Posted on

By Matthew Rosen

The United States has had its fair share of mistakes throughout its history. While most of these mistakes are pretty well known, some of the United States policies that I believe were huge mistakes are overlooked. As it turns out, all of these policies were enacted under President Woodrow Wilson. So instead of analyzing a current event, I want to bring attention to these policies that have still not been repealed.

17th Amendment: The Legislature is made up of two chambers: the House and the Senate. When the country was established, the founders made a system where members of the House were elected in small districts and represented the public’s interest. The Senate instead was intended to represent the States’ interest. To ensure this, members of the House would be elected on a simple popular vote within their district while members of the Senate were to be appointed by state legislators.

This system was set up to make sure the federal government did not take rights from the public by holding Congressmen accountable to the people. It also made sure the federal government didn’t overtake powers that were reserved to the States. The passage of the 17th Amendment in 1913 completely took away this second aspect. Having a chamber in Congress that represented States’ rights was the whole point!

As a direct result of the passage of the 17th Amendment, the federal government was able to overtake powers that are reserved to the states, since they could no longer be held accountable. Basically everything that the federal government currently has a hand in, besides defense, justice, taxes, and foreign affairs, is an overreach of their constitutional boundaries. Things like healthcare, drugs, education, marriage, energy, the environment, and others were never meant to be federally controlled, but rather held in the jurisdiction of state and local governments. Although I agree with some of the policies that the federal government has implemented or promoted, that does not mean that they were pursued constitutionally. This is very dangerous, and in my opinion, the 17th Amendment is a direct attack on the 10th Amendment.

Federal Reserve: As for economic policy, the creation of the federal reserve bank is one of the worst ideas that have been pursued. Ever since its creation in 1913, the federal reserve’s job has been to regulate the money supply, which in turn is supposed to steer the economy through inflationary or contractionary policy. The way this is primarily done is by artificially choosing the interest rate, or more specifically the federal funds rate, by increasing or decreasing the money supply.

The federal reserve and monetary policy is horrible for the US because it sends false signals to the economy, causing malinvestment, and therefore creating a bubble. For example, suppose the targeted interest rate is lower than the equilibrium interest rate that banks and borrowers would have naturally decided on in a free interest rate market. What this would do is convince more people to borrow money and invest in projects that there was no economic demand for. This is because if the natural interest rate is 5%, but the federal reserve targets a 2% interest rate, borrowers who see a 3% or 4% rate of return on their investment will choose to invest, even though in a free market they wouldn’t. Then the supply of that product on the market is larger than the demand, creating confidence where there shouldn’t be, and a large bubble in the economy. To explain it more simply, it changes the price of money (the interest rate), to something it normally wouldn’t be.

This process is how we get large booms and busts in the economy. The artificially low interest rate inflates the economy to a seeming “boom.” But when the bubble pops, we get a bust. And the worst part of it is that when we have a “bust,” the federal reserve tends to lower interest rates more to counteract it, but that just makes the coming bust even more painful.

Another reason the creation of the federal reserve was awful, is because it allowed the US to print large amounts money, which devalues the dollar, and allowed us to pay for more guns and butter (wars and welfare) than we could actually afford. The creation of the federal reserve also played a role in taking away the gold standard, which the US was on for most of its history. The gold standard allowed the US dollar to be pegged to the value of gold. This was good because gold has held value very well for thousands of years. Holding the value of the dollar is beneficial in limiting inflation, preventing the devaluing of the dollar, eliminate fluctuating exchange rates, etc. Also it makes logical sense to have currency backed by something with value, as opposed to the current dollar bill which is backed by faith and debt alone.

There are many other issues with the Woodrow Wilson Presidency. His World War I policies are my main concern. Personally I find fault in even getting involved in a war that we had no need to be in, putting excessive punishments on Germany, trying to create the League of Nations, allowing the Middle East to get carved up, etc. In reality he should have continued to aid the Allies without getting directly involved. The war would have ended up closer to a stalemate and the German economy wouldn’t be ruined. Also, as many who have read my articles before know, I am a non-interventionist, and Woodrow Wilson basically created American interventionism. The League of Nations is a horrible and unconstitutional idea, and carving up the Middle East was just plain ridiculous. However, the reason I didn’t focus my article on these issues is because these are past foreign policies that can’t be undone. In contrast, there is still a chance to repeal the 17th Amendment and abolish the Fed.

Leave a Reply

Your email address will not be published. Required fields are marked *