Category Archives: Monetary Policy

09.14.13
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Silver Bear Cafe: The Truth of the Federal Reserve System – The biggest financial crime in the history of the United States

In this short article I will discuss the basic mechanics of the biggest financial crime        in the history of the United States and some elements of how this crime, conducted by the        Federal Reserve System, is cheating all Americans every day out of the wages which they        receive for their labor. A future article will discuss how the savings which Americans are        putting aside for their future are being slowly and steadily stolen by this same group.        But there is first a even more important question to ask : While you have recently seen        the media discuss the financial scandal regarding the Enron corporation why haven’t you        heard one word about what I am about to discuss which in size makes Enron look like a ant        compared to Mount Everest?

From the beginnings of our nation there was a great debate and battle over many years        regarding a basic question of how the nation will function : Who shall issue the money of        the nation? The answer to the question of who shall issue ( make ) the money of the nation        boiled down to 2 possibilities –

  1. The government shall use the sovereign powers granted to it via the Constitution to          issue money.
  2. A private corporation, established via legislation, shall take over the function of          issuing money.

While a fuller understanding of the history of the battles over this issue can be found        at the various forums and websites to which we will refer you to for greater information        the quickest summation of the answer to the problem is that :

  1. Government issue of money is constitutionally, monetarily, and financially the soundest          policy for the prosperity of the nation.
  2. The issuance of the money of the nation by a private corporation leads to the draining          of the resources of the nation to the private corporation which controls the issuance of          money.

The summated result of this action is that the private corporation, unaccountable to        the people of the nation, controls the nation as it controls the flow of money within the        nation. As part of a mountain of evidence that the private corporation controls the nation        I refer you now to the following website : http://www.algaoaktree.com/MoneyMenu.htm

You will be taken to a website which has the best explanation of the money situation  that I know of and it is here where you will learn of the total corruption of the Federal  Reserve System, the private corporation which currently controls the issuance of money  within our nation.

Please take your time and read the many extremely well written articles at this site        completely. After reading the articles on this site you may ask one of the questions which        I did upon learning the truth of our monetary system : Even though the subject of money is        a somewhat technical one, why isn’t the information found on this site more well known to        the citizens of our nation?

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Click below for the full article.

http://www.silverbearcafe.com/private/09.13/criminalfed.html

08.25.13
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Reason.com: Delete the Fed

Who should run the Federal Reserve System when chairman Ben Bernanke’s term expires next year: Vice Chair Janet Yellen or former Obama adviser Lawrence Summers?

Neither.

Who then?

No one.

The fact is, we need the Federal Reserve like we need a hole in the head. Contrary to folklore, the Fed is not needed to stabilize the economy or to prevent unemployment. As the Fed heads into its second century, we ought to realize that its record is terrible. Even if we don’t count the interwar period (which some economists call the new Fed’s practice round), America’s central bank is a flop. Monetary economists George A. Selgin, William D. Lastrapes, and Lawrence H. White wrote in “Has the Fed Been a Failure?”:

Drawing on a wide range of recent empirical research, we find the following: (1) The Fed’s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed’s establishment. (2) While the Fed’s performance has undoubtedly improved since World War II, even its postwar performance has not clearly surpassed that of its undoubtedly flawed predecessor, the National Banking system, before World War I.

The authors support that generalization with details. On inflation: “Far from achieving long-run price stability, [the Fed] has allowed the purchasing power of the U.S. dollar, which was hardly different on the eve of the Fed‘s creation from what it had been at the time of the dollar’s establishment as the official U.S. monetary unit, to fall dramatically” — by 95 percent.

Selgin, Lastrapes, and White also show that the central bank has given us longer recessions and slower recoveries.

But without the Fed, who would set interest rates to guide the economy? The first answer is that government policy and Fed manipulations can create the very recessions that the Fed then tries to reverse. If the politicians and their court economists would get over their hubristic belief that they are stewards of the economy, macroeconomic crises would disappear.

Besides, the Fed cannot set interest rates, not even its narrow federal-funds rate for overnight interbank loans. At most, it targets that rate by buying and selling government securities, but it doesn’t always hit its target. The idea that the Fed can even heavily influence mortgage and other interest rates ignores important facts.

First, the Fed’s operations are small compared to the complex U.S. and world economies. Writes monetary economist Richard Timberlake,

Traditional economics properly teaches that many complex market forces — countless investment and savings decisions not dependent on monetary factors — are essential in determining interest rates. The Fed funds rate that Fed policy can influence through its monopoly over the quantity of money is inconsequential in shaping most short-term and long-term rates in capital markets, unless that moneymaking power subsequently promotes a pervasive price inflation. [Emphasis added.]

Second, the Fed can’t lower rates through monetary inflation beyond the very short run. Why not? Because lenders will respond by raising their rates to avoid being screwed by price inflation –unless the Fed prevents the inflation, as it’s been doing, by effectively borrowing back the new money from the banks at interest.

Moreover, as monetary economist Jeffrey Rogers Hummel points out,

Globalization, with the corresponding relaxation of exchange controls in all major countries, allows [investors] easily to flee to foreign currencies, with the result that changes in central-bank policy are almost immediately priced by exchange rates and interest rates. Add to this the ability to purchase from many governments securities that are indexed to inflation, and it becomes highly unlikely investors will be caught off guard by anything less than sudden, catastrophic hyperinflation (defined as more than 50% per month) — and maybe even not then.

While inflation is not the threat it once was, the Fed is not harmless. “Bernanke has so expanded the Fed’s discretionary actions beyond merely controlling the money stock that it has become a gigantic, financial central planner,” Hummel writes.

No one should have such power.

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Click below for the full article.

http://reason.com/archives/2013/08/25/delete-the-fed

 

08.04.13
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Forbes: Bernanke Tells Congress: I Don’t Really Understand Gold

While Ron Paul is no longer part of  the Congressional committees that grill Ben Bernanke twice a year, the Fed Chairman was forced to answer questions about gold on Thursday again.  Asked about the falling price of gold, which is down nearly 25% this year, Bernanke admitted he doesn’t understand the yellow metal.

“No one really understands gold prices,” Bernanke told the Senate Banking Committee, adding he doesn’t get it either.

Gold prices, which have been under intense pressure since at least last September, were actually up on the day, gaining 0.5% to $1,284.20 an ounce by 12:47 PM in New York.

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Click below for the full article.

http://www.forbes.com/sites/afontevecchia/2013/07/18/bernanke-tells-congress-i-dont-understand-gold/

07.31.13
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OpenMarket.org: Detroit Bankruptcy Focuses Attention on Public Pensions

For people watching it from afar, the bankruptcy of Detroit — the biggest municipal bankruptcy in American history — may have brought a sense of relief in the fact that they live somewhere else. But it’s also brought needed public attention to the state of city finances around the nation. While Detroit is an egregious case of municipal incompetence, corruption, and mismanagement, its problems are not unique.

In fact, one of the drivers of debt that brought the Motor City to its knees is common among states and cities: defined benefit pension plans, which guarantee payments independently of the level of the plan’s funding. This week’s cover story in The Economist brings some needed attention to the problem:

Most public-sector workers can expect a pension linked to their final salary. Only 20% of private-sector workers benefit from such a promise. Companies have almost entirely stopped offering such benefits, because they have proved too expensive. In the public sector, however, the full cost of final-salary pensions has been disguised by iffy accounting.

Pension accounting is complicated. What is the cost today of a promise to pay a benefit in 2020 or 2030? The states have been allowed to discount that future liability at an annual rate of 7.5%-8% on the assumption that they can earn such returns on their investment portfolios. The higher the discount rate, the lower the liability appears to be and the less the states have to contribute upfront.

Even when this dubious approach is used, the Centre for Retirement Research (CRR) at Boston College reckons that states’ pensions are 27% underfunded. That adds up to a shortfall of $1 trillion. What is more, they are paying only about four-fifths of their required annual contribution.

On a more realistic discount rate of 5%, the CRR reckons the shortfall may be $2.7 trillion. A similar calculation by Moody’s, a ratings agency, reckons that schemes are 52% underfunded.

This is a huge problem. But to effectively address it requires knowing how big it actually is. That is easier said than done, given that much of the underfunding is the result of fuzzy math that has resulted in discount rates based on overly optimistic investment return projections.

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Click below for the full article.

http://www.openmarket.org/2013/07/31/detroit-bankruptcy-focuses-attention-on-public-pensions/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Openmarketorg+%28OpenMarket.org%29

07.29.13
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The Daily Beast: Paul Krugman’s Nasty and Inane Attack on ‘Libertarian Populism’

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It’s got to be a pretty good gig to be Paul Krugman. He’s rich enough to bitch to The New Yorker about not being able to afford a home in St. John so, sigh, St. Croix has to do. He’s got tenure at the second-best college in New Jersey, an equally secure gig at the second-best newspaper in New York, and he’s even copped a Nobel Prize (economics, but still). He’s asked for his opinion on pop bands in a way that I’m pretty sure Milton Friedman or John Kenneth Galbraith never experienced (thank god for small favors). “The New Pornographers are probably technically better than Arcade Fire,” he’s solemnly sworn to Playboy. “But what the hell? It’s all good.”

The man also known as Krugtron the Invincible is able to utter such fallacious conventional deep thoughts as “the Great Depression ended largely thanks to a guy named Adolf Hitler” and that the 9/11 attacks were just the ticket to goose the soft early-’00s economy in lower Manhattan (“All of a sudden, we need some new office buildings,” he actually wrote in the Times on September 14, 2001) and still be taken seriously. He’s repeatedly called for a a bogus alien invasion that occasions even more super-stimulative spending than we’ve seen already in this awful 21st century—an idea presumably lifted, unacknowledged, from the Watchmen comic books.

 

Best of all, Krugman has attained that rare level of eminence where he doesn’t even have to engage the very opponents he dismisses as beneath contempt. Like Kurtz in Heart of Darkness and Apocalypse Now, he just needs to wave his hand, mumble vague abjurations, and rest assured his devoted minions will finish his work for him.

 

Krugman’s latest target is “libertarian populism,” which he summarizes thus: “The idea here is that there exists a pool of disaffected working-class white voters who failed to turn out last year but can be mobilized again with the right kind of conservative economic program—and that this remobilization can restore the Republican Party’s electoral fortunes.”

 

This ain’t gonna happen, chuffs Krugman, because … because … because … Rep. Paul Ryan (R-Wis.)! Despite the fact that the former Republican vice-presidential nominee and marathon-time amnesiac is nobody’s idea of a libertarian or a populist, Krugman insists that libertarian populism is doomed precisely because  to “the extent that there was any substance to the Ryan [budget] plan, it mainly involved savage cuts in aid to the poor. And while many nonwhite Americans depend on these safety-net programs, so do many less-well-off whites—the very voters libertarian populism is supposed to reach.”

 

Had Colonel Krugman ventured outside his ideological compound, he might have happened upon the writings of Tim Carney of The Washington Examiner. To the extent that libertarian populism has a policy agenda, it’s mostly thanks to Carney, who likes to write books attacking right- and left-wing crony capitalists. He’s libertarian in that he consistently believes that freer markets function more fairly and more efficiently, and he generally thinks people should be left alone when it comes to economic and personal freedom (he’s not an absolutist on most things). He’s populist in that he is basically obsessed with what he sees as concentrations of power and wealth among elites who rig markets, status, and more against the little guy.

 

Unsurprisingly, Carney’s libertarian-populist policy agenda has precious little to do with starving poor people to death or stoking white working-class resentment against dusky hordes (Carney is pro-immigration). Unless by dusky hordes, you mean Wall Street banksters and well-tanned pols such as Speaker John Boehner.

 

For better or for worse, it’s filled with prescriptions such as “cut or eliminate the payroll tax” (that’s the one that hurts low-wage earners the most); “break up the big banks and/or place stricter safety and soundness rules on them” (hmm, how does that help the Rothschilds again?); and “end corporate welfare” (Carney specifically name-checks the awful Export-Import Bank and subsidies to Big Sugar, which both receive bipartisan congressional support).

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Click below for the full article.

http://www.thedailybeast.com/articles/2013/07/19/paul-krugman-s-nasty-and-inane-attack-on-libertarian-populism.html

07.25.13
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Motley Fool: Bernanke’s QE Magic Trick

In May of this year, Federal Reserve Chairman Ben Bernanke suggested to a congressional panel that the Fed could taper its policy of Quantitative Easing (QE). The obvious happened — the stock market took a quick hit, and interest rates spiked.

So Bernanke pulled a quick change, saying the Federal Reserve will continue an open-ended policy of QE, which artificially suppresses interest rates but immeasurably helps the housing, bond and stock markets. This was a calculated act to test the reaction of the markets.Their negative response validated what Bernanke already knew to be true, that the Fed is trapped in its magic policy of Quantitative Easing, and it’s going to be much harder to make it disappear than anticipated.

Bernanke will be exiting the Federal Reserve stage at the end of his term in January 2014, and returning to academia. I imagine he is glad to do so, leaving the possible tapering of QE to his successor. And, with only months left in his tenure as chairman of the Fed, it’s understandable that he would not want to show his hand and risk rocking the stock market.

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Click below for the full article.

http://beta.fool.com/oglove/2013/07/25/bernankes-qe-magic-trick/41523/?source=eogyholnk0000001

07.17.13
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Marketwatch: Bernanke says tapering not on ‘pre-set’ course

The Federal Reserve’s proposed timetable for tapering its bond-buying program is not set in stone, said Federal Reserve Chairman Ben Bernanke on Wednesday. “I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Bernanke said in remarks prepared for delivery to the House Financial Services Committee. Bernanke repeated his guidance from mid-June that the Fed anticipates it will be appropriate to begin to moderate the pace of purchases “later this year,” and end them “around midyear.” The Fed chairman said the central bank would react to developments. If economic conditions were to improve faster that expected, the pace of asset purchases could be reduced “somewhat more quickly.” But if the outlook were to become relatively less favorable, or if financial conditions were seen as too tight, “the current pace of purchases  could be maintained for longer,” Bernanke said. The chairman’s prepared remarks were fairly dovish. He said the economy remained vulnerable to shocks and there was a risk that a dispute in Congress over the debt ceiling could hamper the recovery.

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Click below for the full article.

http://www.marketwatch.com/story/berrnanke-says-tapering-not-on-pre-set-course-2013-07-17?siteid=yhoof2

05.19.13
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The Motley Fool: How Much GM Truly Stole From American Taxpayers

General Motors  (NYSE: GM )  figures its re-entry into the S&P 500 club will be quite soon, even though the company is still in the early stages of its turnaround. There’s no denying that the U.S. automotive recovery is going well for Detroit. It’s only been a few years since the ugly recession, financial collapse, and ensuing bailouts for two of Detroit’s Big Three, the exception being Ford  (NYSE: F ) . And all three companies have gained market share this year in the U.S. at the expense of Japanese rivals Toyota  (NYSE: TM )  and Honda  (NYSE: HMC) . GM just recorded its 13th consecutive profitable quarter, so the nearly $50 billion that taxpayers like you and I funded to save GM was a huge success. Right?

Wrong.

Most people don’t realize how much GM actually took from taxpayers, and how little it’s given back. If I told you GM has repaid only $6.7 billion out of the $49.5 billion in loans it was given, would you be surprised? If I told you the expected loss to the U.S. Treasury of roughly $12 billion isn’t even a fraction of the real cost, would you believe me? If not, you might be in for a nasty surprise.

Bailout by the numbers The Treasury plans to exit its entire holdings of GM by next April. By the end of this past March, the government had reclaimed just over $30 billion of its investment, leaving a substantial loss. While the government says it didn’t anticipate making a profit from saving the auto industry, the other $419 billion in TARP funds were 94% recovered — making GM a big loser. At today’s GM stock price, the Treasury looks to lose between $11 billion and $12 billion, unless the stock price changes drastically.

Yet that number doesn’t tell the whole story.

Consider that the only true loan GM received from the U.S. government was for $6.7 billion at 7% interest, which it has since repaid. The majority of the nearly $50 billion was in stock purchases by the U.S. Treasury at a price that GM didn’t lose money when recently rebuying shares.

Also consider that GM was “gifted” tax losses from the “Old GM” corporation in amounts of $45 billion. What that really means is the “New GM” can write off current profits up to that amount and not pay taxes on it. That’s a complete joke, in my opinion.

Think of it like this: GM took our tax dollars to save its company, and then after turning 13 quarters of profit, it still isn’t paying a single income-tax dollar. Are you kidding me? News flash: My recent taxes cost me and my wallet a bundle, and I didn’t turn billions in profit.

Too often, people assume that since GM received nearly $50 billion in taxpayer funding, and when people hear that GM has fully repaid its obligations, we assume that means it repaid the said $50 billion. That couldn’t be further from the truth. GM has merely paid its initial pure loan of $6.7 billion with interest, and rebought some of its own shares from the Treasury — often at a cheaper price. Most of us taxpayers don’t even realize Ford paid an effective tax rate of 26% in 2012, compared with 0% for GM — a complete joke to Ford, which didn’t take any of our taxpayer dollars.

Bottom line You’ll see in my disclosure that I own stock in both Ford and GM. But I own stock in both for completely different reasons. I believe Ford has excellent management and is way ahead of GM in operating efficiency and global consolidation of platforms — helping it create net income off lower revenue. It’s also way ahead in creating value and quality in segment trends dominated by fuel efficiency — not to mention that its F-Series has been the best-selling truck for 36 years.

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Click below for the full article.

http://www.fool.com/investing/general/2013/05/19/how-much-gm-truly-stole-from-american-taxpayers.aspx

05.16.13
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The Daily Beast: Is Obama Worse For Press Freedom Than Nixon?

Is Obama Worse Than Nixon?

President Barack H. Obama’s outrageous seizure of the Associated Press’s phone records, allegedly to discover sources of leaks, should surprise no one. Obama has relentlessly pursued leakers ever since he became president. He is fast becoming the worst national security press president ever, and it may not get any better.

It is believed that Obama’s Justice Department sought AP’s records to find the source of a leak that informed an AP story about a failed terrorist attack. What makes this action particularly egregious is that Justice didn’t tell AP what it was doing until two months after it obtained the records. This not only violates Justice Department guidelines for subpoenas of this sort, but also common sense, decency, and the First Amendment.

 

Under the guidelines, subpoenas concerning the press cannot be issued without the express approval of the Attorney General. Further, before a subpoena is issued, the government is honor bound to negotiate with the party to which it is directed.

 

While Attorney General Eric H. Holder, Jr. may have approved the subpoena, he apparently never told AP about it. In the meantime, the Justice Department for two months has had all the details of AP’s newsgathering. AP could bring a lawsuit to declare its First Amendment rights have been violated and seek a return of its records. Gary Pruitt, President of AP, has already made a demand for them.

 

While this legal action by AP is possible, the government has picked the one federal jurisdiction most favorable to it for obtaining the source of leaks, namely, the federal court in the District of Columbia. Its subpoenas were directed to telephone companies located in D.C.

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The Liberty Report Take:  While Neocons, GOP Establishment, and general Conservative folks would all probably say Obama is the worst President not just for Freedom but overall, he probably has a ways to go before reaching the level of his predecessor W. or Richard Nixon.  After all, Nixon was the man who enhanced a Big Brother Government, got us off the gold standard, and started the unconstitutional war on drugs.

Click below for the full article.

http://www.thedailybeast.com/articles/2013/05/14/is-obama-worse-for-press-freedom-than-nixon.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+thedailybeast%2Farticles+%28The+Daily+Beast+-+Latest+Articles%29

 

05.14.13
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Reason.com: Free Markets Are More Important Than Safety Regulations

California and Texas officials have been having an ongoing tit-for-tat over which of the nation’s two mega-states is the better place to live and do business – something that has become a proxy issue for the broader philosophical debate over the proper size and scope of government.

In California, Democrats control every state constitutional office and have an iron grip on the Legislature, where they always propose new regulations and seek new ways to secure additional tax revenues.  In Texas, Republicans are dominant and Gov. Rick Perry has spent time in San Diego and other California cities luring businesses to the Lone Star State, which prides itself on a low tax burden and more manageable level of regulation.

The rhetoric often has gotten silly, especially given that both states are part of a nation that is highly taxed and highly regulated. Most of the differences are around the margins. Nevertheless, Democrats here pretend that businesses aren’t leaving and that the common critiques of $150,000 pension deals for public employees, sky-high tax rates and punitive bureaucracies are a right-wing, Koch-funded plot to turn the Golden State into Bangladesh.

The latest flare-up centers on a Sacramento Bee cartoon in which Perry says “Business is booming in Texas.” It then shows the recent, tragic fertilizer plant explosion in West Texas. Cartoons are rarely subtle, and the message here is that Texas’lower-regulation climate is responsible for a blast that killed 14 people and injured 200. Gov. Perry penned an angry letter to the editor.

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Click below for the full article.

http://reason.com/archives/2013/05/10/free-markets-are-more-important-than-saf