The question is, who determines how much money there is? And the answer is, in our present system, there are 19 people who sit around a table in Washington once every two weeks who have the power, the unlimited power, to double the quantity of money over the next year or to cut it in half over the next year. Those 19 people are the seven members of the Federal Reserve Board and the 12 presidents of the Federal Reserve Banks or the regional Federal Reserve Banks. Only five of those 12 presidents have a vote on that open-market committee at any time, but all 12 attend every meeting and influence the action that occurs. They have the unquestioned power to do this, and it was the way they exercised that power during the Great Depression that was responsible for the depth of the Depression. It was the way they exercised that power during the 1970s that was responsible for the inflation during the 1970s and is fundamentally responsible for the savings-and-loan debacle.
The Federal Reserve, over the whole of its existence, has done much more harm than good. Yet, I want to give a tribute to Alan Greenspan, the present chairman of the Federal Reserve. As its penance for my sins, I have read the statement of every chairman of the Federal Reserve since its beginning to Congress — when he reports to Congress. And I hate to tell you how many of those I’ve read. Until Alan Greenspan came along, in not a single one of those did any chairman ever say, we may have made a mistake. Every one of those reports, when times are good in prosperity, they say, “We’re responsible for what good times you have.” In bad times, they say, “The times are bad in spite of us; we did everything we could to offset it.” Even in the depth of the Depression in 1932 and ’33, the chairman of the Federal Reserve Board was saying, “You cannot imagine how much worse things would have been if we hadn’t done our duty.” But Alan Greenspan is the first chairman of the Federal Reserve who in public testimony before Congress said, “We may have made a mistake.” And I give him very high marks for that.