If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately. It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people. The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy. But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place? Wouldn't our economy function much more efficiently if we allowed the free market to set interest rates? And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures". So why is the Federal Reserve doing it? Sadly, this is the way it works all over the globe today. In fact, all 187 nations that belong to the IMF have a central bank. But the truth is that there are much better alternatives. We just need to get people educated.
by Tim Iacono - The Mess that Greenspan Made
Published : March 04th, 2013
429 words - Reading time : 1 - 1 minutes
[This article, originally published on March 21st, 2012(preserved here), has seen steady inbound traffic since that time and, as such, it seemed like a good idea to run it again after similar charts appeared at Bloomberg and elsewhere last week when Fed Chief Ben Bernanke commented on how great a record he has on inflation.]
In a lecture yesterday, Federal Reserve Chairman Ben Bernanke made the mistake of talking about inflation during his critique of the gold standard, going so far as to say that when the barbarous relic was used as the foundation of our monetary system “over the medium run, it sometimes caused periods of inflation and deflation” (see this item from earlier in the day for links and other specifics).
That struck me as a particularly odd way of addressing a subject that probably shouldn’t have been addressed at all and that prompted the creation of the chart shown below using data from … the Federal Reserve.
Maybe it’s just me (after all, my background is as an engineer, not as an economist), but, the hard money days prior to the formation of the Federal Reserve sure seem to be a better alternative to what we’ve had over the last hundred years, inflation-wise, especially when looking at the slope of that red curve since the last vestiges of sound money were abandoned back in 1971.
When you think about it, any sensible central bank chief serving decades after the launch of another experiment with pure fiat money really shouldn’t be talking about the gold standard at all. History shows that these pure paper money systems usually run their course after a few decades (sometime much sooner) and, depending upon how many terms Bernanke serves as Fed Chairman, that could occur on his watch.
I mean, what’s the possible upside in calling attention to the gold standard in general and, in particular, to the inflation data under that system as compared to what we’ve got now?
But, if our current Fed Chief feels as though he must talk about how returning to a gold standard would be problematic today (probably as a result of increasing calls from the public as they see rising prices everywhere but in the government’s statistics), he should probably just leave out the part about inflation.When you think about it, any sensible central bank chief serving decades after the launch of another experiment with pure fiat money really shouldn’t be talking about the gold standard at all. History shows that these pure paper money systems usually run their course after a few decades (sometime much sooner) and, depending upon how many terms Bernanke serves as Fed Chairman, that could occur on his watch.
The following summarizes only the recent Federal Reserve ("FED") failed monetary manipulations. Woody Wilson's FED has done nothing but slowly destroy the private economy of the USA since 1913. While the bills that produced 16th Amendment and the Federal Reserve Act were already in process in the legislature, Woody had the good fortune of presiding over the passing and eventual signing of both Acts which have detroyed LIBERTY and the US dollar's value.
While enabling the government to finance never-ending wars around the globe and decreasing the 1913 dollar's value to 3 cents, the FED's fiat dollars have transformed our limited federal government into royalty.
The latest examples of "Government by and for the People" are:
the royally excessive and extravagant GSA (our government expenditure watchdog)
the king's guard, monarchical Secret Service living lavishly on the FED flood of dollars in Colombia, and
the infamous TSA deviants, groping airline passengers for a thrill.
It's hard to believe that in the 21st century, educated people believe the government can produce real wealth by creating money. It's especially ironic that the main preachers of this superstition fancy themselves progressives and are the first to accuse their opponents of being against science. What could be more antiscience than the alchemic proposal to create wealth by having the Federal Reserve make entries in a digital ledger? It's more absurd than alchemy: Alchemists claimed they could turn base metals into gold. Inflationists require only thin air.
Americans have devolved into a society that prefers safety over liberty, honor and strength, who derive their satisfaction and strength from watching the US military destroy other civilizations and then rebuild them as puppets of the US government.
Trading partners are good, Puppets are bad because like children they mostly grow up to rebel against their parents and vehemently support the opposition. Many of these future puppets have no concept of a republic or democracy, and the US is not a school teacher even though after conquering a given future puppet, the US becomes the primary teacher and transformer for the new One World Currency.
Imagine a gang of criminals breaking into your home, stealing your most valuable possessions, and then going on national TV claiming it was for your own good.
How Would You Feel?
My guess is that you would be pretty angry. Yet this is essentially what our central bankers and political leadership are doing right now.
Recently, at a picturesque resort in beautiful Wyoming, Fed chairman Ben Bernanke met with his global counterparts, including Bank of England's Mervyn King, the ECB's Jean-Claude Trichet, and Masaaki Shirakawa of the Bank of Japan.
The financial world was attentively looking for indications of what these men are planning after having exhausted every monetary policy tool at their disposal.
These bankers have collectively printed TRILLIONS of currency units, purchased unprecedented amounts of government debt, given handouts to commercial banks, slashed interest rates to record lows, and taken risky assets onto their ever-expanding balance sheets.
Poorly. Aside from a few outliers, economic data in the developed world is anemic at best. There has been little recovery in the jobs and housing markets, and the debt crises have grown worse.
Look, I'll be the first to tell you that there are GREAT OPPORTUNITIES and GOOD NEWS stories around the world; unfortunately, millions of people are having their lives and livelihoods turned upside down whilst Bernanke and his friends toasted themselves to expensive champagne at a luxury resort.
Politicians, meanwhile, are flying around the world on their government jets, praising themselves in front of voters and trying to convince the taxpayers that stimulus programs are working.
They've spent TRILLIONS of dollars over the last few years with little result. The ultimate consequence is more debt with little benefit to show for it. Despite printing and spending trillions of dollars, the world is still faced with the same financial conditions as when this crisis started: huge government debt, and lack of credit availability in the private sector.
And so... what is their solution now?
Continue cutting interest rates, spending trillions of dollars, and printing trillions more.
Full stop. Something is wrong with this picture.
The first thing that comes to mind is the definition of insanity: "doing the same thing over and over again, but expecting a different result." This is exactly what's happening now.
Then again, how do you cut interest rates that are already at zero? How much more money do you print when you have already printed trillions of it? How much more do you spend when the deficit is already beyond $2 trillion?
At some point, even the most insane individual has to question this logic.
John Adams said, “Without [term limits] every man in power becomes a ravenous beast of prey”. That being said, here are some of the reasons we believe our country needs Term Limits.
Term Limits can help break the cycle of corruption in Congress. Case studies show that the longer an individual stays in office, the more likely they are to stop serving the public and begin serving their own interests.
Term Limits will encourage regular citizens to run for office. Presently, there is a 94% re-election rate in the House and 83% in the Senate. Because of name recognition, and usually the advantage of money, it can be easy to stay in office. Without legitimate competition, what is the incentive for a member of Congress to serve the public? Furthermore, it is almost a lost cause for the average citizen to try to campaign against current members of Congress.
Term Limits will break the power special interest groups have in Congress.
Term Limits will force politicians to think about the impact of their legislation because they will be returning to their communities shortly to live under the laws they enacted.
Term Limits will bring diversity of people and fresh ideas to Congress.
[Editor's Note: If you want to get rich, i.e. advance from a low paying government bureaucrat job on the local or state level, THEN GET ELECTED TO THE US CONGRESS (House or Senate). Once you're elected, it's easy to steal from your campaign contributions or the Congressional budget allocated to your seat and staff. You can go on a government-funded junket with 'lavishly' paid expenses. The list of ways to steal from the government while in office is inexhaustible. There are only a few Congressmen who left Congress just wealthy instead of a multi-millionaire. Of course, there are several who arrived in Congress as multi-millionaires and don't need to steal from the government.]
Below is an excerpt from a very comprehesive work that explains, compares and contrasts tirelessly, with references from the foremost economists of the world -- past, recent and present -- the economic advantages and benefits of commodity based money and the indisputable, inevitable future failure of fiat paper money standards either by economic collapse or hyperinflation.
On the other hand, we have seen that replacing inelastic commodity money with elastic paper money must lead to economic dislocations, to the obstruction of the pricing process, to ongoing decline in money’s purchasing power, and increasingly to economic disintegration.
So how can we explain that practically all economies are operating under paper money standards today? If money users can derive no advantage from the abandonment of commodity money and the switch to paper money, how could the paper standard completely replace commodity money?
It has been shown that a type of paper money was issued in the form of fiduciary media by fractional reserve banks a long time ago. It has also been shown that this issuance was not in response to any additional demand for money but simply a by-product of contentious banking techniques, and that this form of money never replaced commodity money. So how was commodity money replaced with paper money?
The answer is clear and unambiguous on the grounds of both theory and history: Paper money systems are creations of the state. History does not provide a single example of privately issued paper money replacing commodity money simply as the result of the spontaneous and voluntary interaction of private citizens. Fiat money is, has always been, and always will be state money. It therefore deserves special scrutiny. Unlike other elementary social institutions, like private property, market exchange, and commodity money, paper money cannot claim to be the result of voluntary interaction. It was not adopted because its benefits were obvious to the mass of money users who then voluntarily chose to use it. Since it has been introduced by political means and for political purposes, the specific doctrines that support it require close attention. Various reasons are cited today for the alleged advantages of fiat money, but, as we have seen, none of them stands up to critical inspection.
Historically, the reason for why paper money was introduced has – consistently, very straightforwardly, and often by official admission – been this one: to fund state expenditure, predominantly to finance war.
The most famous case of hyperinflation is the one that occurred in Germany during the Weimar Republic, from January 1919 until November 1923. According to Investopedia, "the average price level increased by a factor of 20 billion, doubling every 28 hours."
One would expect gold to fare well during such an extreme circumstance, and it did – in German marks, quite dramatically. In January 1919, one ounce of gold traded for 170 marks; by November 1923, that same ounce was worth 87 trillion marks.
…
The implication of this is sobering: while hyperinflation wiped out most people's savings, turning wealthy citizens into poor ones literally overnight, those who had assets denominated in gold experienced no loss in purchasing power. In fact, their ability to purchase goods and services grew beyond the runaway prices they saw all around them.
One can't help but wonder how the people whose wealth evaporated in Germany during this time felt. In effect, they were robbed by the government – they were on the losing end of a massive transfer of wealth. Of course, there are two sides to the story, as those who held significant amounts of gold and silver were the recipients.
…
Those who today argue that our obscene debt levels, runaway deficit spending, and money-printing schemes are sound strategies and believe they won't lead to out-of-control inflation might want to rethink those beliefs. We've seen this movie before: it doesn't have a happy ending.
The historical record is clear on what happens when countries embark on fiscal and monetary paths today's leading economies are embracing. If gold's recent price performance is anything like the calm before Germany's hyperinflationary storm, this is a time to be accumulating more gold.
Keep in mind that hyperinflation is not a rare event. Since Weimar Germany, there have been 29 additional hyperinflations around the world, including those in Austria, Argentina, Greece, Mexico, Brazil, Taiwan, and Zimbabwe, to name a few. On average, that's one every three years or so.
…
It's no secret that many currencies around the world, including the US dollar, are choosing the path of inflation. If we were to slip into hyperinflation, there will be disastrous consequences for those unprepared. Given that the US dollar is the world's reserve currency, the problems would spread to practically every country on earth. Hyperinflation will shake people's confidence not only in the US dollar, but in the paper currency system as a whole.
