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Ron Paul: "Blame The Fed For The Financial Crisis"
An OpEd from the only sane person in Washington, written for the Wall Street Journal
Blame the Fed for the Financial Crisis
The Fed fails to grasp that an interest rate is a price, the price of time. Attempting to manipulate that price is as destructive as any other government price control
To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.
The Federal Reserve has caused every single boom and bust that has occurred in this country since the bank's creation in 1913. It pumps new money into the financial system to lower interest rates and spur the economy. Adding new money increases the supply of money, making the price of money over time—the interest rate—lower than the market would make it. These lower interest rates affect the allocation of resources, causing capital to be malinvested throughout the economy. So certain projects and ventures that appear profitable when funded at artificially low interest rates are not in fact the best use of those resources.
Eventually, the economic boom created by the Fed's actions is found to be unsustainable, and the bust ensues as this malinvested capital manifests itself in a surplus of capital goods, inventory overhangs, etc. Until these misdirected resources are put to a more productive use—the uses the free market actually desires—the economy stagnates.
The great contribution of the Austrian school of economics to economic theory was in its description of this business cycle: the process of booms and busts, and their origins in monetary intervention by the government in cooperation with the banking system. Yet policy makers at the Federal Reserve still fail to understand the causes of our most recent financial crisis. So they find themselves unable to come up with an adequate solution.
In many respects the governors of the Federal Reserve System and the members of the Federal Open Market Committee are like all other high-ranking powerful officials. Because they make decisions that profoundly affect the workings of the economy and because they have hundreds of bright economists working for them doing research and collecting data, they buy into the pretense of knowledge—the illusion that because they have all these resources at their fingertips they therefore have the ability to guide the economy as they see fit.
Nothing could be further from the truth. No attitude could be more destructive. What the Austrian economists Ludwig von Mises and Friedrich von Hayek victoriously asserted in the socialist calculation debate of the 1920s and 1930s—the notion that the marketplace, where people freely decide what they need and want to pay for, is the only effective way to allocate resources—may be obvious to many ordinary Americans. But it has not influenced government leaders today, who do not seem to see the importance of prices to the functioning of a market economy.
The manner of thinking of the Federal Reserve now is no different than that of the former Soviet Union, which employed hundreds of thousands of people to perform research and provide calculations in an attempt to mimic the price system of the West's (relatively) free markets. Despite the obvious lesson to be drawn from the Soviet collapse, the U.S. still has not fully absorbed it.
The Fed fails to grasp that an interest rate is a price—the price of time—and that attempting to manipulate that price is as destructive as any other government price control. It fails to see that the price of housing was artificially inflated through the Fed's monetary pumping during the early 2000s, and that the only way to restore soundness to the housing sector is to allow prices to return to sustainable market levels. Instead, the Fed's actions have had one aim—to keep prices elevated at bubble levels—thus ensuring that bad debt remains on the books and failing firms remain in business, albatrosses around the market's neck.
The Fed's quantitative easing programs increased the national debt by trillions of dollars. The debt is now so large that if the central bank begins to move away from its zero interest-rate policy, the rise in interest rates will result in the U.S. government having to pay hundreds of billions of dollars in additional interest on the national debt each year. Thus there is significant political pressure being placed on the Fed to keep interest rates low. The Fed has painted itself so far into a corner now that even if it wanted to raise interest rates, as a practical matter it might not be able to do so. But it will do something, we know, because the pressure to "just do something" often outweighs all other considerations.
What exactly the Fed will do is anyone's guess, and it is no surprise that markets continue to founder as anticipation mounts. If the Fed would stop intervening and distorting the market, and would allow the functioning of a truly free market that deals with profit and loss, our economy could recover. The continued existence of an organization that can create trillions of dollars out of thin air to purchase financial assets and prop up a fundamentally insolvent banking system is a black mark on an economy that professes to be free.
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This is a bit overstated. While it's likely too late now, eliminating the Fed would (have) certainly restrained a lot of "malinvested capital." But the existence of the Fed in and of itself doesn't cause everything, it largely enables. Of course, "enabling" graduates into "depending" and so it goes. But there are other accomplices at work here.
...like the government, whose current incarnation depends fully on a Fed that creates 'currency' to fund debt that gets passed on to our kids and grandkids; and on a Fed that debases the currency in order to more-easily service escalating debt, and in order to discourage saving and encourage financial risk-taking.
And yes, the international banks who own the FRBNY also profit from its government-enforced monopoly on the issuance of 'legal tender', not to mention ZIRP that puts money in the pockets of Primary Dealers (who just happen to also be owners of the Fed).
The 'other accomplices' are spokes of the wheel, the hub is the Fed (whose structural integrity is ensured by the government).
So you're arguing that money needs to be printed before it's spent? I don't think so...
I'm arguing that the Fed has presided over a 97% devaluation of the US Dollar since its inception. Their mandate of 'price stability' is a joke. I'm also arguing that it is a combination of arbitrary fiat currency, legal tender laws prohibiting currency competition, ZIRP, and heaps of moral hazard created by bailouts and TBTF policy, that are primary causes of our current economic mess.
Yes, banks have always and probably always will create 'money' in the form of fractional reserve lending. I'm not defending fraud, I think depository banks and investment banks should be separated, and there should be some kind of 'nutritional content' label for loaning institutions that informs borrowers of the reserves backing the loan, the risks, etc. ...Something clearer than page after page of fine print.
But you have to admit, the current crisis is shaping up to be one for the ages, and compared to busts which happened in less-centrally-'controlled' times, this one is big. I'd rather see a few banks fail, than a whole financial system. TBTF and ZIRP policies ensures that the latter is more likely to happen. It my belief that the Fed, Treasury, and big (international) banks are all on the same page in this regard. And without the control/issuance of currency enabled by a central bank and enforced by the government, the big banks lose much of their leverage over the economy.
I don't disagree with you fb, I just don't think all of the evils are concentrated in the one Fed. Take the bank and auto maker bailouts. There was a statist agenda at work there apart from the need to keep the fiat flywheel turning. Spoke & wheel, chicken & egg, call it what you will. Evil will find its ways. The fractional-reserve, digital-fiat, I've-got-your-toxic-back enabling by the Fed will make this collapse the Mother of them all, as you point out.
But if the government couldn't issue treasuries at 1% interest to the fed, and had to pay a market related 8-10%, congress would have had a much harder time convincing joe public that tarp is affordable.
How the hell did Bernanke go to Princeton?
How the hell did Bernanke go to Princeton?
He didn't. He went to MIT (Math Is Tough). (Using math to model human behavior is even tougher, but I digress). He subsequently became Chairman of the Princeton Econ Dept. after demonstrating proficiency in ignoring that which cannot be put conveniently into an equation.
i am really starting to think that Ron Paul should NOT want to be President for these next 4 years
I'm really starting to think he should drop out of the race and save his money. He has no chance of winning and never has. Great idea guy, but not a get it done guy. Clairvoyant about the approaching ills, but can't rally the folks around him to address things when they can be addressed.
He has not the magnetism nor the gravitas to lead the unwashed.
Wake up and smell the revolution.
LOL. The "revolutionaries" aren't the people around him. They are just cheerleaders, ineffectual noise in reality. The people around him, whom he cannot rally, are the 434 other folks propped up in Congressional chairs, and the rest of the inside-the-beltway crowd.
I'm not sure what's more powerful, the hopium floating the equity markets or that which Paul zealots ingest to believe he is going to make any difference in this mess.
Not to worry.
good read,... nothing to say here other than the fact i agree wholeheartedly on your article
keep-em-com`in
The big problem is conflicts of interests which inevitably breed corruption and damage markets and confidence in them. The FED is owned by private banks but still semi-public it seems and thus serves two masters one of which, the govt., is pretty much owned by the other. Over time this has of course resulted in a debt driven economy which favors the FED´s bank owners and has also benefited the two-part one-party political system in producing misleading economic indicators from the debt-driven consumption. The debt-bubble is absolutely staggering but has been deflating to some extent since 2009 although the govt. still runs desperate and probably increasing deficits and debt increases to counter this.
It´s clearly a system in terminal decay. It´s a reactionary system, not a proactive one. Its reactionary measures have grown ever more erratic and desperate since 2000 when the great stock market bubble finally burst. The 911 hollywoodshow and resulting warmongering and endless wars must be viewed in this light. Wars are supposed to follow depressions but those jokers decided to take pre-emptive action and fix the depression before it happened. The results will no doubt be disasterous.
Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers.
Money's exactly *different* from any other good in our economy in that it has no inherent value. It exists solely as an abstraction we use to represent real commodities and labor.
Epic fail of high-school level micro-economics. Worthless.
Complex economies can't function without sound money. That makes it indispensable. Somehow you missed that fact.
Bullshit. There hasn't been truly "sound money" since the days of barter of food supplies, because the "value" of money has always floated relative to the value of goods/services.
And yet...we've seen thousands of complex economies function over the course of history.
You're mistaking your simple theoretical model with reality. A common failing of starry-eyed idealists.
OK, then. Give me all your useless money. I'll make sure it has a good home.
Sorry, it won't work for you. It's not "sound" money, so the economy can't function.
Sure, the fiat money you defend can work in an economy --- just like the oil in my engine can continue to function after being unchanged for 40,000 miles. Yes, it functions, but not well, and with long-term damage to the engine guaranteed.
Where'd I defend fiat money? (Psst: you're projecting.)
I just pointed out that the article starts with a huge glaring fallacy: "money" is not just another product.
It cannot be if it's to be usable at all.
Unfortunateoy Mr Paul is unelectable by the sheeple who really do prefer the free handouts, being told what to do, airport shakedowns and Dancing with the Stars over liberty, competition and free markets
am i in the middle of an economic wet dream? o please do not let me awake....
We NEED! to continue to pay The Share Holders of the Federal Reserve Bank 6%..
So that NO ONE! will call Commie's!
The New York Banks, The Wall Street Banks NEED! to be paid 6% for money printed out of thin air so that America can continue being a Capitalist Country.
Printing money from the Treasury, Paying OFF! the debt owed and going back to a real (tied to PM's somehow) money standard (ala' President Kennedy) would make each and every one of us.. Pinko Commies! just like Kennedy was!
We as a Nation would rather SUFFER paying Wall Street Banks 6% on money printed out of thin air.. that have someone call us Commie's!
We are truly a Nation of superior minds and depth.. we deserve exactly what we have now!
and unless we as a Nation can become educated and be able to maintain our inflated egos.. even if someone calls us a Commie.. We as a Nation will continue to suffer our own ignorance.
what we need is more of this Capitalist CAN DO! Attitude!! see below for a link to true American Status Quo Behavior! Can I have an extra helping of Corruption Smothered in Tax Dollars Please!
http://www.wallstreetandtech.com/data-security/231901426?cid=nl_wallstreettech_daily
just de-link oil from the dollar. problem(s) solved.
99% of the people in America have NO Fucking Idea! that the Petro-Dollar economic Model is Broken, World Wide!
All you will get from the ignorant / stupid, is that there is NO SUCH THING AS PEAK OIL!! OIL IS EVERY WHERE!!!
mean while, Peak Lite Sweet Crude.. or affordable oil has come and gone.
the entire economic model of wage arbitrage.. that is what keeps the World Trading and thusly keeps the World away from armed conflict.. is FUCKED! and it's Not coming back until we start building nuclear container ships!!
But people dont like bad news.. they dont want to hear the truth.. people want to hear someone tell them something like what they believe to be true (because of what they have been fed in heavy rotation thru corporate owned media).. and that something that is close to what they believe to be true should have a happy ending.. or it is kill the messenger or fight the truth and follow that feeling in your gut! LOL!!
Americans have been sold the idea that they should follow their feelings and not trust mathematics!!! You or I will be screwed, because the ignorant masses out number us.. because our corporate owners what to keep the people ignorant (more fluoride in the water!! Hurry!!) and on the same circular track of retail consumption to nowhere!!
Americans broadly are sheep / cattle / dumb fucks! the majority rules.. with a little help from the 5th Ave steerage Committee! and trying to consensus build within a ignorant group will lead you to insanity, quickly.
We the People have given our children future away by being ignorant or more to the point allowing ignorance to reign supreme!
Those of us with such high standards for morality, those of us with the ability to grasp the larger concept of what is happening have FAILED our Fellow Americans by NOT being able to present them with the truth in a way that would allow for Real Change for the betterment of all, except the irrevocable off shore trusts crowd.
If those of us that do know are unable to teach, educate and / or inform the rest of "We the People" then we are DOOMED to suffer the broader populaces ignorance.. and at some point it can NOT! ALWAYS! be the Sheep's Fault! at some point we that know the truth have to hold ourselves responsible for NOT!! being able to reach others!
WE FAILED THE SHEEP! they are NOT! to blame!! WE ARE TO BLAME for NOT REACHING THEM IN TIME TO SAVE US ALL!
There can be NO! us and them.. we all need to be US, the informed, empowered US!
nuclear container ships? meh blame it on HAARP
Interest rate is the price of borrowing money, irrespective of time.
Holding interest rates way below market fundamentals encourages more borrowing, living on credit, the ONLY way to keep an economy and government going when manufacturing and other forms of true wealth creation have been dismantled and destroyed by that same government.
That's the case here in America, in Greece, in France, in Italy, etc, ad nausem. Entire nations living on credit now after their economies have been decimated by their own governments.
This massive and growing worldwide sovereign debt ponzi scheme is going reach unsustainable size and suddenly pop somewhere along the way, wiping out the banking system and other creditors.
When it happens there will be no warning, no time to sell and get out.
The ONLY alternative is print and lend and print and lend and print and lend till currencies are worthless, sustaining the debt ponzi and governments and banks and creditors but wiping out everybody else.
Basically all market activity is about finding some sort of equilibrium for the future which of course results in overshoots and undershoots along the way. But the market is pretty short-term oriented and I don´t think it pays enough attention to really long historical and demographic waves.
Just two quick examples.
In the U.S. about 90 million baby boomers are about to retire. The x-geners that are supposed to support their medicare with taxes are one third fewer than the former and mired in debt and out of jobs as it is. So, it seems very likely that those boomers will be sellers rather than buyers of equities and other assets in the next decades.
The really big wave of the last decades has been evening out of living standards between west and east, the developed and the less developed. This will rise for decades to come. It is a very well deserved correction since living standards in the west have for centuries been based on theft and slavery from the east.
Precisely why TPTB in the west want to burn it all down, it won't affect them and it will serve as cover for their crimes. The people on both sides end op losing. Same as it ever was.
Absolute Marxist bullshit.
While one cannot deny the slavery and colonialism of the past, it was (relative) FREEDOM, and free markets, and the innovation and the productive utilization of accumulated capital made possible by economic freedom, that allowed the West to grow and prosper. "Theft and slavery" had existed within many, if not most, societies for millennia --- so just why was it in the West, and ONLY in the West, of the last two or three hundred years that such unparalleled prosperity was able to grow and flourish? I will give you the answer: The Enlightenment, and the liberation of the common man that followed from it. Sadly, the West is increasingly turning its back on those core values, and that freedom, that fostered that creativity and dynamism, and is happily marching backward into authoritarianism and the statist mire that kept our forefathers cowed, perpetually fearful, and toiling in the dirt and the muck for most of their short and miserable lives.
so just why was it in the West, and ONLY in the West, of the last two or three hundred years that such unparalleled prosperity was able to grow and flourish? I will give you the answer: The Enlightenment, and the liberation of the common man that followed from it.
First time I've seen credit like that given to the liberals around these parts.
But I'm a bit dubious about it, myself. England did really well for awhile when they were the dominant military empire, too. And the Romans before that....and the Egyptians before that...and...
Well come to think of it: every nation that's conquered huge areas with military power has gotten hecka RICH. It worked for the kingdoms, the republics, and the democracies too.
Seems to come with the territory, regardless of philosophical pedigree.
I will give you the answer: The Enlightenment, and the liberation of the common man that followed from it. Sadly, the West is increasingly turning its back on those core values ...
It's much simpler than that. America's prosperity was the result of small limited government doing a handful of tasks on behalf of the people, defending national borders, coining money, operating a national postal system, and resolving disputes between states being the 4 major tasks.
Those 4 tasks are maybe 1% of what the federal government does today. The other 99% exceeds their constitutional authority.
On the coining money point, it's COINING money, not creating money. The constitution authorizes minting gold and silver into coins. That's not creating money. It's taking money that already exists and minting it into coins for convenience sake. Nowhere does the constitution authorize creating money. Printing paper currency and declaring it has X value is creating money and is unconstitutional.
The only constitutionally authorized paper currency would be gold and silver certificates, redeemable in gold and silver at a fixed weight and purity declared on the certificate.
Gold and silver certificates merely declaring gold and silver redeemability but not declaring a fixed weight are fraudulent and counterfeit because the government can change the amount of gold or silver anywhere along the way.
Paper currency having no redeemably in gold or silver is blatantly fraudulent, counterfeit, and unconstitutional. It's created money, which the constitution does not allow.
I was reading this old Beast article on how the Fed buys (and owns) the economics profession while Robert Reich was arguing with Steve Forbes on the Kudlow show.
Reich: And I tell you that 85% of professional economists disagree with you!
Forbes: We need a Copernican revolution in economics.
Amen. BTW, imagine this pathetic profession without a Fed. Who's left to employ them? Just big banks and colleges.
Wonder if drug cartels employ economists...
They pretend its a science, maybe it is but not in the way they "practice" it, practice on us as guinea pigs
Earthquake in Hokkaido (north island of Japan), 6+
Plus earthquakes in Berkley to shake up the academics.
Yesterday, put call shot up to the magic box of Bear bitch slapping MBBBS
http://oahutrading.blogspot.com/
I'm surprised that the NWO hasn't poisoned
Ron Paul needs a good slogan to attract the attention of the morons whose votes he needs...something simple that strikes a chord with the patriotic average American. Maybe something like Santelli's tea party rant?
His stalwart supporters are not enough. Logic does not inspire the masses.
I see a commercial that ties in the American pilgrims fleeing the bonds of Europe, the revolution, the founding fathers wisdom and the freedoms they enshrined...juxtaposed against the mess today and the entanglements that are dragging us down. End with - "We have a choice....we are Americans".
He already has one, END THE FUCKING FED!
http://www.youtube.com/watch?v=GdRA04iIFtI
I'm guessing you're not a creative director for an advertising agency.
Ron Paul's got a tough sell, though, if he's sincere about cutting back on transfer payments.
The old folks get out and vote, and if they somehow get the idea that RP wants to end SS and/or Medicare, why would they EVER consider voting for him?
The truth is that if Bernanke's magic did work, why would anyone else needs to work at all.
Yeah that's right Ron, the economic system is stable and tends towards equilibrium...
occupy liberty street
#OLS
expect us.
I'm sure we'll smell your totalitarian bullshit coming miles away...
Ron Paul will End these WARS http://www.youtube.com/watch?v=VoEPnAqCMjk
He hasn't blocked or ended them yet, why would that change? On inauguration day 2013, he's going to be in the same seat he's in today...
He is a part of a group of Representatives that is suing the President with illegally going into Libya. http://www.cbsnews.com/stories/2011/06/15/politics/main20071286.shtml
He has voted against every military intervention, (war) when the Congress was actually asked to vote. He will end them because he is honest and we cannot afford these wars anymore. The military men and women want to come home and they believe him too.
Look at who the military support and ask yourself, what do they know that most law makers don't? http://www.opensecrets.org/pres12/contriball.php?cycle=2012
Thanks for making my point. All that he's tried to do...and yet we still have the wars.
I'm not advocating for the wars, just saying he is powerless to bring about what he thinks should be done about it.
wow ...someone else gets it besides Anony.
Well...I'm not attacking the guy. I think he's pretty smart and pretty honest. What I think we're in violent agreement on is that he has no shot of being elected to any higher office than he already occupies. So the hopium around what he is going to do once he's POTUS is wasted energy in my view.
Possibly 4 years ago, even being an ardent RP supporter, I'd have agreed with you. But with the growing social unrest happening in the USA I think the time could well be ripe for a revolution.
It's taken RP the better part of 30 years keeping the embers of liberty alive, I think he is on the cusp of igniting a wildfire. The fact that he has an op Ed in the WSJ, has gotten all the other candidates to talk about the fed, managed to get a partial audit of the fed to reveal its $16 trillion in loans to banks, got Anderson cooper to respond to his campaign office, and is the only candidate who's not been challenged as having flip flopped in any of the debates thus far, is the start of something great.
He never gets challenged in a debate because he's a non-issue. I'm not against the guy at all, he just doesn't (or isn't allowed to) resonate with enough of the populace to make any difference. As I said before, the RP hopium is a powerful thing...it's like rooting for the Cubs.
A president can change the foreign policy and since Ron Paul will be the Commander-in-Chief he will be able to bring the troops home.
I agree that Ron Paul will bring the troops home when he is Commander in Chief...which won't be anytime soon.
RP passed away today from natural causes after celebrating his recent election win with his supporters, police and forensic teams cleared away the remnants of his last "Pollonium tea party" before allowing family members to view his remains.There were no suspicious motives stated police at the scene.
Ron Paul rocks. So glad the WSJ published his article.
Not sure that anyone really sees comments buried on page 3, but TexMac @ RPF found the paper that Cain has on his website, and which he touted during the last debate to support his plan, is apparently a copy of a paper published in 1996 about flat taxes in general and is not specific to Cain's 999 plan:
Cain challenged us in the debate to read the independent analysis of 9-9-9... Please help!
Looks like fraud to me.
Economics isn´t science. It´s an abstraction that is as such subject to changing perceptions lke theology and sociology. By now this dogma is about totally bankrupt after teaching how great it is to go into debt chasing falling prices and gigantic technological and productivity advances.
Can we please start using Ben's full name, Ben Shalom Bernanke, as in any article about serious criminals, it would be appropriate he isn't confused with someone innocent.
God Is!
If us MeriKans aren't getting what we want, it's the OTHER PARTY'S FAULT. It's not the Fed! <sarcasm off>
We do need a monetary system that is somewhat "elastic". So I believe it's not the system that is wrong per se, it's the abuse of the system. We inflate but never deflate. We inflate not for the monetary needs of the country, but to fund excess government spending and put the tab on the backs of the taxpayers.
People either forget or they just don't know human countries and kingdoms had plenty of problems when they had inelastic metal currency, and it was the eventual abuse in those systems that caused their failures too.
The FED, like the honey badger, doesn't give a shit - it gets an interest check from the taxpayers no matter what - "money created out of nothing and the interest checks are free!"
Mick: Doctor Paul, it hurts when I use fiat currency.
Dr. Paul: Don't use fiat currency.
Mick: Are you serious? I want a second opinion!
Dr. Paul: OK. End the Fed.
We owe a debt of gratitude to Dr Paul, elected or not. His tireless efforts have awakened people to the idea that non-elected, not well known, heavily politically connected individuals control so many aspects of our lives.
What about the damage done by these assholes in DC and the Barack disater?
"The most powerful entity in the United States is riddled with conflicts of interest," Sen. Bernie Sanders (I-Vt.) said after reviewing the Government Accountability Office report.
Staggering.
The study required by a Sanders Amendment to last year's Wall Street reform law examined Fed practices never before subjected to such independent, expert scrutiny.
The GAO detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves. "Clearly it is unacceptable for so few people to wield so much unchecked power," Sanders said. "Not only do they run the banks, they run the institutions that regulate the banks."
The GAO identified 18 former and current members of the Federal Reserve’s board affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis including General Electric, JP Morgan Chase, and Lehman Brothers.
Also check this out, the OCC, which is one of the organizations that regulate banks is funded by the banks!"The OCC does not receive appropriations from Congress. Instead, the OCC's operations are funded primarily by assessments on national banks and federal savings associations."
WTF
Is Dr. Ron Paul unelectable because th people are stupid or because the two parties have rigged the election system?
The Party of Power has divided itself into two wings, and keeps the people stupid with its mind-control media, and keeps them entertained by arguing about trivia, while the Party's masters -- the real Powers -- make all the real decisions. Like how many trillions of 'dollars' worth of of wealth they want to loot from the American and world economies.
So far the people are too stupid and entertained to rebel.
But the Powers' control over the people is slipping badly, as is their ability to parasitize the world's economies.
Red light special.
The corporate affiliations of Fed directors from such banking and industry giants as General Electric, JP Morgan Chase, and Lehman Brothers pose "reputational risks" to the Federal Reserve System, the report said. Giving the banking industry the power to both elect and serve as Fed directors creates "an appearance of a conflict of interest," the report added.
The 108-page report found that at least 18 specific current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis.
An appearance of a conflict of interest? Are they implying that there is not an ACTUAL conflict of interest? Because this is a fucking conflict of interest.
Their unearthing of massive conflicts of interest and corruption is somewhat dampened by their intrinsic political correctness. It´s a defensive mechanism, cognitive dissonance if you will.
I heard JFK wanted to end the fed, and why does RP hate america so much?
"Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster."
But, the Federal Reserve System is a Private Bank, not a Government Agency.
The Government Agency in charge of the Money Supply prior to the Federal Reserve System was the Treasury Department. If Government should not manage the money supply, and neither should a Central (Private) Bank, then who?
'The Market' is incapable of creating a Money Supply, and less capable of Management.
The Money Supply should be the responsibility of the Treasury Department, and subject to the Will of the People by Elected Representation.
Central Banking is unnecessary and expensive. The Treasury Department can create a Debt-Free Money Supply, and replace the Federal Reserve Note with a Treasury Note.
"Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster."
But, the Federal Reserve System is a Private Bank, not a Government Agency.
The Government Agency in charge of the Money Supply prior to the Federal Reserve System was the Treasury Department. If Government should not manage the money supply, and neither should a Central (Private) Bank, then who?
'The Market' is incapable of creating a Money Supply, and less capable of Management.
The Money Supply should be the responsibility of the Treasury Department, and subject to the Will of the People by Elected Representation.
Central Banking is unnecessary and expensive. The Treasury Department can create a Debt-Free Money Supply, and replace the Federal Reserve Note with a Treasury Note.
With respect, I detect the possible statist stench of Bill Still the Fiat Shill, and Ellen Brown the Money Clown, in your post.
So-called "debt free money" issued by the US Treasury is NO solution to our fundamental problems whatsoever, it is merely a shift in the responsibility for issuing fiat, unbacked, fractionally-reserved currency from a quasi-governmental agency to a full governmental agency. The problem is FIAT CURRENCY itself, and the coercive, legal tender laws that prop up that fiat currency, along with the fraud of fractional reserve banking. THOSE are the dragons that need to be slain; replacing the green dragon for a red dragon is hardly the solution.
Just as we have the separation of church and state, to protect the freedom of worship, what we truly need in the monetary sphere is the complete and total separation of government from money, both the issuing of it, and the manipulation of it via central banking. Get it ALL out of the government's hands, or else we will continue to suffer the same economic, financial and monetary disruptions, dislocations and distortions, with their attendant cronyism for the well-connected elite and the usual criminal depredations against the average citizen.
i think Paul still doesn't grasp the implications of a Fedless economy. Most likely UST would take over the same functions, which should be even more disturbing as the firewall between private and public spending disappears. the myth of the omipotent Fed comes from the cynical apprecation that the two party system is incapable of providing us with long term economic planning, through fiscal means.
without the Fed we have outright government price controls. a Fedless economy, run by government only will spend the private sector into the dust. Ending the Fed doesn't change the equation, it just removes the middleman, which might actually make interest rates even lower. ouch
The return of Honest money should be the focus of OWS, anything else is off base
YES!
sound money.
#OLS.
occupy liberty street.
It never makes any sense to chase falling prices with added credit, yet the FED has been pushing this hopeless theory for decades. When the resulting debt bubble starts finally cracking by 2009 what do they do? Add more debt to allow even more capital to chase falling prices. Reactionary doesn´t quite catch it, psychotic is more like it. They´re desperately trying to put up the appearance of inflation in a world that is swimming in overabundance of about everything and in a gigantic and rising wave of technological and productivity advances with an endless supply of dirt cheap labor. In this situation you obviously need to contract the money supply and let the market in peace work out the mess you have created.
Bernanke is an academic testing his hypothesis via naturalistic observation instead of a lab.
He also obviously bangs bankers in the arse.
End the Fed.
Reactive vs. proactive. That´s how you measure the success of systems over time. The more reactive they get the more likely it is that they are defending a hopeless trend. After all systems are composed of individuals who are interested in self-preservation and therefore want a well being of a system in which they exist. So that´s a seriously lagging indicator of a health of a system.
In our times of ballooning technological advances where it gets ever cheaper to produce things with ever decreasing human input this will become ever greater problem for the reactionary system and the individuals who make a living promoting it.
I remember viewing the RP video with the FED lawyers before his committee. He asked if the FED had the Gold. Answer: No, that would be the Treasury.
The next most logical step would be:
New meeting.
Live cameras.
One end of table same FED lawyers.
Other end of table Little Timmy Geithner.
In front of all, RP and committee.
Under the blare of bright lights and live cameras a repeat of same questions to FED.
Then same question to little Timmah!
Bright lights would add to the drama.
Would the truth out?
Most likely not. But the lies would. And they would be quite interesting.
It doesn't matter if the gold is there or not. The currency is NOT REDEEMABLE in gold.
Ron Paul, vote for him, tell someone about him, forward his writings (like this) to someone, link his videos to your page, etc. Do something to promote him! Our only chance is to change NOW. As ZH just recently showed, the US is now +100% Debt/GDP and at current burn rate will be 120% in 2 years. What other country is 120% Debt/GDP? That bastion of financial stability otherwise known as GREECE.
With social security, medicare, and unfunded liabilities, the US is at 900% Debt to GDP. The 100% figure is straight from the liars themselves.
Economic theory peddles the notion of shortages, which is why it´s known as the dismal science. The result after 200 years is a still rising technological and productivity waves. It is still absolutely hopeless to take on debt to chase down prices of overabundant stuff. This debt bubble finally burst in 2009.
Economic theory peddles the notion of shortages, which is why it´s known as the dismal science. The result after 200 years is a still rising technological and productivity waves. It is still absolutely hopeless to take on debt to chase down prices of overabundant stuff. This debt bubble finally burst in 2009.
Awfully sorry about the double post but my point is that economic theory in our swiftly changing times is about as credible as static religious doctrine in the 1500´s.
Fed’s Fisher Says Operation Twist Benefits Traders
Fed’s Lacker: Twist will boost prices not growth
Fed’s Yellen: QE3 May Be Warranted for Stimulus
Fed’s Evans favors more ‘out of the box’ easing
Fed’s Tarullo backs more MBS purchases
Fed’s Plosser sees inflation danger from bond buys
Pick yer poison... tongue.
But the tongue can no man tame; it is an unruly evil, full of deadly poison.
Their throat is an open sepulchre; with their tongues they have used deceit; the poison of asps is under their lips.
"Freedom" and "The Free Market" are unicorns as much as anything else. And don't bother thinking I'm a socialist, cause fuck that, too.
If you have a social security number, you are a socialist. You are right about the unicorns though.
Social Security number= upc code for humans.
Tough as nails, not going anywhere.
So as an outsider looking in, I watched the Republican Presidential candidate debate.
Looking at the candidates my observations are:
* Most boomer candidates - these are not candidates for the young who need jobs and houses, without which can't pay taxes to remove deficits
* Usual "I was in the military, created a business, did charity stuff" narrative - ok but what does that do for the US ? US voters need to cut through this marketing BS.
* I am in favour of simpler taxes and lower taxes buty the 9-9-9 plan to me looks like a Gimmick. No indepth on how this will work beyond sloganising
* Ron Paul is clearly the only candidate with any credible analysis and track record of what has happened to the economic system. He would make the best president, not sure he has what it takes to win a presidential election though. Should play the experience card - difficult times call for a wise leader not a populist.
On the strength of this, I have concluded that UK politics is actually in better shape than US politics. We have yonger, gen-X leaders in all 3 main parties. We are discussing values politics finally and generartional issues are beginning to be discussed in a sensible way.
For US, it looks more of the same and I don't even think the Republicans have a candidate to beat Obama who politically has some deft skills despite his low poll rating.
Great analysis. Unfortunately, the entire US election is rigged, and what you get at the end is one of the two puppets who have proven that they will suck the almighty dick of A) the military industrialists who rely on them to keep supporting the killing of brown folks for natural resources, and the bankers who will print the money to do so.
Those are the 3 groups.
1) Puppets
2) War Profiteers
3) Counterfeiters
The voting machines are electronic, and people have so much as admitted on TV that they program them to elect the chosen mafia figure head.
Thinking that you have some sort of a say is insane.
Even Ron Paul is a current politician, who certainly knows that the corporation called UNITED STATES usurped the republic and is a defacto government. Even he must do only what the three groups tell him to do, and sign what they tell him to sign.
We're under martial law folks. Have been since Lincoln. Executive orders are not constitutional. The presidents are just CEO's of the corporation. The president is a puppet dictator, no different than any other dictator, except for the better army, and the fact that he is controlled by a huge, brutal cartel.
Voting for these people is pointless. Even Ron Paul can not come riding in on a white horse and turn a brutal mafia in to a force for good. If you think you can do it, go join MS-13, and try to rise to power and turn them in to a force for good.
The only difference between MS-13 and the US Gov't is a few visible tattoos, and the fact that the MS-13 guys are'n trying to make you think that they are decent human beings.
Sucks, but so is it.
Ron Paul would end up like JFK when he tried to print money with no interest.
A few more observations.
* Having been to the US several times, it looks to me to be an increadibly difficult place to govern. Huge land mass, huge population and competing wealth centres. To me that makes the US quite vulnerable to corruption. I am not entirely sure the local population gets that.
* One of the impressive things about the US presidential election is the fact that all candidates need to walk around farms in the Mid West in winter to stake a claim. The less impressive thing is the fact who ever raises the most money wins the presidency - something the US media is joyful to boast about. Surely that is the wrong message ?
* One of the key issues NOT being discussed it the relationship of corporations to the state. The state grants corporations the right to sell goods and services to the public. The quid pro quo is that in return they pay taxes and employ people. Now you think about that - corporations sell goods to your market, using money borrowed from overseas that create inflation and prices home labour out of a job. Yet the the money that gets raised does not get taxed due to flowing through tax havens and the jobs that are needed are sent overseas. Who said that was allowed ? Why is there no discussion of this and a public vote on it ?
* If you align your trade to China, then you effectively align your labour standards to Chinese, rather than western standardss (no unions, no legal workers rights, slave hours, slave wages, infact - just slavery). Who said that was OK ? Why allow China into the WTO on that basis ? Who do that decision ? Why is no-one talking about that in the debates ?
While I agree with Ron Paul that the Fed has not done anything good for our country, I don't think that it is accurate to blame all of our problems on it. The fact is that the US was experiencing major booms and busts long before the Fed was formed.
The problem is with banking itself.
When bankers make loans, it expands the money in circulation, causing wages to rise, business to boom and infusing a (false) sense of optimism everywhere, which causes people take out risky loans, start risky businesses, etc.
Then when bankers call in the loans, money in circulation falls, wages fall, businesses fail, people become unemployed, asset prices fall, and the bankers are able to pick up valuable assets at bargain prices.
Then the cycle repeats.
Actually banking isn't really necessary for our economy. It could be replaced by alternative arrangements where the risk is shared by both parties. For example, mortgages could be replaced by rent-to-own agreements. This kind of system would be much more stable than our current system.
The only people who benefit from our current system are the bankers.
Remember folks, JFK was assaniated for tyring to start a silver redeemable currency. He had authority to do it by executive order. It would have been legal. But the banker mafia wouldn't allow any such competition to their unredeemable fiat monopoly money currency.
Ron Paul wants to achieve the same result a different way, by shutting down the banker mafia and declaring their monopoly money currency no longer legal tender, a far larger challenge.
His chance of success is zero and his chance of ending up like JFK is nearly 100% if he was to be elected POTUS.
WAKE UP AMERICA
The FED is not a governemnt agency
It is owned by the TBTF banks that Geithner and Bernanke will continue to protect at the expense of the American people.
"One nation under God, indivisible, with liberty and justice for all." has beem subverted
God did not create the world in seven days and the US executive does not work for the good of all.
LISTEN TO RON PAUL AND SAVE YOURSLVES
As anyone has attended the very first lecture on control theory will tell you, the reason for instability is positive feedback. Booms and busts are caused by positive feedback loops in the economy.
That is why the role of the central banker is to take away the punch bowl just as the party is getting going... i.e. introducing negative feedback into the economy.
Keynes was correct. In times of depression government should run a deficit... that is negative feedback, and in times of expansion government should run a surplus... again negative feedback. Unfortunately, politicians are uneducated arseholes and they reckon that if deficit spending works well during recessions, then it will put the economy on steroids if it is applied during a period of expansion, so they abandon Keynes and engage in deficit spending during an expansion, which is positive feedback. Then we get a boom, which eventually becomes unsustainable, and we get a bust.
The solution to this problem... only allow persons with an engineering degree into Congress.
The solution to this problem... only allow persons with an engineering degree into Congress.
Everything old is new again...
http://www.authentichistory.com/1930-1939/2-newdeal/2-newdeal/technocrat...
There are (good) reasons why that movement didn't go anywhere.
The information above is common knowledge for most that frequent ZH. Unfortunately, it doesn't seem to be for the average American. The reactions I've gotten from friends, family, and co-workers to my comments (and occasional rants) about the Fed are usually met with puzzled looks, limited interest, or outright apathy. Clearly, some people are too dumb to connect the dots, but most have to wake up in their own time I suppose.
All that's happening in the economy is predictable, as there are 7 stages that every major economy goes through.
Those who know how it works profit & massive wealth is transferred to them.
Several months ago I learned this information from a millionaire whose site I found & am sharing it with everyone I know.
You can see how you too can profit like the ultra-rich during these uncertain times.
His free video-
"How To Create Wealth in Today's Economic Crisis" is at:
http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...
Hope this helps everyone as much as it has me.
Dr. Nancy