Consider for a moment that the institution which controls the value of our money, and which is empowered to create unlimited quantities of it to gift to whomever it wants, for any amount of time, is under the control of we know not whom. The Fed is a privately owned corporation, with stocks which more or less have to be offered by the institution itself to member banks, and which are non-transferable. As a privately owned corporation, it could be owned in part by any bank or even government in the world, although it seems likely most owners are domestic. It makes its policy decisions in secret, and without any consultation with any member of Congress, any business leader, or anyone outside of its system, which we must assume is run for the benefit of the members whose names–and thus interests–we are not allowed to know.
We can safely assume that Goldman Sachs and JP Morgan Chase and Bank of America are large shareholders. Thus when we read that “The Fed announced X, Y, Z”, we can subtitute “GoldmanSachsJPMorganChaseBankofAmerica” announced today. Or we can substitute “The representative body of the largest banks in America today announced. . .we are going to gift ourselves a lot of money. Or We are making plenty of money, and are going to stay the course. Or, the economy is doing well, a lot of value has been stored up, and we would like a sale. We are therefore going to dump our stock and bond holdings, deflate the currency, then buy things up at fire sale prices. These are their three principle operations.
People need to understand that Quantitative Easing 2, in which something like $700 billion in US Bonds were bought up, masked the decreasing value of our Treasury notes. Given ordinary supply and demand, which are oriented around value seeking and following equilibrium between price and value, the interest rates that the US would be paying on its debt would be rising steadily. Things do not get expensive suddenly: it happens gradually. Homes lose their value over time. Cars lose their value over time.
But this gradual increase, which of course would also imply the increasing risk of default which is plainly present, has not happened. The devaluation of our national stock, the value of the word of the American government, is happening silently, invisibly.
This means that the Fed is at this very moment positioned to radically alter the cost of our debt. If they dumped their holdings, we could see a multiple point spike in the cost of our borrowing within a month or two. It is that bad. And as I have mentioned, there would be no reason we could assume that George Soros himself is not a member of the Federal Reserve.
I will end by refuting a stupid idea one sees here and there, which is that because the “governing body” of the Fed is appointed by Congress that some sort of control exists over the Fed.
The meetings happen in secret. Nobody from Congress can or does attend. Nobody can gainsay their decisions, and most of the time we don’t even know what those decisions are. Do we know who got the $700 billion or whatever in QE2? Of course not.
The American experiment has been a noble one, but we cannot endure this abuse of power indefinitely.
Please use your brain.