The Federal Reserve and Santa Claus [Spoiler Alert]

December 11th, 2011

Spoiler Alert: If there are any six year olds reading this blog, you can skip today’s post. It’s not written for you. Do the right thing and click the “x” on this tab right now. Santa’s watching.

I believed in Santa Claus a little longer than most children do. For some reason, as long as I couldn’t definitely prove that my parents were the ones leaving presents under the Christmas tree, I wasn’t ready to completely reject the possibility that it really was jolly old Saint Nick riding a sleigh pulled by reindeer and magically shrinking himself small enough to slip under the front door or through the key hole and into my house (we didn’t have a chimney).

And my parents were incredibly sneaky. I never once caught them. But when I finally told my dad I didn’t believe in Santa any more, he said, with a sly grin, “Santa doesn’t deliver presents to kids who don’t believe in him,” and I promptly responded, “I believe! I believe!” The matter was settled. I got some awesome Legos that year.

The Federal Reserve, fiat money, and inflationary stimulus policies are no different than the Santa Claus of our childhoods. The only problem is that so many adults still believe in them. Let’s examine just how similar the two really are: Santa magically gives you everything you wished for at no cost to you. Free stuff, created magically out of thin air by elves in the North Pole. Purportedly, so can the Fed. Its magical elves are accountants that create wealth out of thin air at the stroke of a pen.

Santa supposedly keeps a list of naughty and nice children, but no matter how bad you were all year, you still got presents at Christmas. Trust me, as a child I was thoroughly prepared to wake up and find nothing under the tree some years and was shocked to wake up and find that Santa had overlooked some of my recent behavior. The Federal Reserve is the same way– banks that should make the naughty list and get nothing but a nice, orderly bankruptcy still get sweet, low (or no) interest loans from the Fed.

So what’s the real criterion? How do you get presents from Santa or loans from the Fed even though you’ve been bad? Like my dad told me in the illustration above, you’ve got to believe. Financials that believe in the Federal Reserve system get the loans. You’ve got to believe that fiat money is real. You’ve got to lobby for it instead of working to create actual, valuable goods. You’ve got to keep everyone else deluded into thinking the fiat money is real too, or else you can’t use it, hence the stigma against sound money advocates in politics and the media. They’re every bit as annoying as that smart, loudmouthed kid who told the others in his elementary school class that Santa isn’t real and spoiled the whole fantasy for everyone.

Santa Claus is a wise, old, bearded man who knows everything. Ben Bernanke is also a bearded old man who people believe is supernaturally wise; he knows enough to set prices and policies for something as complex as the global credit market. Santa does his work in secret. You never get to actually see his elves produce your gifts. You never get to see him delivering them to the corner of your living room. He sneaks in under cover of night and slips out without a sound. The Fed’s work is also done in secret, out of sight, with no transparency.

Every Christmas Eve, the media does a cute little report for the kids about how weather radar or air traffic control has sighted Santa and his sleigh flying over Canada. I was very impressed by this as a child. It was another reason I held on to my belief in Santa for so long. If it was on the news, it had to be true! They wouldn’t just make this up to make kids happy. This was the news. The news is serious. And they would never, ever lie. LOL. The rest of the time, the news does cute little reports for adults about the economy and various metrics of economic growth. And just like kids on Christmas Eve, the adults buy into it completely. The housing bubble was real! It had to be real! Everyone on the news was saying invest in real estate. If it’s on the news, it’s got to be true! They wouldn’t just make this up to keep people happy.

Santa comes every December 24th. The Federal Reserve System was created on December 23rd. Santa didn’t actually create your presents magically out of thin air. Your parents had to work to pay for them. The Federal Reserve also doesn’t magically create wealth out of thin air. Your parents have to work to pay for its loans and bailouts, and at the rate it’s been printing, your kids are going to have to as well. The only difference between the Federal Reserve and Santa Claus is that most people stop believing in Santa Claus by their teens. Most people never stop believing in the imaginary, fiat money, central banking scheme perpetrated by the Federal Reserve. But just like Santa… it’s not real.

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About the Author: Wes

Wesley Messamore, 24, is an independent journalist and political activist who believes in the Founding Father's vision of a free, enlightened, and moral America. He also blogs at HumbleLibertarian.com