Data Point Two: Read this article. Salient quote: “In 2009, foreign purchases of U.S. debt amounted to
6 percent of GDP. The current percentage has fallen by over eighty
percent to 0.9 percent of GDP. So who’s picking up the slack? The
Federal Reserve, which is buying a mind-blowing 61 percent of
government debt issued by the Treasury Department. ”The Fed is in effect
subsidizing U.S. government spending and borrowing via expansion of its
balance sheet and massive purchases of Treasury bonds. This keeps
Treasury interest rates abnormally low, camouflaging the true size of
the budget deficit,” wrote Lawrence Goodman, former Treasury official
and current president of the Center for Financial Stability, last March.”
Data Point Three: “Basel III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and scheduled to be introduced from 2013 until 2018.[1][2] The third installment of the Basel Accords (see Basel I, Basel II) was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The OECD estimates that the implementation of Basel III will decrease annual GDP growth by 0.05–0.15%.”
Basel III will be deflationary, as it will require higher reserve ratios.
First, I want to note in passing that the Federal Reserve is owned and controlled by large banks, and has complete secrecy with respect to its actions, and has no legally enforceable fiduciary duty to anyone–although, self evidently, the self interest of member banks will no doubt be paramount.
Secondly, though, it submits to what I might term the “council” of the members of the Bank of International Settlements, even though it is clearly “primus inter pares.” It is a sort of shadow world, like the council on the Avengers, that reports to no government.
To the point: currently, over half of our borrowing is being enabled by the Federal Reserve. As banks have less money to lend, as the economy slows for a variety of reasons, as tax receipts decline even at higher rates, and as spending GROWS, the relative importance of the Fed will skyrocket.
It would likely not be exaggerating to say that TODAY we are at a point where our government quite literally cannot operate without Fed money, and this process is increasing in scope, and will continue to in a virtually exponential fashion for the foreseeable future.
This state of affairs means that ALL politicians will have to kowtow to the Fed, or risk ruin.
Keynesian Fascism is based on this basic process, in which the government gets its hands into everything, such that it is a web from which it is impossible to untangle functional, meaningful economic liberty, or truly free markets.
The Fed is buying the government. It is using inflation–always a wealth transfer, remember–to buy influence at the highest levels.
Now, none of the people involved need money. These companies have asset portfolios that would dwarf the wealth of most nations, and their CEO’s make hundreds of millions over their careers.
It does seem likely that power mongers at the highest levels–aided and abetted by amoral thieving academics like Paul Krugman–have a plan for us to reach a place where we BEG for government.
I will note, too, that since banks create most price inflation. the fact that their reserve ratios are going up will in part mask the inflationary effects of all the new money being put into circulation by the Fed.
Quantiative Easing is really simply a mask for this process, and economic decline is actually a good thing for them, since it masks both inflation, and the actual motivation for the money creation.