The Federal Reserve

Why do you need to go all the way to the financial press in Sri Lanka to find stories by the one politician that question the very foundations of our money system?:

"Few Americans give much thought to the Federal Reserve System or monetary policy in general," Ron Paul wrote in his column this week.

"But even as they strive to earn a living, and hopefully save or invest for the future, Congress and the Federal Reserve Bank are working insidiously against them. Day by day, every dollar you have is being devalued.

"The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration.

"The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation."

Read the rest here.

Pilfered from Lew Rockwell

The Federal Reserve

Eric Parks over at Red State Eclectic writes about the Federal Reserve:

In the fifth plank of the communist Manifesto, Karl“I-can’t-prove-my-own-labor-theory-of-value” Marx calls for the monetary means of causing the ruination of a capitalist society in order to bring about a Communist utopia. The Manifesto calls for “Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly.” Other planks call for institutions that, on the face, seem normal to us today: Graduated income tax, inheritance tax, government schools, etc. They are all communist in origin.

Read the rest here

Crossing the Rubicon

I'm truly speechless:

In the past two weeks, the Federal Reserve, long the guardian of the nation's banks, has redefined its role to also become protector and overseer of Wall Street.

With its March 14 decision to make a special loan to Bear Stearns and a decision two days later to become an emergency lender to all of the major investment firms, the central bank abandoned 75 years of precedent under which it offered direct backing only to traditional banks.

Inside the Fed and out, there is a realization that those moves amounted to crossing the Rubicon, setting the stage for deeper involvement in the little-regulated markets for capital that have come to dominate the financial world.

Leaders of the central bank had no master plan when they took those actions, no long-term strategy for taking on a more assertive role regulating Wall Street. They were focused on the immediate crisis in world financial markets. But they now recognize that a broader role may be the result of the unprecedented intervention and are being forced to consider whether it makes sense to expand the scope of their formal powers over the investment industry.

"This will redefine the Fed's role," said Charles Geisst, a Manhattan College finance professor who wrote a history of Wall Street. "We have to realize that central banking now takes into its orbit everything in the financial system in one way or another. Whether we like it or not, they've recreated the financial universe."

The Fed has made a special lending facility -- essentially a bottomless pit of cash -- available to large investment banks for at least the next six months. Even if that program is allowed to expire this fall, the Fed's actions will have lasting impact, economists and Wall Street veterans said.

The story is more floating of an idea than anything else. But the mere fact that our leaders are considering expanding the role of the Fed should raise alarms and red flags to everyone. The response from everyone to this idea SHOULD be a resounding Ari Gold "Fuck You!" along with calls for Bernanke resign and the Fed to be abolished. That is, unless everyone likes inflation at 20 percent, and government intruding into every aspect of your life, and us living in a banana republic like Zimbabwe.

Looking at the situation, I'm reminded of this quote by one of our founding fathers:

"If the American people ever allow private banks to control issue of their currency, first by inflation, then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson

Anyone wonder where we are at?

Ron Paul Schools Some Douchebag about the Gold Standard

Yeah, I'm pretty sure that the guy who they brought on to counter Doctor Paul was talking out of his ass especially when he started talking about the Great Depression. But don't take my word for it. This is what Milton Friedman had to say about what caused it. From a recent article in Worldnetdaily:

Friedman: Well, we have to distinguish between the recession of 1929, the early stages, and the conversion of that recession into a major catastrophe.

The recession was an ordinary business cycle. We had repeated recessions over hundreds of years, but what converted [this one] into a major depression was bad monetary policy.

The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve System, you had the worst banking crisis in the history of the United States. There's no other example I can think of, of a government measure which produced so clearly the opposite of the results that were intended.

And what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary.

At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.

Click here to see what current Fed Chair Ben Bernanke has to say about Friedman's assessment. I'm sure you'll find it enlightening.

This Guy Knows Something that Bernanke Does Not

How come Jim Rogers and Peter Schiff are the only ones on TV who know what they are talking about when it comes to the Fed and our economy:



The unprecedented actions of Bernanke and company this week ALWAYS comes at the price of the taxpayer. Bailouts, inflationary rate cuts: it's not necessary for a central planner like Bernanke, or Greenspan, to have a job dictating what our dollar should be doing. Get rid of the Federal Reserve.

People should be angry that their wealth is being stolen from them. I know I am.

Did Maria Bartiromo get collagen injections in her lips?

Pajamas Media Blogosphere Reaction to Falling Dollar and Government Bailouts: Outrage and Silence But Mostly Silence

I took a brief survey of the Pajamas Media Blogosphere that I visit on my web travels looking for the reactions to the dollar crisis that has been brewing for awhile and is finally coming to a head. Let's see:

Hotair: There's a nice video of Dana Perino's appearance on the Daily Show, but no mention of the Bear Stearns bailout by the government, or the continued free fall of the dollar. Come on, I would have thought Ed Morrissey would have had something to say about it.

LGF: There's a couple of entries about Obama and his religion, Elliot Spitzer gets goofed on a bit as well. But nothing about the economy or the dollar there either.

Malkin: Michelle See-dubya has a story about Obama, Michelle writes about Dickie Scruggs as well as an entry about the super-secret session in Congress that didn't accomplish anything. Anything about the financial health of the country? Not today, maybe something on Monday.

Ace: We have a winner! An entry on the bailout for Bear Stearns. It's a brief mention because entries about Obama and Spitzer dominate.

One entry out of all of the PJM blogs I visited mentioned the big financial news today. What's wrong with them? They are supposed to be "conservative" but nothing about the bailout? Malkin, to her credit, has talked about the sub prime mortgage crisis that has been developing into a story over the past year, and her take on that has been correct. Suck it up, no bailouts for the people who took crappy loans. Does that apply to the banks and other financial institutions? I don't recall seeing any mention from her about the dollar tanking in the past few months either. Why is that?

Federal Reserve: We should put it on the Green Mile

The reports of the weakening dollar keep coming in:

Antique store owners in lower Manhattan, ticket vendors at India's Taj Mahal and Brazilian business executives heading to China all have one thing in common these days: They don't want U.S. dollars.

The reason people don't want dollars is simple, people don't want what the dollar is offering. The dollar, at one time, used to represent stability, value, and security. Now, based on the unprecedented liquidity injections, interest rate decreases and other market manipulations by Bernanke and company, one can conclude that a full fledged panic is just around the corner because that stability, value, and security is being shredded.

What offends me the most is that peoples life savings are being stolen from them by inflation. The buying power that someone on a fixed income (like the elderly) has is being taken from them through no fault of their own. It was bad enough when 3 percent inflation was deemed "acceptable" (sorry Milton Friedman, you were wrong on this) but now that the inflation rate is pointing towards double digits. Where is the outcry?

Shouldn't I see headlines like: "US Economy Killed by Terrorists and Excessive Government Spending and Inflation, but mostly by Excessive Government Spending and Inflation" over at Ace?

or even a "Dude" by Allahpundit over at Hotair?

What does the White House have to say about the weakening dollar? Oh yeah:



We should be at LEAST as offended about the Federal Reserve as we are about illegals coming into this country.

The Fed Makes it Rain

The more I listen to the chorus of this vid by Fat Joe and Lil Wayne the more I think of what Bernanke and the Fed are doing with our dollar.



Gary North has an analysis of the recent action by the Fed and the other Central Banks:

Here is the FED's official description. The first two paragraphs are clear. They are a warning call.

Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures.

To that end, today the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing specific measures.

This is an international credit crisis. Make no mistake about this. No single central bank can deal with it successfully.

Read the rest here, and remember, if we even introduced legalized competition of gold and silver as legal tender, those who aren't rich and ridiculously handsome like me will have a better shot at preserving their wealth instead of having it eaten away by inflation. F#$@ the Federal Reserve.

Numbers in Asia

Asian Markets 3-4 percent down in early trading and gold and silver hitting record highs as well.

I'm going to repeat: Get rid of the FED, allow gold and silver to be used as currency and get rid of the income tax. No matter what happens over the next few years (and I'm thinking there is going to be a LOT of pain), this can all be laid at the hands of Washington DC and the Federal Reserve. Too much spending, and too much regulation and too much of a war.

This thing is going to end very badly, but recovery can be had relatively quickly if we get back to an asset based currency, if we got rid of the income tax, and if we start severely shrinking the government (the easiest thing to do is start coming home).

Ron Paul Abuses Ben Bernanke, Again

Update: Cavuto follows up with Dr. Paul and his hearing with Bernanke on Fox Business. Pilfered from Liberty Maven:



Dr. Paul is one of the only politicians out there who really understands the way the economy works. Can't say that about any of the other douchebags running for President.

First Montana, Now Liechtenstein?

Awesome:

The government of Liechtenstein on Wednesday detailed plans to strengthen privacy guarantees for the investment vehicles at the center of a tax evasion scandal in Germany, a move that might prevent this tiny Alpine country from exiting a short black-list of international tax havens.

But wait, it gets awesomer:

Liechtenstein maintains that whether Germans or other foreigners with Liechtenstein-based bank accounts or foundations pay their taxes is none of its business. Klaus Tschütscher, the Liechtenstein justice minister, said foundations should not be tarred with a bad reputation just because some Germans might have set them up in order to avoid taxes, saying that was a separate matter.

"The Germans say, "Take this product off the market because some Germans may be using it wrongly," Tschütscher said at a news conference in Vaduz, the capital. "If someone puts their money in a mattress to avoid paying taxes, I can't say, 'You have to stop making mattresses.' "

It's the equivalent of the "Guns don't kill people, people kill people" argument. Good for them, at least some common sense is prevailing in Europe. Now if we can bring some of that back to this country we'll be all right. (Thanks to Montana for keeping hope alive here.)

MaxedOutMama: Ooh, Bankers Lobbying Congress

Maxed Out Momma reporting on the story of, gasp!, Bankers lobbying Congress for a bailout.

It turns out that Bank of America has a nice little plan to solve the mortgage mess, which they have been submitting to your Congress Critters while y'all have been out there working to pay your mortgages. BofA, of course, has the little problem of the CW loans it just bought to deal with, and Congress Critters are relatively cheap in comparison to deeply underwater loans.

I say we let the banks just eat the writedowns and while we're at it, we get rid of the FED as well. But that's just me and a certain OB/GYN who happens to be running for president.

Didn't they used to give away toasters?

Pilfered from Deb Yost over at RedstateEclectic :

My two cents worth: banks are losing billions, and replace it with more fiat money. Citigroup and Merrill Lynch holding lion's share of market risk, while local services are slashed; Yahoo! rebounds from layoffs by buyout notice; banks are losing hundreds of billions of dollars and those in the banking industry tell us only losing $1 billion is considered a good news event!

Want to know if it's time to pull your money out of those CD's that get 5% and put them into gold and bicycles? Well don't go over to the Bank Implode-O-Meter, if your bank or credit union gets mentioned there, it's already too late.

How Bad Is It?

I've had friends in New York City tell me about this, and now it's finally making the news:

In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise.

"We had decided that money is money and we'll take it and just do the exchange whenever we can with our bank," Robert Chu, owner of East Village Wines, told Reuters television.

Everyone repeat after me: The business cycle of massive booms and busts that we have will go away, or be isolated to segments of the economy, when we get rid of the Federal Reserve.

Inflation and Our Money Supply

I've had a couple of people email me about inflation and our money supply and asking me how come a guy as ridiculously handsome and charming as me can be such a kook when it comes to the dollar. (Kerri, this means you)

Well, needless to say, the headlines about the declining dollar keep piling up and things are looking to get much worse in 2008. England is looking to surpass us in standard of living for the first time since the 19th Century. Anyway, here is a good explanation of the money system and why inflation isn't just rising prices (which is what most people think it is). It does get a little X-fileish in explaining how the Federal Reserve Bank system was formed but it's the simplest explanation I've found as well.

The Gathering Storm

An academic predicts that 2008 is going to be a rough year:

Why a devalued US dollar is bad for exports:

First, the bulk of crude oil purchases takes place in dollars; a falling dollar translates into still higher crude oil prices. Second, the U. S. dollar is the major reserve currency of the international monetary system and dollar-paying investments (such as U.S. Treasury bills and bonds) are held in massive amounts by foreign banks and governments. Dollar devaluation makes these investments less attractive and any disinvestment in these areas would sharply drive bond prices down and increase interest rates.

The third reason why dollar devaluation makes recession more likely is that it effectively prevents the Federal Reserve from pushing U.S. interest rates much lower. Any additional Fed easing (inflation) would be seen as a signal of even further future dollar devaluation and even higher dollar prices for oil. Unfortunately, we will not be able to "inflate" our way out of this recession this time. We will simply have to take our lumps and let market forces liquidate the bulk of the malinvestments caused by the unprecedented Greenspan money bubble. This liquidation process will not be pretty but it is necessary to restore a sustainable economic recovery in the years ahead.

Needless to say Professor Armentano is not really optimistic about the economy in 2008. The rest of his column is here.

Ron Paul Linkorama

It looks like the Ron Paul blimp is going to fly. As of this morning, there are $383,000 worth of pledges at www.ronpaulblimp.com , they were looking to raise $350,000.

Dr. Paul interviewed on Fox and Friends this morning (talking about the Bunny Ranch endorsement): http://www.youtube.com/watch?v=noyTu_Wgse0

He also was the subject of a CNN piece this morning as well:
http://www.youtube.com/watch?v=p1iFfAvM6jc

A column by Michael Scheuer, author of the book "Imperial Hubris". His column is called "What the World Could Expect from Dr. Ron Paul's Non-Interventionist America" The title of the column is longer than his book. But the whole piece works to explain our history on non-interventionism and what it would mean if America truly went to war (emphasis mine):

Going to war would once again require a formal, constitutional declaration by the U.S. Congress; the world would see America involved in far fewer wars, and none started by the whim of a single man and the foreign-influenced ideological clique around him. And when war was declared, America’s foes would absorb an application of U.S. military force that would both utterly destroy them and their supporters, and serve as a warning to other miscreants bent on doing America harm.

The whole column is here

The CNN/Youtube Debate for the GOP is on tonight at 8 pm EST and 5 pm out here in Cali. watch the live stream at cnn.com, Michelle Malkin is liveblogging it, as well as Conservative Belle, Red State Eclectic will have live chat. I'll be lurking at those spots as well as at Ron Paul forums, and Ron Paul Radio.

I'm guessing this will be the night where people really start swinging hard at each other. Hopefully there will be tough questions asked about the economy, inflation, the falling dollar, and the volatility of the stock market.

Finally, TNR has an article broaching the subject of what our world would be like without a central bank:

Some of the country's greatest economists, including Nobel Prize winners, have been saying for years that the Federal Reserve has probably caused more problems than it has solved since its creation in 1913. Its role in the last century's boom and bust cycles is a matter of record; it looks as though it played a similar role in the current housing market crisis too.

Could it be possible to eliminate the Fed? Only if a certain OB/GYN gets elected. He's the only candidate talking about it.

The Second Amendment and College Students

The Second Amendment will be a topic of discussion at Thanksgiving dinner tomorrow with the Supreme Court choosing to hear a case that may finally answer the question of whether gun rights are applicable to the individual or are "collective". Then I find out today from Ron Simpson over at the Cluttered Eclectic Mind Blog that there are a group of college students who are looking to be able to carry firearms on campus.

What's happening at colleges nowadays? Ron Paul does a rally at the University of Michigan and 2000 students show up to support him. He gets his biggest cheers when he talks about fiat money and getting rid of the Federal Reserve Bank (the students end up burning dollar bills as a sign of protest). Now these kids are looking to be able to carry on campus? Is knowing and studying the Constitution next?

When I was going to college, the easiest way to get laid was a 12 pack of Coors Silver Bullet and the latest Hootie and the Blowfish CD and my charm ("Why yes, that BodyGlove T shirt would look much better on my floor"). I guess nowadays pillowtalk consists of why the 17th amendment should be rescinded and reverting the election of the Senators back to the state legislatures. Which, now that I think about it, is pretty hot. Hold me.