The Federal Reserve appears across The Bob Zadek Show as an object of libertarian criticism: a state bank, in one guest’s phrase, rather than an institution of the market. Guests attack it on monetary, historical and political grounds, while the host supplies the framing that the Fed is a recent and artificial invention. The excerpts contain no defense of the institution and no extended account of how it operates; what they offer is a set of charges, a historical anecdote or two, and one sustained argument about who should sit on its board.
The Fed as a state institution
In the 2012 episode on the morality of capitalism, Tom G. Palmer called debasement of the currency through the Federal Reserve a very serious issue, describing the Fed as a state bank and a creation of the state rather than an institution of the market. He placed it inside what he called a system of cronyism — special favors handed out through state control of the monetary system to the cronies and buddies who keep politicians in power, at the expense of everyone else in society. Palmer said he strongly favored the movement to audit the Fed, and went further: he would like to get rid of the Federal Reserve altogether, ending government privileges for this or that bank or financial institution and having real free-market money The Morality of Capitalism (2012).
Bob Zadek added his own framing to Palmer’s remarks, noting that the Fed is a relatively recent invention, which he called the Monster of Jekyll Island, borrowing a book title. He said that for the period of time when America enjoyed extraordinary economic growth leading up until 1913 there was no Fed, and that the country muddled along just fine. In his account the Fed was an artificial institution created in great secrecy and without a lot of public debate, perhaps filling a need that never existed The Morality of Capitalism (2012).
The same charge of cronyism is made from a different direction in the 2013 episode on extra-constitutional power. Bob Zadek described a proposal by Senator Elizabeth Warren to lower the interest rate charged on student loans to about half of one percent, which he identified as the rate the Fed charges to the major banks. In a clip played on the show, Warren said a big bank can get a loan through the Federal Reserve discount window at a rate of about three-quarters of 1%, while a student would pay almost 7% — interest rates, she said, nine times higher than those charged the biggest banks, the same banks that destroyed millions of jobs and nearly broke the economy War – A Rationale For Extra-Constitutional Power? (2013). The excerpt records the proposal and the clip; it does not record any reply to Warren’s argument.
Historical failures attributed to the Fed
The 2014 episode with Burton Abrams, author of The Terrible 10: A Century of Economic Folly, treats the Fed as the author of two of the century’s worst economic mistakes. Abrams said the Great Depression involved the Federal Reserve’s bungling, which exacerbated the recession and made it into a Great Depression. Separately, he described research of his based on listening to the Nixon tapes, in which he found that Richard Nixon very skillfully manipulated Arthur Burns and the Federal Reserve into pursuing a monetary policy that Burns frequently said would be disastrous. Burns, he said, nonetheless caved in to Nixon’s manipulations and started the printing press going, touching off a decade of inflation — the worst in about a hundred years — and requiring three recessions to correct Worst Ten Economic Mistakes of the 20th Century (2014).
Abrams described his method for the book as benefit-cost analysis, weighing what benefits a policy or program produced against its costs to society and seeking the worst cases, where costs exceeded any possible benefits, with some quantitative assessment of the losses to the economy. Bob Zadek drew a general lesson from the list: that these mistakes are repeated, and that governments adopt such policies while ignoring whether they make economic sense, because there is a greater goal on the part of the politicians adopting them Worst Ten Economic Mistakes of the 20th Century (2014).
A third historical thread runs through the 2014 episode with Matt Zwolinski on bleeding heart libertarianism. Discussing nineteenth-century libertarian writing on poverty and credit, Zwolinski said it is fascinating how many of the same issues seen today — the ones people like Ron Paul identify with the Federal Reserve — were being identified more than 150 years ago in a different context Matt Zwolinski on Bleeding Heart Libertarianism (2014). The excerpt does not elaborate on which issues those were.
The Fed, debt and financial collapse
Gary Johnson, in the 2011 episode, tied the Fed to the possibility of fiscal collapse. He said he believed the country was on the verge of a financial collapse because it cannot pay back $14 trillion worth of debt and is not good for the $100 trillion of unfunded entitlement liability going forward. Because the Federal Reserve is buying up our own Treasuries — buying up our own debt — that is eliminating the short-term reality of an actual financial collapse, but at a point that has to stop, and it will stop. Johnson also said he did not support foreign aid while the government borrows 43 cents out of every dollar it spends, and argued that balancing the federal budget would mean $1.6 trillion in cuts rather than $60 billion this year or $200 billion next year, starting with Medicaid, Medicare, Social Security and Defense Straight Talk with Gary Johnson (2011). Bob Zadek praised Johnson as the only public figure with the courage to touch the alleged third rails, including cutting Defense, and said no one could defend the Defense budget today as the perfect number Straight Talk with Gary Johnson (2011).
The 2019 nomination and the question of independence
The 2019 episode, hosted by Charlie Deist in Bob Zadek’s absence, turns from the Fed’s conduct to its composition. Deist noted that President Trump had nominated Stephen Moore to the Federal Reserve Board, and that it looked from the outside like a politically motivated move, since Moore had just written an op-ed in the Wall Street Journal calling the Fed and its recent interest rate hikes a threat to growth. Deist framed the question for the hour: is it the Fed’s job to promote growth, and should it promote growth under a particular president, or focus on price stability, a stable dollar, or some aggregate measure of whether the economy is overheating or artificially depressed? He said many people believed the nomination threatened the Fed’s independence because Moore had been a partisan in favor of Trump’s presidency, and noted that Trump had accused Powell of throwing cold water on his economic recovery, with Moore chiming in that maybe Jerome Powell should step down David Henderson on Trumponomics, Deficits, and Immigration (2019).
David Henderson, Professor Emeritus at the Naval Postgraduate School and a research fellow at the Hoover Institution, said that although he and Moore are friendly, he did not think Moore should be appointed to the Fed, and that Moore simply does not know enough about monetary policy. He contrasted Moore with someone he would support — Larry White at George Mason University, who wants to end the Fed — and with George Selgin, saying he would rather the Fed be reacting to someone who can bring intellectual weight to bear. Henderson called Moore a very nice guy but a very careless guy, and said the job Moore would be good at is Assistant Secretary for Economic Policy, where he would push for capital gains tax cuts; he noted that Moore had laid out the revenue case for reducing the capital gains tax rate in an article in Henderson’s Concise Encyclopedia of Economics David Henderson on Trumponomics, Deficits, and Immigration (2019).
Henderson also described the Fed as very snobby about these things, recounting that he was invited to speak at the annual meetings of the San Francisco Federal Reserve Bank and was told in advance that his panel’s talk would be recorded and put online — and that the Fed made an exception the year he gave it. He attributed the exception to a slide in which he asked: if the government isn’t really good at figuring out the right amount of steel in the economy, why would you think it’s good at figuring out the amount of money in the economy? David Henderson on Trumponomics, Deficits, and Immigration (2019).
Across episodes
The Fed is touched on in the 2011, 2012, 2013, 2014, 2019 and 2023 episodes, but the excerpts show no development of a single argument across them: the earlier treatments are brief asides within shows about other subjects — foreign aid, capitalism, student loans, economic folly, poverty and credit — while the 2019 episode is the only one that makes the Fed its organizing question, and it does so through the narrower lens of a personnel nomination rather than monetary doctrine. The 2023 episode with Arnold Kling lists the Federal Reserve among its topics and describes Kling as having worked at the Fed, but the excerpt breaks off before any substantive discussion of the institution.
What the sources do not cover
The excerpts contain no account of the Fed’s statutory mandate, its structure, its founding legislation or the date of its creation, and no description of how monetary policy is actually conducted. No guest defends the institution or answers the cronyism and debasement charges on the merits. The 2013 excerpt records Elizabeth Warren’s comparison of the discount window rate to student loan rates but no response to it, and the 2023 excerpt stops before Arnold Kling’s argument begins.