U.S. Senator Mike Lee has recently introduced the ‘Abolish Act,’ a bill aiming to dismantle the Federal Reserve system, including the board of governors, and repeal the 1913 Federal Reserve Act. This move comes as Senator Lee criticizes the Federal Reserve, or ‘the Fed,’ for overstepping its mandate and failing to control key economic variables like inflation and public debt. Representative Thomas Massie from Kentucky has also expressed support for this initiative in the House of Representatives.
Senator Lee has accused the Fed of engaging in ‘economic manipulation,’ citing its failure to achieve its mandate and contributing to financial instability. He emphasized the need to safeguard the economy by dismantling a system that enables unchecked government spending and monetization of federal debt, resulting in economic disruption.
The proposal to ‘End the Fed’ echoes sentiments shared in Ron Paul’s book from 2009, with Senator Lee drawing support from allies like Rand Paul, the current Republican senator from Kentucky. The bill also aims to address the impact of the Federal Reserve’s actions during the COVID-19 pandemic, which allegedly led to significant inflation and devaluation of the dollar.
As the Federal Reserve faces increased scrutiny, lawmakers are questioning its use of interest rates to address inflation and unemployment. Despite a slight decline in year-on-year inflation to 3.4% in April 2024, the rate remains above the Fed’s target of 2%. Prices of goods and services have stayed elevated post-pandemic, prompting the central bank to raise interest rates aggressively since 2022.
Under the Abolish Act, Senator Lee proposes the dissolution of the central bank’s board of governors, with only the chairman retained temporarily for transitional purposes. The liquidation of assets would result in proceeds transferred to the Treasury Department, ensuring a smooth transition as part of the proposed legislation.
