Scandal: Albert Edwards Alleges Central Banks Were Complicit In Robbing The Middle Classes

Tyler Durden's picture

We apologize in advance for the NY Magazine-style headline, but this is a report that has to be read by all Senators who are preparing to reconfirm Bernanke for a second term. When voting for the Chairman, be aware that all of America will now look at you as the perpetrators who are encouraging the greatest inter and intra-generational theft to continue, and as prescribed by Newton 3rd law, sooner or later, an appropriate reaction will come from the very same middle class that you are seeking to doom into a state of perpetual penury and a declining standard of living.

America spoke in Massachusetts, and will speak again very soon if you do not send the appropriate signal that you have heard its anger - Do Not Reconfirm Bernanke.

You have been warned.

We present Albert Edwards' latest in its complete form as it must be read by all unabridged and without commentary. These are not the deranged ramblings of a fringe blogger - this is a chief strategist for a major international bank.

 


 

Theft! Were the US & UK central banks complicit in robbing the middle classes?

by Albert Edwards, Societe Generale

Mr Bernanke’s in-house Fed economists have found that the Fed wasn’t responsible for the boom which subsequently turned into the biggest bust since the 1930s. Are those the same Fed staffers whose research led Mr Bernanke to assert in Oct. 2005 that “there was no housing bubble to go bust”? The reasons for the US and the UK central banks inflating the bubble range from incompetence and negligence to just plain spinelessness. Let me propose an alternative thesis. Did the US and UK central banks collude with the politicians to ‘steal’ their nations’ income growth from the middle classes and hand it to the very rich?

Ben Bernanke?s recent speech at the American Economic Association made me feel sick. Like Alan Greenspan, he is still in denial. The pigmies that populate the political and monetary elites prefer to genuflect to the court of public opinion in a pathetic attempt to deflect blame from their own gross and unforgivable incompetence.

The US and UK have seen a huge rise in inequality over the last two decades, as growth in national income has been diverted almost exclusively to the top income earners (see chart below). The middle classes have seen median real incomes stagnate over that period and, as a consequence, corporate margins and profits have boomed.

Some recent reading has got me thinking as to whether the US and UK central banks were actively complicit in an aggressive re-distributive policy benefiting the very rich. Indeed, it has been amazing how little political backlash there has been against the stagnation of ordinary people?s earnings in the US and UK. Did central banks, in creating housing bubbles, help distract middle class attention from this re-distributive policy by allowing them to keep consuming via equity extraction? The emergence of extreme inequality might never otherwise have been tolerated by the electorate (see chart below). And now the bubbles have burst, along with central banks? credibility, what now?


After reading Ben Bernanke?s speech, once again denying culpability for the bubble, I really didn?t know whether to laugh or cry (remember that Ben Bernanke, like Tim Geithner, was a key member of the Greenspan Fed). I feel like Peter Finch in the film Network, sticking my head out of the window and shouting "I'm as mad as hell and I'm not going to take it anymore!" Although criticism of the Fed (and the Bank of England) has now become louder and more widespread, I feel my longstanding derision for their actions during the so-called ?good years? puts me in a stronger position than some to offer further comment.

Opening my 2002-2005 file of old weeklies I did not have to go any further than the first paragraph of the top copy (end of December 2005). “As far as Alan Greenspan’s tenure at the Fed is concerned, we have spared few words of derision. We have made plain our views that the supposed US prosperity that has accompanied his tenure has been based on a grotesque mountain of debt. We have likened the economy to a Ponzi scheme which will ultimately collapse. He has allowed the funding of strong economic activity by mortgaging the US’s future against one bubble (equity) and then another (housing), which is now beginning to implode”. These are almost consensus thoughts now, but not then.

The pigmies that populate the political and monetary elites prefer to genuflect to the court of public opinion. Blaming the banks is simply a pathetic attempt to deflect the public fury from their own gross and unforgivable incompetence. We have stated before that banks are not the primary cause of the bust. Just as in Japan, a decade earlier, bank problems are a symptom of the bust. It is the monetary and regulatory authorities that are responsible for this mess. And it is not just obvious in retrospect. It was perfectly obvious from the beginning.

I was shocked by a recent survey of Wall Street and business economists, published in the Wall Street Journal (see Bernanke View Doubted 14 Jan? link). Asked whether they agreed or disagreed with the proposition ‘excessively easy Fed policy in the first half of the decade helped cause a bubble in house prices’, some 42, or 74% agreed with the proposition. So unbelievably there are still 12 economists surveyed who did not agree! Even more incredible, a majority of academic economists did not agree with the proposition. Maybe they have sympathy for a fellow academic or maybe they actually believe the preposterous proposition that the western central banks were not in control of the bubbles which were primarily due to tidal waves of surplus savings washing across from Asia.

John Taylor shows this to be nonsense. There was no global savings glut (see chart below)

John Taylor is well known for his famous ?Taylor Rule? for the appropriate level of interest rates and he has been very vocal in his criticism of Fed laxity in the aftermath of the Nasdaq crash in his paper ?The Financial Crisis and Policy Responses: An Empirical Analysis of What Went Wrong’, Nov. 2008 and elsewhere - link. His thesis is simple. Lax monetary policy caused the boom in housing upon which euphoric credit excesses were built. The subsequent bust was an inevitable mirror image of the boom. This simply would not have occurred had the Fed (and the Bank of England) acted earlier to tighten policy as shown in the Taylor?s counterfactual profiles (see charts below).

More recently, the San Francisco Fed published a paper this month showing that those countries which saw the steepest run-up in house prices over the last decade also saw the largest rise in household sector leverage (see charts below and link). Of course the causality runs both ways. Loose monetary policy generates higher borrowing which pushes up house prices. Subsequently this prompts other households to borrow against the rising value of their houses to finance consumption via net equity extraction.

Generally most commentators have fallen for the populist line that the banks are to blame. Very rarely does a leading commentator pin the blame where it deserves to be ? on the central banks. Hence, I was very interested to read the Financial Times Insight column on Tuesday from the deep-thinking columnist, John Plender (interestingly his title in the print edition was “Blame the central bankers more than the private bankers” was changed to “Remove the punchbowl before the party gets rowdy” in the web edition - link).

Plender?s point is classic Minsky. An unusually long period of economic stability, also known as The Great Moderation, engineered by Central Bank laxity inevitably created the conditions for the subsequent bust. “Central banks clearly bear much responsibility for past excessive credit expansion. The Fed’s gradualist and transparent approach to raising rates in middecade also ensured that bankers were never shocked into a recognition that unprecedented shrinkage of bank equity was phenomenally dangerous. Despite the popular perception that financial innovation caused so much of the damage in the crisis, the rise in bank leverage was a far more important factor”. His point that it takes guts to remove the punch-bowl when the party is in full swing is spot on. The Fed and the Bank of England were both gutless and spineless. Their love affair with The Great Moderation meant they simply were not prepared to tolerate a little more pain now to avoid a Minsky credit bust and massive unemployment later.

But what is the relationship, if any, between this extreme central bank laxity in the US and UK and these countries being at the forefront for the extraordinary rise in inequality over the last few decades (see cover chart)? And does it matter?

I was reading some typically thought-provoking comments from Marc Faber in his Gloom, Boom and Doom report about current extremes of inequality. It reminded me that our own excellent US economists Steven Gallagher and Aneta Markowska had also written on this. To be sure, the rise in inequality has been staggering in the US in recent years (see charts below).

It is well worth visiting the website of Emmanuel Saez of the University of California who has written extensively on this subject and now has updated his charts up until the end of 2008 (data available in Excel Format ? link). The New York Times reported on the recently released Census Bureau data and showed not only that median income had declined over the last 10 years in real terms, but that this is the first full decade that real median household income has failed to rise in the US - link. What is also so interesting from Professor Saez?s cross-sectional research is how inequality has clearly risen fastest in the Anglosaxon, freemarket economies of the US and the UK (also note that France, with much higher levels of equality, saw much more subdued growth in household leverage).

Our US economists make the very interesting point (similar to Marc Faber) that peaks of income skewness ? 1929 and 2007 ? tell us there is something fundamentally unsustainable about excessively uneven income distribution. With a relatively low marginal propensity to consume among the rich, when they receive the vast bulk of income growth, as they have, then the country will face an under-consumption problem (see 9 September The Economic News ?- link. Marc Faber also cites John Hobson?s work on this same topic from the 1930s).

Hence, while governments preside over economic policies which make the very rich even richer, national consumption needs to be boosted in some way to avoid underconsumption ending in outright deflation. In addition, the middle classes also need to be thrown a sop to disguise the fact they are not benefiting at all from economic growth. This is where central banks have played their pernicious part.

I recalled seeing another article from John Plender on this topic back in April 2008. His explanation for why there had been so little backlash from the stagnation of ordinary people?s income at a time when the rich did so well was simple: ?"Rising asset prices, especially in the housing market, created a sense of increasing wealth regardless of income. Remortgaging homes over a long period of declining interest rates provided a convenient source of funds via equity withdrawal to finance increased consumption” link.

Now you might argue central banks had no alternative in the face of under-consumption. Or you might conclude there was a deliberate, unspoken collusion among policymakers to ?rob? the middle classes of their rightful share of income growth by throwing them illusionary spending power based on asset price inflation. We will never know.

But it is clear in my mind that ordinary working people would not have tolerated these extreme redistributive policies had not the UK and US central banks played their supporting role. Going forward, in the absence of a sustained housing boom, labour will fight back to take its proper (normal) share of the national cake, squeezing profits on a secular basis. For as Bill Gross pointed out back in PIMCO?s investment outlook ?Enough is Enough’ of August 1997, "?When the fruits of society’s labor become maldistributed, when the rich get richer and the middle and lower classes struggle to keep their heads above water as is clearly the case today, then the system ultimately breaks down.”- link. In Japan, low levels of inequality and inherent social cohesion prevented a social breakdown in this post-bubble debacle. With social inequality currently so very high in the US and the UK, it doesn?t take much to conclude that extreme inequality could strain the fabric of society far closer to breaking point.

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Anonymous's picture

Welcome to Austrian economics.

Cursive's picture

Has Albert Edwards seen/read "The Creature from Jekyll Island"?  It was a fix from the start.  If the Federal Reserve is owned by its Member Banks, what difference is there between a central banker and a private banker?  The problem is debt-money and it is foisted upon us by the bankers, all bankers.  We must repeal the Federal Reserve Act and end the issuance of debt-money.

JR's picture

+$23,700,000,000,000.00 + 4,000,000,000,000.00 (2010) = +$27,700,000,000,000,00!

JuicyTheAnimal's picture

If Bernokio is not reconfirmed I will stick my dick in the mash potatoes.  I think this is quite sporty of me knowing that the replacement will probably be just another seller of pig snot in a different colored tie. 

dark pools of soros's picture

+8

 

make sure to spread the sour cream

Anonymous's picture

"has to be read by all Senators"

there are 3 oxymoron's contained in those 7 words

justme's picture

I was thinking earlier that it would be at least lip service to accountability if Bernholio were given his walking papers. Then I thought, good Lord, the morons will put Larry Summers in there. Then I cast about for a spork to kill myself with.

 

At any rate, I'll stick with the rice, thanks.

Cognitive Dissonance's picture

As more and more info comes out regarding the complicity of the Fed in this massive Ponzi, I must ask myself how the Fed has lost control of the information stream? Who is engaged in this intergalactic war against Helicopter Ben, Turbo Tax Timmy and company?

Be carful when reading information that confirms you point of view and feeds your belief system. I'm not saying the information is correct or incorrect. I saying ask yourself who benefits from these disclosures here and now.

Sometimes during information dumps, some deliberate dis-information is mixed in with the rest to give it credibility. This is why we must always apply the critical eye to everything we read, particularly info that pleases us and thus gets a free ride straight into the brain.

Problem Is's picture

"This is why we must always apply the critical eye to everything we read, particularly info that pleases us and thus gets a free ride straight into the brain."

+1111

Critical analysis and logically valid reasoning-- a peasants best friend. Or so my Russian friends who lived through the Soviet era tell me.

WaterWings's picture

Alexander Solzhenitsyn, Nobel Prize winner:

 

Harvard Address: A World Split Apart

 

"We have placed too much hope in political and social reforms, only to find out that we were being deprived of our most precious possession: our spiritual life. In the East, it is destroyed by the dealings and machinations of the ruling party. In the West, commercial interests suffocate it. This is the real crisis. The split in the world is less terrible than the similarity of the disease plaguing its main sections."

 

http://www.columbia.edu/cu/augustine/arch/solzhenitsyn/harvard1978.html

Warning to the West 

We have a Russian proverb: "Do not call a wolf to help you against the dogs." If dogs are attacking and tearing at you, fight against the dogs, but do not call a wolf for help. Because when the wolves come, they will destroy the dogs, but they will also tear you apart.

 

There is another Russian proverb: "The yes- man is your enemy, but your friend will argue with you."

 

http://www.orthodoxytoday.org/articles7/SolzhenitsynWarning.php


The Gulag Archipelago:

"And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family?

 

Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, polkers, or whatever else was at hand? After all, you knew ahead of time that those bluecaps were out at night for no good purpose. And you could be sure ahead of time that you'd be cracking the skull of a cutthroat.

 

Or what about the Black Maria sitting out there on the street with one lonely chauffeur – what if it had been driven off or its tires spiked. The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin's thirst, the cursed machine would have ground to a halt!

 

If... if... We didn't love freedom enough. And even more – we had no awareness of the real situation. We spent ourselves in one unrestrained outburst in 1917, and then we hurried to submit. We submitted with pleasure! ........... We purely and simply deserved everything that happened afterward."

 

http://www.lewrockwell.com/gaddy/gaddy53.html

 

cougar_w's picture

They had nothing left to lose.

The wisdom of the ages. The wisdom of 5 million years of human evolution. Summed up right there.

They had nothing left, but what do we have? Is there anything? Can you point to it, please?

Make me believe, cause me to see it. Lie to me, fake me, empty my skull and fill it with dreams for I want to see it!

You can't because there is nothing left. Even the lies are too little.

cougar

WaterWings's picture

You forgot to turn off the sarcasm at the end of your post.

faustian bargain's picture

Here's a random list of some things we might have left: 42" plasma, nationwide 3G coverage, texting (or sexting), 40 hour workweeks, minimum wage for doing nothing, P/E ratios thru the roof, fractional (microscopic) reserves, cheap double mortgages, subsidized health care, dinner at Micky-D's.

Hm, you may be right.

WaterWings's picture

My list only has one item that is worth living for: the laughter of children.

faustian bargain's picture

aw man, quit tryin' to deconstruct my cynicism. ;-P

WaterWings's picture

Cynically, you can get what I want at Mickey D's, too.

faustian bargain's picture

that's more like it!

the party never stops at chuck e cheese's!

DaveyJones's picture

Timmy G

is Monetary P

by Chuck E Chee

ro0t's picture

In the words of Fat Mike from NoFX:

Don't think (Stay)
Drink your wine (Home)
Watch the fire burn (Be)
His problems not mine (Safe)
Just be that model citizen

Anonymous's picture

Like a long prison sentence, you are being stripped of every novelty and shiny distracting thing. You are coming to know the carnal nature of man and his neighbor. Perhaps it is to work more expressly upon your mind, provoking some spiritual search.

Maybe there is truly more than fine dining, pomp&circumstance, vanity and pride.

That is the new frontier. Don't miss it with cynical skepticism and ignorant unbelief.

Anonymous's picture

Like a long prison sentence, you are being stripped of every novelty and shiny distracting thing. You are coming to know the carnal nature of man and his neighbor. Perhaps it is to work more expressly upon your mind, provoking some spiritual search.

Maybe there is truly more than fine dining, pomp&circumstance, vanity and pride.

That is the new frontier. Don't miss it with cynical skepticism and ignorant unbelief.

WaterWings's picture

@ cougar_w

A final word on "nothing left to lose":

The author of the quote lived in the camps for 11 years. Which is far above average considering the life expectancy of those that survived interrogation. The accounts in The Gulag Archipelago numb you very quickly if you can even continue reading - if it were not for the author's writing style you would assume the worst and put the historical account down forever.

The author was a primary witness of the infernal machine. The constantly gleaned Soviet society had only to act as one to demonstrate that they were willing to give it all in order to avoid the inhumane interrogations and camps one by one.

And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family?

http://www.youtube.com/watch?v=QwKS1jE2lmY

So I believe I share similar feelings. I have little hope for the majority of America. We no longer have a common bond to unite us.

Anonymous's picture

“What do we mean by the American Revolution? Do we mean the American war? The Revolution was effected before the war commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments, of their duties and obligations…This radical change in the principles, opinions, sentiments, and affections of the people was the real American Revolution.” John Adams

so now the counter revolution has taken place. we must now counter the counter revolution to get back to that place where we were. it has been a long time and a long road....can we do this?

moneymutt's picture

great post, good stuff, thanks

Anonymous's picture

I usually scroll through the comments quickly looking to see if you've commented. Fantastic insight as always.

Heavy's picture

Implying that either the info dump is intentional and part of a larger plan?  The info dump increases disdain of the financial system allowing change to the financial system, the change enacted is not going to reflect the disdain of the people, but rather their hope, as ascribed to them by the mainstream media, in reality most people won't know what has gone on until it's done, and their existancex will be under a new system of monetary rule, by some of the same rulers, to rule them all, and in the darkness...

Either that or similarly influential parts of the oversociety from other regions disagree with us, (read as conflicting with us) here in the good ole USA.  They could try to short circuit our system in order to gain relative prominance and influance for their own interests.  This seems more likely to be a case of influancing rather than a case of conflicting with the hope of destroying, others have more to gain by riding our changes than by fighting them? 

Who knows, I agree, t.hat the new Mainstream lines of truth may be less so than they are hoped to be.

B9K9's picture

If there is any grain of truth in the notion of a controlling cabal dating all the way back to the Illuminati, then we are all mere pawns in a huge game of chess played out by those so bored with life that their only joy (if they even experience that emotion) is to fuck with other people just for fuck's sake.

Don't think they exist? How does a Tiger Woods, Michael Jordan, et al rise above all others in their respective fields? Are there not financial super-predators so innately attuned to their chosen calling that they perform such feats with, dare I say it, artistic genius?

If so, then recent events are merely the trap being sprung to extract the last piece of wealth before the bottom drops out. The game has always been about monetary expansion - the day monetary expansion ceases, the modern global economy dies. So now, in quick succession, we get the election results in MA, leaked information about the Fed and other central banks, notice that Ben's confirmation hearings have been suspended, and new proposed rules regarding Wall St leverage and prop activities. What does it all mean? It means monetary CONTRACTION! What does that mean? It means DEFLATION!

So yes, question why these events & news releases are now taking place - cui bono - who benefits? The shit storm that is about to engulf us all will take all of our individual & collective resources and will power to over-come. Let us take a mutual vow to make sure that those that did this to us are never allowed to do so again. Don't let them benefit.

OutLookingIn's picture

"Don't let them benefit (?)

They already have. Too late. The next phase of the game is already in motion, and our team has only just arrived for practice!

If indeed there is a machiavellian plot afoot, then what use closing the hen house door after the fox has eaten all the chickens?

What is needed, nay required! Is an old fashioned 'fox' hunt, with no quarter given or expected.

cougar_w's picture

Sadly, both comments appear correct in both form and substance.

Who was wondering what awaited us at the bottom of this rabbit hole? Well ... behold.

Assetman's picture

Wow... I totally agree, cougar.  B9K9 is en fuego...

Anonymous's picture

cui bono?

The Treasury needs credibility, in order to fund the upcoming rollover...that's who benefits from all this "Enough!" talk. Methinks they protest too much, particularly knowing what they've allowed up to this point. Sociopaths don't suddenly grow empathetic...they just fake it, when needed, to continue the con.

When the financing needs are nailed down enough to get past the election, the temporary allergies to can kicking
will miraculously clear up and we'll be back to visible corruption and looting, and we'll all be sitting around talking about
how the "Enough!" phase seems to have died.

Anonymous's picture

Excellent comment.

Anonymous's picture

Excellent comment.

Apocalypse Now's picture

Yes, I wonder if in other democratic countries there is a move on to discredit their political leaders and central banks to lose credibility.

Then we will all be presented with a "savior" most likely in the form of some global entity that exists outside the laws of each country in the form of the IMF, World Bank, and BIS.

The constitution was designed by clever individuals to combat against future clever individuals seeking world domination.  Just remember it is Congress that is supposed to be responsible for coining money and that taxation without representation is not acceptable (if a global entity was to rule and enforce in each country).  The recent approval by Obama of Interpol jurisdiction could be the start of using Interpol as an international tax authority (like the IRS).  Laying the groundwork.

Problem, Response, Solution.

Anonymous's picture

Aren't you over-thinking this? Not every country has a centralized authority, some country exist as a federation. In Canada, the four stock exchanges are each subjected to the securities regulator of their respective provinces. The big national banks have to comply with each of the banking regulator in each province their operate in. If the provinces of some countries won't surrender their regulations to their national federation, what makes you think they will surrender their regulation to the super-national union or to the global government?

BS Inc.'s picture

As the Romans said, "Cui bono?"

I think in general that anyone touting "free lunches" or "new eras" or "risk-free returns" are the ones to watch for. Looking back in history, they seem to be the ones who cause the most trouble, if given the chance.

Seth Davis's picture

Thankyou for raising the point of the importance for critical analysis and reasoning when consuming information. It seems all to simple for this mob mentality to develop  when there is information that caters to a predisposed view of the majority. The reasons and facts on why those 12 acadimic economist felt it was not the feds policies that caused this disturbing economic enviroment would be a welcomed addition to Zero Hedge and in my opionion add to the integrity of this "Scandal" accusation.

Anonymous's picture

The reason the 12 acadimic economists felt it was not the feds was because they were "fresh water economists" and there was no room in their model for such a thing.

carbonmutant's picture

+10

Suspend what you believe and trade what you observe.

Anonymous's picture

Did you see Alan Alda's "Searching for the Human Spark" on PBS? We are hard-wired to perceived cooperation and joint preference.

This fact, in the hands of "unkind" people, delivers the world of hurt we live in.

Cog, i very much appreciate your efforts to convey the human-ness of economics.

The grabbiness of humans is a central roadblock:(

40muleteam borax

Mark Beck's picture

Debasement of the currency hurts everybody holding USDs, not just the middle class. Many would say corporate america, through outsourcing, has done as much harm to the middle class as monetary inflation.

If you don't hold USDs you will not pay for its debasement. Its that simple.

I would also like to stress that, if you do not pay tax, you will not pay for government debt. This has always been the case, and many influential people use a tax sheild of some sort to essentially have no taxible income. This is usually done through foundations or some other non-profit corporation controlled off-shore through a subsidiary, just ask Bill Gates, who now takes care of Warren Buffet's nest egg.

That being said, the actions of the Treasury and FED directly effect people who pay tax. The population that pays some amount of tax is probably the middle class, but the middle class does not pay the most tax. The people who pay the majority of tax are in the upper 10% of income. They are being hurt the most.

I am also a little suspecious of legislators trying to hold up the FED as a separate scape goat. When our president and legislators have done as much or more harm than the FED. They bash the FED, and then talk about raising the debt ceiling. They talk about the deficit, and then increase military spending. Hypocritces!

If it wasn't for the FED there would be know way for the legislators to spend money we don't have. The FED essentially funds all of the legislators pork projects.

No I am not defending the FED, but it is easy to FED bash and stall on reappointing Bernanke in an effort to mask irresponsible deficit spending. Every time I think the FED is our biggest problem the politicians enact some fiscal nonsense.

Without coordinated fiscal and monetary policy our currency is doomed. I would like to see a return to sound money, but this is not even remotely possible at this point.

I was a little dissapointed with the article, because no solutions were really offered. It was just more of the evil FED with stupid economists. So what's new.

What would be far more enlightning would be to present some viable solutions to the overall systemic problems with our Government which includes the FED.

Mark Beck

Anonymous's picture

"Debasement of the currency hurts everybody holding USDs, not just the middle class. Many would say corporate america, through outsourcing, has done as much harm to the middle class as monetary inflation".

It's done the worst harm. GATT, and the WTO have seen to gutting our Manufacturing base. Interesting both Republican, and Democrat were responsible for that. What geniuses they are.

James Goldsmith saw this coming, and points out just how this would occur in the book "The Trap". Also, a very good interview/debate with a Clintonite in 1994 on the Charlie Rose show. Here is the link if you are interested. Poor chap died shortly afterward.

http://video.google.com/videoplay?docid=5064665078176641728&ei=2s4yS-jdG...

-Mark

Anonymous's picture

"Debasement of the currency hurts everybody holding USDs, not just the middle class. Many would say corporate america, through outsourcing, has done as much harm to the middle class as monetary inflation".

It's done the worst harm. GATT, and the WTO have seen to gutting our Manufacturing base. Interesting both Republican, and Democrat were responsible for that. What geniuses they are.

James Goldsmith saw this coming, and points out just how this would occur in the book "The Trap". Also, a very good interview/debate with a Clintonite in 1994 on the Charlie Rose show. Here is the link if you are interested. Poor chap died shortly afterward.

http://video.google.com/videoplay?docid=5064665078176641728&ei=2s4yS-jdG...

-Mark

Crab Cake's picture

Blaming the banks is simply a pathetic attempt to deflect the public fury from their own gross and unforgivable incompetence.

When we start asking who benefits, specifically from central bank actions, is it not the banks?

Perhaps this was not specifically your point, but it's what your point brought to my mind. 

The Fed is the banks, and I find it disengenuous for the author to separate the two so offhandedly. 

Cognitive Dissonance's picture

Crab Cake,

Thanks for the feedback. I had no point other than to warn people from making assumptions or worse, accepting at face value something simply because it feeds their world view and confirms what they wish to believe. That's the worst assumption to make.

Assetman's picture

Very insightful comments, Crab Cake.

For some strange reason, during the height of the financial crisis in 2008, Uncle Ben made comments surrounding the passage of TARP that struck me as very intriguing.  And worth remembering for a later date.

At the time-- and I paraphrase-- Uncle Ben mentioned that we would be able to get through this crisis.  But he emphasized the it was very important that those in Congress maintain their "political will".  Obviously, this infers that at some point future decisions on saving the financial system would be very unpopular, and Congress would need to stay the course to head out of troubled waters.

Little did most of us realize at the time that Uncle Ben was orchestrating the foundation for the largest transference of wealth we have seen at our lifetimes-- with his own constituent member banks being the winner take all party-- and the rest of us set up as the ultimate losers. 

That wealth transference is still running full-bore today, under the watchful eye of a person hell bent on saving the financial system-- regardless of the collateral damage.  Saving the system is saving the Fed.  And saving the banks.  And the enourmous cost is being beared on all of us.  That same person is up for 4 more years of service. 

When Ben spoke of "politcal will", he essentially spoke of the risk of not being re-elected based on the priciple of saving the finanical system from peril.  The central question is, does it deserve to live after all the raping and pillaging pre- and post-crisis?  My vote is "NO".

Anonymous's picture

Ray Charles can see what's going on.

The Supreme Court just let corporations cut in front of me in the line of life, liberty and the pursuit of happiness.

As to the Fed, lets be simple and rational, and who cares who is telling me --where is the money?

If you think this is some loss of control, let's simply count it.

Anonymous's picture

The Fed has lost control of the information stream because of the Internet, and for people to finally put two + two together - thus exposing the fraud, cheating, lying and collusion all at the helm of a complicit Congress and many administrations spanning the political parties.

Don't be a dipshit, when the Fed can change the law at will and operate outside of it, how the hell is this a nation of rule of law?

This country is on track for the corporations, by the corporations at the expense of absolutely everyone but the rich.

If you want to sit around and smoke pot and think about it in your world of denial, then get out of the way so the rest of us can save your ass!