Consider the following shocking claims:
Every day the Federal Reserve exists, we work a bit harder, and earn a bit less.
Since the Fed is a key backer of the IMF and World Bank, every day the Federal Reserve exists, we lose a bit of our national sovereignty, move closer to global currency, and move closer to global government.
If the Fed did not exist, our actual purchasing power would be 5 times or more what it is today.
If the Fed did not exist, we would have little or no national debt, and would instead be a nation of savers.
Coming to these conclusions made my jaw drop, but they appear unassailable.
Consider our productivity gains in the last century. Can we not suppose at a bare minimum a 3% annual improvement? That every year, we make 3% more with the same resources and same effort? This seems low, but reasonable. Why don’t we live better? Our grandparents had houses. They had savings. They may not have gone out to eat every night, but they didn’t go hungry. Most of them had a car. They lived much like we do, and owned what they had.
Today, we are a nation of debtors, that by and large own nothing, have no savings, and will be paying the company store all of our lives, as will our children and grandchildren. Our collected debt just for the national government is $12 trillion–some $40,000 per person–and climbing steadily. How is this possible?
It is inflation that took this wealth from us. Now, we are told 3% or so inflation every year is “normal”. It isn’t. It is completely unnecessary. It is a gash below the surface of the water that is slowly sinking the boat of our economy. It is the direct result of the Federal Reserve.
What is inflation? It is an inflation—increase–of the money supply. Whenever more dollars are “printed”, they decrease the value of every other dollar in existence. There is no way for inflation to occur unless more money is created.
How is this done?
Primarily by writing checks that are backed by nothing. You read that right. The Fed can, for example, buy securities in any amount it likes, with no money. It could write a $1 trillion check if it wanted to. It could write a $10 trillion check. There are no limits, although those things would have immediate inflationary consequences, and shine a light on them they have spent nearly a century avoiding. When you read some nation, like Zimbabwe, is enduring massive inflation, what has happened is somebody had a night on the town by writing themselves checks based on nothing.
The Fed can “loan” money in any amount it wants, backed by nothing. As an example, when Bear Stearns first got in trouble, the Fed bought billions of dollars of mortgage backed securities, since nobody else wanted to. They write the check, against which Bear Stearns cashes checks, and thus the money is created out of nothing. In our digital age, obviously physical, cash money is relatively unimportant, but as inflation increases, they do consistently need to print more.
How does this hurt us? Consider the following thought experiment. Let us put on one side of a table a dollar bill, that stands in for all the dollars in existence–in banks, wallets, and coded as 0’s and 1’s in computers around the world. Let us put on the other side a teacup, that stands for all the material goods in existence, the cars, houses, highways, electronics, watches, and actual teacups.
Common sense tells us that if we are making more stuff with the same amount of effort, that the price of that stuff ought to be dropping. Yes, we add bells and whistles to cars, and houses seem to be getting bigger, but not to the tune of the 3% per year I am here positing. What should be happening is that for every dollar, we get—for simplicities sake—TWO teacups. Material wealth should be inflating, while the dollar stays constant. Why is this not happening?
What is happening is a second dollar is being placed next to ours. This dollar was created out of nothing. It did not exist, then through a feat of accounting magic, suddenly it did. The person who got this dollar—a large commercial bank on Wall Street, nine times out of ten—now has purchasing power with it, despite having done nothing to earn it. Our wealth—our actual purchasing power—has thus been diluted. It has gone to build a house on Long Island sound, or lined the pocket of an African dictator, or facilitated the expansion of the Federal Government.
The game is not keeping up with the Consumer Price Index. This is a fool’s game. Prices on everything should be DROPPING. We should be working 10 hours a week and living as well as we are currently. We should have, for that reason, full employment, and no poverty. This is what a purely Capitalistic system, based on real money, would have won for us. There would be no need for our current conflict between the Left and the Right, at least over anti-poverty programs. We are fighting over crumbs.
To be clear, we have done this experiment: in the 19th Century, after Jackson broke the Second Bank of the US, purchasing power increased substantially. What cost a dollar in 1800 could be had for 66 cents in 1900, despite the fact that wages remained the same or increased. It was, by and large, a time of steady economic expansion. This is what happens without a Central Bank. Given the HUGE strides we have made in the 20th and 21st centuries in technology, that effect should have been multiplied many times over, probably exponentially.
This fact is so large it is missed. Economists spend so much of their time trying to use complex formulas that relate employment, inflation, productivity and the like that they miss the forest for the trees. Economists nearly ALWAYS miss what OUGHT to have been, but wasn’t. They fail either to see the big picture, or the long haul, usually both. You can always help the few at the expense of the many, or the present at the cost of the future. That doesn’t take any brainpower. We have, at this very moment, a Nobel Prize winning economist writing regular pieces for the New York Times, in which he argues we can borrow our way into prosperity, and that increasing the costs of our healthcare will lower the costs of our healthcare.
It gets worse: the International Monetary Fund and World Bank do what the Fed does, but internationally. They loan, in effect, money they don’t have to developing nations. Curiously, they don’t loan it to CAPITALISTS, which is what one would expect if increasing wealth were the goal. In the limited experiments which have been tried, microloan programs work exceedingly well to fund economic growth, and larger loans to startups ought to work yet better. This would be the actual path to world economic development.
Instead what happens is they loan money to GOVERNMENTS, in what amount to New Deal sorts of public works projects that generate no sustainable jobs, no new business, and quite often economic impoverishment, since the projects yield debts with no corresponding business profits. It’s the equivalent internationally to what was done to Detroit: you get people addicted to easy money, ruin what businesses already exist, then withdraw most of the money, and make them beg for the rest. It works great for those at the top–the Mugabes, and the Detroit City Halls–but creates great suffering for those it was supposed to help.
The principle architect of the IMF and World Bank—Assistant Secretary of the Treasure Harry Dexter White—was unambiguously an agent of the Soviet empire. We have the wire intercepts. There is no doubt about this. What would his game have been?
Simple: ruin American money through inflationary dilution, support the development of dictatorships in the Third World, discourage actual Capitalism, and set the stage for a global government to be administered by the UN, and controlled by the Soviets. If this sounds ridiculous, consider that that was in fact the stated goal of the Soviets, and that the conference in San Francisco that created the UN was itself chaired by another Soviet agent, Alger Hiss–whose title was Secretary General at the meeting–who in fact went to jail for espionage later. Again, the Venona wire intercepts—in addition to the physical evidence that put him in jail–permit no doubt as to his loyalties.
Now, this was not the goal of the founders of the Federal Reserve. What they wanted was simply to keep financial power on Wall Street, to make money from nothing, and to have some mechanism by which to pass bad loans off to taxpayers, all of which they got. Yet, history is clear that any concentration of power can be turned in any direction, once it is in place. A bad king can replace a good king. Our Wall Street bankers want continued economic growth, since they get a percentage of everything that is done. They have no desire to see the system go down in flames. Yet, if other people push the situation far enough, collapse is inevitable. They have set us up to fall.
Look at our current situation. What is the debt Obama is rapidly amassing doing? Setting the stage for a collapse of our currency, economic disaster, and correspondingly desperate circumstances in which calls for a global currency—to “solve” the problem—will look reasonable. To cede our money is to cede our sovereignty. If you doubt that, look at Europe today, and the trouble the Greeks are causing everyone else. If the Chinese dumped all the dollars they hold tomorrow, the value of our money would disappear almost overnight. That would kill their exports–so they are unlikely to do it–but the fact remains we are in a very, very precarious position, AND IT IS GETTING WORSE DAILY.
Here is what we need to do: the moderate Left (those who don’t oppose profit, per se) and the Right need to put aside our differences, and realize that if we had a real currency–one in which money could not be created at the whim of an unelected elite–all the problems of development would disappear. This problem is not just an American problem, but truly a global problem. Every nation on the planet is affected in a negative way by the status quo.
The Fed hurts everyone but the very rich, here and abroad. Leftists already hate the rich, so they should be supportive of ending it.
Conservatives hate anything that curtails our liberty, and the Fed definitely does that. It answers to no one but the “club” of bankers who run it in their own interest. There are no elections where We the People can apply pressure, and no rules by which Congress can insert its voice. It is literally an agency that is damaging our democracy, about which we can do nothing but get rid of it. It started with a Congressional charter, and can be ended the same way.
As far as details, here is one concrete proposal: http://moderatesunited.blogspot.com/2010/05/abolishing-fed.html
And to be clear, the supposed “financial reform” bill will actually play to the hands of the very banks it purports to regulate, by supporting the process by which we the taxpayers clean up the messes created by bankers who have no incentive not to take large risks. They keep the money when they win, and get us to pay when they lose. This is the worst possible situation for everyone BUT the bankers.
ALL AMERICANS HAVE A VITAL STAKE IN THIS ISSUE, UPON WHICH OUR VERY FUTURE AS A DEMOCRATIC REPUBLIC DEPENDS. Please forward this link to everyone you can think of who even possibly might read it, particularly any friends you may have on the political left.