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Guest Post: The Federal Reserve: Our Policy Is To Steal From You

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

The Federal Reserve: Our Policy Is To Steal From You  

Inflation is theft in more ways than one: it also steals our liberty.

We know two things: 1) the official policy of the Federal Reserve is to engineer and maintain inflation and 2) inflation is theft. As I have recounted here many times, in nominal terms, it looks like average wages (earned income) in the U.S. have been rising smartly for decades. But measured in purchasing power, i.e. adjusted for inflation, earned income has declined for most workers, especially in the past three years.

Measured in purchasing power, i.e. the number of gallons of gasoline or loaves of bread an average worker could buy with one hour of labor, American workers have experienced a steady decline in the value of their labor for the past 40 years.

Whenever a pundit scoffs at the idea that the dollar might lose 95% of its value, readers remind me it already has lost 95% of its value in the past century.

The dollar has lost most of its value just in the past 45 years; according to the BLS inflation calculator (which very likely understates real inflation), it takes $7 2011 dollars to buy what $1 bought in 1966, at the top of the post-war Bull market.

Can we buy 7 times more goods and services now? Or can we actually only buy 6 times more goods? If so, then our earnings have actually declined by 15%. Put another way: 15% of our earnings have been effectively stolen via inflation.

The Federal Reserve robs savers every day of millions of dollars, which it then transfers to the "too big to fail" banks by paying interest on those banks' reserves. Savers earn .01% on their cash while banks are paid 2% interest. The difference is what is stolen from savers and funneled to the banks.

Inflation is theft not just of cash but of liberty. Longtime contributor Chad D. explains why:

I've never seen this topic covered (not to say that it hasn't) which is of great interest to me: the nexus of the criminal justice system and the financial system, specifically the inflationary nature of our system. The criminal law books have statutes (and their associated regulations) with provisions regarding the value of property and the relative level of crime with which a person would be charged, if one violated that law. In addition, these statutes spell out the amount of fines and penalties for convictions for those crimes.

The trouble is that these statutes are not indexed for inflation, so what happens is people are charged with a higher level of crime than they otherwise would have in the past, for no other reason than inflation.

As an example, if a person in NY decides to intentionally damage the property of another with a value of $250 or more, he is guilty of a felony. Intentionally damaging the property of another which has a value under $250 is a misdemeanor. Well, that statute was passed over thirty years ago, when $250 was a decent chunk of money. $250 in 1980 is equivalent to $653 today, according to an inflation calculator on the web that I used. Conversely, a product that costs $250 today only cost $86 in 1980.

So if the law were to remain equal over time, the triggering level for the felony level of the statute should have been revised upward to around $650 to reflect the inflationary nature of our system. What we have now is a number of people being charged with felonies when they should only be charged with a misdemeanor if the statutes were indexed for inflation.

Let's run through a scenario. In 1980, I decide that I'm going to intentionally damage my friend's stereo that's worth $200 and I get arrested for doing so. I would be charged with a misdemeanor. Fast forward to 2010, I damage the same stereo, but now, because of inflation, that stereo is now worth $522. Now I get charged with a felony.

My actions have not changed and for the sake of this example, the stereo has not changed, either. Now, we have a lot of people getting felony records and we are having to spend more on prosecuting these offenses (felonies generally cost more than misdemeanor to prosecute for various reasons). One can argue that the stereo has gotten better, so my example is imperfect, but that misses the point. The point is that the statute was promulgated upon the assumptions that a dollar represents an adequate measure to value property and also to set a minimal value upon which a felony prosecution would take place.

If the relative value of the dollar goes down over time due to government mismanagement, how is that statute a fair one? There was no debate in our legislature or discussion in our society to see if we want additional numbers of people prosecuted for felonies, rather than misdemeanors.

We could look at reporting requirements the same way. For example, one has to file reports with the feds, if one has cash transactions of 10K or higher. Again, back when the statute was passed, 10K was a good chunk of money, but now it doesn't buy nearly as much.

Consequently, the number of these reports has skyrocketed, at least in part, due to inflation. How efficient is that? Are we catching more criminals because of it or are we making more criminals out of otherwise decent people? The same goes for fines. Are fines that are promulgated 30 years ago still an effective deterrent? I don't think so, in general. Though, I have noticed that the government is much better at raising fines than raising the levels for felony prosecution.

After writing the above, I decided to do some more research and I found that some NY statutes have been revised upwards (e.g. grand larceny) due to inflation, but not the statute about which I was talking (criminal mischief 3rd). The legislature did raise the minimum felony threshold for grand larceny to $1,000 several year ago, but not criminal mischief, which just highlights the problem in my mind. (Note: Raising the level for felony criminal mischief is currently being considered by the legislature).

Even though some in government are aware of inflation and its nexus with the criminal justice system, nothing (semi-)automatic is put in place to assure a consistent, fair application of the law. In this case, the legislature changed one law, but not another.

What other laws are missing, I wonder? Should the grand larceny level be raised again right now? Why should numerous people be subjected to felony charges, because of legislative/bureacratic inertia? Are other states or the federal government better at taking care of this? What happens when the inflation rate starts to get exceedingly high in the coming years, as we get QE 3,4, 5, etc.? So, it appears some people are looking at this, but not enough, in my opinion. I doubt many law makers and law enforcers really understand how pernicious inflation actually is.

One last example: consider the absurdity of the disparity between the current criminal mischief and larceny laws here in NY. For instance, if I intentionally damage a stereo that is worth $750, I would be charged with a felony. If I steal that same stereo, I would be charged with a misdemeanor. Crazy, right?

Correspondent Chris noted the pernicious way that long-term capital gains enable theft of purchasing power via unrecognized inflation:

The problem with long term capital gains is that it taxes inflated gains, not real value.

Say I invest $100 in stocks and then sell them 15 years later for $200. I made a profit of $100 right? Wrong! During that time inflation (caused by government policies) reduced the value of my money so that the purchasing power of my $200 is about the same as the $100 I invested, meaning I really made no money at all.

If capital gains laws allowed us to inflation adjust the basis then I would have no problem with taxing the gains at the normal rate of the rest of your income.

Thank you, Chad and Chris, for highlighting two of the many perversions created by the Federal Reserve's explicit policy of stealing from the American public via inflation. Too bad theft via inflation isn't a felony.

 

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Thu, 07/21/2011 - 11:43 | 1477304 Clueless Economist
Clueless Economist's picture

THIS sickens me

Thu, 07/21/2011 - 11:48 | 1477316 Ripped Chunk
Ripped Chunk's picture

It should

Thu, 07/21/2011 - 12:10 | 1477370 Quixotic_Not
Quixotic_Not's picture

Another day in cowardly (D) & (R) Free Shit Empire™...wake me up when the DemoRATs and GOPhers find out they aren't really Americans.

Remember that a government big enough to give you everything you want is also big enough to take away everything you have. ~ Davy Crockett

Patriotism means to stand by the country. It does not mean to stand by the president or any other public official ~ Theodore Roosevelt

Paramount among the responsibilities of a free press is the duty to prevent any part of the government from deceiving the people. ~ Hugo Black, Supreme Court Justice

Thu, 07/21/2011 - 12:24 | 1477448 Hearst
Hearst's picture

Don't forget to add this just released bit of info which highlights the above articles point.


Fed’s Dudley Got Waiver to Keep AIG Holdings

"


The Federal Reserve Bank of New York’s William C. Dudley got a waiver in 2008 to keep personal financial holdings of American International Group Inc. after the company received a Fed rescue, a U.S. senator said.

Dudley, who was the New York Fed’s markets-group chief at the time and is now the bank’s president, is the senior New York Fed official identified in a Government Accountability Office report today as receiving the waiver, Senator Bernard Sanders, a Vermont Independent, said today in a statement. Jack Gutt, a New York Fed spokesman, declined to comment."

 

 

http://www.bloomberg.com/news/2011-01-11/sanders-says-bernanke-ducks-request-for-details-on-fed-loans.html

Thu, 07/21/2011 - 12:41 | 1477510 GottaBKiddn
GottaBKiddn's picture

 

"Too bad theft via inflation isn't a felony."

It is a felony, it just isn't prosecuted.

 

 

Thu, 07/21/2011 - 23:25 | 1478753 Quaderratic Probing
Quaderratic Probing's picture

Scared me too so I checked my wallet....Thank God not one single dollar I earned in 1966 was there. I had 7 bucks I earned yesterday and they were not hit too bad. I expect to buy a burger with it today, and will devalue that food to shit by tommorow. The burger store can worry about the 7 bucks value next week.... but I bet they will buy something with it before too long. Burn rate for $100 is 4 days ( time average person holds $100 ). 98% of what they buy is valueless soon after they own it.

Thu, 07/21/2011 - 11:46 | 1477313 Hondo
Hondo's picture

FED policy of stealing savers wealth accumulation is killing the elderly group who had saved and expected to live off the income and principal....eating in to principal a decade before they expected.

Thu, 07/21/2011 - 12:15 | 1477400 Quixotic_Not
Quixotic_Not's picture

Same shit, different century...

Anyone who has the power to make you believe absurdities has the power to make you commit injustices. ~ Voltaire

The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it. ~ Albert Einstein

The government I live under has been my enemy all my active life. When it has not been engaged in silencing me it has been engaged in robbing me. So far as I can recall I have never had any contact with it that was not an outrage on my dignity and an attack on my security. ~ HL Mencken

Thu, 07/21/2011 - 11:56 | 1477319 Azannoth
Azannoth's picture

"The problem with long term capital gains is that it taxes inflated gains, not real value."

The system has all bases covered, be born a slave die a slave

Reminds me of the movie 'War Games' where a computer learns that the only way to win is not to play

http://www.youtube.com/watch?v=NHWjlCaIrQo

Only the subtitle should read 'Winner is: Not You'

Thu, 07/21/2011 - 12:13 | 1477398 HungrySeagull
HungrySeagull's picture

The winner was the Movie theater. We had em stacked 12 across two decks deep in a 1/3 mile long shopping mall for 6 hour waits to standing room only 700 at a time per viewing every two hours in all 10 theaters. Nothing else was being shown for a long time.

That was a crazy time in those days.

 

Now here we are sitting in a world where a Arab can carry nuke and ensure that NYC is a smoking hole in the land.

Thu, 07/21/2011 - 13:03 | 1477647 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, an Arab asset of the CIA you mean.

 

Tuco

Thu, 07/21/2011 - 13:52 | 1477850 weinerdog43
weinerdog43's picture

I didn't realize Tim McVeigh was an arab CIA asset.

Thu, 07/21/2011 - 18:33 | 1478923 chemystical
chemystical's picture

i didnt realize mcveigh had a nuke.

 

p.s. if you think that mcveigh was anything more than a patsy and that big brother made an earnest effort to find the others involved, then i have some swamp land you might want to invest in.  sorta like when bush vowed to find those who made millions shorting the airlines stocks on sept 10 2001.  how's that investigation going?

Thu, 07/21/2011 - 11:49 | 1477320 PlausibleDenial
PlausibleDenial's picture

http://www.gao.gov/new.items/d11696.pdf.  Yes, and they do so preferentially. But, who didn't know that???

Thu, 07/21/2011 - 11:50 | 1477322 Matto
Matto's picture

Q. If productivity increases by 2% per year (as a figure), and official inflation rate is 3%, what is the real inflation rate? 

Answer: 5%

Thu, 07/21/2011 - 11:53 | 1477334 Matto
Matto's picture

(Ignoring the manipulation of official inflation figures themselves)

Thu, 07/21/2011 - 13:02 | 1477639 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Simply put, monetary inflation is the amount of currency produced above and beyond the increase in goods and services.  If monetary inflation is 3% in a given year and goods and services increase 2%, the real monetary inflation rate is 1%.

 

Tuco

Thu, 07/21/2011 - 15:03 | 1478187 Matto
Matto's picture

No that's the measurable inflationary effect. Monetary inflation is the amount of currency produced in addition to the previous amount of currency produced.

Thu, 07/21/2011 - 11:52 | 1477327 Ripped Chunk
Ripped Chunk's picture

"the official policy of the Federal Reserve is to engineer and maintain inflation"

 

Thanks, I know this has been pointed out over and over but I think it needs to be posted daily until people finally get it.

Thu, 07/21/2011 - 12:44 | 1477527 Greenhead
Greenhead's picture

"the official policy of the Federal Reserve is to destroy the purchasing power of your money"

Thu, 07/21/2011 - 12:01 | 1477329 Cognitive Dissonance
Cognitive Dissonance's picture

The dollar has lost most of its value just in the past 45 years; according to the BLS inflation calculator (which very likely understates real inflation), it takes $7 2011 dollars to buy what $1 bought in 1966, at the top of the post-war Bull market.

Very interesting. And if I remember correctly the dollar value of Silver in a 1964 90% Washington Silver Quarter in 1964 was around 6 cents. So if that were to double 7 times, today that would be....

$0.12, then $0.24, then $0.48, then $0.96, then $1.92, then $3.84 and finally $7.68

And at today's Silver spot of $39.83 plus or minus...

$39.83 x .0321507466 x 6.25 x .90 = $7.2031722260

So today's dollar Silver 'value' of that 1964 Silver Washington Quarter is $7.20. Looks like Silver is a very effective hedge against the Fed's currency destruction.

#Winning

http://www.coinflation.com/coins/1932-1964-Silver-Washington-Quarter-Value.html

Thu, 07/21/2011 - 12:23 | 1477446 r101958
r101958's picture

+100 Cog.

Thu, 07/21/2011 - 12:57 | 1477609 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Simply put pre-65 dimes, quarters and halves are worth about 27 times $1 face value.

 

Tuco

Thu, 07/21/2011 - 13:27 | 1477761 pods
pods's picture

Makes me long for the days when you could get them at 10x face.  

pods

Thu, 07/21/2011 - 11:54 | 1477332 wsmith
wsmith's picture

Which CNBC girl would you most like to fuck?

Erin?

Becky?

The hot Chinese Fast Money girl?

Or the English fag?  His name escapes me.

This is very important, people.

Don't take the poll lightly.

Anyway, so long.

And God bless all you Marxist cocksuckers.

http://geraldcelente.proboards.com

Thu, 07/21/2011 - 12:01 | 1477362 InconvenientCou...
InconvenientCounterParty's picture

holding your breath for a really long time is a blast dude! Just power through the light at the end of the tunnel.

God is waiting to bless you with the rewards you so richly deserve.

Thu, 07/21/2011 - 12:12 | 1477405 Clueless Economist
Clueless Economist's picture

Steve Liesman

Thu, 07/21/2011 - 12:59 | 1477615 Ripped Chunk
Ripped Chunk's picture

should be euthanized.

Sorry to finish your sentence for you.

Thu, 07/21/2011 - 12:29 | 1477465 Cpl Hicks
Cpl Hicks's picture

Your parents must have cut off the cable to your basement boycave; Erin has been gone from CNBS for months.

Thu, 07/21/2011 - 13:01 | 1477629 madbomber
madbomber's picture

I cant tell if you're saying you're a communist or that you don't like them.  

 

Thu, 07/21/2011 - 11:53 | 1477333 Stoploss
Stoploss's picture

Felony punishable by hanging.

Thu, 07/21/2011 - 11:54 | 1477336 sitenine
sitenine's picture

In gold we trust.

Thu, 07/21/2011 - 11:56 | 1477337 Sudden Debt
Sudden Debt's picture

Inflation has always been there in history. It's also a mayor factor in pricing and profit models.

Inflation is good, as long as it's contained below economic growth. And that... isn't that good...

So if you have a 5% growth and a 4% inflation, you're not in danger but you have no real growth.

But if you have a -5% growth and a 4% inflation, you lost about 10% of your economy.

AND THAT is what's happening because it's cumulative.

If your drowning in debt, whetever outcome, inflation is good. Especially if you don't care about anything else.

And as the FED is trying to stimulate inflation while the economy is in the shit house, that's indeed stealing because they know all to well that when the economy contracts you need deflation but again, when you're drowning in debt... deflation kills you.

A Rock and a Hard place so to speak.

And bankers punish governments more then citizens do, so it's a easy decision.

 

Thu, 07/21/2011 - 12:54 | 1477589 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

The bankers "are" the governments.

 

Tuco

Thu, 07/21/2011 - 14:44 | 1478074 Matto
Matto's picture

Fail. The notion that inflation is good is an economic fallacy.

A productive economy earns and is rewarded by deflation.

Thu, 07/21/2011 - 18:11 | 1478881 Nels
Nels's picture

 

So if you have a 5% growth and a 4% inflation, you're not in danger but you have no real growth.

Well, if you have a tax rate > 25%, you have a loss on that 5% gain if you sell.  And as inflation continues, more and more folks will be seeing higher effective tax rates.  Inflation has always been there in fiat money, not so much in gold bullion.

Inflation is theft.  If you are drowning in debt and want to steal your way out of it, then inflation is a good.  It is still theft.

Thu, 07/21/2011 - 11:57 | 1477348 gbresnahan
gbresnahan's picture

Now that some of the "too big to fail" banks are no longer at risk, I think it is time to dismantle them and split them up piecemeal.  Too big to fail = Too big to exist.  We can't allow the health of the American/global economy to be at risk if this happens again.

Thu, 07/21/2011 - 11:57 | 1477349 GiantWang
GiantWang's picture

"[I]t takes $7 2011 dollars to buy what $1 bought in 1966, at the top of the post-war Bull market.

Can we buy 7 times more goods and services now? Or can we actually only buy 6 times more goods? If so, then our earnings have actually declined by 15%. Put another way: 15% of our earnings have been effectively stolen via inflation."

What . . . ?  This is wrong.  The question is does $7 today buy exactly what $1 bought in 1966 AND is more work required today to earn $7 than was required to earn $1 in 1966.  Analyzing that information is the only way to conclude that inflation has stolen from workers.  Inflation clearly steals from savers who invest conservatively (and aren't savers conservative by nature anyway?).

Good points on the criminal justice system.

Thu, 07/21/2011 - 12:04 | 1477371 SheepDog-One
SheepDog-One's picture

The dollar has lost 98% of its 'value' since 1913.

Thu, 07/21/2011 - 12:13 | 1477410 GiantWang
GiantWang's picture

Which is fantastic for companies that existed in 1913 and were net debtors at that time.  The loss in value of the dollar is only one component to determining inflation for people who depend on wages rather than savings.

Your statistic is devastating for people and companies that were net savers in 1913, but the only way to determine the effect on workers is to take into consideration increases in wages.  Does an average hour of work today yield the same purchasing power?

Again, inflation is devastating for savers, especially in an environment like this where interest rates clearly lag inflation and real value is being destroyed.

Thu, 07/21/2011 - 12:18 | 1477423 GiantWang
GiantWang's picture

Woops . . . double post.

Thu, 07/21/2011 - 12:52 | 1477573 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Amazing how that is a loss of 1 percentage point per year since the establishment of the privately held Federal Reserve in 1913, which means by the end of 2013 the dollar will be worth its intrinsic value.  Plan accordingly!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Thu, 07/21/2011 - 13:51 | 1477810 Smiddywesson
Smiddywesson's picture

The dollar has been debased by 98%???  Yes but that remaining 2% is the best part of the dollar. 

Think of the dollar as a big Tootsie Pop the Fed has been licking for a century, and Ben's just getting to the chewy center.  All is well.

Thu, 07/21/2011 - 11:58 | 1477351 JJSF
JJSF's picture

I've made it my mission over the past 10 years to just explain one thing to folks in come into contact with whether it's my single-serving-friend on a plane, relatives etc..

And that is explaining in a simplistic way how money is created and to whom the benefits for that creation go..

The following works well and spawns many questions from the person you are talking with..

 

Me : "The federal reserve creates a dollar out of nothing then it is lent to the treasury and we pay interest on it."

Counterparty: You mean every dollar in existence is currently yielding interest? Who get's this interest?

Me: The Federal Reserve.

 

Thu, 07/21/2011 - 12:25 | 1477454 SilverIsKing
SilverIsKing's picture

Money should represent assets, or an IOU on assets, not an IOU on thin air.

Looking at it another way, two people can barter for goods and if one doesn't want what the other offers, he can accept an IOU for that good and use it later or use it in a separate barter transaction.  If someone prints up a bunch of these IOUs, what will the underlying value of each IOU be when they are brought back to the original issuer for redemption?

Thu, 07/21/2011 - 12:53 | 1477583 Amish Hacker
Amish Hacker's picture

It's a little more complicated than that. In theory, the Fed is a non-profit operation. Their earnings from the interest payments on Treasury borrowings are used to cover expenses, salaries and (lavish) perks. Any money beyond that is returned to the Treasury.

Thu, 07/21/2011 - 14:47 | 1478084 Matto
Matto's picture

No, a 6% dividend is taken before the balance is returned.

Thu, 07/21/2011 - 15:09 | 1478223 Amish Hacker
Amish Hacker's picture

Quite right, Matto. I should have made it clear that the 6% dividend to member banks is considered part of the expenses: http://www.mindcontagion.org/fed/fedfacts.html

An outrageous system however you look at it. Meanwhile the public sleeps on.

 

Thu, 07/21/2011 - 15:50 | 1478431 Matto
Matto's picture

!!

Thu, 07/21/2011 - 13:00 | 1477625 Thisson
Thisson's picture

How do you explain the counterargument that the interest is then remitted back to the treasury? 

My understanding is that it is, after certain dividends are paid out to Fed shareholders, and that the amount of those dividends are not public info.  I sure would like to know the details.

Thu, 07/21/2011 - 13:31 | 1477775 pods
pods's picture

That is a surefire comeback.  That is a pittance compared to the value of being able to create debt money out of thin air.

Remember, it is not the FED that creates most of the debt.

It's US!  You and me, every mortgage, credit card purchase, auto loan.

And banks would surely set up a facade for that privilege.  The FED doesn't have to make any money, as the ones who own it do!

pods 

Thu, 07/21/2011 - 12:00 | 1477354 Jim in MN
Jim in MN's picture

Interest rate policy has always been an economic abomination.  It is disgusting and immoral, not to mention highly destructive and counterproductive.

Also, the Japanese nuclear disaster is fading from view, but the information continues to roll in bad--now months after the fact the government is 'finding out' that contamination is very widespread.  Again, regular folks, babies, the elderly being sacrificed to serve the convenience and greed of the elites over there. 0.5 microsieverts per hour equates to 4.38 millisieverts per year; over four times the allowed dosage for the public in Canada, for example. 

High levels of radioactivity found extensively

Japan's science ministry says air above the ground about 150 kilometers from the Fukushima Daiichi nuclear plant is as radioactive as areas 50 kilometers from the source of radioactivity.

The ministry on Wednesday released a map showing radiation levels at locations one meter above the ground in Miyagi Prefecture, north of Fukushima, based on the results of an aerial survey from June 22nd through 30th.

Radioactivity levels are highlighted in different colors.

Some parts of Kurihara City, about 150 kilometers north of the plant are light blue, indicating that the air there was 0.2 to 0.5 microsieverts per hour.

That's similar to areas close to the crippled plant, such as Iwaki City in Fukushima Prefecture, about 50 kilometers from the radioactive source.

Radioactive cesium far above the government standard was detected in rice straw for cattle feed collected by a supplier in Kurihara City.

Thursday, July 21, 2011 07:31 +0900 (JST)

Thu, 07/21/2011 - 12:32 | 1477469 White.Star.Line
White.Star.Line's picture

It is a travesty and a crime that most of the REAL news and objective analysis has to come from places like Jim in MN instead of news agencies who claim to serve the public interest.

Thanks Jim, you have been there from day 1, and we appreciate your insight.

Thu, 07/21/2011 - 13:04 | 1477649 V in PA
V in PA's picture

I don't doubt there is a cover up but links would be nice.

Thu, 07/21/2011 - 13:49 | 1477837 viahj
viahj's picture

enenews.com

 

Thu, 07/21/2011 - 14:16 | 1477960 Jim in MN
Jim in MN's picture

Good point.  Normally I post the links but sometimes it doesn't seem like anyone is all that interested.

All I do nowadays is check the English language main Japanese news sources, the IRIS seismic monitor, and maybe the typhoon forecast.  I rarely even look at the webcams of the plants any more, a couple times a month.

For this particular story, it's NHK News:

http://www3.nhk.or.jp/daily/english/21_06.html

 

Thu, 07/21/2011 - 12:00 | 1477359 rfullem
rfullem's picture

saving is anti-capitalist which is anti-American. dont you know that?  Greenspan rules. Growth? who cares. It has been going down for years. Everybody in the equity market pool.   

Thu, 07/21/2011 - 12:02 | 1477363 SheepDog-One
SheepDog-One's picture

What? The FED is a bunch of criminal bankster crooks? Frankly I'm SHOCKED!

Thu, 07/21/2011 - 12:12 | 1477375 Bob
Bob's picture

Don't worry, the Chained CPI-U is gonna put an end to inflation!

Chocolate rations may go down, but fear not! there will be perfectly serviceable substitutes.  We have lots of equally brown stuff--just load it with artificial sweeteners.  Bullish for shit. 

Gimme my Victory Gin, baby. 

Thu, 07/21/2011 - 12:07 | 1477381 Oh regional Indian
Oh regional Indian's picture

Let us change that to:

The Federal Reserve: We were created to Steal Everything from you.

ORI

http://aadivaahan.wordpress.com/2011/07/16/66th-anniversary-of-trinity-and-thoughts/

Thu, 07/21/2011 - 12:07 | 1477386 gwar5
gwar5's picture

Always worth repeating:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold....  The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Alan Greenspan, 1966 ---“Gold and Economic Freedom” Originally published in “The Objectivist”.

 

Thu, 07/21/2011 - 12:22 | 1477439 SirPlayomic
SirPlayomic's picture

The puppet masters must have some serious dirt on Greenspan; one does not go from writing that to acting out the complete opposite without some serious pressure. The evil genius of it - render someone that dares to speak the truth so eliquently into the thing he himself despises the most. Maybe they have pictures of him with minors or something.

www.greedion.com

Thu, 07/21/2011 - 12:47 | 1477540 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, gold miner minors.

 

Tuco

Thu, 07/21/2011 - 16:25 | 1478569 Smiddywesson
Smiddywesson's picture

No.  Greenspan wrote that when he was young.  He sold out to the establishment when he learned that speaking out is no way to get ahead in this world.  He later threw in with the Clintons and tossed George H.W. Bush under the bus.  Although he is an opportunist villain, that quote is more important to underscore that Greenspan runs with a crowd that is ruthless and powerful enough to turn the person who wrote that piece into a dark lord.  There is no limit to what they will do.

Thu, 07/21/2011 - 13:12 | 1477694 CU1981
CU1981's picture

@Gwar:

 

A Gold Standard is not the answer. Depression will soon follow if it is implemented. Revauling the debt (everyone's debt), higher to that of Gold, would crush all debt holders. = Slavery to the banksta's forever.

Example: Greeces debt being marked higher to THE EURO !

 

A gold standard is not the answer.

Thu, 07/21/2011 - 13:50 | 1477841 Greenhead
Greenhead's picture

A gold standard is the answer.  Debt is the problem.  No doubt some economic activity would slow down, so what?  Activity financed by debt creates the illusion of wealth and creates an obligation on future income.  It in effect accellerates future purchases up to today.  Yes we would get deflation, like in computers, phones, copiers, lasic surgery, etc.  Your money buys more, now that's a problem!

Not everyone is in hock up to their eyeballs.  Besides, if the transition were made, debt could be revalued at the same time.  Use some imagination.

Thu, 07/21/2011 - 14:51 | 1478110 CU1981
CU1981's picture

What we need is a COW standard.

 

It would be the same thing. (They still use it in Africa, even today.)

 

All we need is a MEDIUM of Exchange and UNIT of Account.

 

You see the problem. There isn't enough COWS.

 

Giving the oligarchs a gold standard would only INCREASE their control over the sheeple. my .02

Thu, 07/21/2011 - 20:02 | 1479159 Vlad Tepid
Vlad Tepid's picture

A depression will follow either way...

And cows aren't fungible or divisible (unless you have access to a fridge).  Oh, and gold doesn't eat up all my pasture land while I'm waiting for it to appreciate relative to the things I want to buy.

Thu, 07/21/2011 - 12:13 | 1477409 PaperBugsBurn
PaperBugsBurn's picture



BEAUTIFUL FREAKING HEADLINE!

Thu, 07/21/2011 - 12:16 | 1477425 PaperBugsBurn
PaperBugsBurn's picture



BEAUTIFUL FREAKING HEADLINE!

Thu, 07/21/2011 - 12:16 | 1477426 pods
pods's picture

Now this is an article that looks at the big picture.  

Inflation is the silent thief. The reason why you gasp when the grocery store register shows $100 due, but you walk out with 4 plastic bags of groceries.  Unless you are buying modern "food".

I argue all the time, the last with our CEO, that fiat money is slavery.  I exchange my labor for an amount of money, which represents the amount of goods that I can purchase.  I would not exchange my labor if I could not purchase the goods I needed (and a few that I wanted, like that cold black SIG P226 E2).  The trouble is, my labor is not indexed to inflation.  I work the same (harder actually), but my labor buys less and less.  Of course raises never keep up with inflation, and that is by design.

Cant wait for after this whole thing collapses, for the next time someone starts to talk the benefits of an elastic currency, that is what the Sako is for.

pods

Thu, 07/21/2011 - 12:16 | 1477427 Developers
Developers's picture

What sickens me even more is that when trying to explain the wrong-doing of the Fed to a few of my co-workers, they think I'm the crackpot.  These are also the same people that think I'm a loon for purchasing PMs.

 

Maybe they don't want to know the truth...ignorance is bliss, right?!? 

Thu, 07/21/2011 - 12:39 | 1477498 Federal Reserf
Federal Reserf's picture

If Lady Gaga started singing lyrics about how the gubbmint and Fed are ripping them off...they might respond due to her far greater credibility amongst the masses that that off Ron Paul or the fellows at the Mises Institute.

 

Keep stacking.  I might have to take physical delivery of more lead to keep the Gaga/American Idol fans out of my house when the reality of fiat smacks them upside the head.

Thu, 07/21/2011 - 13:00 | 1477620 Ripped Chunk
Ripped Chunk's picture

Find a new job

Thu, 07/21/2011 - 13:40 | 1477804 Developers
Developers's picture

No shit! I'm working on it!!

Thu, 07/21/2011 - 16:36 | 1478610 Smiddywesson
Smiddywesson's picture

What sickens me even more is that when trying to explain the wrong-doing of the Fed to a few of my co-workers, they think I'm the crackpot.  These are also the same people that think I'm a loon for purchasing PMs.

Too funny.  Your revenge is to use your status as the only gold authority they know against them. 

When gold is around $3000, and inflation is out of control, they will panic and come to you for advice.  Tell them gold is about to crash and they missed the bus.  Think of how much fun it will be to see them around the office when gold proceeds to reach $5k, $10k, $60k, whatever price the banksters need to dig them out and own the world.

If they get in your face, ask them their advice about who is going to win American Idol, because you are considering taping it in your new teatre room. 

Revenge is a dish best served cold.

Thu, 07/21/2011 - 12:21 | 1477437 Djirk
Djirk's picture

Deflation is a dirty word, although it makes people relatively richer. Of course the banks make money, the FED is the biggest bank so more money more money more money

 

Great article, any chart porn I can share with my non financial friends...you all should get some of those too

Thu, 07/21/2011 - 15:00 | 1478172 Matto
Matto's picture

Deflation is the reward of efficiency. Inflation is the theft of that.

Thu, 07/21/2011 - 12:27 | 1477460 V in PA
V in PA's picture

Could someone explain why the price of a loaf of bread today is not the same, or cheaper (better manufacturing techniques) than a loaf of bread from 1900, without using the FED/Inflation in the answer?

Thu, 07/21/2011 - 12:42 | 1477516 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Inflation "is" the main culprit but bread used to be made locally and sold locally.  Now it is distributed throughout the country entailing distribution and other costs and let's not forget the tax element in this scenario.  Good question though.

 

Tuco

Thu, 07/21/2011 - 13:59 | 1477881 V in PA
V in PA's picture

Lets say a widget cost $1 in 1800. By 1900 it would have cost $2.04. An increase of roughly 100%. Now that $2.04 widget from 1900 would cost $42.80 in 2000. Roughly a 2100% increase.

Enough to make one sick.

http://www.westegg.com/inflation/

Thu, 07/21/2011 - 14:59 | 1478165 Matto
Matto's picture

Sorry there is only one answer. Inflation (both fed and fractional reserve kind).

Deflation is a society's reward for efficiency. 2% productivity increase and 3% CPI = 5% inflation

Thu, 07/21/2011 - 12:30 | 1477468 TideFighter
TideFighter's picture

I'm seriously tired of the quote stuffing. One or two contracts going off while the big quotes evaporate. I know this is nothing new, just venting. The golden beach ball should pop to the surface very soon. 

Thu, 07/21/2011 - 12:35 | 1477485 Shameful
Shameful's picture

Glad the tax situation is brought up.  Not only do we lose purchasing power but we get pushed into higher tax brackets so Uncle Sugar ends up with even more of our labor.  Dad told me a few years back "If you would have told me as a kid that I'd be making what I make now, I would have thought I would be driving a porsche...not a 20 year old GM truck"

Thu, 07/21/2011 - 12:36 | 1477489 White.Star.Line
White.Star.Line's picture

While the FED claims that managing currency and inflation rates are their primary mandate, in the back room they are planning the takeover of nations.

Thu, 07/21/2011 - 12:36 | 1477491 V in PA
V in PA's picture

Pretty cool inflation calculator that starts in the year 1913.

Same year the FED was created. Mmmmm!?!

http://www.coinnews.net/tools/cpi-inflation-calculator/

Thu, 07/21/2011 - 12:36 | 1477493 MrBinkeyWhat
MrBinkeyWhat's picture

Move on...Nothing to see here. /sarc

Thu, 07/21/2011 - 12:40 | 1477506 Pain Train
Pain Train's picture

The part about the dollar amount of crimes not being adjusted is incorrect. Just this year, for example, California adjusted the dollar amout at which a petty theft (misdemeanor) becomes a grand theft (felony) from $400 to $950.

Thu, 07/21/2011 - 12:43 | 1477521 V in PA
V in PA's picture

But last year the theft of $401 would have been a felony. Are you sure you read AND comprehended the article?

Thu, 07/21/2011 - 12:52 | 1477577 Pain Train
Pain Train's picture

re-read the article, Mr. Comprehender. Allow me to quote: "What we have now is a number of people being charged with felonies when they should only be charged with a misdemeanor if the statutes were indexed for inflation."

 

Why is this incorrect? Last year, if you stole something worth $500, it was a felony. THIS YEAR, after the adjustment for inflation, it's only a misdemeanor.

Get it????

 

Thu, 07/21/2011 - 13:16 | 1477679 V in PA
V in PA's picture

I believe the point being made was that the levels of money written in the law should be tied to inflation EVERY year, not just when the legislature decides to do something about it.

1980 - $500

1981 - $550

1982 - $585

1983 - $605 etc...

 

From article "So if the law were to remain equal over time, the triggering level for the felony level of the statute should have been revised upward..."

 

Your example of $400 to $950 implies an inflation rate of 237% year over year

Thu, 07/21/2011 - 13:18 | 1477732 Pain Train
Pain Train's picture

Riiiight. So in a particular year down the road, a felony is $1,000. Then, with 3% inflation, it should be adjusted to $1,030 the next year. The $30 per year is CRUCIAL to fairness. So let's have the state legislature wast untold amounts of time voting/passing that 3% adjustment on every property crime every year rather than a substantial increase every five years or so. Nice waste of taxpayer money.

 

Before you call someone out, know what the hell you are talking about.

Thu, 07/21/2011 - 13:22 | 1477746 V in PA
V in PA's picture

If it is written into the law in the first place, the job is finished. No need to review the law again.

Thu, 07/21/2011 - 13:40 | 1477808 Pain Train
Pain Train's picture

You're one of those guys that can't admit when you're being retarded. Bad trait.

 

Per your suggestion, now we can have cops and prosecutors calculating inflation rates as applied to various crimes and defense attorneys arguing over fractions of dollars. Not to mention the fact that inflation stats for the prior year are never available on January 1.

 

Good idea. "Written into the law." Much better than an adjustment every few years.

Thu, 07/21/2011 - 13:50 | 1477840 V in PA
V in PA's picture

Your right. It's way better to have our representatives pass half-assed laws that need to be revisited, than actually sit down and get it right the first time. God forbid they put some thought into it. How else would they (the police state) stay in business?

The grand point is that it isn't fair and was NEVER meant to be.

Thu, 07/21/2011 - 13:56 | 1477872 Pain Train
Pain Train's picture

first of all, it's "you're," not "your" right. Lastly, I will re-pose my first point...how is it unfair that California just made the dollar amount of a felony over twice as much?

 

Jesus! Amazing. I'm out.

Thu, 07/21/2011 - 16:44 | 1478642 Smiddywesson
Smiddywesson's picture

Those aren't very substantive objections.

If a mortgage writer with a high school education can compute the interest on a mortgage, I'm pretty sure a prosecutor can compute the rate of inflation on a inflation calculator.  It ain't rocket science.

The real issue is the law is so messed up already, they will never get around to dealing with this except on an ad hoc basis.

Thu, 07/21/2011 - 12:42 | 1477520 Missiondweller
Missiondweller's picture

Excellent story, I had never thought of that.

Thu, 07/21/2011 - 12:51 | 1477567 Bansters-in-my-...
Bansters-in-my- feces's picture

Fucking thieves....

And you's Americans have not run them out of the country yet...???

What's Up...???

Thu, 07/21/2011 - 13:10 | 1477691 Ripped Chunk
Ripped Chunk's picture

Why don't you come on over and do it Mr. Righteous One. Put a shirt on first how bout it? 

Thu, 07/21/2011 - 14:08 | 1477922 pods
pods's picture

Well, we need a boat to ship their asses back to the City of London.

pods

Thu, 07/21/2011 - 14:55 | 1478138 Matto
Matto's picture

Im struggling to think of a western country that is any different.. perhaps you're icelandic.

Thu, 07/21/2011 - 13:15 | 1477721 linrom
linrom's picture

Not so fast shifty! Inflation is theft not because it robs the savers, it's theft because it transfers wealth from the many have nots to the few haves. If this was not so, there wouldn't be any rich people , would there? You see shifty, inflation is necessary to rob workers since they are not in position to outrun it. But without inflation there would be no job creation because job creators would have to pay the workers out of their own pocket instead of other peoples money and pocketing profit.

Thu, 07/21/2011 - 13:33 | 1477783 ImNotARobot
ImNotARobot's picture

I see his point, but if you don't go around destroying people's steroes, you don't have to worry about it in the first place.

Just sayin...

Thu, 07/21/2011 - 13:55 | 1477867 vinoverde
vinoverde's picture

I know the Fed is stealing interest that should be mine as a saver and sending it to prop up insolvent banks. The question is what do we DO about it?

A knowledgable friend of mine grasped a while ago that the Fed policy was clearly to inflate, and he is deep into TIPS. I have done well with what few TIPS I bought at around par, but don't like them so much at $112. Plus, as is obvious from the debt debate kafuffle, its the Gov't that sets the TIPS rate and they can clearly set it for their benefit.

I am into both paper and physical gold, mostly paper, but its hard to shake the shackles of diversification and pour a significant fraction of my wealth into gold.

Jim Grant has been recently recommending WMT, JNJ, HP etc as safe as the fed but paying more in Dividend Yield than the Fed Pays. Lending the Fed money at 0.02%, as has been pointed out here by Tyler repeatedly makes no sense. Anyway, looking into Grant's ideas, may even buy the observer to learn more. At least articles like this encourage me to act with my portfolio, not just take what the Fed is dishing out.

Thu, 07/21/2011 - 14:53 | 1478122 Matto
Matto's picture

Read FOFOA and be happy to have the chance to buy more gold. Diversification means survival supplies and a foreign passport.

Thu, 07/21/2011 - 19:42 | 1479100 Manzilla
Manzilla's picture

You are following recommendations of others to determine what stocks to buy. Anyone that 1.) says the fed is safe is fucking schmuck and 2.) and asshole that says stocks are "safe" is full of shit. I suppose next you are gonna tell me that T-bills are "risk-free". Good luck with that. Diversification is a hoax. If you are gonna be active and take control of your own holdings than screw diversification. It's nothing more than some bs pushed by wall st to sell more products and keep people's money from leaving their firm. Good luck with that paper gold too.

 

What do you do about it? Nothing. It's the fuckin' fed. Following the advice of a shill and trying to beat the fed is feudal. The only thing you can really do is think for yourself and listen to what the markets are saying at the moment. Trying to forecast or protect against the fed is a waste of time. Ultimately the market doesn't give a shit what people think.

Thu, 07/21/2011 - 14:10 | 1477929 Youri Carma
Youri Carma's picture

The Ugly Truth About the US Debt Ceiling Crisis from Catherine Austin Fitts http://www.youtube.com/watch?v=3bnwWXzVilA

Catherine Austin Fitts: “The Problem isn’t we have no money and we’re fiscal irresponsible (and all that crap) the problem is you’re steeling

Thu, 07/21/2011 - 19:50 | 1479110 Manzilla
Manzilla's picture

Must be written by a true hack. No the problem is we keep voting in 2 crooked parties that do nothing but pillage our country and feed the sheeple a bunch of bull shit. The problem is the population's stupity. It's really pretty simple to understand.

Thu, 07/21/2011 - 14:12 | 1477942 MillionDollarBonus_
MillionDollarBonus_'s picture

Don't you morons know our Federal Reserve's dual mandate!? Are you completely retarded!? QUOTE from the Federal Reserve's OFFICIAL site: "The Congress established two key objectives for monetary policy--maximum employment and stable prices". Only a MORON wouln't want stable prices and maximum employment! If you idiots had your way, the global recovery would be dead by now.

Thu, 07/21/2011 - 14:32 | 1478012 PulauHantu29
PulauHantu29's picture

...ahhhh...errrr...define "steal" please.....Bill Clinton would like to know.

Thu, 07/21/2011 - 14:52 | 1478113 malek
malek's picture

Taxing capital gains on an inflation adjusted basis, or indexing crime levels for inflation, only pushes the problem to a different area: who determines the actual inflation rate?

See CPI gaming since 1981.

Thu, 07/21/2011 - 15:13 | 1478244 pcrs
pcrs's picture

The great thing for the government is not just that they spend the new money first and spend it for the high value, while the lower minions get it when it has already devalued, but also tax slaves automatically get into higher tax brackets. With hyperinflation, everyone will soon be a millionair, but it no longer buys you anything and almost all your income will be in the highest tax bracket.

The income of the ones who made these laws automatically goes up the more debt they take on and the more they inflate the money supply.

Thu, 07/21/2011 - 18:10 | 1478879 jack stephan
jack stephan's picture

You now have 14 minutes to reach minimum safe distance.

Thu, 07/21/2011 - 18:49 | 1478959 Thievery Corporation
Thievery Corporation's picture

An explanatory post on my first day, sweet!  Thanks for the warm welcome.

Thu, 07/21/2011 - 19:02 | 1478984 cityguyusa
cityguyusa's picture

Never thought of that.

Thu, 07/21/2011 - 19:30 | 1479052 Manzilla
Manzilla's picture

"What we have now is a number of people being charged with felonies when they should only be charged with a misdemeanor if the statutes were indexed for inflation."

I'm feeling most of this article but the fact you use this as proof of inflation taking our liberty is a stretch. So someone steals something and inflation is the reason they go to jail/prison? Ahhh, not quite. If said asshole didn't steal he wouldn't have to worrying about the fact that the statutes haven't been indexed. Inflation or not the prick broke the law. Maybe people should consider that before they commit the crime.

"God damn inflation! I'm being treated unfairly!"

 

If I catch this criminal in the act and shoot him can I blame the debt ceiling for pulling the trigger? Please, please?

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