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Is The Fed TRYING To Force A Surge In Commodity Prices And Input Costs? Diapason Explains Why Hyperinflation Is Blackhawk Ben's End Goal
A Fed paper released in September, which we luckily missed as otherwise it would have led to the collective death through uncontrollable foaming in the mouth of the entire Zero Hedge staff, was "Oil Shocks and the Zero Bound on Nominal Interest Rates", in which author Martin Bodenstein (an econ Ph.D.) argues that oil price shocks (i.e., surges in the price of oil such as the one we are about to experience courtesy of a fresh trillion in liquidity about to be unleashed by the Fed) are... wait for it... beneficial to GDP and stimulative to the interest-rate sensitive parts of the economy. To wit: "In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion.". Yes you read that right. The Fed is stealthily floating the idea that a surge in oil prices will be for the greater good. In essence, the Fed is telegraphing that while it acknowledges that oil is about to jump to over $100, it won't be as bad as those with a functioning brain dare to claim. And, as we show below, it will actually be a very good thing! While we would probably get a massive lethal subdural hemorrhage if told to argue a view so blatantly and stupefyingly demented, insane and, simply said, wrong, as that espoused by Bodenstein, we are glad that Sean Corrigan of Diapason has gone the extra mile to not only expose the Fed charlatans for their voodoo gimmickry in this narrow topic, and brings up an even more critical idea, which is that the Fed "actually welcomes the current surge in the prices of many of the staples of everyday life; that it actually exults in the drain being exerted on family budgets; that it revels in the squeeze on profit margins being suffered by already-struggling small businesses, because it imagines this will serve to lower the reckoning of the ethereal construct of a generalized, future real interest rate and that this alone will serve to shower riches upon all who are presently suffering, in comparison for the present woes."
That nobody has reached this conclusion before is explainable - it is something only the brain of an illogical, demented, perverted genocidal madman's brain can come up with. Which is why we are now convinced the Fed is hoping for not only mild inflation, but an outright surge in prices. And since the Fed is confident that it can stop hyperinflation (as did that other idiot Rudy von Havenstein), the only logical outcome is that real, prevailing hyperinflation is what is imminent as this is precisely what the intermediate goal of Fed policy ultimately is!
From Sean Corrigan's Material Evidence October 28 note.
In a self-immolating exercise in reductio ad absurdum, this superficial reasoning has led the Fed right up against the so-called 'zero-bound" in nominal rates (one which a dedicated inflationist could, in any case, make a great deal less constraining if $1 trillion in excess bank reserves did not accrued positive interest). Ergo, the only way the Doves feel they can deliver more "stimulus" via lower real rates is (a) to force down yields at longer and longer maturities - and rational capital allocation and return on invested income, go hang! - or (b) to push up either the rate of price appreciation itself, or, at the least, expectations thereof. Nominal rates down and/or prices up = real rates down -> spending up is the alpha and omega of their plan.
This last has even been taken to the ludicrous extremes that an FRB discussion paper last month, entitled 'Oil shocks and the Zero Bound, purports to argue that while higher oil prices normally lower output by pushing up inflation, once under conditions of ZIRP, the higher oil price raises inflation expectations, reduces the prospective real interest rate, and therefore stimulates the interest-rate sensitive parts of the economy!!!!
Oh, Brave New World! Here we are supposed to concur in the notion that a man whose job is at risk because his employer can no longer afford the dearer diesel he needs to run the factory, and whose commute to that work has suddenly become that much more expensive, too, will be inspired both by this heightened anxiety for his livelihood, as well as by his shrunken disposable cash flow, to take out a loan - which he would otherwise never have countenanced contracting - in order to buy a newly-built house at his lower real yield!!!!Additionally, in this Bread from Stones scenario, we are supposed to imagine that an erstwhile despairing entrepreneur gets out of bed one morning and cries, "Hallelujah! The cost of coffee is up, cotton prices are surging, copper wire has just become exorbitant - I better go start a business before it's too late!"
Well, yes, perhaps in those particular industries assuming he has the aptitude, the means, and the ability to persuade someone to finance his eureka moment - but in any other line of business? Really?!?
Here we must force ourselves to pass over the objection that oil-driven inflation and lowered output are not necessarily such unfailingly automatic bed-fellows (see the late Boom) with only the brief observation that this confluence generally originates from either the second-order effects of a prolonged, frictional price disco-ordination, or from CB action to rein in a generalized price rise which only its own, previously over-accommodative policy could ever have allowed to occur in the first place (Hint: with an unchanged supply of money, more spent on one item implies less spent on another).
Instead, we return our focus to this Laputan piece of pseudo-scientific mumbo-jumbo for what it reveals about the muddle-headedness which informs both the ineffable Bernanke Fed and its far too numerous counterparts elsewhere.
In confounding cause with effect, in sacrificing the micro to the macro, in falling victim to any number of category errors and logical non sequiturs; in pursuing, with unthinking mathematical rigour, a set of utterly unreasonable premises to the point of an untenable - indeed, a highly damaging-conclusion, we have a prime example of everything that is wrong in mainstream economics and a glaring illumination of why the state interference which this typically seeks to justify has proven so counter-productive to this-or, indeed, to any other recovery of the past 80 years.
Perniciously, Mssrs Bodenstein, Guerrieri, and Gust even argue that the increasing material scarcity of an oil "shock" can be even more effective at dissolving the 'zero-bound'-and so-err-lessening the general material scarcity being suffered in the slump- if the price rise progresses at such a steady pace that people expect it to continue for some fairly protracted period and if the monetary authority now makes it unequivocally clear that it will not respond to this rise in its habitual manner.
In other words, this strongly insinuates that the Bernanke Fed actually welcomes the current surge in the prices of many of the staples of everyday life; that it actually exults in the drain being exerted on family budgets; that it revels in the squeeze on profit margins being suffered by already-struggling small businesses, because it imagines this will serve to lower the reckoning of the ethereal construct of a generalized, future real real interest rate and that this alone will serve to shower riches upon all who are presently suffering, in comparison for the present woes.
Pushing this line of argument up to the hilt, it also leads to the idea that the Fed-having already stretched credulity by consulting the less than disinterested counsel of the primary dealers regarding the size of its next assault on the free market-should also start buying baskets of commodities! Truly, that way madness lies-the madness of Wallace and Warren and Roosevelt's depression-prolonging circus of restrictionist and inflationist cranks.
Never mind that it is not the general, but the specific estimation that his own, uniquely-determined, residual entrepreneurial income (i.e., the one left to him after deducting the costs of, e.g., his now pricier commodity inputs, Mr Bernanke) will exceed his tangible, pecuniary interest costs (not his airy-fairy, abstract, modelled ones) which incentivises the business leader to act, but even under Blackhawk Ben's own, Neo-Keynesian framework, there is something of a paradox at work here.This lies in the fact that, however implicit it may be in the obscurantism of the Beelzebub of Bloomsbury's magnum opus, in an economy locked into partial idleness (and a rather more widespread wastefulness) by the vicissitudes of a market-hindering institutional and political setting, the lubricative effect of a monetary debasement only comes about when that inflation is unanticipated.
Put another way, it is only when people who have been withholding previously saleable supplies of goods and labor from a now inconducive marketplace are tricked into releasing them at unchanged nominal-but lower real-prices that a purposeful dose of inflation can hope to offer any palliative effect. Conversely, if they do recognize what is afoot; if they do not succumb to so-called 'money illusion', then they will simply seek to reprice their services to offset the change and so no discernible impact on output or employment will result.Yet here we have Bernanke and his breathless battalions of banknote bundlers about to embark upon the perilously disruptive process of engaging in a gross manipulation of asset values, interest rate settings, and currency parities by telling people explicitly that prices will both rise and rise more rapidly and for longer, and all with the Fed's unreserved blessing and encouragement!
In other less poetic words, hyperinflation is coming, and Bernanke is welcoming it with open arms.
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LOL! +1
See, this is the fundamental problem with society.
It's people like you - you are an IDIOT.
You do not understand what is meant by the term EFFICIENCY, which is roughly translated as energy in versus energy out.
Why are we in cars, you idiot? It's not because they are MORE EFFICIENT in terms of miles/BTU than walking is! Machine power is in NO WAY more efficient than human power in terms of work done per unit energy. That is the DEFINITION of efficiency, DOLT!
What machines do is do MORE WORK in the same unit time - they offer MORE POWER.
You can VERY EASILY google a comparison of hand mined coal in terms of entropy vis a vis machine coal mining. Then you can compare that to OIL. You will very quickly see a DECLINE in efficiency for each process.
We use machines because they do things we WANT, which is NOT EFFICIENCY, it is because they offer higher POWER RATES.
Pit a guy against a backhoe and you will find FAR MORE ENERGY CONSUMED by the backhoe to dig the ditch than the man. Eat that, moron.
Here's a bit of advice - SHUT UP. As I said in the previous post, everything you think you know is FALSE. You haven't even a clear grasp of what the TERMS mean! Your ignorance is dangerous and misleading.
No, you blithering moron. Efficiency in terms of ECONOMIC OUTPUT. I make 50x more money by driving to work (spending more time in the office) than I would if I took two hours to walk there.
You think humans don't consume energy? How stupid are you? Machines provide leverage on human action. Think about ALL of the energy inputs that go into human labor. It goes a lot deeper than just food energy input, which is high enough in and of itself. There is also shelter, heating and cooling, medicine, transportation to and from the worksites, and the biggest one: RAISING A HUMAN BEING FROM BIRTH. This is INCREDIBLY expensive, with a cost of $100,000 or more, not including college. If labor without machines was more efficient, no-one wuld ever have put the time and energy into developing mechanized labor, and further, no-one ever would have adopted it! So pardon me, for thinking that 100 years of industrialized labor knows a little more than some abrasive asshole on the internet.
So, I would advise that you follow your own advise and SHUT UP, because you obviously haven't thought through ANY of your opinions. If you want evidence of that, remember that your ideas are the exact fucking same as those of the Khmer Rouge, which abstained from use of any mechanized labor, and plunged their nation into decades of ddarkness and terror the likes of which have rarely been seen on the Earth.
You know nothing of economics. Period. Go to mises.org and learn some before you draft a hot-winded response.
The last time I heard this type of thinking it was the year 2000 and I was working for an internet start-up. The "MBAs" would speak at company meetings saying how we needed to spend all our money in an internet "land-grab". We shouldn't guard our cash hord but rather spend it on fruitless ventures and mergers. 2 years later they walked us one by one into the HR department and laid everyone off. It turns out spending money like a drunken sailor didn't bring us the riches we all dreamed of. So sad.
Where did those MBA's get their degrees, you guessed it: Harvard.
If we are not hastening to be slaves, then we are hastening to be tyrants.
See, I was arguing for hyperinflation as a byproduct of Fed incompetence—but I never actually believed they were that incompetent.
I stand corrected: They are even more incompetent than I thought. Than anyone thought.
GL
It feels like we are on the bad end of a person, who is SAT smart, that always wished, if he were in charge he would do this radical thing.
And now he is doing it.
You're GD right—Backstop Benny is like that timid guy who's too shy to talk to a girl, but reckless enough to stick up a liquor store.
GL
IMHO I disagree. He is an arrogant little twit who is so impressed with his mathematical prowess and skills at ass kissing his way up the bureaucratic ladder, that he not only believes that he can know with mathematical precision the macro economy but as well believes his climb up said ladder legitimizes this belief. This is due to a philosophy that says that economics is about utils increasing or decreasing based on the movements of little green peices of paper, rather than a study of human action.
No wonder the chicks that are grown enough to know say that the supposed good boys are just low hanging rotten fruit, like nearly all of the supposed AAA wall paper Robo posts. The shit does carry GL of that there can be little doubt. No wonder bad in a good way sells. In that vein, keep writing.
Cheers
The elites would rather see y'all riding the bus anyway.
Won't bother me. I'm gonna have to spend next year dead for tax purposes anyway.
Wake me for the zombpocalypse.
The French had a suitable answer years ago and think it apropos now!
The French had a suitable answer years ago and think it apropos now!
Yes Virginia; conspiracy theories can some sometimes be factual.
Shinola, Bitchez!
Good thing we avoided that cap n trade stuff.
Of course, TPTB who counted on access to those trillions are pissed off now.
I have been saying this for awhile that people will one day wake up and Bernanke will be brought up on treason for his destruction of our currency. The idea that he is just stupid does not fly.
It's really a shame IMHO that we have so many Bible-quoting Christians here on ZH and comparatively so few Koran quoters. Even though the first and second books of the Koran are the Old and New Testaments, surely the final book, the Almighty's latest and probably final attempt to get people to see the light, has some ardent quoters out there. Surely you're not gonna let all these Christians out-quote you? I mean, c'mon. What would The Prophet Mohammed, blessed be his name, say about the Fed? Let's hear it!
Taoism: "Shit Happens"
Confucianism: "Confucius says 'Shit Happens'"
Bhuddhism: "If Shit Happens, it is not really shit."
Zen Bhuddhism: "What is the sound of Shit Happening?"
Hinduism: "This Shit has Happened before."
Islam: "If Ship Happens, it is the will of Allah."
Protestantism: "Let Shit Happen to someone else."
Catholicism: "If Shit Happens, you deserve it."
Judaism: "Why does Shit always Happen to us?"
Objectivism: "Shit is shit."
Athiestic/Agnostic/Political Correctness: "You can pick up a piece of shit by its clean end."
Rastafarian: "let me smoke my shit in peace"
Damn, didn't see this reply before I made mine. D'oh!
Shit is hashish in french. Interesting
Rastafarianism: "Pass dat shit over here, mon."
Quantum Physics: "Is this shit exhibiting a particle or wave function? Oh shit, we forgot to NOT look...shit!"
This part of the thread made me spew my water...lol
:)
/
Don't know of many other Bible quoters here besides myself. Perhaps because there's not much benefit in quoting the screed of a mass-murdering, child-molesting, homosexual psychopath?
http://www.answering-islam.org/Authors/Wood/pedophile.htm
You talking about God? Because he did all that and more, according to the Bible and many of the early texts associated with it.
Be careful when you call the Holy Ghost a child rapist and adulterer, as blasphemy against the Holy Ghost is a sin that can not be forgiven by any means, apparently.
So maybe you should take your broad brush, and shove it up your ass.
"Be careful when you call the Holy Ghost a child rapist and adulterer"
Ermmm, you may want to learn how to read. I called Mohammed a child rapist and adulterer, which he was and more.....
it's because the fuckin bankers and economists are IDIOTS.
They are WRONG; it's as simple as that. Sure they had to be sharp cookies to get this stupid monetarist shit, but they failed to understand that monetarism has NOTHING to say whatsofkingever about CREDIT demand. I mean, gd, these are bankers, they pimp credit. Our money is credit, that's the long and the short of it.
What the hell is velocity supposedly going to do? BB thinks it will lead to an increase in credit demand? What, to stampede out of paper? THAT's the solution?
Get people borrowing to outrace hyperinflation?
YOU CAN'T PRINT OIL, ben! These dipshits are clueless. But...but, the MODELS all say that they can lower rates to 0% and create more production. They never understood WHY production grew and how little it had to do with their parasitic endeavors.
don't tell me I'm wrong; I have high-IQ acquaintances who have economics backgrounds. They don't get it either!
you make a lot of good points.........the velocity of money arguement was being made by VanHoisinton more than a year ago.
i think you are delineating an important distiction with the missing demand for credit.
as I understand Vof money it implies economic growth for the simple reason that an incentive to do business arises and creates demand for an accelerating exchange of goods and services which in turn by simple logic also creates demand for credit to extend and sustain further growth.
i think you have it right. one of the problems in the current envirionment is that the rule among ruling elites is that you can slide a lot further on bullshit than you can on gravel
so, if it looks like shit and smells like shit.......if it tastes like shit for any so fucking stupid, then it must be shit.
printing money is price illusion much like the mirage of water for the unfortunate dying of thrist while trying to cross a desert of sand.
Debt can also be categorised as untapped future energy in the form of human labour
this sounds like something an autistic would blurt out at a Wal Mart checkstand
Sounds more like a deep seated fetish of yours. Let me guess you work for the government & prey on young autistic boys. Too bad your avatar is the complete polar opposite of your true self which judging by your remarks places you in the 40 something balding small cock no girlfriend weekend felchin model train enthusiast category
I'm not the one who said that people were capital. Where do you come off making me or anybody else, capital? This is the sort of vapid bullshit a bankster might say. My father was right when he cautioned me against arguing with idiots.
I was merely extrapolating on how the the FED, TPTB &/or our debt masters might tackle the notion of the prevailing energy decline & assumed out aloud that humans can or will be exploited through their debts. I for one also detest the notion of labelling any life form as capital. So from that standpoint I'm on your side, autistic or not.
now you're crawfishin
felch that!
Pass me your favourite straw Daddy's boy
you're not very good at this
Self praise is no recommendation
how about you google some more witty sayings
"A Fed paper released in September, which we luckily missed as otherwise it would have led to the collective death through uncontrollable foaming in the mouth of the entire Zero Hedge staff"
TD... I love ya!
All the increases in prices in things I need will encourage me to spend even LESS on things I don't need
EXACTLY. The intelligent consumer is now one that looks at goods in terms of "future" value. I'm not making the purchase of a capital item unless i can withstand inflation and still have "value" when the greenback is kindle.
If you break the FED's theories down to the most basic level they are so absurd that only a zealot or an idiot could believe them.
I don't see any of this changing because far too many are simply unaware of what the FED is and what it does to them. Its not like the media or anyone in power will put the FED in the cross-hairs and say "Its these idiots that make your life worse and here is why". Even when we do shine some light on the FED's idiotic planning the public is quickly distracted by BS like ZIRP or QE. The FED gives the public a sugar high and then we forget why we disliked them.
I used to think I was being cynical when I said "Our leaders won't fix anything because the public has no idea what needs to be fixed" but now I think I am just being realistic.
The American People Can Close the Fed
When Congress borrows money on the credit of the United States, bonds are thus legislated into existence and deposited as credit entries in Federal Reserve banks. United States bonds, bills and notes constitute money as affirmed by the Supreme Court (Legal Tender Cases, 110 U.S. 421), and this money when deposited with the Fed becomes collateral from whence the Treasury may write checks against the credit thus created in its account (12 USC 391). For example, suppose Congress appropriates an expenditure of $1 billion.
To finance the appropriation Congress creates the $1 billion worth of bonds out of thin air and deposits it with the privately owned Federal Reserve System. Upon receiving the bonds, the Fed credits $1 billion to the Treasury's checking account, holding the deposited bonds as collateral. When the United States deposits its bonds with the Federal Reserve System, private credit is extended to the Treasury by the Fed. Under its power to borrow money, Congress is authorized by the Constitution to contract debt, and whenever something is borrowed it must be returned. When Congress spends the contracted private credit, each use of credit is debt which must be returned to the lender or Fed. Since Congress authorizes the expenditure of this private credit, the United States incurs the primary obligation to return the borrowed credit, creating a National Debt which results when credit is not returned.
However, if anyone else accepts this private credit and uses it to purchase goods and services, the user voluntarily incurs the obligation requiring him to make a return of income whereby a portion of the income is collected by the IRS and delivered to the Federal Reserve banksters.
Actually the federal income tax imparts two separate obligations: the obligation to file a return and the obligation to abide by the Internal Revenue Code. The obligation to make a return of income for using private credit is recognized in law as an irrecusable obligation, which according to 'Bouvier's Law Dictionary' (1914 ed.), is "a term used to indicate a certain class of contractual obligations recognized by the law which are imposed upon a person without his consent and without regard to any act of his own."
This is distinguished from a recusable obligation which, according to Bouvier, arises from a voluntary act by which one incurs the obligation imposed by the operation of law. The voluntary use of private credit is the condition precedent which imposes the irrecusable obligation to file a tax return. If private credit is not used or rejected, then the operation of law which imposes the irrecusable obligation lies dormant and cannot apply.
In 'Brushaber v. Union Pacific RR Co.' 240 U.S. 1 (1916) the Supreme Court affirmed that the federal income tax is in the class of indirect taxes, which include duties and excises. The personal income tax arises from a duty -- i.e., charge or fee -- which is voluntarily incurred and subject to the rule of uniformity. A charge is a duty or obligation, binding upon him who enters into it, which may be removed or taken away by a discharge (performance): 'Bouvier', p. 459.
Our federal personal income tax is not really a tax in the ordinary sense of the word but rather a burden or obligation which the taxpayer voluntarily assumes, and the burden of the tax falls upon those who voluntarily use private credit. Simply stated the tax imposed is a charge or fee upon the use of private credit where the amount of private credit used measures the pecuniary obligation.
The personal income tax provision of the Internal Revenue Code is private law rather than public law. "A private law is one which is confined to particular individuals, associations, or corporations": 50 Am.Jur. 12, p.28. In the instant case the revenue code pertains to taxpayers. A private law can be enforced by a court of competent jurisdiction when statutes for its enforcement are enacted: 20 Am.Jur. 33, pgs. 58, 59.
The distinction between public and private acts is not always sharply defined when published statutes are printed in their final form: Case v. Kelly, 133 U.S. 21 (1890). Statutes creating corporations are private acts: 20 Am.Jur. 35, p. 60. In this connection, the Federal Reserve Act is private law. Federal Reserve banks derive their existence and corporate power from the Federal Reserve Act: Armano v. Federal Reserve Bank, 468 F.Supp. 674 (1979).
A private act may be published as a public law when the general public is afforded the opportunity of participating in the operation of the private law. The Internal Revenue Code is an example of private law which does not exclude the voluntary participation of the general public. Had the Internal Revenue Code been written as substantive public law, the code would be repugnant to the Constitution, since no one could be compelled to file a return and thereby become a witness against himself.
Under the fifty titles listed on the preface page of the United States Code, the Internal Revenue Code (26 USC) is listed as having not been enacted as substantive public law, conceding that the Internal Revenue Code is private law. Bouvier declares that private law "relates to private matters which do not concern the public at large."
It is the VOLUNTARY use of private credit which imposes upon the user the quasi contractual or implied obligation to make a return of income. In 'Pollock v. Farmer's Loan & Trust Co.' 158 U.S. 601 (1895) the Supreme Court had declared the income tax of 1894 to be repugnant to the Constitution, holding that taxation of rents, wages and salaries must conform to the rule of apportionment.
However, when this decision was rendered, there was no privately owned central bank issuing private credit and currency but rather public money in the form of legal tender notes and coins of the United States circulated. Public money is the lawful money of the United States which the Constitution authorizes Congress to issue, conferring a property right, whereas the private credit issued by the Fed is neither money nor property, permitting the user an equitable interest but denying Allodial title.
Today, we have two competing monetary systems. The Federal Reserve System with its private credit and currency, and the public money system consisting of legal tender United States notes and coins.
One could use the public money system, paying all bills with coins and United States notes (if the notes can be obtained), or one could voluntarily use the private credit system and thereby incur the obligation to make a return of income. Under 26 USC 7609 the IRS has carte blanche authority to summon and investigate bank records for the purpose of determining tax liabilities or discovering unknown taxpayers: 'United States v. Berg' 636 F.2d 203 (1980).
If an investigation of bank records discloses an excess of $1000 in deposits in a single year, the IRS may accept this as prima facie evidence that the account holder uses private credit and is therefore a person obligated to make a return of income. Anyone who uses private credit -- e.g., bank accounts, credit cards, mortgages, etc. -- voluntarily plugs himself into the system and obligates himself to file. A taxpayer is allowed to claim a $1000 personal deduction when filing his return. The average taxpayer in the course of a year uses United States coins in vending machines, parking meters, small change, etc., and this public money must be deducted when computing the charge for using private credit.
On June 5, 1933, the day of infamy arrived. Congress on that date enacted House Joint Resolution 192, which provided that the people convert or turn in their gold coins in exchange for Federal Reserve notes. Through the operation of law, H.J.R. 192 took us off the gold standard and placed us on the dollar standard where the dollar could be manipulated by private interests for their self-serving benefit. By this single act the people and their wealth were delivered to the banksters. When gold coinage was thus pulled out of circulation, large denomination Federal Reserve notes were issued to fill the void. As a consequence the public money supply in circulation was greatly diminished, and the debt-laden private credit of the Fed gained supremacy.
This action made private individuals who had been previously exempt from federal income taxes now liable for them, since the general public began consuming and using large amounts of private credit. Notice all the case law prior to 1933 which affirms that income is a profit or gain which arises from a government granted privilege. After 1933, however, the case law no longer emphatically declares that income is exclusively corporate profit or that it arises from a privilege. So, what changed? Two years after H.J.R. 192, Congress passed the Social Security Act, which the Supreme Court upheld as a valid act imposing a valid income tax: 'Charles C. Steward Mach. Co. v, Davis' 301 U.S. 548 (1937).
It is no accident that the United States is without a dollar unit coin. In recent years the Eisenhower dollar coin received widespread acceptance, but the Treasury minted them in limited number which encouraged hoarding. This same fate befell the Kennedy half dollars, which circulated as silver sandwiched clads between 1965-1969 and were hoarded for their intrinsic value and not spent. Next came the Susan B. Anthony dollar, an awkward coin which was instantly rejected as planned. The remaining unit is the privately issued Federal Reserve note unit dollar with no viable competitors. Back in 1935 the Fed had persuaded the Treasury to discontinue minting silver dollars because the public preferred them over dollar bills. That the public money system has become awkward, discouraging its use, is no accident. It was planned that way.
A major purpose behind the 16th Amendment was to give Congress authority to enforce private law collections of revenue. Congress had the plenary power to collect income taxes arising from government granted privileges long before the 16th Amendment was deemed ratified, and the amendment was unnecessary, except to give Congress the added power to enforce collections under private law: i.e., income from whatever source.
So, the Fed got its amendment and its private income tax, which is a bankster's dream but a nightmare for everyone else. Through the combined operation of the Fed and H.J.R. 192, the United States pays exorbitant interest whenever it uses its own money deposited with the Fed, and the people pay outrageous income taxes for the privilege of living and working in their own country, robbed of their wealth and separated from their rights, laboring under a tax system written by a cabal of loan shark banksters and rubber stamped by a spineless Congress.
Congress has the power to abolish the Federal Reserve System and thus destroy the private credit system. However, the people have it within their power to strip the Fed of its powers, rescind private credit and get the banksters to pay off the National Debt should Congress fail to act.
The key to all this is 12 USC 411, which declares that Federal Reserve notes shall be redeemed in lawful money at any Federal Reserve bank. Lawful money is defined as all the coins, notes, bills, bonds and securities of the United States: 'Julliard v. Greenman' 110 U.S. 421, 448 (1884); whereas public money is the lawful money declared by Congress as a legal tender for debts (31 USC 5103); 524 F.2d 629 (1974).
Anyone can present Federal Reserve notes to any Federal Reserve bank and demand redemption in public money -- i.e., legal tender United States notes and coins. A Federal Reserve note is a fixed obligation or evidence of indebtedness which pledges redemption (12 USC 411) in public money to the note holder.
The Fed maintains a ready supply of United States notes in hundred dollar denominations for redemption purposes should it be required, and coins are available to satisfy claims for smaller amounts. However, should the general public decide to redeem large amounts of private credit for public money, a financial melt-down within the Fed would quickly occur.
The process works like this. Suppose $1000 in Federal Reserve notes are presented for redemption in public money. To raise $1000 in public money the Fed must surrender U.S. Bonds in that amount to the Treasury in exchange for the public money demanded (assuming that the Fed had no public money on hand). In so doing $1000 of the National Debt would be paid off by the Fed and thus canceled.
Can you imagine the result if large amounts of Federal Reserve notes were redeemed on a regular, ongoing basis? Private credit would be withdrawn from circulation and replaced with public money, and with each turning of the screw the Fed would be obliged to pay off more of the National Debt. Should the Fed refuse to redeem its notes in public money, then the fiction that private credit is used voluntarily would become unsustainable.
If the use of private credit becomes compulsory, then the obligation to make a return of income is voided.
If the Fed is under no obligation to redeem its notes, then no one has an obligation to make a return of income.
It is that simple! Federal Reserve notes are not money and cannot be tendered when money is demanded: 105 So. 305 (1925). Moreover, the Ninth Circuit rejected the argument that a $50 Federal Reserve note be redeemed in gold or silver coin after specie coinage had been rescinded but upheld the right of the note holder to redeem his note in current public money (31 USC 392; rev., 5103): 524 F.2d 629 (1974); 12 USC 411.
It would be advantageous to close out all bank accounts, acquire a home safe, settle all debts in cash with public money and use U.S. postal money orders for remittances. Whenever a check is received, present it to the bank of issue and demand cash in public money. This will place banks in a vulnerable position, forcing them to draw off their assets. Through their insatiable greed, banksters have over extended, making banks quite illiquid.
Should the people suddenly demand public money for their deposits and for checks received, many banks will collapse and be foreclosed by those demanding public money. Banks by their very nature are citadels of usury and sin, and the most patriotic service one could perform is to obligate banksters to redeem private credit.
When the first Federal Reserve note is presented to the Fed for redemption, the process of ousting the private credit system will commence and will not end until the Fed and the bankstering system nurtured by it collapse. Coins comprise less than five percent of the currency, and current law limits the amount of United States notes in circulation to $300 million (31 USC 5115).
The private credit system is exceedingly over extended compared with the supply of public money, and a small minority working in concert can easily collapse the private credit system and oust the Fed by demanding redemption of private credit. If the Fed disappeared tomorrow, income taxes on wages and salaries would vanish with it. Moreover, the States are precluded from taxing United States notes: 4 Wheat. 316.
According to Bouvier, public money is the money which Congress can tax for public purposes mandated by the Constitution. Private credit when collected in revenue can fund programs and be spent for purposes not cognizable by the Constitution.
We have in effect two competing governments: the United States Government and the Federal Government (Corp. US). The first is the government of the people, whereas the Federal Government/Corp US is founded upon private law and funded by private credit.
What we really have is private government. Federal agencies and activities funded by the private credit system include Social Security, bail out loans to banksters via the IMF, bail out loans to Chrysler, loans to students, FDIC, FBI, supporting the U.N., foreign aid, funding undeclared wars, etc., all of which would be unsustainable if funded by taxes raised pursuant to the Constitution.
The personal income tax is not a true tax but rather an obligation or burden which is voluntarily assumed, since revenue is raised through voluntary contributions and can be spent for purposes unknown to the Constitution.
Notice how the IRS declares in its publications that everyone is expected to contribute his fair share. True taxes must be spent for public purposes which the Constitution recognizes. Taxation for the purpose of giving or loaning money to private business enterprises and individuals is illegal: 15 Am.Rep. 39; Cooley, 'Prin. Const. Law', ch. IV.
Revenue derived from the federal income tax goes into a private slush fund raised from voluntary contributions, and Congress is not restricted by the Constitution when spending or disbursing the proceeds from this private fund.
It is incorrect to say that the personal federal income tax is unconstitutional, since the tax code is private law and resides outside the Constitution.
The Internal Revenue Code is non-constitutional because it enforces an obligation which is voluntarily incurred through an act of the individual who binds himself. Fighting the Internal Revenue Code on constitutional grounds is wasted energy.
The way to bring it all down is to attack the Federal Reserve System and its banking cohorts by demanding that private credit be redeemed, or by convincing Congress to abolish the Fed.
Never forget that private credit is funding the destruction of our country.
Thanks for the long post. Was this linked from somewhere? I'd like to bookmark...
Besides coin, is there any US notes still in existence? Does the Fed have access to them if an FRN is presented them for redemption?
this is an outstanding post deserving of its own thread
Looks as if you have none to spare...thread that is!
that's one hell of an inaugural post amigo
outstanding post...but is it true? and will someone here at ZH research this?
You are on to something big here thanks, now please tell us why the fed keeps the penny? anyone.... anyone?
Does seigniorage have anything to do with it?
But there is a dollar coin:
http://www.usmint.gov/mint_programs/golden_dollar_coin/index.cfm?action=...
Sacagawega no less. maybe she's still a guide for american explorers who wish to travel into the wilderness?
here's a thought to chew on : if one were to go to the bank and cash a check and ask for it to be payed in dollar coins, wouldn't this transaction be completely outside the realm of the federal reserve system?
Just to put a face and contact information with the article for those who might feel the need to contact Mr. Bodenstein.
http://www.federalreserve.gov/research/staff/bodensteinmartinr.htm
All the best,
AD
Them: "Why do you invest in precious metals? I mean, you don't even get a return on your investment in dollars."
Me:"That's exactly the point, bag holder."
Ever notice that the longer someone is in a position of power or authority, the more twisted and capricious their actions become? Emotional issues, unresolved childhood conflicts, etc begin to dominate their judgement with predictably perverse consequences. This can be a supervisor on the job or a politician who's been in office too long. Seems to be one of those ironclad facts of life where the exception proves the rule.
lol, describes ~80% of the Director, VP, and C-level execs at the fortune 50 company I USED to work at...
How many around the world will starve due to sudden shortages in basic food commodities? Yes, Ben... genocide.
I've been trying to get people to listen
subsidizing corn to be turned into ethenol=genocide
cap and trade=genocide
induced inflation=genocide
on a planet of limited resources, any attempts at social/financial engineering that drives up the cost of food production means starvation....for someone, somewhere
but since no one in the West can look out their window and see it, they are safely disconnected from the reality that all the policies they're being sold are not only lies, but murder. but hey, its usually a bunch of third worlders anyway, at least for now.
Of course it’s about creating inflation. It’s the only possible way for the Fed and the banking system to diminish the shadow losses on a mountain of bad debt assets they now own. After all, they can only transfer so much of it to the taxpayer. Ever since the financial markets crashed, there has never been a question in my mind that this must be their underlying goal. The only way for the problem to be eliminated is to reduce its real value relative to everything else. The only challenge for the Fed has been to create an inflationary strategy without it looking so obvious.
Good luck to those who just bought 30 yr treasurys.
"There comes a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can't take part, you can't even passively take part; and you've got to put your bodies upon the gears and upon the wheels, upon the leaders, upon all the apparatus, and you've got to make it stop, And you've got to indicate to the people who run it, to the people who own it, that unless you're free, the machine will be prevented from working at all."
Mario Savio.
"it's only when we've lost everything that we are free to do anything."
tyler durden
Obviously the time is coming for far too many in that scenario.
Freedom is another word for nothing left to lose!
I need to see it. I need to see Sharron Angle's cuisinart brain go Kabooom!
Chart analysis of every FX pair versus the dollar on 3 time frames. My hand notes, and rational basis for choices are in the attached pictures. I looked at all the major forex pairs compared to the USD. Results were startling. For all 24 Pairs Short Term Medium Long (over 2 years) Bullish 17 13 10 for USD Bearish 0 7 7 Neutral, or 7 4 6 No Data Then I looked at my off the cuff, Major trading partners, and I included CHF Swiss Franc. Short Term Medium Long (over 2 years) Bullish 7 7 5 for USD Bearish 0 0 2 http://oahutrading.blogspot.com/
Apologies¡ Slip of the finger, I junked you by mistake.
So let's replace the term Banana Republic with Bernanke Republic.
Why did Larry Summers quit his job 3 weeks ago...?
He knew that this big scam going on is about to
get ugly... Hank Paulson and others need to be in jail...
Larry Summers suggested he may return to the life of academia. I'd hire him to talk to me so I could fall asleep.
"EFFICIENCY, which is roughly translated as energy in versus energy out" - Trav777
"Efficiency in terms of ECONOMIC OUTPUT." - Tmosley
IMO
Both commentators argue past one another about how best to measure efficiency. One in terms of energy units (as in physics), the other in terms of money (economics which is presumed to accurately reflect a more nebulous concept of energy - as in the cost of educating a person).
Both commentators are more or less correct within their own parameters.
BUT (here’s the “but”):
The arguments of both commentators share the same conventional premises about human production.
One is that the worth of economic activity is best measured by the efficiency of production (whether measured in energy units or dollars).
Two is that efficiency be narrowly defined to exclude social costs and environmental inventory loss.
Humans have traditionally plundered the planet.
Forests, fisheries, fauna, and minerals have been reduced for the mere cost of their taking.
The historical profit-taking of “capitalism” has been accomplished with the accounting gimmick of being able to ignore social costs and environmental inventory loss. Typically, this has also been accompanied also by privatizing (or monopolizing) access to natural resources.
Corporations are the optimal organization for plundering. The corporate institution is founded to maximize profit by efficiency, monopolization, and narrow liability. And within that framework they have efficiently plundered and produced.
As social organizations operating to maximize profit, corporations have no notion of “excessive” greed, or compunctions how to limit costs. Typically, those who defend and adhere to the corporate goal are rewarded and promoted, and head the organization. In a snowball effect, corporations may utilize the wealth they channel to themselves to bend the larger society to their purposes, and thereby garner even more prerogatives and wealth.
Just as other fauna may be treated as commodities for the efficiency poultry factories and cattle feedlots, so too may humans be treated to reduce costs of production, to keep the corporation viable, profitable.
The important question is no longer, if it ever was, how to make traditional “production” more efficient.
But is instead how to better measure the true costs of production, and the worth of what is produced.
Robobbob (and others) do have a point about economic “efficiency“.
“… no one in the West can look out their window and see it, they are safely disconnected from the reality that all the policies they're being sold are not only lies, but murder”
If your erection lasts for longer than four hours...
Aarghhhh!! So, according to this eclownomist, the desired result of destroying the value of currency is higher GDP. Sure makes saying, "Mission Accomplished!" an easy goal. Does an increase in GDP actually mean anything? Hell no! This illustrates the dependence on and the belief in statistics, rather than common sense. When we're paying some multiple of our current price for a gallon of gas or a loaf of bread, I'll sure be thankful that GDP increased.
Back to the ED commercial...Is the goal really to be standing there with a multi-hour woody but nothing to do with it?
"Is the goal really to be standing there with a multi-hour woody but nothing to do with it?" - just having fun, but....
your comment leaves me to question if you haven't been married with kids for over 7 years and a stressful job and the wife/partner is PMS-ing...
I dunno, sounds like a standard issue Saturday night to me in that life position....
again, just having FUN...laughing at myself as well as I have had a share of those nights...
that's what garages, lawns, gardens and power tools are for...:)
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