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How The Federal Reserve Is Purposely Attacking Savers
Submitted by Chris Martenson via Peak Prosperity,
There's something we 'regular' citizens wrestle with that the elites never seem to: a sense of moral duty.
For example, following the collapse of the housing bubble, many people struggled with mortgages they could no longer afford to pay, fearing the shame of default. Many believed defaulting was wrong somehow; that it was their moral obligation to pay their mortgages, no matter how dire their personal situation. And of course, the mortgages lenders did their utmost to reinforce this perception.
In a perfect world, we would honor our debts and obligations, every one of us. But the world is an imperfect place ,and moral obligation is something that almost never enters into the decision matrix of our society's richest. Or the banking industry.
For them, the number one (and two, and three...) rule is that whatever is expedient and makes the most money is the right thing to do.
For the bottom 99%, it’s like playing with a stricter set of rules than your opponent: you’re not allowed to hit below the belt, and they’ve brought a baseball bat into the ring.
Note how this guy had to fight through his middle class conditioning before coming to a sense of peace over his decision to enter into a short sale on his house:
How a short sale taught me rich people’s ethics
Sep 29, 2014
The closest I ever came to acting like a rich person was two years ago when I short-sold my primary residence. I might have been able to keep it but strategic default made life easier. I owed about $400,000 on a house that short-sold for $150K. The bank lost more than a quarter of a million dollars, and I lost at least $80K in down payment and property improvements.
I was taught growing up to “keep my word” and that your handshake “meant something.” Yet businessmen and individual wealthy people make decisions that are far less moral than a short sale. People “incorporate” so they can avoid legal responsibility for individual actions.
It works great. You can stiff creditors, declare bankruptcy, pollute daily and raid pensions to enrich individual executives. If it all goes wrong, like it has so often for Donald Trump, you can keep your mansions and individual fortunes.
I entered the shark-infested waters of high finance with a short sale. It was the worst ethical decision, but the finest, most profitable business moment, of my adult life. It was an informative, even transformative, experience.
(Source)
This poor guy has a very bad case of ‘middle class morality’. It's a very real phenomenon. All our lives, we are all taught (programmed?) to stay within the true and narrow groove of middle class life, pay our bills, and be on the hook should things go awry.
Not everybody holds that view, however. As he continues in the piece, the author discovers something important along the way:
I always knew business was getting over on me, but I had no idea the extent until I started looking to short-sell. I first learned all I could aboutprivatehome financing. I called up some shady investment groups around town and questioned them at length. I didn’t end up using them, but they were frank, informative and unashamed.
“Who would pay 11 percent on a home loan?” I asked.
“Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”
Rich people = bad credit: Just let that sink in.
Bill told me in roundabout ways that rich people never pay a bill if there is any way around it. If something goes wrong in an investment or a business, they always preserve their own assets first.
Rich people have terrible credit. They know that there’s a system and it has rules. And, for them, these rules can (and should) be optimized for their own benefit. So they do anything and everything that works to their advantage.
There’s a reason and a logic to that which I can appreciate, but it makes me wonder where the rest of us obtained our deep-seeded beliefs about duty and responsibility towards debts.
Similar to rich people, banks do not have any entangling moral restrictions on their behaviors. That absence allows them to get away with extraordinary misdeeds, none more obvious and damaging than those that the Federal Reserve has perpetrated on the nation, specifically, and the world, more broadly.
To understand why, we first have to discuss something called Financial Repression.
Financial Repression
In my recent interview with Daniel Amerman, to whom I will credit much of the concise thinking and for unearthing the sources that I will weave throughout the remainder of this piece (please read his excellent article on Financial Repression here), the truly immoral intent of the Fed's policies really sank in.
In response to the Fuzzy Numbers chapter (18) of the Crash Course, reader JBarney pondered the following:
Thanks for putting this update together. I think one of the problems is there are so many moving parts, so many manipulated numbers it is difficult to get a clear picture. The way it is organized here is helpful.
However,I can't help but wonder about all of the implications of these numbers for the real economy and people's lives. One of the sections which really hits home was the impact inflation has on all of this. If these are the numbers now, what will it be like when things really start to change?
The answer is that while inflation always steals from savers, it really does its dirty work when the central bank and government conspire to create a condition of pervasive and unavoidable negative real interest rates.
This is the heart of Financial Repression: an environment in which you literally cannot save money without paying a penalty.
The main takeaway of Chapter 18 on Fuzzy Numbers is not that the government fibs a little now and then (okay,all the time) merely because that's politically expedient, but it does so in service to a larger and more pernicious aim: forcing people to accept an inflation rate that is higher than either their income growth and/or the market's safe rate of return.
As soon as you are locked into a negative interest rate regime, your capital is losing purchasing power. But simple accounting rules dictate that loss of wealth had to go somewhere. So where did it go? To somebody else.
Negative real interest rates transfer money from every saver to every over-extended borrower. This is especially true with the government (largely because of its special revolving door relationship with the Fed, which both issues the money out of thin air and then buys government debt forcing rates into negative territory).
It's really that simple. The Fed has openly and actively suppressed rates -- not to help the credit markets, as they claim, but to engineer a condition of Financial Repression. Because that's what the government needs to stealthily take your wealth to pay down the prior debts it accumulated.
Thus 'negative real rates' are the essential component of transferring wealth from the many to the few, with the 'few' being defined as the government, Wall Street, and others who exploit leverage and liabilities at sufficient scale to be on the right side of that wealth transfer.
This well-known phenomenon is a thoroughly accepted and well-described practice of governments and central banks everywhere. One of the better descriptions of it comes to us courtesy of the BIS in this working paper published in 2011.
From the abstract:
Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts.
A subtle type of debt restructuring takes the form of “financial repression.”
Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks.
In the heavily regulated financial markets of the Bretton Woods system, several restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s.
Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt.
Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation.
Inflation need not take market participants entirely by surprise and, in effect,it need not be very high(by historic standards).
For the advanced economies in our sample, real interest rates were negative roughly ½ of the time during 1945-1980. For the United States and the United Kingdom our estimates of the annual liquidation of debt via negative real interest rates amounted on average from 2 to 3 percent of GDP a year.
(Source)
Let me decode that.
- Step 1: Governments get into trouble by borrowing too much.
- Step 2: Rather than pay this down honestly via cutting spending (unpopular) or by defaulting (even more unpopular), the government conspires with the central bank to slowly liquidate the stack of obligations by forcing negative real interest rates on everyone.
- Step2b: Hang on one second...it wouldn’t work if people could dodge the Financial Repression, so a ring fence has to be built out of capital controls and explicit rate caps on and across the whole spectrum of interest-bearing securities.
- Step 3: Sit back and wait for everyone with savings to contribute their purchasing power to those who issued the debts, be those public or private entities.
And this is exactly what has happened. All of the talk about the Fed focusing on unemployment or inflation or whatever are red herrings. What the Fed is really trying to do is to create a set of macro conditions that will allow the federal government to slowly crawl out from under a pile of debt and entitlement obligations that it literally can not pay by honest, above board means.
I guess if we were to imagine a "Step 4" in the above process, it would be to wait for the head of the central bank to come out and deliver a speech in which she expresses a grandmotherly concern for the wealth gap that naturally results from all this, but to deflect attention away from this being a direct and understood consequence of the Fed's intentional goal of financial repression and towards some failure on the part of those who have been targeted to donate to the cause of bailing out the profligate and rewarding the borrowers.
Oh, wait. That did just happen. Here it is, Step 4, courtesy of Janet Yellen last week:
Why Fed Chair JanetYellenis “greatly” concerned about growing inequality
Federal Reserve Chair Janet Yellen on Friday expressed deep concern over widening economic inequality in the country and called for tackling issues such as early childhood education and encouraging entrepreneurship to help narrow the gap.
[Comment:Oh boy...must contain my emotions...did she really just deflect the consequences of the Fed's policy of financial repression towards 'early childhood education? Yep. That's like a burglar saying that we need to invest in better metallurgical processes as the means of preventing doors from being kicked in so easily.]
In a speech at the Federal Reserve Bank of Boston, Yellen said steady growth in inequality over the past several decades represents the most sustained rise since the19thcentury.Living standards for most Americans have been “stagnant,” while those at the very top have enjoyed significant wealth and income gains, she said.
[Comment: Glad the Fed finally noticed that those at the very top have been making out like bandits! This was something I said explicitly would happen as a consequence of future Fed printing back in 2008 in the Crash Course, before the printing even started. How is it that I knew that this would happen back in 2008 and the Fed is just now noticing this observationally? Is my research department better than theirs? In fact this is a very well known and easy to understand process. That the Fed is feigning ignorance speaks volumes about how ignorant they believe we all are. This is a sure sign that we are trapped in a dysfunctional relationship with an abusive partner.]
“I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history,among them the high value Americans have traditionally placed on equality of opportunity,” Yellen said in prepared remarks.
[Comment: Once we accept that the Fed is openly and specifically creating the wealth gap as a matter of active and ongoing policy, which it is, then it's actually more appropriate to ask if the Federal Reserve is compatible with values rooted in our nation's history. The answer, obviously, is "no."]
The problem of inequality is an unusual topic for the leader of the Fed, if only because the central bank’s ability to address the issue is limited.
[Comment: Stop right there Washington Post! You've just inserted an assertion that might as well have come straight from a PR press release from the Fed. I, for one, refuse that claim and reject it completely right here and on grounds that hardly have to be substantiated, but I will just for fun. When the Fed buys 'assets' (really debt instruments) from major financial firms using freshly printed money they are,by definition, buying those assets at steadily increasing prices which means that those who hold the largest amounts of these assets get the richest. When the Fed secondarily targets the stock market as something to 'go up' and the top 5% own 82% of all stocks, then the Fed's role is anything but 'limited.' It is direct and proportional and they are 100% responsible for any and all gains that accrue to the top via the 'miracle' of asset inflation. Period. End of story. See also any of the innumerable charts plotting the S&P 500's rise along with the growth in the Fed balance sheet for further confirmation. Sorry Washington post, assertion denied!!]
Yellen listed four factors that can influence economic opportunity: investing in education for young children, making college more affordable, encouraging entrepreneurship and building inheritance.
[Comment:OMG. She just blamed the victims and did it in a very let them eat cake kind of way. How aggravating(!). According to Yellen, if people are finding themselves getting poorer what they need to do is stop scrimping on their kids, become an entrepreneur and then somehow go back in time and have rich parents. This statement of hers calls for pitchforks and torches. Literally. Without a shred of decency, she has shifted all blame from the Fed to the victims. How corrupt or morally adrift does someone have to be to blame their victims? In a criminal case this would be used as evidence of sociopathic if not psychopathic behavior and used by a prosecutor to call for a maximum sentence to prevent a dangerous individual from running loose in society. And rightly so. Such individuals are poor prospects for rehabilitation.]
Yellen did not address in her prepared text whether the Fed has contributed to inequality.
[Comment:No surprise there. Ted Bundy never acknowledged the harm he caused either.]
(Source)
At this point, based on Yellen's testimony, I think it's time to say what everybody is already thinking: the Fed Chairwoman is literally displaying psychopathic tendencies by blaming her victims. I'm serious: if the Fed were an individual, we’d have no problem identifying its behaviors in psychologically pathological terms.
I understand that some, or perhaps many, will excuse this last point by saying that the Fed cannot possibly state the truth because doing so would create loss of confidence or public anger. But I submit that the so-called "white lie" defense is utter nonsense.
A greater harm is done by lying than by telling the truth. You can get away with small lies for a while, but they never actually go away, they just sit there corrosively undermining the very foundation of trust upon which civilized society rests. Large lies just do more damage over a shorter period of time, and that’s exactly where we are today. This explains much in terms of people’s general sense of unease despite an apparently reasonable economy and awesome living standards (by any historical measure).
Here's what truth would sound like if I were to re-write Yellen's speech:
My fellow Americans. Decades of poor fiscal restraint and accommodative monetary polices have brought us to an uncomfortable juncture.
My intention today is not to cast blame – there will be plenty of time for that later – but to take stock of where we are so that we can all decide on the best course forward, openly and honestly, as should be the case in a democracy.
There are no easy choices at this point, only a rather poor range of options spanning from somewhat unpleasant to potentially catastrophic.
The heart of the matter is simply this: the US government has built up an extraordinary amount of public debt, and an even larger pile of unfunded liabilities.
There’s simply no way for those to all be paid back under current terms. And given recent trajectories in play with respect to economic growth and deficit spending patterns, those debts and liabilities are only growing larger with time.
Quite simply our choices are these:
- Pay down the debt by taking in more revenue than expenses. This is also known as austerity and given the size of the debts and other obligations, several decades of severe belt tightening would be required. This program would be extremely painful for nearly everybody and would require massive tax hikes coupled to major spending cuts.
- Default on the debts and obligations. This simply means not paying people, investors, institutions and countries what we have promised to pay. Down this path lies the potential for massive destruction of our financial and political systems, so we have chosen to not entertain this path any further than to mention it exists.
- Do nothing and wait for a fiscal and monetary accident to happen. This is a guaranteed disaster that could result in the sudden and permanent decline of opportunity in this country that would be so painful we cannot even predict the possible outcomes.
- Engineer conditions where negative real rates of interest slowly allow the government’s obligations to fall relative to inflation. Over the span of decades this is the least painful route and our country has been down this path before.
We’ve selected path #4 as the least bad option. Since 2009 our policies have been geared towards #4 and we see no alternative besides staying on that path for as long as necessary. The alternative is the literal bankruptcy of our nation and we cannot and will not allow that to happen. Not on our watch.
While path #4 is the least objectionable of them all, it comes with its own share of unfortunate consequences and injustices. At its heart, negative real interest rates are an effective tax on savers and those whose incomes fail to keep pace with the inflation we are creating as an overt act of policy. This generalized and widespread loss of purchasing power takes a little bit from everyone, rather than a lot from a few systemically important institutions such as your federal government, which spreads the pain widely, and therefore causes the least disruptions to our daily lives.
Path #4 has a name: Financial Repression. This policy combines negative real interest rates with various forms of capital controls and tax policy to assure that nobody can evade it.
Obviously this is not fair, nor is it in alignment with our national narrative of prudence and hard work being rewarded because, truth be told, it rewards the profligate and those who produce nothing of real value but can play the game of high finance well. Yet here we are without any better options before us, and so we reluctantly chose Financial Repression.
One other distasteful ‘feature’ of the program of financial repression we’ve been putting you all through is that the rich get richer. Until or unless there is a massive change to the taxation and wealth re-distribution programs of the federal government, the Federal Reserve’s program of Financial Repression will continue to deliver an ever-larger gap between the wealthy and everyone else.
Such is the nature of the compounding function combined with the inequity of who gets first access to the newly created funds we make available in order to drive the interest rate curve into negative territory.
Are there any risks to this program? Well, the largest of them really needs to be discussed. Financial Repression has worked in the past, but it has only worked because we experienced both inflation and economic growth in equal measures.
Today, for reasons that we are still studying, neither the wage growth necessary to incite the sort of inflation we need nor economic growth have arrived as we thought they would.
If economic growth does not return, then the entire program of financial repression could well fail, and fail spectacularly. Everything depends on a return of economic growth sufficient to service the vast increases in debts that will result from the program.
But if that growth does not materialize? If the world is now stuck in a ‘New Mediocre’ of low growth then one risk is the possibility of a crisis that will be rooted in a permanent loss of confidence in debts of all forms, but government debt specifically. Down that road lie currency crises, and a wide variety of related financial upheavals the final result of which is what most will experience as a massive destruction of wealth.
We are working hard to assure that these risks are well contained, but you should be aware that they exist
After all, this is all of our futures that we are experimenting with and we do not have a playbook that we can follow here in 2014. We are in wholly uncharted territory. The exact arrangement of conditions we see across the global landscape is brand new.
We’re sorry to have to be in the position of engineering Financial Repression, but we felt there were no other options before us and we hope that you agree that a slight yearly discomfort to almost everyone is preferable to a major disruption to our way of life, our political system, and the possibility of worse things.
Is this fair? No. Was it avoidable? Yes. Is there anything we can be doing differently today? Not that we are aware of. The choices are between bad, worse and utterly terrible. We're choosing the bad path, and we hope you’ll agree that this is the best we can do at this point.
But you deserve the truth because it’s already completely obvious and available for anybody with access to a computer. Since we are all in this together and we’re all being asked to sacrifice in some way, it's much better that we all agree on the treatment plan.
It’s not a perfect plan, far from it. But considering the alternatives, this is the best one on the table.
If you want to make it more fair, more equitable, and with an eye towards building to a future in which we can all share some hope, you’ll need to turn to your policy makers and ask them to work from the fiscal side to correct what they can. Without a profound realignment of priorities, we’ll just get more of the same and, truth be told, eventually more of the same turns into a fiscal and monetary disaster about which nothing can be done except absorb the pain and loss that it will bring.
Conclusion
Context is everything. The growing gap between the very wealthy and everyone else is a consequence of Fed policy.
Whether you decide to be shocked, angry, or scared by Janet Yellen’s recent speech is up to you. Personally, I'm pissed off at being lectured to that falling further behind the super wealthy is my fault for not investing enough in my kids, not being entrepreneurial enough, and not having wealthy parents.
That level of ‘blame the victim’ is psychopathic, utterly appalling, and I reject it on every level. Worse, the level of trust destruction that happens with such a tone-deaf speech stains our entire national leadership. It is the modern version of Let them eat cake.
Once an institution, be it royalty of old or the Fed today, gets so far off the rails that they cannot locate their own role in the misery they see around them, it’s a sign of a huge problem for that society.
Ms. Yellen should not be allowed by anyone to get away with such a patently and provably false set of arguments. She should have been soundly booed off the stage and the President should be asking for her resignation immediately.
But we’re so far down the rabbit hole that almost nobody blinked an eye at the speech, and thought it perfectly normal.
For you personally, you need to be aware that the debts, deficits and liabilities across the entire OECD world are continuing to grow at a far faster pace than GDP, and far faster than oil production and discoveries of low-cost oil reservoirs (those schooled in net energy understand this to be the real issue), and that the most likely outcome, someday, will be an extraordinary financial accident.
It will be called something else -- a period of wealth destruction -- but for those who can see it coming, it will actually be period of massive wealth transfer.
And we'll keep up our efforts on how to see clearly amidst the intentional obfuscation, to help those aware to the situation avoid ending up on the wrong side of that transfer.
[/rant]
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This is not just the US, our government here in the UK knows all the tricks but is not playing the cards very well.
They tell us they are cutting back and it is due to austerity, so everyone knows why they are feeling poorer and it is good for the long term but then we find out they are lying and have actually been borrowing more.
God help us 99% when they really start to have to have to sort it out. They can't even cut spending or raise taxes enough to do balance the books, let alone pay anything off the ever increasing principle.
To give you an idea of the scale of the problem, eliminating all pensions paid by the state might just be enough, eliminating all health spending might be enough, eliminating all defence plus education plus foreign aid spending will not be enough. The UK is in deep sh*t.
Noblesse oblige has been transformed into, “look how smart I am, I can screw the 99%, all the time.” The establishment’s tactics are to loot and then move the goal posts, when things go wrong—those in the establishment are never held accountable.
The establishment operates in two modes: 1) being truth stoppers, or 2) being truth ignorers. If the 99% refuses to ignore the truth, the establishment sends in their “misinformers,” whose propaganda is trumpeted by the media they own. The truth and the people do not stand a chance.
Good writeup, but I received Daniel Amerman's first article on the subject over 3 years ago: http://inflationintowealth.com/Course/aeONEb2y.pdf
Now would not be a good time to go into debt to procure income producing assets, but 2011 was. The following piece (5th in the series) discusses how many made lots of money, often by accident, going into debt: http://inflationintowealth.com/Course/ewFIVEla5.pdf
Here's an article on financial repression, also written in 2011: http://danielamerman.com/articles/2011/RepressionA.htm
Didn't read the article yet but I will because Martinsen wrote it. I like the title. We are under attack and I would say that it is treason and Blankfein, Dimon and Yellen should be arrested and brought to justice.
Governments and elites are always hyper vigilant at protecting themselves from deflation--they HAVE to protect themselves from deflation.
Ordinary people do not need to protect themselves from lower prices--they HAVE to protect themselves from the inflation that governments and elites conspire to create in order to steal from them.
"The fed" is a corporation as is the corporation of USA. So let the corp(s) go bankrupt. Get back to the US treasury issuing gold backed US "dollars" instead of Federal Reserve Notes.
Shunning the macro economy by local trade and barter is in the best interest of the middle class.
Opt out of the system by getting completely out of debt, running your own business from home (lower fixed costs), paying and receiving in cash or barter, avoiding taxation and regulation at every turn.
Not easy, not exactly "ethical" on their standards, but we are playing hardball here, and playing for keeps.
It's a cruel, bitter world out there, so be prepared to be an enormous ass-hole if need be. I did just that today with somebody who thought he could get over on me. Hope I scared him away. Lots of scammers out there.
I agree. We need to starve the beast that enslaves us. Withdraw from international financial institutions, support locally ownned business.
Become litigious.
Litigious, YES!
Please see last two sentences here:
http://occupywallst.org/forum/higher-education-panders-to-intellectual-s...
That is one hell of a wall of words just to say inflation.
The theft, wealth destruction and catastrophe that will eventually result from all these "ad hoc" policies, so-called in this otherwise fine essay, are an act of DELIBERATE AND PREMEDITATED larceny. This is the Federal Reserves raison d'être! If people don't understand this by now then they just don't really care, do they. TO HELL W/ ALL CENTRAL BANKERS!
Chris Martenson,
YOU are doing your part to hurt the people, by NOT showing them these real asset price histories:
http://www.showrealhist.com/yTRIAL.html
These show apparent asset overpricing, and would deter bubbles IF THEY WERE SEEN!
The financial sector cons the people, AND funds other sectors to do so also!
They insist on starving amidst plenty .
See
http://andreswhy.blogspot.com/2011/10/paradigm-of-plenty.html
Gotta love Mr. Martinsen's musings.
His command of the English language, style of writing (including humor), and use of the facts set him apart.
I put it this way: Exit the system or take a (financial) beating. If you stay there, they're going to continue to "suck you out" like a giant vampire. Please see >> http://www.zerohedge.com/news/2014-03-25/list-97-taxes-americans-pay-eve...
The "glory days" in the US died during the (most recent) financial crisis. And a higher standard of living was/is the reason to stay in a certain location and system, yes?
We walked the talk...we prepared and left the system and country.
We can breathe once again...
It’s bad enough that every schmuck from Donald Trump to this guy and that guy, and especially the Fed get to play “Heads I win tails you lose” with other people’s money.
Adding insult to injury, they somehow manage to call the toss wrong nine times out of ten. Go figure.
Encourage those overseas to borrow as much as they can, buy PMs overseas and then default on the money and leave the US. Nothing better than non-performing loans on the Fed's member banks balance sheets.
The banks are always pushing loans for visitors and green carders.
Screw the Fed, they want debt, give it to them. Load them up with non-performing garbage.
Good luck IRS because when these people leave the country you get nothing.
Even the Bible advocates a periodic cleansing of old debt. This was actual written law, not some weak exhortation to be merciful to your debtors and only cripple, not kill them.
The benefit to society, and to the continued health of the economy, was understood. The temporary inconvenience of writing off some bad loans was more than paid for by the economic 'booms' that followed, and they had many more years to profit before the next Jubilee.
'old debt'
The 63 and over crowd? Har, har, har.
The student debt = lifestyle to former faculty.
Those sub prime car notes = transfer payments to the former.
Sales tax = bennies to some long gone politicians.
Yada, yada….
don't know what you mean by "even the bible", or how a mis-translation of a mis-translation of a book written by men (yes, men) thousands of years ago is relevant.
but, if you think about it rationally, the proposal of a so-called "debt jubilee" would have obvious consequences: any lender would be very hesitant to loan out money, especially if a jubilee is coming up.
so, you want a loan to buy a house or a car or to pay for college? well, you can't get one, because a debt jubilee is coming up, and no one wants to give you a loan that you won't have to pay back, too bad for you.
a debt jubilee would choke off lending completely, and cripple the economy
there's no such thing as a free lunch!
better solution: everyone honors their debts and other commitments, doesn't live beyond their means, and we get rid of government sponsored private issuance of currency (the fed) which abuses the system.
The Federal Reserve encourages fraud by it's member banks. Fiat is all printed money anyways.
In short, taxing savers (responsible people) to rescue borrowers (irresponsible people) is ok so long as the Fed tells truthfully what it's doing. LOL.
Fed and the government spending don't need NO STINKING savers any more. They can
print digital money, without even the cost of ink or paper. Just "committee" meetings, and then a nice lunch!
17% beef price increase it irrelevant. No steak or beef stew or hamburgers. Just hot dogs. The chicken and pork (the other white meat) is now for China and other countries right people. Not our savers! In hindsight, the obviously were sLaves!
And our economy has many sLaves now, working for minimum wage, or as interns.
Chris Martenson tries. And I agree with everything he wrote.
BUT, to be clear, the Fed does none of this FOR the government. It does ALL of it for the Fed's owners.
It seems to me that, while the Fed holds interest rates below free-market level to keep the government alive (BECAUSE the Fed needs the government's police power to protect the Fed from the citizens), the biggest "game" the Fed plays is the "creating money out of thin air" game. The Fed's owners can step up to the Discount Window and borrow money that, essentially, they never have to pay back. With that money, they can buy up all the profitable corporations. Once they control the corporations, they get the profits, and and are therefore rich forever. Plus, they can use the corporations to bribe (aka "give generous donations of campaign funds to") legislators, executives, and judges. Plus, they can use the corporations to do much of their spying (on foreign competitors and governments, of course). Plus, they can buy the media corporations and use those to endlessly propagandize and confuse the citizens, and to blackmail noncooperative legislators, executives, and judges.
Really, if you can win the Central Bank Ownership game, you can own everything there is to own. (But there is a price: you CANNOT enter into the Kingdom of Heaven. But the Fed's owners have no doubt decided long ago that that was a price they were willing to pay.)
The government is helped because they get reduced interest rates on their borrowings, as well as retired debt in the amount of QE. But since the government is a captive of the big banks, they are the ultimate beneficaries. So your first point is esentially correct although I wouldn't have phrased it that way.
The amount banks borrow from the discount window at 0.75% is small, currently only $300 million. Most of the money the banks use is customer deposits where the interest rate they pay is close to zero.
(not me who down-voted you)
Awesome rant, and a well documented path to conclude Yellen being a psychopath!
If a person wants to 'save', the best place to keep your cash is in the home in a safe place. You will end up losing money there too, as inflation will take care of that, but you will know where it is.
Why give someone you don't know to keep your money? At least in the old days they gave some interest for keeping your money in a bank.
If there is ever a run on a bank, forget FDIC. If it is a big bank, they haven't got the coin to cover it or your money be held up for months.
Many generalizations unfortunately. Who can seriously understand our situation if people refuse to accept that gov't debt creation by the Pols and their ravenous bureaucracy, enlist and even threaten the federal reserve to accommodate the Pols political/population ruling needs? One might say this is the egg or the chicken paradigm.
http://www.federalreserve.gov/releases/h6/current/
These motherfuckers are bathing in negative liquidity.
Psalm 73
When I thought how to understand this,
It was too painful for me—
17 Until I went into the sanctuary of God;
Then I understood their end.
Wasn't dear dictators credit card recently rejected..........just sayin
If I die before I tell where it is, it may not be found til Jesus comes back around.
Great Article. Superb. When I opened my first savings account I got 5% interest. Now I get less than .05% When I see those idiots on CNBC laughing and enjoying the market going up enriching themselves on conterfeit money it makes me want to puke. The other thing that amazes me is that Obama gets off without being asked about anything financial. I know he is too stupid to know but that does not excuse it.
When I was young(during the 80s), I remember my grandfather telling me that saving money and acumulating wealth was the best thing to do. Never go into debt, and pay for things with cash.
Now, it seems everything has flipped. If you save, you lose your ass, if you invest you'll eventually lose your ass, so about all you can do is buy as many things as you can on credit and 'strategically default', just like the big corperations do. Chances are, you're out of work anyway, so you have no wages, and probably no good assets for them to take. LOL (sucks to be them)
Given how they keep relaxing credit standards, you'll be able to do it all over again within 3-5 years. lol
It all changed on August 15th 1971. His advice was incorrect after that date. My parents and grandparent similarly didn't understand what the change meant and so gave poor advice.
Poor advice? Oh lord, how pooor would you be if would have been saving in gold at $ 35 / oz ?
Above all, ours is a competition of Worldviews and Values:
Christians have an inherent disadvantage, Kabal Talmudians do not. The former raises people as Sheeple, the latter as Shepherds or Wolves.
Christianity as we know it, had its DNA manipulated by Emperor Constantine's select Bishops (at the Council of Nicaea)... who made sure that what was kept and what was thrown out and burned, was Pasteurized and Homogenized, and consistent with the kind of Product that the "Born Again" Constantine found... "useful".
For Christianity to survive, the faith itself must be "reborn", to endure, overcome and vanquish the Invasion of the "Mind Snatchers", who have turned Christians into Latter Day Spiritual Zombies.
Kirk, literal DNA manipulation? Or more likely the narrowing of Debate to an Orthodox Christian Doctrine, Vetted, Culled, and shaped to a homogenous Roman, Papal, Religion of the Fascist Empire?
Feel you are talking about how doctrine is shaped for power to set the national education policy... only in this case it was to bolster an Empire.
Fuck christianity. Lets go back to genetics. You harm me or mine and I come after you and yours.
The Swiss are fed up with it too. ;)
The only good thing is that the borrow and spenders will fail. They will take down most save and investors with them.
But not all.
This one is must read
http://ru-facts.com/news/view/34251.html
http://ru-facts.com/news/view/34181.html
Russia Moving Nukes Into Crimea
http://novorossia.today/publications/world/russia-moving-nukes-into-crim...
you’ll need to turn to your policy makers and ask them to work from the fiscal side to correct what they can
Dude you need to have a revolution and bring them to justice. And, to do that you need them to screw things up so bad first that muntiny among the elites provides an avenue for military intervention to set things straight.
Unfortunately when morality breaks down in the tech world of today, hell like never before will descend from the heavens. We are toast unless some young elites see that their futures are very much in danger and choose to open some doors so that we can all get out.
Replace Loyd Blankfein with Bitcoin bitchez.
The Cantillon Effect: He who spends it first, always spends it best. End the fucking FED.
Hold on...where's that fear charty thingy?
Calculate this into the pipe of fear rampage by these blowhards on the coporate media stations.
Sierra Leone: Nano Silver 10 PPM Now Official Ebola Therapy:
http://www.prweb.com/releases/2014/10/prweb12264647.htm
Is anyone else just sick and tired of the charades, dis-information, lies, and outright insanity of overblown corruption in the modern world of babylon?
Does this mean we have to repay 'debt' created from thin air?
Why do I / we have to repay someone for something they never had?
The people that benefit from the current system are not going to change it. The slaves have to disengage, withdraw and fight this unjust system.
The way to end pigs like yellen is to stop spending.
Spend when necessary only - food, shelter, etc.
Give it a rest, Chris.
"All of the talk about the Fed focusing on unemployment or inflation or whatever are red herrings."
Agreed, but the premise that the fed actions are intended to facilitate the gov's debt reduction by inflation is faulty. The gov could confiscate every dollar of savings from all savers and hardly make a dent in it's obligations. The virtual zero rate is an ongoing bank bailout without which the banks would have long ago collapsed under their burden of non and under performing loans and malinvestments. Ask the fellow who feels he benefited from his short sale if his motivation would have been similar if he could have simply reduced the interest rate on his mortgage to zero? On an interest only payment plan this works pretty well. No need to mark to market.
Again, this is simply an ongoing bank bailout!
My Grandma Yellen only works 5 hours a day and steals Trillion$
Click here to find out how.
I laughed!
There's no adequate prizing for to be par with our moral code. Sadly we have to admit just the opposite works fine.
The losers in the pointing game, wrestling with, that's their mark.
The financial quest for power piles up on that damage as that damage is feeding it.
Understand the gear of the enterprise, war. There is no moral in it.
The actual purpose of inflation is to prevent what actually happens with gold when lenders are allowed to loan at interests. Old usury laws were not made out of the kindness in the hearts of nobility, they were made because the Kings knew then, when the rich can loan at interest, in about 150 years, two or three families ended up with all the gold of the kingdom. The exact same thing happens with fiat, if a fresh supply does not come into the economy. The theft part is actually just a bonus.
Why isn't option 1 the preferred option?
Financial Repression will only work when there is only THE GOVERNMENT doing the repressing. Too many sub players, well connected and cronies in on the game. It's like playing a practical joke on ten people and all eleven of you know it's coming.
Nope, never going to ber able to pull it off, not with these debts, not with an oligarchy.
Which makes this even more painful as they will keep it going until there is a feudal state and where every neighborhood looks like a District 9 shanty town.
According to John Williams of Shadow Stats, we are at the point of no return. Cut all federal expenditures except entitlements, tax everything at 100 percent and we still would not take in enough to balance the budget. Or something close to that. Here is the scenerio folks. Interest on existing debt will rise. Those payments will eat everything. The fed prints and the presses glow red hot. Hyperinflation ensues. The poor and the free shit classes get crushed first. Businesses that rely on disposable income fall like domonoes. Tax burden on the remaining few are increased exponentially. And then the riots start. The protected classes burn the inner cities to the ground. Martial law and its ensuing brutality lead to civil war. You think the blacks are pissed off now? Wait till you see them being picked off in the streets by police3 state snipers.
And as the good old USA has managed to piss off most of the rest of the entire planet, look to russia and maybe China to take advantage. Its going to get damn ugly. But all is good. FEMA has a coffin with your name on it.
Savings accounts in banks. Christ what a farce.
I prefer to keep cash and phyz stashed - yet handy - without a third party involved. I have zero credit card debt. I endeavor to not play that goddamn game as much as humanly possible.I only keep enough in my checking account to finance certain transactions. Everything else is cash. I can't stand walking into a bank, I fucking hate it.
I know in 2015 I'll have to replace my wheels, and I want to roll in there with the funds ready to go, no credit check, no banks needed to complete the transaction. I'd like to just offer an envelope full of C-Notes, but I'm sure an actual cash purchase at the auto dealer would send some .gov shitbird sniffing around my reality.
Great Article, directly on point. Well done!
The Duke of Lu asked Confucius how he could get his people not to steal, commit adultery and do their duty. Confucius said, "You could lead by example and not do those things yourself." Confucius and his disciples had to flee Lu state after. That is where Confucius doctrine that corruption flows from the top down comes from.
When all of society becomes corrupt, the economy fails, civil war ensues and civil society crumbles, ushering in violence, poverty and want. That is why we are increasingly being tyrannized by a militarized police force, constant surveillance and an out of control judiciary... to keep us in line to stave off the total collapse.
That is why I wrote my book, The Fourth Branch. If we could force the elite to be virtuous, the people will follow, and our society could be saved. https://www.smashwords.com/books/view/277193
Solution: Stop believing in fictions. Example: Santa Claus does not exist. Another example: government does not exist. Literally. So drop the illusion, drop the delusion, drop the insanity that keeps your mind believing pure nothing is something.
Sure, human predators exist, and many of them call themselves "government". So just understand what is simply true. The human predators exist. Their weapons exist. The buildings they have had constructed with fiat funds stolen from producers exist.
But there is no "government"... simply attaching a name or label to a pack of predators adds nothing... all that exists is what already existed, namely human predators.
Unless humans stop making decisions and taking actions based upon utterly bogus mental-units in their noggins (fictions treated as if real), humans have no chance. The predators will continue to bleed them and eat them alive.
Only complete abandonment of insanity has a chance. All partial measures are guaranteed to fail... insanity simply cannot work, does not work, and never will.
They are not attacking people who save. They are forcing them into bogus buyback equities.