gold and other precious metals as a hedge against economic uncertainty. Gold’s value has historically risen during times of inflation, market volatility, and geopolitical tension—all factors that are likely to persist as debates over the Fed’s role unfold.
In 2024 alone, gold prices have surged over 34%, driven by record central bank purchases and growing concerns about the global economy. Experts predict that gold could reach $3,000 per ounce in the coming months, making it an attractive option for those seeking to safeguard their wealth.
Elon Musk’s challenge to the Federal Reserve has reignited a long-standing debate about the role of central banking in America. Whether through reform, increased transparency, or a complete overhaul, the Fed’s future will likely remain contentious.
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