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Guest Post: Say Goodbye To The Purchasing Power Of The Dollar

Tyler Durden's picture




 

Submitted by Adam Taggart of Peak Prosperity blog,

On a long solo car trip last week, I listened to several podcasts to pass the time. One was a classic: The Invention of Money, originally released by NPR's Planet Money team back in January of 2011. I highly recommend listening (or re-listening) to it in full.

The podcast is an effective reminder of how any currency in a monetary system is a fabricated construct. A simpler way to explain this is to say it has value simply because we believe it does.

Through the centuries in historic cultures like that of Yap Island who used giant, immovable stone disks for commerce, to today's United States, whose Dollar fiat currency exists primarily in digital form "money" is able to be exchanged for goods and services because society agrees to accept it (at a certain rate of exchange).

But what happens when a society starts doubting the value of its money?

Fed, the Great & Powerful

The podcast goes into the mind-blowingly simple process by which new money is created in America by the Federal Reserve (or the "Fed"). That is to say:

  1. The Fed holds a meeting
  2. Those in the room decide how many more dollars they think the world needs
  3. Someone walks over to a computer and adds that many dollars to the banks, with a few clicks of the keyboard

The banks then, if they want to, lend this new money out into the economy on a fractional basis, adding even more "thin air" dollars to the nation's money supply.

This unique ability in America lends the Fed enormous power. The power to create new money from nothing. With no limit.

And with that power, the Fed can control and/or influence economies and markets the world over.

Should such power exist? And if so, should a single private entity owned by the major players in the banking system be allowed to wield it?

Such power certainly has its dangers.

Back in 2011, the Planet Money team described the normally staid Fed as having "gone to central-bank Crazytown". Panicked by the global credit contraction, the Fed began a series of programs intent on combating the deflationary force of credit defaults. It essentially force-fed liquidity (a.k.a. freshly-printed dollars) to the world, using ham-fisted tactics that it had fastidiously eschewed over the previous century:

As the financial crisis unfolded, the Fed created...trillion[s of] dollars, which it lent out as emergency loans to all the big names on Wall Street: Goldman Sachs, Morgan Stanley, huge banks like Citigroup and Bank of America. The Fed lent money to private equity firms, hedge funds, and even regular companies like Verizon, GE, and Harley Davidson.

And it wasn't just the recipients of that cash that were new. It was also what the Fed was requiring in return: the collateral.

 

In the past, in the rare instances that the Fed used its powers to serve as the lender of last resort, it demanded the highest quality collateral in return. Assets that were safe and would hold their value.

 

But in 2008, the Fed started accepting all sorts of...collateral that just months ago it never would have touched.

 

The sheer amount of new money that the Fed created was unprecedented. From the time we went off the gold standard of 1933 until 2008, the Fed had created a net total of $800 billion. In the months after the financial crisis, that number nearly tripled to almost $2.4 trillion.

 

[The Fed was] spending more newly created money in just 15 months than [it] had created in its entire history up until 2008.

And what effect did this fast-and-loose money-printing bonanza have? The big banks were able to recapitalize their damaged balance sheets while continuing to pay themselves record bonuses. Commodities, priced around the globe in U.S. dollars, became much more costly as many more dollars competed for the same amount of real assets. And financial assets, like stocks and bonds, marched upwards, raised by the unrelenting rising tide of Fed liquidity.

Notice however, that the economy itself did not fundamentally improve in the way the Fed had hoped it would. While a collapse of the system was averted (delayed?), economic growth has remained sluggish, unemployment high, and real wages stagnant or worse.

Of course, the reason for this is simple. Money is not wealth. It is merely a claim on wealth.

You can't print your way to prosperity. History is abundantly clear on that. 

With the clarity of hindsight, it's now obvious how the Fed has now painted itself into a corner. Here's how the stock market has fared during the Fed's rescue efforts:

They say a picture is worth a thousand words. In this case, the picture above is worth several trillion dollars (some would argue as much as $9 trillion).

The financial markets have become dependent on new Fed dollars. If you look at the few gray segments of the chart, the stock market swoons nearly immediately once the Fed halts its balance-sheet expansion.

For whatever reason (perhaps because it's owned by banks?), the Federal Reserve has chosen to use the price of financial securities as the signaling device that its efforts are yielding results. But the markets, like any junkie, demand greater and more frequent infusions to reach new highs. Note how the trend of successive Fed programs yields smaller and shorter-lived boosts.

The Fed lives in fear of re-entering recession while unemployment and wealth inequality remain stubbornly elevated. With so many families teetering at the edge, things could get ugly very quickly if a fall in asset prices were to create a "reverse wealth effect" that triggered another recessionary slowdown. So as long as low single-digit GDP growth persists, the Fed's hands are tied. It must continue to print.

No matter that the rising price of financial assets grossly benefits the top classes namely the 1% who own 40% of the entire nation's wealth. In stark contrast, the bottom 80% of Americans own only 7%.

No matter that the Fed's money tsunami is creating asset bubbles (again) in stocks, bonds, college tuition, housing, commodities, etc. further eroding that bottom eighty percent's ability to form capital to fund its future.

The Fed has gone "all in" here. There is no Plan B.

Should We Place Our Faith in the Fed?

Perhaps I'm being overly pessimistic.

Perhaps the Fed has just the right talent and tools we need to finesse our way out of the challenges we face.

Unlikely.

As for the talent, the key body that makes decisions on the money supply is the Federal Open Market Committee (FOMC). Many of its members have only had academic and/or government positions throughout their working careers. Voting members with actual business operating expertise, or experience running a commercial bank, for that matter, are rare.

And as for tools, the Fed only really has one: the interest rate. It can move it up or down. But the effects take time to be felt in the markets. And it is a blunt, imprecise tool, at best. Again from the Planet Money podcast, where interviewer Alex Blumberg is talking with Gerald O'Driscoll, former vice president of the Dallas Regional Federal Reserve:

Alex Blumberg: I sort of think of it like a joystick. You move it too far in one direction, you get out-of-control inflation. You move it too far in the other direction and then you can really sort of put the brakes on the economy. Is that too simplistic a way of thinking about it or is that?

 

Gerald O'Driscoll: I mean, it's okay to think about it that way. I winced a little when you said that, because the joystick presumes a very precise control, which is exactly what they don't have.

 

Alex Blumberg: Right.

 

Gerald O'Driscoll: It's more like you're moving a super tanker and you start moving the wheel and there's no effect that you can see for quite a while.

In fact, the inner sanctum itself, where the all-important FOMC meetings takes place, seems much less like the rarified Olympian god-chamber we'd expect, and more like the conference room from Office Space:

Whatever you imagine the room looks like where you can create one and a quarter trillion dollars, this is not it. It is not grand. It is not ornate. It is not ceremonial. It has four grey cubicles, it has computer screens, and there's no other way to say this: It's a mess. There are papers and notes scattered around. There is a yoga ball someone has been sitting on. And there is a basketball net, possibly Nerf brand. This is where the magic happens.

The reality is, the Federal Reserve is like any other organization. Human. And fallible.

And like any other organization, it makes its best assessment of what the future holds and places its bets accordingly.

For those who want to argue that the Fed, with its cadre of hyper-degreed academics and its insider access, has superior information and thus the ability to predict the future with unparalleled accuracy; I humbly ask you to watch the following:

 

 

Cyprus: Are Things Different This Time?

In Hollywood, they say you're only as good as your last movie. By that metric, the Fed's latest sanguine prognostications should be taken with a huge amount of salt(ed popcorn):

Cyprus does not pose a threat to the U.S. economy or financial system and there are no signs of stock market bubble, Fed Chairman Ben Bernanke said on Tuesday.

 

The Fed chief told reporters that the central bank was monitoring the situation in Cyprus. "At this point, we're not seeing a major risk to the U.S. financial system or the U.S. economy," he said.

 

And while the cheap money supplied by the Fed has pushed up stock prices, Bernanke said the central bank isn't measuring the success of its policies against moves in stocks.

 

He also said the recent advance was not out of line with historical patterns. "I don't think it's all that surprising that the stock market would rise given that there has been increased optimism about the economy and...profit increases have been substantial," he said.

Sound familiar? Are you feeling comforted yet?

So, how much confidence can we really have in the Fed to navigate these yet uncharted monetary waters, with so many variables and unknowns, and its less-than-spot-on record? Honestly, we'd be fools to assume much.

Cyprus has awakened the world to the reality that central planners can appropriate their money with the bang of a gavel. And while we don't yet know with certainty how things will unfold in Cyprus, we can project that events there have shaken society's confidence in the soundness of fiat currency in general. If we know it can be confiscated or devalued overnight, we are less likely to unquestioningly accept its stated value. This doubt that strikes at the very foundation of modern monetary systems.

Cyprus is meaningful in the way that it shines a light on both the importance of hard assets and the risk it poses to market stability. It certainly increases the risk of our prediction of a 40%+ stock-market correction by September, as investors begin to realize that current high values are simply the ephemeral effect of too much money, instead of a sign of true value.

At this point, prudence suggests we prepare for the worst (by parking capital on the sidelines, investing in our personal resilience, etc.) and add to our hard asset holdings (like precious metals bullion, productive real estate, etc.) as insurance to protect our purchasing power. The dollar may strengthen for a bit versus other currencies and perhaps the financial markets, but the long-term trend is a safer and surer bet: Dollars will be inflated. There will be more of them in the future than there are today. So, while our dollars still have the purchasing power they do, we should use the window of time we have now to exchange paper money for tangible wealth at today's prices.

Those with a shorter time horizon, higher risk tolerance, and capital to spare may want to start considering a strategy for going short the financial markets.

Next stop: Crazytown!

 

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Mon, 03/25/2013 - 17:45 | 3374300 localsavage
localsavage's picture

It's the evil speculators.....

Mon, 03/25/2013 - 18:31 | 3374450 cifo
cifo's picture

Here you have it: Good bye.

Mon, 03/25/2013 - 18:37 | 3374472 Stackers
Stackers's picture

A Dollar is a unit of measure like an inch.

You have an inch. .... an inch of what ?

You have a dollar .......a dollar of what ?

Mon, 03/25/2013 - 18:49 | 3374529 tenpanhandle
tenpanhandle's picture

Unfortunately, we all know what the "inch of what" is and where we're getting it.

Mon, 03/25/2013 - 19:07 | 3374593 flacon
flacon's picture

Don't you love it when the Fed talks so pompously about it's "TOOLS" as if that imaginary idea has any validity what so ever? Imagine you on your job interview talking about your imaginary "TOOLS". You'd get laughed right back to your car with no handshake. 

Mon, 03/25/2013 - 19:41 | 3374718 toys for tits
toys for tits's picture

+1

Especially if you admitted your tools were only experimental.

Tue, 03/26/2013 - 03:04 | 3375787 All Risk No Reward
All Risk No Reward's picture

Guys, the false narrative is put out to deceive us.  So is the "opposition" false narrative.  And every other media narrative.  False.

The Fed is controlled by the mega-banks that are TBTF&Jail - talk about incestuous right out in the open.

The mega banks are controlled by THE OWNERS - Biggest Finance Capital.

The mega banks tell Bernanke what that they want their little B* to do and say, and that little puppet does it  He wasn't wrong about the housing market - he was selling the top of the bubble on purpose to jack as many people as he could.  Yeah, he's that evil - and he enjoys it, the sick f*.

Now, ask yourself the following:

1. If you were the mega banks and you were going to tell the Fed to destroy the value of the dollar, would you lend 30 year money at 3%?  If so, why?  If not, why?

2. If you owned trillions in cash personally and in your front corporations, would you hyperinflate it away? If so, why?  If not, why?

3. If you owned trillions in debt and your front corporations owned trillions in debt, would you hyperinflate it away?  If so, why?  If not, why?

Why are the mega banks (their OWNERS, actually) issuing so much debt based currency such that they're speculating is causing prices to go up on goods society needs?

BECAUSE THAT'S THE COST OF RIPPING OFF SOCIETY'S FACE.

4. Are you worried about a 10% decrease in purchasing power when you double your cash position through looting?

5. Is looting sustainable forever?  Nope.

The real question is...  what happens when the cost benefit to looting is deemed unsatisfactory?

Basic human nature SCREAMS at you that they will rescind credit, bust those they've criminally duped into unpayable debt AND THEN TAKE ALL THE DEBTORS' REAL CHIT.

How to be a Crook
https://www.youtube.com/watch?v=2oHbwdNcHbc

Once these mofos own the world, then they don't care about the value of their societal asset stripping debt money value, so they'll hyperinflate, balance their books and call it even.

They will also bankrupt and consolidate all their competition for pennies ont he dollar.

They will own it all, the serfs will own nothing, they will toast to Darwin and society will be their b* if they want that crumb from the table.

It is in neon lights, people.

 "If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
by: Robert Hemphill
Credit Manager of Federal Reserve Bank, Atlanta, Ga.
Source: In the foreword to a book by Irving Fisher, entitled 100% Money (1935)

Debt Money Tyranny
http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

Mon, 03/25/2013 - 19:42 | 3374723 DangerClams
DangerClams's picture

And no handjob?

Mon, 03/25/2013 - 20:23 | 3374885 Thomas
Thomas's picture

Speaking of the Fed's tools, Bernanke gets married and on his wedding night in the honeymoon suite he disrobes. His highly disappointed wife says, "who are you going to satisfy with that puny thing? Bernanke responds, "Me."

Mon, 03/25/2013 - 21:54 | 3375218 Dieselclam
Dieselclam's picture

A "dollar" is not like an inch in any way. Dollars have floating, relative, subjective values based on God-only-knows-what. Inches are measurable and traceable to an EXACT, unchanging physical standard kept in a vault at the National Institute of Standards and Technology. There is no subjectivity with measurements- they are an exact science. I only WISH "dollars" were pitted against such a standard. When the closest thing (the old CPI) got too painful, they changed that standard, all the while an inch today is the same length it was prior to December 1913 http://www.nist.gov/pml/data/physicalconst.cfm

Tue, 03/26/2013 - 07:26 | 3375997 Dick Gazinia
Dick Gazinia's picture

How many elephants can you fit into an hour?

Tue, 03/26/2013 - 00:31 | 3375642 Libertarian777
Libertarian777's picture

a dollar is 371.25 grains of fine silver.

What that green piece of paper that looks like a silver certificate, with the word 'dollar' printed upon it is... I have no idea.

Tue, 03/26/2013 - 03:04 | 3375794 All Risk No Reward
All Risk No Reward's picture

You should learn what it is because it is the Debt Star - a societal asset stripping mechanism that uses 3rd grade math to destroy entire planet economies.

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

How to be a Crook

https://www.youtube.com/watch?v=2oHbwdNcHbc

Tue, 03/26/2013 - 07:41 | 3376015 GubbermintWorker
GubbermintWorker's picture

Silly, that green piece of paper is " LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE"!

So says the Wizard of Fed!

Mon, 03/25/2013 - 18:34 | 3374461 Abraxas
Abraxas's picture

What is China? I'll take Currency Wars for 800 bitcoins.

Mon, 03/25/2013 - 17:46 | 3374302 dick cheneys ghost
dick cheneys ghost's picture

My name is Ben and I'm a PRINTAHOLIC

Mon, 03/25/2013 - 17:52 | 3374326 camaro68ss
camaro68ss's picture

HELLO BEN

Mon, 03/25/2013 - 18:37 | 3374475 Cacete de Ouro
Cacete de Ouro's picture

No cross talking...

Mon, 03/25/2013 - 18:52 | 3374538 nmewn
nmewn's picture

Give that man a drink!

Mon, 03/25/2013 - 19:00 | 3374567 kaiserhoff
kaiserhoff's picture

Some of ya'll know way too much about..., happy hour.

Mon, 03/25/2013 - 19:22 | 3374640 nmewn
nmewn's picture

lol...kaiser, if I couldn't have fun doing what I want, I wouldn't bother getting out of bed my brother ;-)

Mon, 03/25/2013 - 17:47 | 3374314 DoChenRollingBearing
DoChenRollingBearing's picture

I can hardly wait until Jim Willie comes out with his next piece...

Mon, 03/25/2013 - 18:55 | 3374547 Arrowflinger
Arrowflinger's picture

Jim gives the money mavens the willies. I knew things were bad when Jim Willie was proven so right that one had to give him credibility. Now he gazes out like some sort of Prophet.

Mon, 03/25/2013 - 19:18 | 3374625 chubbar
chubbar's picture

His last piece came out last night. I stayed up half the night reading the damn thing. My only quibble is he thinks that Russia will prevail and Cyprus will leave the EU. Obviously that didn't happen. Of course he probably could not have foreseen that the fucking Russkies had all week to withdraw their funds and don't give a shit about whether Cyprus stays in the EU or not! Too fricking funny! What a bunch of asshats these idiots running the ECB are! All this knashing of teeth over nothing, the targets were already long gone!!!! Fucking bozos!

Mon, 03/25/2013 - 21:30 | 3375130 LuchadorChumba
LuchadorChumba's picture

Ah DCRB, you could have been a Luchador malvado! Instead, you go and tell everyone about this gold stuff.

ya know…if you’re in a pure fiat system…then its your obligation paisano (y necessity) to borrow on credit with the full intention of never paying a single peso back…uh i mean dollar.

Come on, crawl between the ropes, get back into el cuadrilatero con me.

Oh, that Willie guy, he better watch his nalgas.

www.askchumba.com

HLS!

Mon, 03/25/2013 - 17:49 | 3374321 Iocosus
Iocosus's picture

But mom! Everybody's debauching their currency through similar programs to quantitative easing so we won't get in trouble! I swear! And like, seriously, mom, we've got the bullies on our side just in case someone gets out of line. Now can I have $50? I want to go out with my friends to Gino's Pizza for a slice.

Mon, 03/25/2013 - 17:51 | 3374328 Sudden Debt
Sudden Debt's picture

at least the energy is back to it's 2007 highs... I filled up my car this morning: 140 euro's... that's a lot.

Mon, 03/25/2013 - 18:11 | 3374397 Kirk2NCC1701
Kirk2NCC1701's picture

$180 US for a tank of gas!?  What do you pay per liter?

Mon, 03/25/2013 - 18:31 | 3374447 pop goes the weasel
pop goes the weasel's picture

I filled my van £115 yesterday and car £105 this morning £1.49 a litre diesel and £1.42 petrol both were on fumes

Mon, 03/25/2013 - 18:49 | 3374528 MachoMan
MachoMan's picture

Holy shit.  No wonder you poor bastards can't afford straight teeth.

Mon, 03/25/2013 - 18:56 | 3374550 nmewn
nmewn's picture

They can, they just all fall out over time waiting on a dentist to see them.

Mon, 03/25/2013 - 19:02 | 3374576 toys for tits
toys for tits's picture

Look at the bright side, you get better mileage because you don't have shitty corn in your gas.  Additionally US gas is subsidized by about $3 per gallon by the taxpayer for ethanol.

Mon, 03/25/2013 - 19:19 | 3374626 nmewn
nmewn's picture

Good point.

But we're trying to do something about that down here (Oregon too)...at least on the demand side.

"In Florida, a bill to repeal the requirement that all gasoline offered for sale in the state contain a percentage of ethanol is being considered in the Florida House. Currently, the Florida Renewable Fuels Standard requires that all gasoline sold or offered for sale by a terminal supplier, importer, blender or wholesaler in Florida contain 9%–10% ethanol, or other alternative fuel, by volume. SEMA is supporting both measures."

http://www.sema.org/sema-enews/2013/10/oregonflorida-propose-elimination-of-ethanol-requirement-in-gasoline

Ethanol destroys small engines (motorcycles, boats, lawnmowers etc) and (as you say) less mileage per gallon.

Mon, 03/25/2013 - 19:40 | 3374717 DosZap
DosZap's picture

nemwn,

Florida contain 9%–10% ethanol, or other alternative fuel, by volume. SEMA is supporting both measures."

http://www.sema.org/sema-enews/2013/10/oregonflorida-propose-elimination-of-ethanol-requirement-in-gasoline

Ethanol destroys small engines (motorcycles, boats, lawnmowers etc) and (as you say) less mileage per gallon.

Well good luck sticking to 10%, the EPA Mandate is calling for 15% Ethanol(and they are not budging),and that will destroy ALL engines.

Ask me how I know.

Mon, 03/25/2013 - 19:44 | 3374728 toys for tits
toys for tits's picture

Ok, what's the punch line?

Mon, 03/25/2013 - 20:40 | 3374958 Key-Rick
Key-Rick's picture

Ethanol's a joke. more energy to produce than it yields. A retard can figure out the problem with that equation. It's mandated to be in gas by the Monsanto/Cargill corn overproduction bullshit lobby. I have to find marine gas for my boat or it will fuck up my engine.

Mon, 03/25/2013 - 20:34 | 3374940 nmewn
nmewn's picture

As I understand it (correct me if I'm wrong) the state bill is to repeal the mandate on retailers for ethanol.

The over-the-top, eco-freaks at the EPA can call for whatever it wants and be shown to the people for the nanny-statist destroyer of their property & lives that it is.

There is nothing like the skeletal remains of a family being stuck in the middle of the Gulf with an ethanol burnt up engine to turn the tide of public opinion.

Too graphic? ;-)

Mon, 03/25/2013 - 21:51 | 3375205 A Nanny Moose
A Nanny Moose's picture

...but it creates jobs in corn production, and engine production/repair.

Mon, 03/25/2013 - 22:07 | 3375280 dark pools of soros
dark pools of soros's picture

Death is bullish!

Tue, 03/26/2013 - 08:29 | 3376135 dunce
dunce's picture

I am sorry to say that both parties were in on the midwest vote buying scheme of ethanol. They did not not discover that it was not a new source of energy after the fact, they knew it was a pork project from the gitgo. As usual what got them re-elected had priority over what was best for the country. The whole thing is a wealth redistribution plan, the left never whinges about the huge subsidy involved though they know as well or better than most that it does not work no matter how you look at it. Their ultimate goal is mass transit so anything that causes private transportation problems is a step in that direction.

Mon, 03/25/2013 - 18:38 | 3374478 Diogenes
Diogenes's picture

In Canada I pay over $100 to fill up my minivan and that isn't a lot. A pickup truck costs $200.

 

Today gas is down to $1.27 per liter (quart).

Mon, 03/25/2013 - 19:00 | 3374566 nmewn
nmewn's picture

Squire nmewn and I were just having that conversation...about why we didn't go with the metric system.

Grandpappy nmewn was right ;-)

Mon, 03/25/2013 - 19:23 | 3374646 DosZap
DosZap's picture

In Canada I pay over $100 to fill up my minivan and that isn't a lot. A pickup truck costs $200.

 

Today gas is down to $1.27 per liter (quart).

Barely a dollar over what it is in the US.(89 Octane)

91 Octane is more, closer to .$50 a gal.

Mon, 03/25/2013 - 20:53 | 3375004 thisandthat
thisandthat's picture

Gas in Eu is 95 or 98io (and up), although I think they use different index standards than in the US. Most of the cost is taxes, though; 95io price before taxes avg .70/.75 €: http://www.apetro.pt/documentos/preco_gasolina95.xls

Mon, 03/25/2013 - 18:41 | 3374491 Gief Gold Plox
Gief Gold Plox's picture

Diesel here is 1.381 eur/l Costs me about 80 eur to fill up.

Sudden Debt, what do you drive mate? Or better still how big is your gas tank?

Mon, 03/25/2013 - 17:52 | 3374331 kaiserhoff
kaiserhoff's picture

Long term, sure, the dollar is toast.

But with the yen being forced down and the Euro run by a bunch of syphilitic idiots (not that there's anything wrong with that), how is the dollar not the best looking horse in the glue factory?

Not advocating it as a store of value, but a lot of ye old spondoolics has to be kept in paper.  If not the dollar, what?

Mon, 03/25/2013 - 17:53 | 3374336 Vashta Nerada
Vashta Nerada's picture

If the government wants it badly enough, they can confiscate wealth in any form, not just bank accounts. 

Mon, 03/25/2013 - 18:01 | 3374372 LawsofPhysics
LawsofPhysics's picture

When fraud is the status quo, possession is the law.  Shit, any person or corporation can take whatever the fuck they want if they have the firepower.   Thanks for the info captain obvious.

Mon, 03/25/2013 - 18:03 | 3374380 little buddy bu...
little buddy buys the dips's picture

"They're welcome to try." (...he says as he racks another round)

Mon, 03/25/2013 - 18:16 | 3374410 Kirk2NCC1701
Kirk2NCC1701's picture

Don't shoot me and sorry to bring you the 'joyous' news, but they DO get you every time you open your wallet, pay a bill online, or even buy the ever more expensive G&A.  It's called inflation and price-manipulation of anything/everything.

Mon, 03/25/2013 - 18:58 | 3374548 akak
akak's picture

Silly starship captain, don't you know that as long as we can find food bargains, and 99 cents/lb chicken breasts, there is no inflation?

Any price rises you see are purely transitory, and are merely the fault of those evil speculators.  (Yep, just like it's been for the past 80 years now.)

Besides, constant inflation-adjusted prices prove that there is no inflation.

Now, if you'll excuse me, I have to board the USS Deflation --- we are going on a cruise to the edge of the flat earth.

Mon, 03/25/2013 - 22:09 | 3375287 dark pools of soros
dark pools of soros's picture

Hurry buy out the dollar store and open up a 2 dolla store next to it!!

Mon, 03/25/2013 - 17:54 | 3374340 DaveyJones
DaveyJones's picture

God, I was out for a week.

The world can sure get fucked up in a week

Mon, 03/25/2013 - 17:59 | 3374355 kaiserhoff
kaiserhoff's picture

You've got problems?

I tried to give up caffeine last week.

Mon, 03/25/2013 - 18:10 | 3374395 toys for tits
toys for tits's picture

I picked the wrong week to stop sniffing glue.

Mon, 03/25/2013 - 19:02 | 3374574 nmewn
nmewn's picture

Try cocaine, its cheaper per serving ;-)

Mon, 03/25/2013 - 19:48 | 3374761 DosZap
DosZap's picture

You've got problems?

I tried to give up caffeine last week.

 

 

Hell that's easy after the first 3-4 days.

Compared to what's headed our way soon, and VERY soon,finances will be the least of our issues.

Mon, 03/25/2013 - 17:59 | 3374359 cdntrader
cdntrader's picture

So you were out of the world for a week? I need that kinda stuff!

Mon, 03/25/2013 - 19:10 | 3374610 DosZap
DosZap's picture

God, I was out for a week.

The world can sure get fucked up in a week

Should have stayed in your LOCKER.

Mon, 03/25/2013 - 17:56 | 3374346 BadKiTTy
BadKiTTy's picture

i've got a small shitty office, with a ball, crap everywhere and a computer! 

I'm going to print me a A TRILLION! :) 

 

Mon, 03/25/2013 - 17:57 | 3374349 caimen garou
caimen garou's picture

Faith? what  is faith? I had some once, I think.

Mon, 03/25/2013 - 18:12 | 3374402 DaveyJones
DaveyJones's picture

She's a country singer I think

Still believes in America

Mon, 03/25/2013 - 19:51 | 3374775 Hulk
Hulk's picture

and has nice legs too !!!

Mon, 03/25/2013 - 18:54 | 3374544 tenpanhandle
tenpanhandle's picture

Look in your wallet.  Anything that is green is pure faith.

Mon, 03/25/2013 - 17:58 | 3374350 Tinky
Tinky's picture

"Anton Goryunov writes from Kiev: You know what the biggest lesson of the Chernobyl nuclear disaster that had happened exactly 25 years today is? You shouldn’t trust a single word governments tell you when things go horribly wrong at some nuclear power station. If they say the radiations levels are 100 times higher than the legal limit, you can safely multiply that by ten or even a hundred times easily. And if the say that they’ve got things under control and know what they’re doing, run for your life, run like the wind."

Feel free to replace "Chernobyl nuclear disaster" with "the ongoing financial disaster", and extrapolate from there.

 

Mon, 03/25/2013 - 19:36 | 3374692 max2205
max2205's picture

Financial disasters as so 2000-2010's

Mon, 03/25/2013 - 18:01 | 3374366 CunnyFunt
CunnyFunt's picture

It's a pity that the Marxists at Planet Money can't realize the proper solution.

Mon, 03/25/2013 - 19:32 | 3374670 Terminus C
Terminus C's picture

That is because the "proper solution" is of them dangling from lamp posts... I think they realize it... they just aren't too keen to implement.

Mon, 03/25/2013 - 21:58 | 3375236 A Nanny Moose
A Nanny Moose's picture

Bingo!! Unfortunately for them, as Ayn Rand once said, "We can evade reality, but we cannot evade the consequences of evading reality."

Mon, 03/25/2013 - 19:59 | 3374798 Bananamerican
Bananamerican's picture

the teddy bear kidz at Planet M still have full faith and credulity in Bernanke, the Great Helmsman of the Federal Reserve

Mon, 03/25/2013 - 18:01 | 3374370 benbushiii
benbushiii's picture

In order to prop the system up to higher and higher levels more money is required to support the inverted pyramid the Fed has created.  This will eventually collapse under its own weight since the majority of the people require a medium of exchange to live and purchase necessities.  The Fed has destroyed income for the retiring workers; saving mean nothing.  If given a choice to manage the exisiting nest egg and cut back on extravagant items, or be forced into stocks that are at ridiculous levels due to the Fed's prop, the people will not be fooled again.  An inverted pyramid is the same as a ponzi scheme and will fall on its own weight.

Mon, 03/25/2013 - 22:12 | 3375299 dark pools of soros
dark pools of soros's picture

but not today!!

Mon, 03/25/2013 - 18:01 | 3374371 Freewheelin Franklin
Freewheelin Franklin's picture

A simpler way to explain this is to say it has value simply because we believe it does.

 

Not quite. It has "value" because we have aircraft carriers and Predator Drones telling you it has value. 

 

https://www.youtube.com/watch?v=_kGOAWnvyWA

Mon, 03/25/2013 - 18:02 | 3374377 LawsofPhysics
LawsofPhysics's picture

Exactly.  Want to use something other than dollars, prepare to be liberated.

Mon, 03/25/2013 - 22:13 | 3375305 dark pools of soros
dark pools of soros's picture

I really wanted some of those gold dinars.....  RIP Gman!

Mon, 03/25/2013 - 18:09 | 3374392 yogibear
yogibear's picture

Bernanke and the fed have adopted the Zimbabwe financial plan.

Raise the stock market by trashing the US dollar.

We should see larger prices soon while the US goverment cooks the CPI numbers and makes double digit inflation appear to be in the low single digits.

"When it becomes serious, you have to lie" - Jean-Claude Juncker

 

Mon, 03/25/2013 - 22:17 | 3375326 Anusocracy
Anusocracy's picture

A study done by a Texas psychology professor done in the early 90s concluded that what it took to be a good President was to be able to lie and be believed.

 

Mon, 03/25/2013 - 18:15 | 3374407 dumpster
dumpster's picture

since 1940 ish the buck has lost 99% of purchasing power

 

and this dude just wrote an article how the dollar is losing its purchasing power this guy has lived in a small tent for years probably now just out of his diaper best

Mon, 03/25/2013 - 18:16 | 3374409 hannah
hannah's picture

what is the point of this article..? fiat is bad. the fed is bad. if you dont have a clue about the shit going down by now you need to just give up....?!

 

 

Mon, 03/25/2013 - 18:26 | 3374434 lolmao500
lolmao500's picture

Purchasing power is overrated!

Mon, 03/25/2013 - 18:27 | 3374435 ebworthen
ebworthen's picture

Excellent interview with Dr. Paul Craig Roberts, former Assistant Director of the Treasury, about how far down the rabbit hole the Western World has gone.

In a little over five minutes he spells it all out; banks running governments, and governments and countries becoming police states.

Worth a listen:  http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/24_D...

Mon, 03/25/2013 - 18:26 | 3374437 jbvtme
jbvtme's picture

the fed is buying $85bil of toxic derivatives per month.  by doing this are they actually creating money or validating money previously created?

Mon, 03/25/2013 - 18:30 | 3374440 ebworthen
ebworthen's picture

They are holding down the lever that lifts the toilet flapper to ensure the flushing of the dollar's purchasing power and our progeny's future to enrich bankers in the moment.

Mon, 03/25/2013 - 18:33 | 3374455 TruthInSunshine
TruthInSunshine's picture

They're using the 85 billion per month (and much more, in reality) to transfer bad assets from the private entities that they really work for onto taxpayers, providing those same private entities with good assets in exchange that really also come from the taxpayers, and have been doing so since 1913 (through dozens of schemes, from manipulation of the world's biggest market, interest rates, via FOMC policy, to the relatively recent open & brash QE-POMO/Maiden Lane/Other Asset Swapping programs.

Mon, 03/25/2013 - 19:21 | 3374636 slightlyskeptical
slightlyskeptical's picture

They are buying the new mortgages not the toxic old crap. If they didn't agree to buy them there would be NO new mortgage market in America at this time, at least not at the incredibly low interest rates that currently prevail. Too much risk for not enough reward.

Mon, 03/25/2013 - 18:28 | 3374441 blindman
blindman's picture

b.b.
shill (n.) Look up shill at Dictionary.com1916, "one who acts as a decoy for a gambler, auctioneer, etc." (probably originally circus or carnival argot), probably a shortened form of shillaber (1913) with the same meaning, origin unknown. The verb is attested from 1914. Related: Shilled; shilling.

Mon, 03/25/2013 - 18:29 | 3374442 Cacete de Ouro
Cacete de Ouro's picture

The UDS has lost 97% of its purchasing power since 1913 or whenever. The start date is immaterial. Everyone knows this...well, wall st knows this, and whoever the fuck bothers to look in the 50 states.

"If they don't research then they are not worth saving!"....

Debate: For the motion we have a team from the Cornell Club (where the cheese burgers are OK, but not a patch on Jackson's Hole;
Against the motion we have a team made up of dare dorm failures who got left behind in Cancun.

Lines stay open until 9.30 est

Vote early, and vote often

Mon, 03/25/2013 - 18:31 | 3374453 Dre4dwolf
Dre4dwolf's picture

I vote for a sugar backed currency!

1 Dollar = 1 LB of Raw Sugar or Equivelant

 

It will always have value.

Mon, 03/25/2013 - 18:59 | 3374561 tenpanhandle
tenpanhandle's picture

I'd accept change in cookies.

Mon, 03/25/2013 - 19:46 | 3374745 toys for tits
toys for tits's picture

So you're advocating the "glycemic monetary index"?

Mon, 03/25/2013 - 18:36 | 3374473 Pseudo Anonym
Pseudo Anonym's picture

why is it that these guest bloggers are having difficulty calling fractional reserve central banking for what it is:  a hofjuden run scam intended to defraud hard working individuals and their families of the fruits of their labor?  instead of asking stupid questions such as:

And with that power, the Fed can control and/or influence economies and markets the world over.Should such power exist?  And if so, should a single private entity owned by the major players in the banking system be allowed to wield it?

who other than a bankster benefiting from the hofjuden run fraud would say "yes"?

Mon, 03/25/2013 - 18:58 | 3374560 Siouxwestern
Siouxwestern's picture

Your anti-semitic rant has no value here. Go away.

Mon, 03/25/2013 - 19:02 | 3374575 akak
akak's picture

NeoNazis will be NeoNazis, bless their goosestepping hearts.

Mon, 03/25/2013 - 18:38 | 3374480 howenlink
howenlink's picture

Precisely why G. Edward Griffin is on my Top-Ten heroes list, and his book about the Fed is among my favorites.

Mon, 03/25/2013 - 19:35 | 3374686 Meat Hammer
Meat Hammer's picture

Especially the last chapter where he talks about solutions.

Mon, 03/25/2013 - 18:39 | 3374482 world_debt_slave
world_debt_slave's picture

One has to admit that the Fed Reserve has had a hell've run, 100 years of screwing the US citizen.

Mon, 03/25/2013 - 18:44 | 3374511 howenlink
howenlink's picture

They are trying to put the Devil out of business.

Mon, 03/25/2013 - 19:35 | 3374689 geewhiz
geewhiz's picture

Not really, that's who they work for.

Mon, 03/25/2013 - 19:39 | 3374705 Terminus C
Terminus C's picture

No man... they are doing "god's" work... they never said which god.

Mon, 03/25/2013 - 18:41 | 3374493 thewayitis
thewayitis's picture

 

 

    Gold bitchez ...And a little silver too. Theres no END to this Fiat printing...

Mon, 03/25/2013 - 19:40 | 3374714 Terminus C
Terminus C's picture

Actually I have a lot of silver and a little gold.  Though if I were to fiatify them both I'd get about the same number of paper notes for each.

Mon, 03/25/2013 - 20:32 | 3374930 Professorlocknload
Professorlocknload's picture

The political path of least resistance. Guaran-god-damn-T'd!

Mon, 03/25/2013 - 18:43 | 3374501 volney47
volney47's picture

Prepare people.

Mon, 03/25/2013 - 18:48 | 3374527 Bobportlandor
Bobportlandor's picture

In the 1970s I thought government new what they were doing.

In the 1980s I thought recessions were inevitable every 7 years

In the 1990s I thought you can't ship jobs oversea and not collapse the economy.

In the 2000s I thought passing out credit cards to teens and dogs is nuts and mortgages, well we all know about those.

Today I think If I only new then what was happening.

Problem is people don't live long enough to put to good use theses lessons.

What I know now is, going forward know one is going to trust anyone anymore and times will be tough.

 

Mon, 03/25/2013 - 19:58 | 3374795 RockyRacoon
RockyRacoon's picture

I now that what I used to now is not what I new I new.

Mon, 03/25/2013 - 20:01 | 3374809 akak
akak's picture

Eye new ewe where going too say that.

Mon, 03/25/2013 - 20:15 | 3374851 Professorlocknload
Professorlocknload's picture

So, you guys already gnew theses lessonses?

Mon, 03/25/2013 - 23:30 | 3375567 El Hosel
El Hosel's picture

.....Kno kway you canoe.

Mon, 03/25/2013 - 18:49 | 3374530 ziggy59
ziggy59's picture

PPPPPPPPP
Proper Preciousmetal Property Planning Prevents Piss Poor Poverty Performance

Mon, 03/25/2013 - 18:54 | 3374543 Cacete de Ouro
Cacete de Ouro's picture

Does anyone read these fuckin' posts? I hope ao...

Ben Bernanke shared an office with Mervyn King. No big revelation there. But, the lineage is important. It means that the sucessor to Eddie George, Robin Leigh-Pemberton, Gordon Richardson, Leslie O'Brien and Lord Cromer (Rowland Baring) have a direct link to the predecessors of Greenspan, Volcker, Bill Miller, Arthur Burns, and McChesney Martin.

JUST SAYIN'

Mon, 03/25/2013 - 19:01 | 3374571 Just Ice
Just Ice's picture

The worldwide central planner print fest is systematically destroying trust in markets and the entire financial system.  You see a hustler with a shell game on the corner and you decide to pass altogether, to bet on the presumption you're good enough to catch the move and win, or bet out of curiosity of whether you will be able to catch the move.  In each instance of choice, however, it is a given that the game is an untrustworthy con in favor of the hustler.  People will only participate on short and limited basis or, more likely, waste no time and money at all.    That is how the markets are increasingly viewed at large -- nothing more than a rip-off which is creeping into mistrust of the entire banking system.  This excessive money creation is not only debasing the currencies and repute of the money printers but is proceeding to attack the very systems under their care.  Since they apparently do not give a twit about society at large, (blowing bubbles in necessities), do they also not care about sowing seeds of their own destruction?      

Mon, 03/25/2013 - 19:55 | 3374790 Professorlocknload
Professorlocknload's picture

No.

Mon, 03/25/2013 - 19:03 | 3374578 22winmag
22winmag's picture

Worthless monopoly money... buying 100 CCI Mini Mags for $7.95 this weekend felt like winning the lottery.

Mon, 03/25/2013 - 19:25 | 3374644 El Hosel
El Hosel's picture

.... Jusk ask Joe about the "Strong Dollar" and his 500,000 dollar "One Nighter".

http://www.huffingtonpost.com/2013/03/25/joe-biden-paris-hotel-cost_n_2950062.html#slide=1440675

Mon, 03/25/2013 - 19:45 | 3374733 DosZap
DosZap's picture

.... Jusk ask Joe about the "Strong Dollar" and his 500,000 dollar "One Nighter".

http://www.huffingtonpost.com/2013/03/25/joe-biden-paris-hotel-cost_n_2950062.html#slide=1440675

 

And the NEXT night in LON_DONNNNN at $400k,and his Paris Limo bill.

http://www.weeklystandard.com/blogs/bidens-321665-limo-bill_708940.html

Mon, 03/25/2013 - 19:31 | 3374634 Radical Marijuana
Radical Marijuana's picture

The existence of the Federal Reserve Board is the result of the best organized gangs of criminals applying the methods of organized crime to be able to take over control of the government, in order to endlessly amplify the ability to legalize lies, and back those lies up with more legalized violence. It is impossible to underestimate the degree to which this social insanity IS going to runaway, and therefore, too much of its "success" must result in final failure, of unimaginably amplified astronomical sizes!

The Fed represents the fact that our money system has become our state religion, with nothing but faith based money, which "faith" would not exist without the force of the government to back it up. Almost the entire social system has become LEGALIZED LIES, BACKED BY LEGALIZED VIOLENCE, everywhere one examines it. Since that VIOLENCE can never make those LIES become true, but nevertheless, keeps on forcing everyone to continue to act as if those LIES were true, our entire civilization is becoming insane, and is headed towards serious psychotic breakdowns.

The path that insanity takes is that it appears relatively nice, at the beginning, but then turns into a worse and worse nightmare, as time passes, and we get stuck more deeply into the rut of that insane system. OF COURSE, Next stop: Crazytown! The Fed is run by the best professional liars and immaculate hypocrites that money could buy. Those tend to manifest one of Mark Twain's observations that the best liars tend to believe in their own lies. However, the only way to do that is to develop wilful blindness and deliberate ignorance to a high art form.

Actually, America has already arrived at Crazytown! Operating a fiat money system requires people to ignore the basic laws of nature, as if those were not relevant. The original American monetary system was supposed to be bimetalic, based on gold and silver, with the value of those set by Congress. However, systematically, for more than Century the international banksters were able to subvert that. For instance, in 1874, silver was demonetized by a legislative trick, which was passed due to the bribery of Congress by agents of the international banksters. The 1913 creation of the Federal Reserve Board was more of the same, with the 1971 total elimination of the backing of gold completing the processes of creating "money" that was based on nothing but faith, indeed, "money" in which the meaning of those words "money" and "dollar" were inverted and perverted. Money no longer had anything to do with metal, and dollars were not a precise amount of silver. Instead, "money" was currency or credit, made out of nothing, as the astonishing privilege of PRIVATE banks, to be able to legally counterfeit that "money," while everyone was forced by the government, through legal tender laws, and taxation, to accept that runaway triumphant fraud of money made out of nothing!

Money made out of nothing violates the most basic laws of nature, namely the conservation of matter, energy and momentum. Privatized fiat money is NOTHING but the triumph of organized crime taking control over the government, and using the powers of We the People, to rob those People ... which robbery of those Zombie Sheeple is now approaching the point where they are likely to be slaughtered, after they have been fleeced to exhaustion.

Of course, America is now almost totally dominated by legalized lies, backed by legalized violence. Another glaring example of that process of an insane state religion is the war on terror. To believe in that one has to be willing to deliberately ignore the laws of physics, and the properties of the substance steel, in the 3 steel frame buildings that suddenly collapsed on 9/11/2001. Similarly, the war on drugs is another set of utterly absurd distortions. 75% of the war on drugs is war against cannabis. That war is based on asserting that the single best plant for people, for food, fiber, fun and medicine, is actually "marijuana, that is almost as bad as murder."

Around and around it goes. All of the most important laws ARE legalized lies, backed by legalized violence. The Federal Reserve Board is the central and most important one of all those lies. The basic mechanisms driving the positive feedback of frauds are the same, and primarily work through the funding of the political processes. (Including paying to assassinate politicians who could not be bribed or intimidated to become the puppets of the banksters.) Today, at least 95% of the politicians are puppets for the banksters. In that context, this article is ridiculously optimistic when it asks its rhetorical questions:

"Should We Place Our Faith in the Fed?

Perhaps I'm being overly pessimistic."

As well, this article is being way too silly and too superficial when it allows those notions that:

"The reality is, the Federal Reserve is like any other organization. Human. And fallible."

The Fed IS like any other human organization, in the sense of being organized crime, which goes down the path of local paths of least resistance, which are the paths of local least morality. The Fed is runaway triumphant organized crime, able to take control over the government, and thereby drive itself further and faster than ever before.  The dance between the American People and the Federal Reserve is a dance of spiralling social insanities. The triumphs of frauds make those doing that become ever more wealthy and powerful, and therefore, able to engage in even more frauds. However, that is still basing the control of that civilization on the foundation of fraud. That fraud continues to be backed up with force, however, that force can never makes those frauds become true. Rather, the only thing that happens in that the whole system becomes increasingly insane!

The feedback loops between funding the political processes being able to take over control of the monetary system, to thereby enable even more leverage over the funding of the political processes, has reached the point of a nearly terminally sick social insanity in the USA. That has now all gotten so extremely bad that there are no longer any reasonable ways to imagine some series of political miracles which could actually happen to resolve the magnitude of the problems caused by the runaway triumphs of legalized lies, backed by legalized violence.

The Federal Reserve Board is at the heart of that system of force backed frauds controlling everything else. However, all around that is layer after layer of social insanities, due to the same basic causes in the patterns of the funding of the political processes, driving more different kinds of legalized lies, backed by legalized violence, controlling almost everything that mainstream Americans believe and do. More radical truth about these issues goes on, and on, through layer after layer of those almost infinite tunnels of deceits.

This kind of article does not face the deeper facts that money must be backed by murder. It stays on more superficial levels of ideas about what money is, or should be. Therefore, it does not understand the degree to which the Federal Reserve Board is a front for a group of trillionaire mass murderers. Moreover, this kind of article gets nowhere close enough to understanding what that would mean with respect to solutions to these social problems, that were based on understanding those deeper social facts.

This article is still a relatively naive and optimistic view of the Federal Reserve Board, and the global monetary system in general, which is privated fiat money, made out of nothing, as debts, backed by governments which are controlled by the biggest gangsters, the banksters. Those banksters appear to have only one real plan for the future, and that is to continue to do what they did in the past, only becoming more astronomically amplified in size. Therefore, they are preparing to rob people more, through more spectacular financial frauds, and to back those things up with more genocidal wars, and more democidal martial law.

Furthermore, the more radical truth with respect to those things is that the only genuine solutions to those runaway social insanities would be to wake up to how and why those things are happening, enough to then do them better than the current banksters are doing.

Mon, 03/25/2013 - 21:57 | 3375230 logicalman
logicalman's picture

Ever try running those thoughts past a non-ZH regular? You'll just get a confused look.

I would say you are absolutely dead-on, and proof that marijuana does not impede, but actually improves, thinking.

Keep smokin' 'em!

 

Tue, 03/26/2013 - 14:00 | 3377878 Radical Marijuana
Radical Marijuana's picture

Yes, logicalman ... I have spent more than 30 years attempting to talk directly to tens of thousands of Canadians, face to face, about the Canadian political contribution tax credit provisions, during which time I was having two court cases against the government of Canada over the laws controlling the funding of politics, which spanned about 15 of those years.

You are absolutely right, 99% of North Americans BEHAVE as if effectively brain dead. Not only do they not understand the monetary and taxation systems, more importantly, they do NOT want to understand. The fact that they do not want to understand is the hardest thing to understand. Obviously, they could understand, IF they wanted to ... BUT, THEY DO NOT WANT TO!

At the present time, I have developed living proof of that situation, focused on the political tax credit, where, IN FACT, 99.7% of the potential of that tax credit has never been used, since more than 99% of taxpayers have never participated, and do not want to start participating. Rather, the social statistics are that less and less people want to participate in any kind of politics whatsoever, despite the situation that I can deliver to them their own autonomous abilities to make an after tax profit from participating, in precisely the ways that they can control:

http://www.marijuanaparty.ca/article.php3?id_article=215

The main reason why I started bothering to post my kind of bla, bla, blah on Zero Hedge a few months ago, (after being a reader for quite a while before) is that I expected that there would be here at least a few people who would be interested ... However, other than that, the overall social situation in North America is like you wrote, logicalman.

Mon, 03/25/2013 - 19:22 | 3374642 Meat Hammer
Meat Hammer's picture

Bernanke wasn't wrong, he was lying and still is.

 

Signed, 

Captain Obvious

Mon, 03/25/2013 - 20:14 | 3374824 steve from virginia
steve from virginia's picture

 

 

 

It's hard to take long articles from Chris Martenson seriously when they start off wrong-footed:

 

 

"Fed, the Great & Powerful


The podcast goes into the mind-blowingly simple process by which new money is created in America by the Federal Reserve (or the "Fed"). That is to say:

  1. The Fed holds a meeting
  2. Those in the room decide how many more dollars they think the world needs
  3. Someone walks over to a computer and adds that many dollars to the banks, with a few clicks of the keyboard

The banks then, if they want to, lend this new money out into the economy on a fractional basis, adding even more "thin air" dollars to the nation's money supply."

 

Thanks, Paul Krugman!

 

The banks lend without the Fed, as money-lenders have done without central bankers for thousands of years. All the banks require are willing borrowers, with-or-without collateral. Please look up famous Austrian economist Joseph Schumpeter who explains it all for you! You might also Google 'Steve Keen'.

 

Taggart suggests that the Fed 'invents' collateral for the banking system ... that it makes unsecured loans. This is impossible. For it to do so the central bank would become instantly insolvent. This is because CBs don't have a capital structure, they have little or no capital. Central banks are collateral constrained ... or else.

 

The private sector banks make unsecured loans on their own account, against re-pledged/re-hypothecated collateral ... or against no collateral at all. Private sector banks create the world's 'new money', they create inflation.

 

During periods of credit expansion the central banks do little or nothing but shepherd forex reserves and overseas credit flows. Their balance sheets tend to be pristine, there is no need for intervention (which does not mean they don't intervene).

 

People need to start to understand the social and economic problem is at the end of their driveways -- not with the central bankers. 

 

Until they understand ... there will be the steady unraveling of what we call our 'way of life' ... until we are all scavenging out of dumps and battling in streets with machine guns over cans of dog food.

 

Tue, 03/26/2013 - 04:12 | 3375843 AnAnonymous
AnAnonymous's picture

People need to start to understand the social and economic problem is at the end of their driveways -- not with the central bankers.

Until they understand ... there will be the steady unraveling of what we call our 'way of life' ... until we are all scavenging out of dumps and battling in streets with machine guns over cans of dog food.
__________________________________

'Americans' have understood the problem a long time ago. But self indiction is a big thing in 'americanism'. They wont point fingers at themselves, not now, not tomorrow. It is part of their 'american' nature.
The problem must come from other people.

It is part of the covenant between the 'american' elite, servant to their master and the King class, aka We The People, aka the 'american' middle class, that the servants will get deflected on them the blame for the 'american' middle class doings.

It is part of the 'american' elite job and they are well rewarded for that.

Tue, 03/26/2013 - 04:15 | 3375849 akak
akak's picture

I thought I was poor because I had no hat, until I met an anonymous man who had no brain.

Tue, 03/26/2013 - 05:52 | 3375899 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

'Americans' have understood the problem a long time ago. But self indiction is a big thing in 'americanism'. They wont point fingers at themselves, not now, not tomorrow. It is part of their 'american' nature.
The problem must come from other people.

You looked like locked in a monologue mode, speaking to yourself and of yourself all the time, only using others to project your inner self.

It is part of the covenant between the 'american' elite, servant to their master and the King class, aka We The People, aka the 'american' middle class, that the servants will get deflected on them the blame for the 'american' middle class doings.

The contortions people must make to fit their propaganda in their boxes... Rejoicing.

Mon, 03/25/2013 - 20:08 | 3374829 Goldilocks
Goldilocks's picture

"History is a set of lies agreed upon." - Napoleon Bonaparte

Mon, 03/25/2013 - 20:21 | 3374880 Fix It Again Timmy
Fix It Again Timmy's picture

I really don't know what to think any more, but with a derivatives market worth 1.2 quadrillion, why think at all?...

Mon, 03/25/2013 - 21:17 | 3375087 Professorlocknload
Professorlocknload's picture

Yeah, like what's a quadrillion... of anything? Mind boggling. When price discovery is revealed on that bugger, only one thing left to do, https://www.youtube.com/watch?v=wcW_Ygs6hm0

 

Mon, 03/25/2013 - 22:00 | 3375248 logicalman
logicalman's picture

The human brain contains about 100 billion cells, wach capable of supporting about 10 thousand connections.

Gives you about 1 quadrillin addresses to work with.

Once a system has to cope with numbers larger than the number of availabe addresses it crashes.

Maybe that's the plan!

 

Mon, 03/25/2013 - 20:28 | 3374903 orez65
orez65's picture

The "Faustian Bargain"

The Federal Government deficit spends and the Federal Reserve counterfeits the Dollars.

The Fed's owners, the TBTFB, get a cut out of every counterfeited
Dollar and saved from their incompetence.

90% of Americans are too stupid to figure this out.

Mon, 03/25/2013 - 22:12 | 3375301 Clowns on Acid
Clowns on Acid's picture

Faustian bargain indeed... financing the Cloward Piven experiment.

Mon, 03/25/2013 - 22:11 | 3375298 Spaceman Spiff
Spaceman Spiff's picture

The Fed seems to be gaining supporters.  Some news outlets acknowledge that they are having an effect, but seem to be more than happy to ignore the dangerous potential for the immediate gains.

For instance:

Larry Kudlow tweeted out this support:  http://scottgrannis.blogspot.com/2013/03/the-fed-is-not-printing-money.h...   Even wrote this column:  http://www.nationalreview.com/articles/343645/has-bernanke-gotten-story-...

 

Mon, 03/25/2013 - 22:34 | 3375382 Bear
Bear's picture

Does the FED have better access to data, superior analytical tools, better knowledge of what's 'really' happening in the economy, have a position to affect and effect policy, and understand economics as well or better than the rest?

I say yes they do, and because of it, they have conspiratorially acted in their self interests by avoiding the use of said knowledge in an attempt to improve the financial position of their constituencies and the expense of the citizens of this nation. 

And, having acted with self interest, continually cling to their lies.

The proof: 'We need to support the economy until the unemployment rate has been reduced to 6.5%" ... when they categorically know that the rate will never achieve this level.

They KNOW the truth of it and they LIE about it.

Mon, 03/25/2013 - 23:38 | 3375578 SmittyinLA
SmittyinLA's picture

All I know is my flookin' carbon footprint is smaller than Algore's.  What's wrong with that, sages?

PS:  My dick is bigger also.

Tue, 03/26/2013 - 00:03 | 3375588 socalbeach
socalbeach's picture

If the Peak Prosperity crew is calling for a 40% drop in the stock market, then at least the dollar's purchasing power will increase by 67% [100*(1/0.6 - 1)] with respect to stocks.

"Say Goodbye To The Purchasing Power Of The Dollar"

Tue, 03/26/2013 - 01:15 | 3375674 alfbell
alfbell's picture

 

 

 

I'm long... gold & silver coins, guns and ammo, fishing rods and tackle, tents and sleeping bags, portable water filtration systems.

Tue, 03/26/2013 - 02:04 | 3375743 serema
serema's picture

outfit like this advice? Well, prom dresses for sale available are two accessible designers that come up again And again for me - entirely about every are popular for bridesmaid dresses, but I reckon you could happily cocktail dresses wear one of their creations as a bride (although if you’re going for many a traditional groom, hopefully this cheap bridesmaid dresses will inspire you for your girls). And of course the best element Not one costs more unlike £300 including post and of course packaging. Seriously.

Tue, 03/26/2013 - 04:07 | 3375839 AnAnonymous
AnAnonymous's picture

I'll look into that.

Signed: an 'american'

Tue, 03/26/2013 - 04:22 | 3375845 akak
akak's picture

Make me laugh!

Look at the Chinese dunghand calling the Chinese spam wok black!

The irony is too rich for words, even monolizing of the speeching means words.  Seriously.

Tue, 03/26/2013 - 06:06 | 3375908 TheFourthStooge-ing
TheFourthStooge-ing's picture

Simple explanation, as postulated by Occam's hair of face cutting implement of great sharpness. Chinese citizenism cross-promotionality at workings here.

Dress spammer is of mylovepromdresses.com(munautist) domain. Registrant whois informings gives:

Domain Name: MYLOVEPROMDRESSES.COM
Created on: 20-Sep-11
Expires on: 20-Sep-14
Last Updated on: 20-Sep-11

Registrant:
online company
shanghai road
shanghai, jiangsu 210000
China

Spamming "online company" somehow related to AnAnonymous Chinese citizenism fastfood restaurant franchise Just Killed Cat (JKC).

Tue, 03/26/2013 - 04:05 | 3375837 AnAnonymous
AnAnonymous's picture

Another 'american' article, another cheap propaganda article.

'Americans' run a business of extorting the weak, farming the poor.

The USD is not accepted by those at the bottom of the 'american' global pyramid, those who provide the necessary inputs to the 'american' economies so that the 'american' middle class can live their 'american' dream because they believe in the USD but because the USD is forced on them.

No belief is required. What must be assessed is their capacity to reject the USD. Which is pretty low.

But as 'americans' would like to force the perception that trading with them is based on free will and mutual benefits, it is quite hard for that 'american' propagandist to admit that the issue of the USD is not one of belief but one of coercion.

'Americans' also like to hijack one cause to tie its effects to one another alledged cause.

The reality is that 'americans' have put the world on the path to depletion of resources. Expect in this context every single currency possible to lose its purchasing power.

The current 'american' monetary policy simply ensures that the 'american' middle class enjoy the lion's share of the consumption of the remaining resources.

By claiming that the cause of the loss of purchasing power is this 'american' monetary policy, 'americans' kill two birds with one stone:
-they avoid speaking about the way they have put the world on the path to depletion of resources.
-they once more depict themselves as victims while the same policy is there to ensure they get the best that is left to get.

But hey, 'americanism' is as 'american' does so...

Tue, 03/26/2013 - 04:13 | 3375842 akak
akak's picture

Don't taze my citizenism bro!

Tue, 03/26/2013 - 06:21 | 3375918 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Another 'american' article, another cheap propaganda article.

Ah, Chinese citizenism propaganda... Growing older by the day.

'Americans' run a business of extorting the weak, farming the poor.

Don't waste your energy on producing this cheap propaganda. Produce a propaganda that can be believed in.

Tue, 03/26/2013 - 12:41 | 3377547 dadichris
dadichris's picture

There's really nothing to debate - monetization of debt is fundamentally anti-free market capitalism and downright un-American.  Why do the Amirican people tolerate this?

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