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Who Is Lying: The Federal Reserve Or... The Federal Reserve? And Why Stalin "Lost"

Tyler Durden's picture




 

When one thinks of the early 1950's, things that often come to mind are fries and milkshake, muscle cars, Little Richard, and greased hair. Things that rarely come to mind are that the US and China were openly at war over a little piece of land called Korea, that the Treasury market did not exist, that short and long end rates were "fixed" by the Fed at 0.125% and 2.5% respectively, even as inflation was at the highest it has ever been in the post war period at over 20%. What absolutely never comes to mind, is that on March 3, 1951, the world as we know it changed forever, after a little noted event known as the Fed-Treasury Accord of March 3, 1951 took place, and mutated the role of the Federal Reserve, which set off on a path that would ultimately lead to the disastrous economic state the world finds itself in today.

Oh and another thing that never comes to mind, is that while the current iteration of the Fed, various recent voodoo economic theories, and assorted blogs, all claim that excess bank reserves are never an inflationary threat, it is precisely two Federal Reserve chairmen's heretic claims that reserves will light an inflationary conflagration, that forced then president Truman to eliminate not one but two Fed Chairmen, and nearly result in the "independent" Federal Reserve being subsumed by the Treasury to do its monetization and market manipulation/intervention bidding. Which then begs the question: who is telling the truth about the linkage of reserve accumulation to inflation - the Fed of 1951, or every other Fed since, now firmly under the control of the Treasury-banker syndicate. Because they can not both be right.

Why is March 3, 1951 such an important date? Because, more than anything, the confluence of events that led to the "Accord" signed on this day have extensive parallels to our current situation, as the attached paper by the Federal Reserve of Richmond shows in exquisite detail, yet 100% in reverse.

In a nutshell what happened in the late 1940s and early 1950s was that in the aftermath of WWII, and the outbreak of the Korean war, America found itself in a very odd situation... one never really encountered until today. The country had soaring inflation - as in real inflation, not just core inflation measured by hedonic adjustments and excluding all those thing that actually do go up in price. More importantly, it had the 1950's version of ZIRP - only then it was called a peg, in this case of 0.375%, and subsequently 0.125% on short end Treasurys, and 2.5% on long-dated paper. In other words, the monetary situation in 1951 was one where both the short and long end of the curve were artificially boosted (think ZIRP and Twist), just so holders of Treasury paper (at that time only insurance companies as banks were not allowed to invest in TSYs) did not experience losses and get further "demoralized" in addition to the war that Truman was currently waging.

In fact, the following quote from none other than Truman is as idiotic, yet as valid today, as it was 61 years ago:

[T]he Federal Reserve Board should make it perfectly plain. . . to the New York Bankers that the peg is stabilized....I hope the Board will...not allow the bottom to drop from under our securities. If that happens that is exactly what Mr. Stalin wants. (FOMC Minutes, 1/31/51, p. 9)

And this:

The FOMC met with President Truman late in the afternoon of Wednes- day, January 31.17    Truman began by stating that “the present emergency is  greatest this country has ever faced, including the two World Wars and all the preceding wars.. . . [W]e must combat Communist influence on many fronts.. . . [I]f the people lose confidence in government securities all we hope to gain from our military mobilization, and war if need be, might be jeopardized.”

This is arguably the earliest recorded iteration in modern history of a "the world will come to an end unless you don't do what I tell you" type of threat uttered by a member of the administration (ahem Hank Paulson) to a governing body. We will skip commenting on the supreme irony that according to Truman, Stalin would win if the US did not engage in the same central planning that ultimately brought the Soviet empire down. 

Yet what is so very different about this date in history, is that while it was the Treasury pushing tooth and nail for endless bond pegging by the Fed (apparently nobody had thought of QE back then yet, because it would have been all the rage), the body warning about the potential threat of runaway inflation from a surge in reserves, as well as the dangers associated with central planning was... The Federal Reserve.

Huh !!??

The same Fed that can not withhold its exuberance in encouraging ZIRP, Twist, LSAP, selling of Treasury Puts, and every other form of market intervention known to man, warning the president these very same actions would lead to ruin? And not only that but Truman being forced to get rid of not just Fed veteran Marriner Eccles (after whom the building in which centrally planned schemes are hatched every single day in yet another supreme irony), but also his successor Thomas McCabe who also refused to follow the precepts of central planning... who in turn was replaced by a Treasury muppet, or someone who will gladly monetize US debt whenever needed, at which point the scene for the final outcome was set.

That is impossible you say. Oh, not only is it impossible but it gets much better.

Because not only did the two veteran Fed chairmen warn against the state's incursion into central planning, but they explicitly said something which the Fed, or at least its modern versions, have rejected over and over, especially during congressional committees: that a build of bank reserves is the surest way to spark hyperinflation.

But....but....but.... this is what fringe tin-foil hat blogs allege.... not Fed chairmen who between them have over 20 years of tenure.

Well, here are the facts:

“We have marched up the hill several times and then marched down again. This time I think we should act on the basis of our unwillingness to continue to supply reserves to the market by supporting the existing rate structure and should advise the Treasury that this is what we intend to do—not seek instructions” (FOMC Minutes, 8/18/50, p. 137).

 

[Fed member] Sproul would state the idea that a central bank controls inflation through the monetary control made possible by allowing market determination of the interest rate: "[T]he Committee did not in its operations drive securities to any price or yield....[M]arket forces had been the determining factor, and that only in resisting the creation of reserves had the committee been a party to an increase in interest rates. That...was the result of market forces, and not the action of the Committee. (FOMC Minutes, 3/1/51, pp. 125–26)"

In response to Truman's ceaseless demands for pegging interest rates even as inflation was spiking over 20%, NY Fed president Sproul said that...

...this “would make the Federal Reserve System a bureau of the Treasury and, in light of the responsibilities placed in the System by the Congress, would be both impossible and improper” (FOMC Minutes, 1/31/51, p. 23).

In other words, pegging (i.e., ZIRP, Twist, LSAP)... is "impossible and improper"... is unconstitutional another word for it?

In retrospect perhaps we were a little too rought on Mr. Martin, who despite being a Treasury puppet, had these words to say:

In his speech accepting an appointment to the Board of Governors, Martin (1951, p. 377) said:

 

"Unless inflation is controlled, it could prove to be an even more serious threat to the vitality of our country than the more spectacular aggressions of enemies outside our borders. I pledge myself to support all reasonable measures to preserve the purchasing power of the dollar."

There are those who claim the Fed has become the bankers' puppet. It was not always so. In fact, the bankers loathed the Fed... Until the "Accord"

The banking community contributed to the Fed’s isolation by refusing to support its position. On February 2, the Board had met with the Federal Advisory Council, which represents the views of large banks. At that meeting, Eccles accused bankers of a lack of “courage and realistic leadership” (Board Minutes, 2/20/51, p. 389).

 

The Executive Committee refused to withdraw the FOMC’s letter to the President. Furthermore, it wrote a defiant letter to Senator O’Mahoney. The initial substantive paragraph began with the famous quote from John Maynard Keynes: “[T]hat the best way to destroy the Capitalist System was to debauch the currency” (FOMC Minutes, 2/14/51, p. 87).

It just gets better, as Marriner Eccles puts it into overdrive:

"We favor the lowest rate of interest on government securities that will cause true investors to buy and hold these securities. Today’s inflation. ... is due to mounting civilian expenditures largely financed directly or indirectly by sale of Government securities to the Federal Reserve.. . . The inevitable result is more and more money and cheaper and cheaper dollars." (FOMC Minutes, 2/7/51, p. 60)

Yet punchline #1:

[We are making] it possible for the public to convert Government securities into money to expand the money supply....We are almost solely responsible for this inflation. It is not deficit financing that is responsible because there has been surplus in the Treasury right along; the whole question of having rationing and price controls is due to the fact that we have this monetary inflation, and this committee is the only agency in existence that can curb and stop the growth of money.. . . [W]e should tell the Treasury, the President, and the Congress these facts, and do something about it....We have not only the power but the responsibility....If Congress does not like what we are doing, then they can change the rules. (FOMC Minutes, 2/6/51, pp. 50–51)

And #2 and final:

Governor Eccles and Representative Wright Patman, who was a populist congressman from Texarkana, Texas, went head-to-head:

 

Patman: Don’t you think there is some obligation of the Federal Reserve System to protect the public against excessive interest rates? 

 

Eccles: I think there is a greater obligation to the American public to protect them against the deterioration of the dollar. 

 

Patman: Who is master, the Federal Reserve or the Treasury? You know, the Treasury came here first. 

 

Eccles: How do you reconcile the Treasury’s position of saying they want the interest rate low, with the Federal Reserve standing ready to peg the market, and at the same time expect to stop inflation? 

 

Patman: Will the Federal Reserve System support the Secretary of the Treasury in that effort [to retain the 2 1/2 percent rate] or will it    refuse?. . . You    are    sabotaging    the    Treasury.    I    think    it    ought    to    be stopped. 

 

Eccles: [E]ither the Federal Reserve should be recognized as having some independent status, or it should be considered as simply an agency or a bureau of the Treasury. (U.S. Congress 1951, pp. 172–76)

And there you have it folks, clear as daylight, every aspect of the tension of the "independent" Fed brought to the surface. Because the few men who dared to stand up against Truman,  the doctrine of central planning, "pegging" Treasury prices,  and the banking cartel whose sole prerogative has always and only been cheap and easy money, all got their just deserts:

Fed president #1:

Eccles also reported in his memoirs that shortly before this event he had completed a letter of resignation to the President. He then decided to postpone his resignation. Eccles had been Chairman of the FOMC from its creation in 1935 until 1948. He did not intend to leave Washington with the Federal Reserve under the control of the Treasury. According to a Truman staff member, Truman had failed to reappoint Eccles as Board Chairman in 1948 to show him “who’s boss” (Donovan 1982, p. 331).

And Fed president #2...

While in the hospital, Snyder conveyed to Truman the message that he felt he could no longer work with McCabe. Without a working relationship with the Treasury, McCabe could not function as Chairman of the Board of Governors. McCabe sent in a bitter letter of resignation, but resubmitted a bland version when asked to do so by the White House. McCabe, however, conditioned his resignation on the requirement that his successor be acceptable to the Fed.

As a reminder Snyder was the Secretary of the Treasury.

And whom did Truman replace McCabe with?

On March 15, the President appointed William McChesney Martin to replace McCabe.

Martin was undersecretary of the Treasury: the same institution that wanted all objectors to central planning scrapped. His position? Quote the Fed:

Truman and Snyder were populists who believed that banks, not the market forces of supply and demand, set interest rates. Truman felt that government had a moral obligation to protect the market value of the war bonds purchased by patriotic citizens. He talked about how in World War I he had purchased Liberty Bonds, only to see their value fall after the war.

Yet by keeping bonds pegged at ridiculously low prices during the late 1940s, and early 1950s, inflation exploded.

And that is what marked the beginning of the end, as while the Fed may have gained its independence, the US presidency, acting on behalf of the banks and populism (to keep capital losses to a minimum) made it all too clear anyone who steps out of line would be fired.

Call it a Stalinist putsch.

Actually hold on, did we say Stalin lost? Perhaps we may need to revise that. And while we got closure on that, we are still confused: is the real seed of inflation in reserves?

"Forced by the rate peg issue to make a stand on the role
of a central bank in creating inflation, Eccles expressed the nature of a
central bank in a fiat money regime. It was not private
speculation or government deficits that caused inflation, but rather
reserves and money creation by the central bank."
[The Treasury-Fed Accord: A New Narrative Account, Richmond Fed, Robert L. Hetzel and Ralph F. Leach]

Ok, now we get it.

And should we listen to the Fed or the... Fed?

Read the full absolutely must read Rchmond Fed narrative of the 1951 accord here. We can only hope someone in Congress can ask Bernanke for his take on the allegations made by the man responsible for the name of the current Fed headquarters.

 

 

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Sat, 04/21/2012 - 09:17 | 2363467 ISEEIT
ISEEIT's picture

If the sheeple only knew. Were you to present this information to the 99%, 98% of them would refuse to consider it and the remaining 1% would already be ZH fans.

Sat, 04/21/2012 - 09:28 | 2363479 slewie the-pi-rat
slewie the-pi-rat's picture

This will go down as one of the great if not greatest Z|h treatises

Sat, 04/21/2012 - 09:40 | 2363495 Oh regional Indian
Oh regional Indian's picture

Try sucking a little harder Slewie, you might get some Brownie points.

The whole thing is a sham/scam, was from the first, why waste time nit-picking.

The FED is "barely legal", go Snoop Dog.

The IRS, it's collection arm is damn near illegal.

The IMF/UN shadow looms large over the US and thus the world. The truth is probably so fantastic that instant CogDiss will ensue.

The FED is privately owned, by mostly NON_US banks at that and non-US personages.

McFadden/Lindhberg et. al. said it enough, often enough and with great fury and clarity. THe FED is a cancer on America/World, but no one listened.

Since the FED: two great World Wars, multiple BOOMS and BUSTS, a globally broken monetary system, thieves at the till, shills on the pill, rye and dill.

Go back to sleep everyone. There is no point flickering about at the edges.

ori

/hey-america/

Sat, 04/21/2012 - 09:44 | 2363499 spiral_eyes
spiral_eyes's picture

The question of whether excess reserves are inflationary can be answered only one way: it depends.

And, under the current system, it depends on just one thing: whether the primary dealers want to bite the hand that feeds them. 

They could start lending, wildly, in theory, which would of course have a wild inflationary impact. But that would come with a pretty fierce rebuke from the Fed/ the Treasury and all Bernanke lackeys who believe Bernanke is an alchemist who has invented a method of non-inflationary monetisation.

When I look at inflationary threats, I actually think there are larger ones. What about the 5+ trillion sitting in Asia that could come home to roost? What about the dangers of oil shocks or a breakdown in global trade? Those kind of events, I think, are much more likely than primary dealers shafting their lord and master Bernanke. 

On a long enough timeline, I think it would happen. But in reality, there are weaker links.

Sat, 04/21/2012 - 09:49 | 2363509 Oh regional Indian
Oh regional Indian's picture

AzNom, I think you are giving the "system" too much credibility. It's a finely crafted set, excellent, carefully chosen actors and a playbook.

In a normal world, we could discuss event probabilities, but in this sham?

Of course there are consequences, but in this game, I don't think there are any unintended ones, at least not one's that lie outside of their "model".

But then again, my tin-foiler is always on. Just hark back to th epeople calling it when it was hapening. All those excellent links on this :

 http://www.zerohedge.com/news/money-debt#comment-2363271

ori

Sat, 04/21/2012 - 09:54 | 2363513 spiral_eyes
spiral_eyes's picture

Central planning always has uncontrollable deleterious side-effects, Ori.

I think the strongest thing I can say about the excess reserves is that they are a bed of inflationary dynamite that could very easily be lit. But I am not going to do a Peter Schiff and predict "hyperinflation in 2010".

Sat, 04/21/2012 - 09:59 | 2363522 Oh regional Indian
Oh regional Indian's picture

True. So, what will happen (what has always happened) everytime Banks hoarded reserves (ie. stopped lending out)?

That damned 3 letter word, War. And everything is lining up again.

War, the great reserve burner, monetary and human.

ori

Sat, 04/21/2012 - 10:04 | 2363529 spiral_eyes
spiral_eyes's picture

Excess reserves is a symptom of excess monetisation, which is a symptom of excess debt.

And war is just another term for when a creditor wants to collect on a debt...

Sat, 04/21/2012 - 10:22 | 2363539 economics9698
economics9698's picture

Excess reserve pile up when the spread between the inflation rate, 2.9% (the real inflation rate is about 8.6%), and the interest rate, 4%, is not big enough.  The spread should be 2% to 4% to give the banks more incentive to lend, assuming the economy is “normal” which of course it is not.

Sat, 04/21/2012 - 10:46 | 2363561 Oh regional Indian
Oh regional Indian's picture

All true e96, as are your points below, well taken.

The BIG Q, in my mind is this:

Who was this system set up to Benefit?

Cui Bono people?

It's all useless laboUr till you hack at and extract the root cause/root. And it's obvious. A little labaynthine, but still, for a big picture viewer, obvious. 

ori

Sat, 04/21/2012 - 11:13 | 2363584 economics9698
economics9698's picture

"Who was this system set up to Benefit?"

The elites.  We all know that.  Codified and glorifies legal plunder of the peasants in America. 

Sat, 04/21/2012 - 11:23 | 2363600 johnu1978
johnu1978's picture

It's all downhill from here. Expect a lot more poverty and pain in the near future.

I strongly encourage everyone to brush up on their primitive skills while they have the opportunity to.

You'll be glad you did!

 

-John
Primitive Skills Classes - Edible Plant Tours
http://www.heartrootnatureconnection.com

Sat, 04/21/2012 - 12:14 | 2363630 TruthInSunshine
TruthInSunshine's picture

While kick the can & extend and pretend have been underway for a long time now, the foundation has already been stress-cracked, and the structure is ripe for implosion.

This happened the moment that real wages in the U.S. failed to keep pace with the real rate of inflation for more than a 'transitory' period of time, which necessitated women entering the workforce (creating the dual income household that was necessary to maintain anything close to the real living standards of the 1960s).

As long as purchasing power maintains stability, whether inflation is 1% or 10% (meaning that wages rise in accordance or roughly thereabout), the sheeple don't care, and why should they? But regardless as to what the BLS or Fed claim about inflation now, average people know they're being misled.

But those who do control the fractional reserve banking system ran out options to harvest assets within 'economic systems' whereby wages rose in lockstep with prices; hence the global, "free trade" pacts and systems (WTO, NAFTA, Chinese MFN trade status, Eurozone, etc.) were born. Now, those insiders who controlled the volume of money didn't have to rely on so few nations for harvest to take place, and they could control the rate by which the water simmered the frogs in a more subtle matter (even though one's wages are declining relative to purchasing power, if better slaves work for far less, those products can be exported to soften the blow of the harvest that's now happening on a far more global scale, as fractional reserve debt Ponzi scheme gets a head of steam and globalized lease on life).

Now that coordinated currency manipulation by the main fractional reserve central banks is the process by which they are seeking to keep the Ponzi rolling, there's no chance that they can maintain the confidence of the citizenry of the developed and BRIC nations for much longer (I'd argue that real confidence has already been lost by far more people than is surmised, and that even network and cable news watching sheeple have begun to awaken to how their lives are being manipulated by things such as currency valuation/debasement, interest rate policy, and a plethora of other policy clearly set to favor financial entities versus 'average citizens,' and that they actually realize their elected leaders don't care about their interests).

The questions that remains to be seen are how bad things will have to get, economically (and subsequently, socially), before people arise, and what course of action will take place when (or if) people do arise.

Sat, 04/21/2012 - 12:19 | 2363662 derek_vineyard
derek_vineyard's picture

inflation is the method of choice to lower USA standard of living and allow current system to 'last' several years longer and extend the pain over longer time horizon (rather than resolution by crisis)

Sun, 04/22/2012 - 16:26 | 2365199 TruthInSunshine
TruthInSunshine's picture

And inflation is a key tool in 'persuading' people who were formerly free to become de factor debt slaves.

After all, the efficiency in Kleptocratic Crony Anti-Capitalism, enabled by the fractional reserve banking syndicate, is in how fast the debt slaves can be harvested (i.e. separated from any real assets that they may have formerly owned/held).

Sat, 04/21/2012 - 12:34 | 2363695 Chupacabra-322
Chupacabra-322's picture

@ TruthInSunshine, "what course of action will take place when (or if) people do arise."

The course of action by The Powers That Be have been incrementally put in place already.  Right before our eyes and hidden in plain view.

The Patriot Act, Military Comm Act, John Warner Defense Act.

N.D.A.A. - Assasination of US Citizens - Rendition - Torture

DHS - Oder of 450 million rounds of .40cal hollow point bullets.

FEMA CAMPS

Drones

NSA - Utah facility - Illegal wire tapping.

 

Yes, the Fascist have been busy little bees.

Sat, 04/21/2012 - 12:46 | 2363703 TruthInSunshine
TruthInSunshine's picture

But they're telling us they're doing these things (what they're forced to admit or selectively leak) because they're protecting you and I.

I really want to believe that's the case, yet I have nagging, persisting doubts.

Let's hope they would never lie to us. I really wanted to buy into the theory that the particle board/laminate desk - attached to plastic chair - that I had in Kindergarten would provide sufficient cover to keep me safe in the event of full tilt nuclear war with the Soviets. Duck and cover.

Sat, 04/21/2012 - 13:09 | 2363718 Chupacabra-322
Chupacabra-322's picture

@ TruthInSunshine, you're one, if not, the most intelligent and articulate poster on the ZH boards so I'll assume you're being sarcastic in your response.  However, I'll leave with you a summary of what I think.

The highly educated intelligent & wealthy owners of the world banking, media, military & major corporations are in control of the world political & economic policies, so morally it doesn't really matter. They deceive, wage wars, killing and impoverish millions of the other 99% human populations, for the New World Order to satisfy their greed & arrogance, all in the name of democracy, freedom & war on terrorism. Does it sound delusional? Not if you are the so called? "God" chosen white western elephants.

Total Complete Full Spectrum World Domination.  Via The City of London. The financial location of The Banksters, which Wall Street is just an extension. They own the Military, Media and have put forth hundreds of years worth of planning to complete their goals of the aforementioned.

It began with The Fascist Patriot Act which morphed into The Military Commissions Act, John Warner Defense Act, NDAA, PD51, Torture, Illegal Wire Tapping etc..etc... You get the picture? We're dealing with pure Evil, which cannot be reasoned or negotiated with. Their goal was to break the sovereignty of The United States along with our good men and women of the Military while simultaneously ushering in their NWO protective force of Their Global Military/Police Force to protect their Corrupt system/Crimes Against Humanity. Divide and Conquer. That's the Elite's game. We're just their Debt Slaves. Divided and Conquered.

-Miggy.

Sat, 04/21/2012 - 20:17 | 2363854 TruthInSunshine
TruthInSunshine's picture

1) Totally sarcastic.

2) I absolutely agree with you, and not just because you complimented me (and there are far more intelligent people posting here than I; I would list them all but wouldn't want to inevitably leave many out, inadvertently).

Sat, 04/21/2012 - 15:05 | 2363876 vato poco
vato poco's picture

So does this mean we can finally put the "Truman was a great Prez!" horseshit to rest? And start recognizing him for the smarmy little Democrat-Machine-controlled little cocksucker he really was? Harry was a Great President just like Boss Tweed was a Great "Supervisor".

Sat, 04/21/2012 - 21:31 | 2364252 Mr. Lucky
Mr. Lucky's picture

Thomas Joseph Pendergast was Harry's "friend".

Sat, 04/21/2012 - 11:23 | 2363599 mess nonster
mess nonster's picture

War is how people who cannot repay, and people who cannot collect, collaborate in the write-off process.

Sat, 04/21/2012 - 11:41 | 2363621 Doña K
Doña K's picture

Every day that goes by makes me think that the hippie movement was way ahead of its time. Why work and have the gov take 50%? They were happy with a piece of land in Oregon someplace, growing their own food and chemical paradise.

If a large % of us did that, plus barter and stored excess wealth (if any) in gold and silver. We will not worry about a thing.

How about it?

Sat, 04/21/2012 - 12:25 | 2363677 derek_vineyard
derek_vineyard's picture

Pirates will then pop up and take your gold and silver and barbaric human nature will surface.  The larger group has to learn from birth how to function in society.  If the system were to collapse today............i'd choose guns and ammo as means to financial security

 

Sat, 04/21/2012 - 14:07 | 2363798 A Nanny Moose
A Nanny Moose's picture

Pirates will then pop up and take your gold and silver and barbaric human nature will surface.

So what you are saying is, government would pop up..again. If the worst possible outcome is that we return to the starting point, when do we get started?

The only way to learn to fly is to leap from the next.

Sat, 04/21/2012 - 15:10 | 2363882 vato poco
vato poco's picture

If the system collapses, and 'barbaric human nature resufaces', you're going to be looking at the age-old human solution, tribalism. If you're wanting financial security in such a situation, you'd better hustle yourself up some cousins/tribesmen. You and 100 guns + unlimited ammo vs. 20 guys with 6 guns and 30 rounds between them = you lose.

Sat, 04/21/2012 - 18:49 | 2364099 derek_vineyard
derek_vineyard's picture

i was going to add that to my post.....you need a loyal and large clan

but on day one i know exactly which of my neighbors i can pillage

Sat, 04/21/2012 - 12:30 | 2363685 Umh
Umh's picture

It will only work if you don't tell everybody; ssssssssssssssh!

Sat, 04/21/2012 - 21:09 | 2364234 Harbanger
Harbanger's picture

The commune theme has never worked.  In small numbers it's tribal and tribes always compete for resources.  It's regressive.  btw- Hippies were living in an affluent time and partying with their parents money,  then they borrowed theirs kids $. 

Sat, 04/21/2012 - 21:42 | 2364267 Cathartes Aura
Cathartes Aura's picture

I know you don't care, but you couldn't be more wrong - you're just parroting something you once heard, someone else's opinions, based on nothing.

believe it or not, there are many examples of people co-operating, sharing and exchanging resources and information, living in supportive agreement, albeit with "less" than the average amrkn thinks they need to be "seen" as worth "something" in the world.

just this ONE link springs to mind:

http://directory.ic.org/iclist/

but know that there are MANY others, and many not even known but by word of mouth. . . and not everyone calls their community "hippy" btw.

Sat, 04/21/2012 - 12:33 | 2363691 FeralSerf
FeralSerf's picture

The federal alphabet soup crew is not about to allow that to happen.  They prefer death and dismemberment.   Why do you think DEA was formed?

Sat, 04/21/2012 - 14:37 | 2363840 fnordfnordfnord
fnordfnordfnord's picture

inb4 "Environmental terr'ism group's remote compound raided by federal agents... multi-day stand-off... ends with a big fire." In the end it turns out you guys financed your hippy utopia by selling drugs, unpasteurized milk to children, giving them autism. At least, that's what the official press release will say.

Sat, 04/21/2012 - 15:39 | 2363907 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Dona will you marry me? (I can't figure out how to get a cedilla on your name...)

I used to have a bumper sticker that said "Hippies Were Right About Everything: Clean Food - Green Energy - World Peace - Free Love"

Mon, 04/30/2012 - 11:55 | 2363929 Doña K
Doña K's picture

I am married to a Greek god. But....sometimes I call him a god damn Greek. Great guy BTW.

We had Que-sedillas for lunch yesterday.

Sat, 04/21/2012 - 11:10 | 2363536 economics9698
economics9698's picture

 

You people need to do more research.  The Fed owned treasury instruments have increased 251% since Obummer entered office.  This is pure inflation, money printing.  This is the Fed picking up the slack in the marketplace and keeping the demand for T-bills at the insane level it is.

The excess reserves are the banks looking at the 2.9% inflation rate and 3.9% loan rate and saying “Fuck You Ben” to the spread.  They would prefer to wait another day and collect 0.25% interest than get booked up on 4% shit paper that will put them out of business when the inflation rate goes to 5%, which indecently is exactly what the TBTF banks would like to see.  The eight firm concentration ratio is over 50% now for those keeping track.

When there is a investment opportunity the excess reserves will disappear like school kids around a dog that just took a dump in the school yard.  Hyperinflation.  When the excess reserves are lent out it will add $15 trillion to the money supply.  You do the math.

For now the inflation is coming from the Fed monetizing the debt, up 251% since the affirmative action hack entered office.

 

Sat, 04/21/2012 - 11:26 | 2363607 mess nonster
mess nonster's picture

It's that "investment opportunity" that is proving to be so damned elusive.

War is another word for a sustained lack of investment opprtunities.

Sat, 04/21/2012 - 11:20 | 2363594 mess nonster
mess nonster's picture

Yes, if excess reserves are held... in reserve by the TBTF banks, as a soggy toilet-paper covering of their obscene derivatives exposure, and if those same banks refuse to loan out money, despite ZIRP, because they NEED those reserves for, yes, their obscene derivatives exposure, and they cannot create more stress on their already overstretched reserve ratios by loaning money to consumers, and IF ZIRP serves only to backstop zombie banks that, were their suply of fresh human brains- er, Fed-created money- to stop, they would instantly vaporize, IF this were the case, if massive global systemic indebtedness were not the pervasive reality, where everyone, including domestic animals, was financially over extended, and in real terms cannot pay back the money they owe...

IF this were the case, then the "reserves" of imaginary money created by the Fed, and held as reserves by the banks in some phantasmagoric circle jerk of collective psychosis,  these same reserves would not be inflationary, but would mertely serve as a deck-chair re-arrangement on a deflationary Titanic.

There you have it.

Sat, 04/21/2012 - 18:33 | 2364087 exartizo
exartizo's picture

ineresting comment.

But I think it bears some scrutiny.

That is, what kind of naturally occuring market forces or environmental events might force the banks to do the postulated unthinkabkle?

Sat, 04/21/2012 - 11:11 | 2363583 moroots
moroots's picture

Let's call it for what it is: government, Wall Street and the central banks are the largest mafia on the planet.

Sat, 04/21/2012 - 11:50 | 2363592 ekm
ekm's picture

Pointing out  the obvious has become quite difficult nowadays with sucking media likes of WSJ, Bloomberg and CNBC taking the top seat.

Zerohedge's capability of repeating over and over what the obvious is, is quite an enormous task. Most of people have lost the sence of the obvious and real.

Imagine: Zerohedge vs All the Rest.  Not easy...

Sat, 04/21/2012 - 11:25 | 2363603 Chupacabra-322
Chupacabra-322's picture

@ Oh regional Indial,

"The FED is privately owned, by mostly NON_US banks at that and non-US personages."

Federal Reserve Banking System

Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? Peter Kershaw provides the answer in “Economic Solutions” where he lists the ten primary shareholders in the Federal Reserve banking system.

1) The Rothschild Family – London

2) The Rothschild Family – Berlin

3) The Lazard Brothers – Paris

4) Israel Seiff – Italy

5) Kuhn-Loeb Company – Germany

6) The Warburgs – Amsterdam

7) The Warburgs – Hamburg

8 ) Lehman Brothers – New York

9) Goldman & Sachs – New York

10) The Rockefeller Family – New York

http://www.nesaranews.blogspot.com/2...ng-system.html

Sat, 04/21/2012 - 11:29 | 2363610 mess nonster
mess nonster's picture

And to think, none of these people ever send me a Christmas card!

Sat, 04/21/2012 - 13:19 | 2363727 FeralSerf
FeralSerf's picture

They don't celebrate Christmas.

Sat, 04/21/2012 - 13:36 | 2363758 francis_sawyer
francis_sawyer's picture

don't EVEN get me started on that...

Sat, 04/21/2012 - 13:24 | 2363736 Perpetual Burn
Perpetual Burn's picture

LOL the fed is not a private corporation. It is independent with in the federal government. FED employees are federal government employes.

 

 

 

 

Sat, 04/21/2012 - 21:35 | 2364259 TheVirginian-HGWT
TheVirginian-HGWT's picture

So it's not private but it's independent from the federal government?

Here is Alan Greenspan telling you how it really works, Comrade.

http://www.youtube.com/watch?v=3QkmLnNEvdU

From the horse's mouth: "... there is no other agency of government which can overrule actions that we take."

Sun, 04/22/2012 - 14:43 | 2365011 All Risk No Reward
All Risk No Reward's picture

PB,

Ownership if the Fed is purposely obfuscated.  It is also a red herring. 

Here are the relevant facts:

1. No government agency can over ride the decisions of the Fed.

2. The government doesn't CONTROL the Fed.

3. The Federal Reserve Directors CONTROL the Fed - http://www.federalreserve.gov/generalinfo/listdirectors/default.cfm

4. Review the list...  The Class A Directors are almost exclusively bankers, Jamie Dimon being at the top of the list.

5. The corporate people who make up the Class A Directors of the Federal Reserve System are ultimately controlled by the OWNERS of said corporations who gave their trusted stewards POWER in the first place.

Got that?  The Federal Reserve Board's policies are directed by corporate executives that, ultimately, report to the OWNERS of said corporations that employ them.

The Federal Reserve System is the expression of this quote...

The secret to success is to own nothing, but control everything.
Nelson Rockefeller

We have to stop dwelling in the false veneer of propaganda that overlays reality.

Because you probably believe the false narrative that the banksters didn't commit any crimes...

2010-11-09 Greenspan Admission.mp4

http://www.youtube.com/watch?v=731G71Sahok

 

 

Sat, 04/21/2012 - 14:19 | 2363812 Oh regional Indian
Oh regional Indian's picture

Awesome, thanks for that.

ori

Sat, 04/21/2012 - 20:59 | 2364219 Kipper und Wipp...
Kipper und Wipperzeit's picture

Farrakhan???? Really??? The rest of the blog looks like grade 'A' lunacy, too.

 

Edited to add-

 

I'm actually listening to the beginning of Farrakhan's talk linked and it actually sounds OK so far-if mostly cribbed from None Dare Call It Conspiracy---but still, Farrakhan? Really?

Sat, 04/21/2012 - 09:45 | 2363500 Dr. Engali
Dr. Engali's picture

You grew an extra hyphen Slewie , and you're 1 week and two days old. Happy belated 1 week birthday.

Sat, 04/21/2012 - 10:02 | 2363525 Turd Ferguson
Turd Ferguson's picture

Slewie is correct. This is terrific!

Not much time to comment here anymore but I had to log on to give props to Tyler for this,

Where else is the financial "media" d you find this type of information and analysis?

GREAT JOB.

Sat, 04/21/2012 - 11:39 | 2363617 phaedrus1952
phaedrus1952's picture

Agree.  While we may endlessly debate/discuss nuance, future potentials, underlying significance, etc., hard, historical events are just that.  This site is - by a wide margin - the best financial site on the web. A (somewhat surprisingly to me), growing audience of receptive listeners are no longer dismissing my input into financial discussions and are being emphatically steered to this site.  My great appreciation and admiration is extended to all the TD/ZH staff and community - both passive and active.  Marla's legacy will endure.

Sat, 04/21/2012 - 14:45 | 2363846 slewie the pi-rat
slewie the pi-rat's picture

Hahaha!

turd, just keeping his eye on zH, cruises by and agrees with slewie clone#3...

and does us the "honor" of logging in, to say so!  on a string entitled: "Who Is Lying", no less!

keep drinking, tyler!

Sat, 04/21/2012 - 16:51 | 2363997 Bollixed
Bollixed's picture

We're all anxiously awaiting the debut of not-slewie-the-pi-rat.

Sun, 04/22/2012 - 11:35 | 2364762 TheFourthStooge-ing
TheFourthStooge-ing's picture

Bollixed said:

We're all anxiously awaiting the debut of not-slewie-the-pi-rat.

...or A Pup Named Slewie-Doo,

or (ugh) Scrappy the pi-rat.

 

Sat, 04/21/2012 - 15:39 | 2363909 paulbain
paulbain's picture

phaedrus1952 wrote:

This site is - by a wide margin - the best financial site on the web. A (somewhat surprisingly to me), growing audience of receptive listeners are no longer dismissing my input into financial discussions and are being emphatically steered to this site.

I agree that ZH is the best, but I have been unable to convince others of this fact. For example, readers at SeekingAlpha.com tend to ignore my praise of ZH. Dolts.

-- Paul D. Bain

paulbain@PObox.com

 

Sat, 04/21/2012 - 11:53 | 2363629 cranky-old-geezer
cranky-old-geezer's picture

 

 

Fed's purpose from its initial conceptualization on Jeckyl Island all the way to today has been to steal wealth from Americans for its government and banker masters, and the methodology for stealing wealth is the currency printing press.

Any Fed chairman bucking that purpose, wanting to turn off the printing press and stop stealiing wealth from the people has been booted out and replaced with someone who will keep the currency printing press running.

By '71 so many dollars were in circulaiton they couldn't keep redeeming them for gold so they closed the gold window, removing the last bit of gold redeemability from the dollar, making it a non-redeemable fiat currency.

That's when the dollar saw a big drop in value, not so much in America but elsewhere in the world.  Fortunately no other currency was redeemable in gold, or the dollar would have lost its world reserve currency status.

Coming forward thru the 70s and 80s and 90s and 00s, steady money printing to fund steadily growing government debt has steadily reduced the dollar's value.  By 2007 the dollar had lost 98% of its value.

All the money printing to bail out failing banks in 2008 and fund unprecedented government deficits of the Obama administration has debased the dollar another 40%, bringing net loss of value near 99% now.

How much longer the rest of the world will let the rapidly-debasing dollar keep its world reserve currency status is anyone's guess, but if I was the leader of some exporting nation watching the world reserve currency lose value so rapidly, I would start looking for an alternative ...and I'd start getting rid of any dollar reserves, converting them to gold or something else with stable value.

I believe the asian bloc is doing just that, putting together an alternative currency much stronger than the rapidly-debasing US dollar, likely pegged to gold, or backed by gold, or possibly even redeemable in gold.

If that happens it'll be instant death for the US dollar, losing world reserve currency status overnight ...then rapidly dropping to near worthless.

 

Sat, 04/21/2012 - 14:37 | 2363838 slewie the pi-rat
slewie the pi-rat's picture

L0L!!!

Sat, 04/21/2012 - 10:22 | 2363541 Gully Foyle
Gully Foyle's picture

http://hotair.com/archives/2012/04/21/executive-order-13547-the-sleeping...

Executive Order 13547: “The Sleeping Power Grab”

To be fair, President Obama’s executive-order output hasn’t unreasonably outpaced that of his predecessors – his especial willingness to actively circumvent Congress and snatch huge gobs of power for the federal bureaucracy only makes it feel like he has.

In July of 2010, President Obama signed executive order 13547 – “Stewardship of the Ocean, Our Coasts, and the Great Lakes.” There wasn’t much hullabaloo about it, since it was just post-BP oil spill and it was ostensibly designed to allow the federal government to better safeguard – er, you know – ecosystems! And, sustainability! And other such politically-soothing environmental buzzwords. The broad policy afforded the feds the authority to zone and regulate the seas and waterways, and all of the activities that take place on them.

There is a great deal of commercial economic activity that goes down on our oceans, including energy, fishing, travel, and shipping, and then when you move upriver and inland, there’s mining, timber, recreation, agriculture, manufacturing, and other industries that make use of our nation’s aquatic networks. As with any large, complex endeavor with many relevant players and countless moving parts, the federal bureaucracy’s attempt to “oversee,” a.k.a. regulate and centrally plan, that endeavor usually just gums up the works and retards economic growth.

In four separate Congresses, legislation outlining the idea of zoning the oceans has been debated and subsequently dropped. Did President Obama bother to ask whether the current Congress would authorize such a move? Well, that would just be silly, when there’s executive fiat to be had, and several effects of this vaguely-defined order have begun to manifest themselves:

“This one to me could be the sleeping power grab that Americans will wake up to one day and wonder what the heck hit them,” said Rep. Bill Flores (R –Texas). …

The ocean policy has already impacted oil and gas development in the Mid and South Atlantic, where more environmental analysis is now required to determine whether new studies must also be conducted to determine its safety, according to Interior Department Secretary Ken Salazar.

Jack Belcher, managing director of the Ocean Policy Coalition that represents numerous industries affected by Obama’s initiative including oil companies, says Salazar’s action is one example of how the administration is already blocking new production “on a policy that hasn’t even been developed yet.”

Still in its draft form, the plan released in January contains vague goals that call for more than 150 milestones to be accomplished by next year that will determine how the ecosystem is managed. …

“But what we are worried about, and already seeing, is it’s being used as a tool to say we’re not going to do something, or delay it,” Belcher said. “It creates another layer of bureaucracy and another opportunity for litigation. We see this as an opportunity to tie things up in complete uncertainty.” …

“This has largely been completely under the radar,” Vitter said. “And that is exactly the way the administration and their environmental allies want to do it—announce the administrative fiat is complete and that we have this new way of life that nobody knew was coming.”

The gist of this executive order is just another environmentalist front for a regulatory power grab, and a major way to expand the government’s authority over oil and gas permitting. No doubt the environmental lobby really does hope to eventually closely regulate all of the ocean’s economic activity, since they’re convinced that the earth (not to be confused with humankind) would be better off if we could rewind our industrial habits back a few thousand years.

Both House and Senate Republicans are starting take note of the disastrous economic impact the Obama administration could exercise with this order, recently asking for oversight hearings and more transparency on “cloaked funding,” and the House Natural  Resources Committee is fighting back.

Sat, 04/21/2012 - 11:41 | 2363614 vast-dom
vast-dom's picture

"...that a build of bank HYPERreserves is the surest way to spark hyperinflation."

 

HYPERreserves: reserves both accounted for and unnaccounted for; mainly, derivative and CDS's and other toxic bank assets on The Fed's shadow books in excess of total bank reserves by a vast multiplier effect. Current bank reserves are not adjusted for againt their losses such that any increase in interest rates could literally destroy the system.

 

The question becomes how and when can these be erased or offloaded into some other accounting gimmick.

Sat, 04/21/2012 - 11:49 | 2363628 BeetleBailey
BeetleBailey's picture

Try 99.95%. That still may be understating it.

I would also re-phrase "refuse to consider it" to "not understand one single thing of the above narrative and treatise".

Americans, while generous, honest, hard working and semi-intelligent for the most part (in their vocational fields for sure), do not get, or even WANT to "get" finance. I have seen this over my multi-decade career in investment advisory.

I have had some pretty intelligent clients, that, faced with understanding anything the Fed does, knowing what and how the debt market works, and grasping basic economics - turn into Gump post someone bashing their skulls with hammers.

Hell; there's much I still don't understand or grasp.

Much of America is simply ignorant, too lazy to take the time to understand what the Fed and banks are REALLY doing, and pre-occupied in their own little worlds - which is why these bankstas and Fed gangstas and members of Congress yankstas get away with rafts of shit year after year. Huge barges of it.

Excellent post here. Well done ZH - as usual.

Sat, 04/21/2012 - 14:06 | 2363795 The Alarmist
The Alarmist's picture

"Much of America is simply ignorant, too lazy to take the time to understand what the Fed and banks are REALLY doing, and pre-occupied in their own little worlds ...."

You need to be a little more open minded ... have you considered that this is the kind of coping-mechanism a beaten-down person uses to get through a seemingly endless series of days in a gulag?

Sat, 04/21/2012 - 14:42 | 2363848 lotsoffun
lotsoffun's picture

i would almost agree with you mr/ms alarmist.  but it took centuries and decades of u.s. to perfect this system where the banks are simply going to suck all your wealth up, either by bailing out from taxpayers to keep their bonus, or by forcing you into risk markets where they will eventually sweep the chips off or if that isn't good enough, by sweeping your 0% savings into their pockets as their banks fail, and the treasury prints more to hand it to the fdic and make you 'whole' at some tiny percent of it's previous value.  most people can't understand this.  and dancing with the idols makes it even more unlikely as does the saltpeter equivalents they put in industrial strength 'food' that they've convinced them all to eat.

 

Sat, 04/21/2012 - 12:40 | 2363699 I should be working
I should be working's picture

Probably 98-99% couldn't even read it. It's better for the sheep not to know why they are being slaughtered.

All I have to say is good luck if you own government bonds. I'm looking at you Gary Schiller. Loan the government money for 30 years at 3% when inflation is already higher? You're fucking kidding me.

Sat, 04/21/2012 - 18:27 | 2364080 The Heart
The Heart's picture

The great thing is, the sheeple ARE knowing.

So much so that all the talk about israel had caused the site to be taken down.

Can not get to the DP now?

Is anyone else having a problem with America's number one news for Ron Paul site?

http://www.dailypaul.com/

Funny thing, all that ranting about isreal and the zionist-banksters that are destroying the world and America must have caused a stir.

Here is this really great radio show that was on RBN today that proves people are waking up and speaking the same language. Listen to the callers toward the end of the first half hour.

http://216.240.133.177/archives32/Tillaw...160000.mp3

They can do all they can, but they will not stop the tsunami that is about to crush the lying dying false and fake lame stream media propagandist liars and deceivers that work for these zionist banksters and globalist scum.

Sat, 04/21/2012 - 09:22 | 2363471 Earl of Chiswick
Earl of Chiswick's picture

Pièce de résistance

Sat, 04/21/2012 - 09:27 | 2363478 SHEEPFUKKER
SHEEPFUKKER's picture

Yeah bro, I don't like what you and your bankster friends have been doing for the last century. I motion to change the rules, tks. 

Sat, 04/21/2012 - 09:21 | 2363472 TwoJacks
TwoJacks's picture

awesome write up

Sat, 04/21/2012 - 09:24 | 2363474 francis_sawyer
francis_sawyer's picture

& to think this was all before Eisenhower even spoke his warnings about the MIC...

Regardless ~

It's all a fancy way of saying... "We'll keep tapping on the CTRL+P button until... Poof! it's gone"

Sat, 04/21/2012 - 10:58 | 2363566 francis_sawyer
francis_sawyer's picture

By the way... the last part of my comment was not meant in any way to make small out of the work... It was a fantastic piece of work... My simple intention was to contrast what, ONCE UPON A TIME, appeared to be some conscience among a few administrators, versus the pusilanimous greed of others... Any 'responsible' notion, at this point, is lost forever (as the current path is set on autopilot to PRINT to infinity)...

Sadly, I feel that ANY developed system is doomed to end this way simply due to the eventual winning out of the greed part of human psychology versus responsibility... I hope I'm wrong about that someday...

~~~

Oh yeah, & BTW... Anybody who has any comprehension at all of the current path we're on, and eventually what will mean to all 'paper wealth' (i.e. go to ZERO)... & continues to trade stocks & otherwise be involved in this game, is a complete & utter ignoramus... 

Sat, 04/21/2012 - 09:26 | 2363476 lizzy36
lizzy36's picture

Amazing that before these dudes at the Fed got fired, the agreed with everything ZH has said about current monetary policy over the last 3 years.

Funny, that they still try and maintain the pretense of "independence".

What a complete clusterfuck.

Sat, 04/21/2012 - 10:48 | 2363564 disabledvet
disabledvet's picture

how DARE you talk dirty like that...

Sat, 04/21/2012 - 09:29 | 2363482 bb5
bb5's picture

is this going to be on CNBC?

Sat, 04/21/2012 - 09:31 | 2363484 jerry_theking_lawler
jerry_theking_lawler's picture

i would be willing to bet that the Federal Reserve is to blame....but everyone has the ability to steer clear of this 'inflation'...buy PMs...

Sat, 04/21/2012 - 11:00 | 2363570 SilverFish
SilverFish's picture

I'm not buying PMs. The little lady uses it as the reason for her psychotic mood swings, but I know she just likes to be that way and uses PMs as an excuse.

Sat, 04/21/2012 - 13:20 | 2363728 MsCreant
MsCreant's picture

What, you don't like those early, medieval, European bards who rode bikes and performed songs whose lyrics told stories of distant places or of existing or imaginary historical events?

Sat, 04/21/2012 - 13:52 | 2363778 SilverFish
SilverFish's picture

I had to look that one up on urban dictionary. Pretty cool in a weird kinda way.

Doesn't really bother me at all.

Carry on.

Sat, 04/21/2012 - 09:37 | 2363492 dick cheneys ghost
dick cheneys ghost's picture

Tyler, are you Eccles Reincarnated?

 

Or just channeling him?

Sat, 04/21/2012 - 09:41 | 2363496 insanelysane
insanelysane's picture

Sign on Truman's desk never said "The buck stops here." but said "The buck will be worth nothing here."

Sat, 04/21/2012 - 09:45 | 2363502 Oh regional Indian
Oh regional Indian's picture

Is Liesman the inverted re-incartion of Truman?

Good one insaneysane.

ori

Sat, 04/21/2012 - 14:34 | 2363832 slewie the pi-rat
slewie the pi-rat's picture

interestingly, this is about where your first post would be if you hadn't cuddled up to one of the clonies to spam and pretend it was "Slewie"

old sport...

Sat, 04/21/2012 - 14:40 | 2363843 Oh regional Indian
Oh regional Indian's picture

Hah! Wow Slewie, someone cloned you, that means you ARE special.

I always knew it. Good for you. 

Stay mean Slewie, stay mean..... the world needs a mean slewie, slewie the slayer of trolls.

ori

Sat, 04/21/2012 - 14:56 | 2363864 slewie the pi-rat
slewie the pi-rat's picture

this is the third clone

i think i'm having kittens, for pete's sake!

Sat, 04/21/2012 - 09:44 | 2363498 Mr. Lucky
Mr. Lucky's picture

We will not get Ike this time.

Sat, 04/21/2012 - 10:37 | 2363549 i-dog
i-dog's picture

Thank goodness ... He was almost as corrupt as Obomber. Almost none of them have acted in the interest of the intent of the Constitution for the American people ... not even "honest" George Washington.

Sat, 04/21/2012 - 10:45 | 2363558 smb12321
smb12321's picture

You are looking for a Utopia of freethinkers who look to an unchanging Constitution. The problem is that people are not laws, principles or sheets of paper.  The essence of politics is compromise and unless we want dictators compromise will be required.

I remember the chagrin upon learning that the Founding Fathers and writers of the Constitution were compromisers of the first degree.   In fact, the Constitution is nothing but a series of compromises which is why it is such a powerful document.  The essence of the Constitution - protecting us from government - remains.

Sat, 04/21/2012 - 11:32 | 2363611 AndTheRest
AndTheRest's picture

LOL.  The constitution is not in effect in the American police state.  Just a piece of paper.  Soviet Russia had a far superior constitution to ours and it guaranteed far more rights, including the right to a good paying job.  How'd that work out for Stalin's many victims?

Sat, 04/21/2012 - 15:34 | 2363904 smb12321
smb12321's picture

Please!  The fact that you feel free to denigrate our insitutions and leaders with impunity says more than bogus comparison with Stalin.  Few would view the Soviet constitution as superior for one reason - all rights are given by the State (and depend upon support of that political apparatus). 

The beauty of the US constitution is its ability to weather the ages.  Sometimes I think ZH posters have gone off the deep end with all the comparisons to a police state.  Obviously, none has ever lived in a real dictatorship where such discussion would be an automatic prison (or death) sentence.  And when folks do this over and over it cheapens what we have here - the right to air our views without worry even if they are repugnant.

Sat, 04/21/2012 - 18:15 | 2364072 The Alarmist
The Alarmist's picture

There is theory, and there is practise.

Sat, 04/21/2012 - 21:28 | 2364249 smb12321
smb12321's picture

Yeah, the Soviet system worked so good in both theory and "practise".  LOL.  Love the name - fits in well with ZH posters.

Sat, 04/21/2012 - 19:36 | 2364155 AndTheRest
AndTheRest's picture

I fully expect to lose my job, have my assets confiscated, and be jailed for the things I have said, despite going to great lengths to protect my identity via technogical anonymization techniques.  When I say we live in a police state it's not hyperbole.  I know for a fact that we live in a high tech surveillance based police state.

 

You're only free until you step out of the main stream.

Sat, 04/21/2012 - 11:36 | 2363612 i-dog
i-dog's picture

 

"the Constitution is nothing but a series of compromises"

I've said exactly that here myself in the past. I'm simply pointing out that none of those who have been elected, and expected, and sworn, to follow it ... have actually followed it! That's why I'm a voluntarist opposed to central government, -- among other reasons, both philosophical and practical.

Sat, 04/21/2012 - 11:34 | 2363613 mess nonster
mess nonster's picture

The Constitution protects me from government about as well as Ghost Shirts protected the Soiux from gatling guns.

Sat, 04/21/2012 - 15:49 | 2363922 smb12321
smb12321's picture

Well, you can come to ZH and post just about anything derogatory you want about the country, its leaders and institutions then run out for a Big Mac without worry of being picked up by the security police.  If that's not protection I don't know what is.  Again, I am not arguing that the nation is perfect or that we are not headed for a financial downfall.  I am saying, as one who has traveled the world, that we have something precious and unique and that to denigrated everyone and everything about it makes little sense.

Sat, 04/21/2012 - 18:18 | 2364075 The Alarmist
The Alarmist's picture

You can run out for a Big Mac, perhaps, but they are detaining and questioning more for speech-crimes at the various ports of entry, and there are plans to tighten monitoring of internal travel.

Sat, 04/21/2012 - 21:48 | 2364272 smb12321
smb12321's picture

Alarmist, the problem is folks associating ONLY with those who share their world view.   It's a self-reinforcing mechanism.  So, despite the fact that we freely post whatever the hell we want, it's countered with "But it's really a police state" or "We are being monitored" or "They are planning concentration camps for the sheeple".  Begging the question, if folks are so dumb (as ZH posters assure us) why the fuck would the powers that be waste money on camps?  

We've crossed a Rubicon.  Revulsion at our financial situation has morphed into bitter hatred for the nation and its institutions and leaders - past and present.  They never notice that the Tylers are big readers of Wall Street reports and at least one of the Tylers has a liking for a few politicians.

Sat, 04/21/2012 - 21:16 | 2364242 TheVirginian-HGWT
TheVirginian-HGWT's picture

You can grab a Big Mac after you clear the internal TSA highway checkpoint and are free of pre-crime thoughts.

Sat, 04/21/2012 - 18:00 | 2364060 Mr. Lucky
Mr. Lucky's picture

i no POTUS is perfect; in fact far from it.  Your comparing Ike to 0 is like Augustus to Nero.

Sat, 04/21/2012 - 09:47 | 2363504 AssFire
AssFire's picture

The federal budget, amounting to $63 million in 1860, rose to well over $1 billion by 1865. At war’s end the federal bureaucracy, with 53,000 employees including new Custom House officials, internal revenue agents, clerks, and inspectors, was the largest employer in the nation.

The Union victory in the War Between the States had the effect of (1) enslaving everyone (North or South) to the consolidated Yankee Leviathan in Washington, (2) destroying the rights of the states and established the dominance of the central government, (3) destroying the spirit of the Constitution, (4) destroying the racial basis of American citizenship, (5) making the federal government the largest employer in America, (6) enthroning the corporation and (7) abolishing slavery to create BRA thereby creating The Black Undertow which had not previously existed.

Sat, 04/21/2012 - 11:03 | 2363576 GOSPLAN HERO
GOSPLAN HERO's picture

Lincoln was a statist and the highest paid corporate lawyer of his day.

Need I say more?

Sat, 04/21/2012 - 11:11 | 2363581 smb12321
smb12321's picture

Yes, I'd say read some history books.  To compare Lincoln to a contemporary "corporate lawyer" is well, absurd.  It's like saying Solomon's temple was the first central bank or the Founding Fathers were really the bad guys.  Any good biography will document the woes and self-doubts Lincoln entertained during the war.  His benevolent attitude toward the South afterwards would have been great for the nation instead of what happened. 

Sat, 04/21/2012 - 13:33 | 2363749 FeralSerf
FeralSerf's picture

His benevolent attitude as exemplified by General Sherman in his goodwill tour of Georgia.

Sat, 04/21/2012 - 14:06 | 2363797 GOSPLAN HERO
GOSPLAN HERO's picture

"Honest Abe" represented railroad builders, canal builders, industrialist et al.

The Lincoln history taught in public sshools is pure BS.

My God, even dickheads like Karl Marx liked Lincoln.

 

Sat, 04/21/2012 - 14:16 | 2363807 insanelysane
insanelysane's picture

The Civil War was the Unjust War of all Unjust Wars.  Every state has the right to secede from the United States.  

If the whole US manages to survive for 5 more years this theory will be tested again.  States like California and Rhode Island and others will financially collapse and come looking for more than "their fair share" of government funds.  We will see if the residents of financially stable states feel like sending more of their money to these states and their useless politicians.  And then we will see how strong this Union is.

Sat, 04/21/2012 - 15:46 | 2363915 smb12321
smb12321's picture

I don't understand.  Are you pulling for the collapse of the nation (it certainly seems that way)? The beauty of our arrangement up to now has been that it is explicitely understood that richer states support poorer states, i.e. the flow of monies is not equal.  I am from Tennessee, a fiscally conservative state, and I doubt any politician could get 10% of the vote if they suggested sending IL or CA funds to support their spendthrift ways. 

Sun, 04/22/2012 - 08:48 | 2364561 GCT
GCT's picture

smb you need to goggle what your state provides to the federal government and what the state gets in return.  They are already doing this.  For instance Calif. sends 43 billion to the federal government and in return gets 40 billion back.  States like Mississippi, Texas and some other states get more back from the federal governement then they send in.  This has been going on for ages.

Sat, 04/21/2012 - 15:43 | 2363911 smb12321
smb12321's picture

Yeah, I know.  ZH posters (with the appropriate links to You Tube) have all the inside information on how things REALLY were.  They know all the conspiracies (in detail) and exactly how and when things will work out - although the frequent prediction of doom fails to materialize to the chagrin of those yearning for a societal downfall. 

They have the scoop on everyone.  Washington was on the take, Jefferson supported slavery, Lincoln was a "corporate lawyer" who didn't give a flip about the nation.  There are never any ideas or suggestions - simply bitching and griping at every president, senator or representative (who, it should be noted, are all corrupt).  All the insitutions are corrupt, of course, and established by those aiming for global domination.  All corporate leaders have joined this conspiracy and want to enslave America.  Reading ZH posts is like crossing into an alternate universe.

Sat, 04/21/2012 - 11:52 | 2363632 mess nonster
mess nonster's picture

"Show me that age and country where the rights and liberties of the people were placed on the sole chance of their rulers being good men, without a consequent loss of liberty! I say that the loss of that dearest privilege has ever followed, with absolute certainty, every such mad attempt.”

Patrick Henry

Sat, 04/21/2012 - 11:07 | 2363579 smb12321
smb12321's picture

The Civil War was simply another in the long clash we've had since independence over the role of federal vs state authority. Two reasons a strong central authority emerged was the opening of territories (and rules for ownership and statehood) and the example of our two wars.

States refusing to support the effort was almost a death knell in the Revolutionary War won only by immense luck and massive foreign aid.  The US not a world power in 1860 and  it could not take chance that half the nation would sit out a war in the future.

The biggest change is the role of federal vs state.  Until recently citizens turned first to the state.  DC was distant, where national concerns were discussed. Now we turn to the feds for the slightest inquiry, problem or activity.

Sat, 04/21/2012 - 12:00 | 2363638 mess nonster
mess nonster's picture

In response to the ratification of the Constitution, Patrick Henry said,

“This government cannot last,” he warned, “It will not last a century. We can only get rid of its oppression by a most violent and bloody struggle.”

He was right about the first part, but not the second. The Civil war marked the death of the bill of rights, and any pretense of limited central goovernment. There will be no violent and bloody struggle now against a one world government, of which the Constitution was but the fisrt blatant lie.

The Civil war was started by Albert Pike, directed by Albert Pike, and the aftermath was controlled and led by Albert Pike. Abraham Lincoln, like his philosophical progeny in 2012, was a muppet of the first degree.

We are all Branch Davidians now if our consciences cannot allow the imposition of tyranny upon our freedoms as human beings.

Sat, 04/21/2012 - 11:46 | 2363624 DarthVaderMentor
DarthVaderMentor's picture

Too bad we lost the War of Northern Aggression. Fort Sumter was for the Confederacy like the Straits of Hormuz will be for the Iranians. 

Sat, 04/21/2012 - 09:47 | 2363506 holdbuysell
holdbuysell's picture

Nice find, ZH. Thanks.

Sat, 04/21/2012 - 09:54 | 2363512 Ayr Rand
Ayr Rand's picture

The only thing surprising is that there is nothing surprising.

As usual, Tyler had done his homework.

As usual, the Fed has worked to support the banks, in a manner that its founders would have called corrupt and a betrayal of the essential purpose of the Federal Reserve. 

I am anxioiusly awaiting the WSJ and other MSM to report this story in fullness. I expect a useful response some time after my great great grandchildren have passed on.

AR

Sat, 04/21/2012 - 10:02 | 2363526 dick cheneys ghost
dick cheneys ghost's picture

The MSM died a long long time ago.................

Sat, 04/21/2012 - 09:55 | 2363514 prains
prains's picture

The true end game is still not clear to me but all I know is that it just keeps getting kookier, if that's even a word. there are still several other unknown layers to this story. And a murderer and rapist like Stalin who dies in his bed on his own accord can never be said to have lost a thing.

Sat, 04/21/2012 - 11:03 | 2363573 knowless
knowless's picture

the end game is consolidation and reeducation, the wealthy will flee to the hills in gated communities, have private security forces (which may or may not be deemed "police"), and generally the same standard of living which was promised to the american middle class over the past century, the inner city work/leisure/shopping districts will be heavily policed, and everything else will be a free for all. they will create an incentive for the violent poor to populate other areas by not policing them. This process will be repeated not just in a city, but between cities. they will harvest talent from the poor who espouse a destructive and antisocial lifestyle and sell it as entertainment, as a form of population control so that no force capable of resistance can ever be reasonably expected to organize from this group, as they have been deprogrammed as to the necessity of mutual aid in bringing the whole out of poverty.

cities which are of little strategic importance will be allowed to burn themselves, those of importance to the empire will be cleaned of all unnecessary humans. it will be very efficient, and very quick, and not a word will ever be said about it in a class on the history of the early 21st century. just like no one ever hears about the nazi's.

all of this will be achieved by creating a reliance on easily directable forms of media, so that a persons specific beliefs and triggers can be ascertained through monitoring, thus granting the ones monitoring the power to send a specifically targeted message posing as reality. there will be no blanket iron fist we're watching you big brother message to everyone, the new big brother will be catered to the individual, with the intent of pacification.

the best part about this new propaganda is that those being controlled actually believe they have more power over their lives because of this technology, as in a sense they might, even if the reality they are acting on is completely different from their neighbor, it is a reality which better suits them.

this process will be repeated every generation.

 

you're living the end game.

 

pure speculation of course.

Sat, 04/21/2012 - 14:14 | 2363806 The Alarmist
The Alarmist's picture

Holy Crap, can I have an option on this screenplay?

Sat, 04/21/2012 - 21:22 | 2364247 TheVirginian-HGWT
TheVirginian-HGWT's picture

I believe the sequel is called "The Hunger Games."

Sat, 04/21/2012 - 11:15 | 2363588 i-dog
i-dog's picture

Stalin was poisoned. He'd served his purpose and was reluctant to leave. Indeed, he had become "disobedient".

Sat, 04/21/2012 - 09:56 | 2363518 eddiebe
eddiebe's picture

Ultimately the seductive power of the printeng press in all its forms is too much for those connected to it in any form to withstand. The inflation genie is out of the bottle and while the powers are busy on each and every front to shove it back it will prove impossible. There will be a re-set, and the damage done by the massive amounts of fractional con games will force major damage, could even cause near or terminal disaster if WWIII ensues. The horror.

Sat, 04/21/2012 - 09:59 | 2363523 TwoJacks
TwoJacks's picture

As long as the Federal Reserve is required to buy government securities at the will of the market for the purpose of defending a ?xed pattern of interest rates established by the Treasury, it must stand ready to create new bank reserves in unlimited amount. This policy makes the entire banking system, through the action of the Federal Reserve System, an engine of in?ation. (U.S. Congress 1951, p. 158)

 

the 1951 Fed was correct.

Sat, 04/21/2012 - 14:27 | 2363823 The Alarmist
The Alarmist's picture

Kind of Back-to-the-Future ala Shakespeare

The Fed is dead ... Long live the Fed.

Sat, 04/21/2012 - 10:01 | 2363524 GMadScientist
GMadScientist's picture

"We will skip commenting on the supreme irony that according to Truman, Stalin would win if the US did not engage in the same central planning that ultimately brought the Soviet empire down."

"The biggest gang I know they call the government 
and a gang is a weapon that you trade your mind in for..." - Jane's Addiction

http://www.youtube.com/watch?v=KPOuoxLGy-w

Sat, 04/21/2012 - 10:37 | 2363551 smb12321
smb12321's picture

I was born in the last Truman budget - 12% of GDP and revenues 14% GDP.  That's right - a surplus.   (Social spending - now 70% - was 16%).  The problem with the FED was made possible as we gradually political economy and central planning *by all those DC "experts") come into being.

Hard to imagine but at the time both parties railed against deficits.   The fact that the greatest rate of job growth and enterpreneurship came when the State consumed a much smaller part of GDP speaks for itself. 

Sat, 04/21/2012 - 10:39 | 2363552 Dr. Engali
Dr. Engali's picture

This proves that the Bernank's lips quiver so much When he speaks because he is out there as the front man for the bankers and their muppet president to spew a line of lying bull shit. He probably walks away from every public adress thinking " I can't believe they are buying this crap. What a bunch of stupid sheeple".
Great article Tyler. Thanks

Sat, 04/21/2012 - 10:43 | 2363557 Alexmai
Alexmai's picture

 

This weekend's must-read "viral" post

"Is there something wrong with you, Dr. Bernanke?"

http://investmentwatchblog.com/this-weekends-must-read-viral-post/#.T5LG3lxYuIA

 

Sat, 04/21/2012 - 14:12 | 2363804 lotsoffun
lotsoffun's picture

as an analogy - that's about all it says.  but i still wonder what motivates this man.  he really must be a little man to suck up to the big bankers.

 

Sat, 04/21/2012 - 21:23 | 2364248 TheVirginian-HGWT
TheVirginian-HGWT's picture

He works for the big banks. That's all the motivation he needs.

Sat, 04/21/2012 - 10:45 | 2363559 Stuck on Zero
Stuck on Zero's picture

Nature and the natural evolution of the universe created the scarcity of the heavy elements.  Silver, gold and the platinum group of metals were created in the brief flash of colliding neutron stars 4.5 billion years ag.  Their scarcity on the surface of this planet was natural and the consequence of events way beyond the caprices and whims of man.  Not so the dollar.   It is born of the machinations, manipulations, and follies of humankind.  Which are you going to trust?

Sat, 04/21/2012 - 10:47 | 2363562 xela2200
xela2200's picture

This is why I don't buy into the QEx not been possible because of political reasons. When, in fact, it is the POLITICIANS who will be one more group pressuring the FED to print. Unless, they are going to stop spending more than the government takes into taxes. What happens when they raise the debt limit, and the FED refuses to print. They are already bringing the commodities under a controllable price and oil, the only one they can't control, was given a nice scapegoat (speculators).

Sat, 04/21/2012 - 10:55 | 2363568 disabledvet
disabledvet's picture

The Velociraptors are uniquely agitated this week. Hmmm. I wonder why that is. Anywho "they cried when Stalin died." Enuf said on that, homey. Insofar as "the only inlfation" being 48-50...WELL, c'mon! Don't tell me you forgot this good time:
http://www.youtube.com/watch?v=yhsjRL2O64g&feature=player_detailpage
I agree INFLATION SHOULD BE HAPPENING! YOU WIN! YOU WIN!
Still...i find myself...
http://www.youtube.com/watch?v=yhsjRL2O64g&feature=player_detailpage

Sat, 04/21/2012 - 14:55 | 2363862 Goldilocks
Sat, 04/21/2012 - 11:01 | 2363571 Fred Hayek
Fred Hayek's picture

And yet, back then, even the bad guys were better than what we have now. Martin was the man who, famously, said that his job was to "take the punch bowl away just as the party's getting started".

Greenspan and Bernanke not only don't take the punch bowl away, they spike it with vodka and then go out on the street to hand out fifths and hip flasks to minors.

Sat, 04/21/2012 - 11:03 | 2363574 RopeADope
RopeADope's picture

The banks fell in love with the Fed after two things happened. 1) A Treasury securities trader was hired by that institution and started convincing other Fed officials to allow a floating interest rate (a.k.a Means to profit from inside information).  and 2) the Truman/Eccles battle created an environment where it became standard procedure to leak confidential information.

The combination of these two events has contributed over time to a Fed that has been captured by parties with motives in direct contradiction to the original purpose of the Fed which was to facilitate the return of wealth generating capabilities to the US citizenry.

Sun, 04/22/2012 - 11:48 | 2364775 TheFourthStooge-ing
TheFourthStooge-ing's picture

Attention Sacrilege: the crapital3x spammer has returned.

zonetraders shat out:

the 24 trading rules

More spam from crapital3x.

See for yourself:

http://www.zerohedge.com/search/user_comments?name=zonetraders

Previously shitcanned accounts from the same spammer:

http://www.zerohedge.com/search/user_comments?name=reutersanalyst

http://www.zerohedge.com/search/user_comments?name=props2009

 

Sat, 04/21/2012 - 11:25 | 2363602 ekm
ekm's picture

This article has the same effect to the brain, as it would have for the stomach when old style mediterranean food replaces north american hamburgers or german/english food (if it can be classified like that).

As that food is quite pleasureable to keep eating followed by typial slow walks outside along the Mediterranean, so it is for the brain to keep reading this article in order to be enlightened (for those who want to be enlightened).

It is ultimately about free will to be free or free will to be a slave.

Sat, 04/21/2012 - 11:40 | 2363619 DarthVaderMentor
DarthVaderMentor's picture

Inflation through monetary expansion was never their mission. Just the opposite. Their original charter requires them to preserve a stable currency, quite the opposite of what they have been doing. They just assumed inflation as the answer for their support for the politically connected yet leveraged elites. If the TBTF had gone bust and failed and many Wall Street and other elites had gone bankrupt, we'd be in a recovery already.

Sat, 04/21/2012 - 11:52 | 2363631 tony bonn
tony bonn's picture

zh has out done itself this weekend by posting the money as debt video and now this article....both are invaluable to understanding the twilight of the bankster's corrupt money system.

Sat, 04/21/2012 - 11:58 | 2363636 Harriet Wanger
Harriet Wanger's picture

So, if the Treasury set monetary policy, it's central planning, but if the Fed sets it it's not?

With Eccles' way, people would have had fewer dollars that were worth roughly the same; with Truman's way people would have roughly the same number of dollars that were worth less. Either way, the public was going to take it on the shins.

Truman might be consigned to a deeper level of Hell because he chose the path of deception by creating an illusion of wealth, but Eccles might be near him for either failing to recognize or acknowledge that the federal reserve system was draining wealth away from the public, which I still think was its original purpose.

The real answer was monetary reform, perhaps along these lines :

http://en.wikipedia.org/wiki/A_Program_for_Monetary_Reform

Sat, 04/21/2012 - 12:04 | 2363641 mess nonster
mess nonster's picture

If only we were taking on the shins! (You're so polite!)

Sat, 04/21/2012 - 14:35 | 2363834 The Alarmist
The Alarmist's picture

But think about it ... Truman was unwittingly willing to destroy the economy of the US because he had lost money on War Bonds after WW I, and did not want to recreate that experience. Talk about fighting the last war, and talk about not seeing the forest for the trees.

And so it is today; they are addressing a series of constituencies in piecemeal actions that are seemingly winning a number of battles but in the process they losing the whole war.

Sat, 04/21/2012 - 12:28 | 2363683 steve from virginia
steve from virginia's picture

First: hat's off to anyone who reads through Fed economic papers. I haven't finished with this one but at least it doesn't have the confusing pseudo-math in it (so far).

Second: There have been many changes in monetary policy between Depression (targeted interest rates) and now. The monetarist approach failed (and in the UK) so there is little left for the reserve bank to do to manage the worth of money than to fix or peg interest rates.

JP Morgan did the same thing when his bank was the defacto central bank for the US before 1913. Did Morgan manipulate markets? Does a bear shit in the woods?

New wrinkle is that money worth is set in gas stations all over the world every single day. Interest rates are irrelevant. You can tell, they are all 'pegged' @ zero. Monetary policy: "If gas is too high, people don't buy". Just remember that little ditty and forget about the Fed. It's irrelevant.

Aside from having to read Fed papers (which I have done many times so I can feel Tyler's pain) I also feel sorry for him because he keeps looking for inflation @ the Fed where he can never find it. As Carl Herman so aptly put it, we don't have a money supply we have a debt supply. We have more holes than money can possibly fill.

The Fed creates holes not money (currency) and can only create a new hole by filling an old one somewhere else.

In fact, this is the problem here in the US and in the rest of the world, there is too little money (while people cry about inflation).

If the Treasury would create new currency, the US would soon not have a debt problem! but it would have a 'financier' problem, instead. That's another story for another time.

Sat, 04/21/2012 - 13:17 | 2363725 Centurion9.41
Centurion9.41's picture

"New wrinkle is that money worth is set in gas stations all over the world every single day."

Sorry, this fails due to the pseudo-monopoly of energy companies and the ability of various sovereigns to effect the supply.  Granted it eventually returns to true economic value, and hence a good way to measure the measuring ability of currencies.

However, PMs, as long as a given market is not cornered is a better measure. 

Still the best may be the BigMac, especially given the explosive growth of McD's in China.

Though given Chipotle's run, the BigMac may fall to the burrito.

Amazing how CMG is a product of MCD...

And given enough time, one or both will always be within walking distance.  So peak oil could become, irrelevant.

Sat, 04/21/2012 - 14:42 | 2363847 The Alarmist
The Alarmist's picture

"Sorry, this fails due to the pseudo-monopoly of energy companies and the ability of various sovereigns to effect the supply.  Granted it eventually returns to true economic value, and hence a good way to measure the measuring ability of currencies."

Strikes me as a somewhat naive observation; if The pseudo-monopoly was so free to set prices, they would be markedly higher.

The kernal of truth to this is that gasoline prices are a lot more elastic than economists and other experts let on, though that elasticity is more often demonstrated at the ballot box than it might be if the commodity was cereal.

Sat, 04/21/2012 - 12:58 | 2363712 q99x2
q99x2's picture

[W]e should tell the Treasury, the President, and the Congress these facts, and do something about it.

Today those dudes all work for the NWO so ain't much sense in talking to them. And, GS/NWO is the FED and the treasury and Panetta/Obama no?

We should leave the FED and the treasury out of it this time and go directly for the soft pulsating underbelly of the NWO.

Sat, 04/21/2012 - 13:09 | 2363717 Centurion9.41
Centurion9.41's picture

Tyler,

Sorry, as much as I'd like to support your reasoning, I can not.  There are two fundamental problems that cause the collapse of your assertion.

1.re " just so holders of Treasury paper (at that time only insurance companies as banks were not allowed to invest in TSYs" - the variables and mechanics during the two periods under comparison are sufficiently different that a the comparison becomes... well a classic Dismal Science attempt to make opinions and SWAG appear to be science.  It's like comparing two war battles, one of bows and arrows in a forest, the other of battleships and aircraft carriers.  Yes it's good to run though the exercise but to assert the tactics of weapons in the former apply to the current battle is a stretch.

2. re "that a build of bank reserves is the surest way to spark hyperinflation" - the money being injected into bank reserves is not a meaningful increase in reserves to create inflation, yet. 

Here's a metaphor for your reserve problem.  A Bankster has a pit 1 trillion feet deep [i.e. mark to market], that is in a "prime" location, which he want's to fill to build upon.  The bankster tells everyone it is only 500 million feet deep, too deep and dark to see the bottom.  But he's got financial mathematicians with PhDs that have a formula that shows in fact the depth is 500 million feet [i.e. mark to model].  He then goes out on a road show seeking investors with the PhD explaining the validity of the calculations.  Of course all the investors lose everything, after 500 million dollars worth of dirt, the bottom is not seen.

Yet, who comes to the rescue!  The head bankster, the Federal Reserve, and he starts taking money from the public [devaluation] and from the children yet born, and buys dirt and starts filling in the pit.

The pit is the true debt of the bankster's balance sheet.

The dirt is the bank reserves.

There wont be bank reserve driven inflation until the money pit is filled.

And yes then there will be a merda tempesta

Of course the problem right now is the various banksters spread throughout the world, all with money pits so deep the system is nothing but, at best, shadows.

Regardless, the argument you make fails for the same reasons most Dismal Science fails.  Using invalid and incomplete data sets and applying formula and logic that is also incomplete.  

It is the fundamental failure shared by both the Keynesian' and the Chicago boys. 

The data sets and all the various factors and multiples that effect Human Action are not know and any attempt to quantify is always, by its very nature, limited by the Heisenberg Uncertainty Principal. 

That said, from a historical knowledge perspective, which is always hugely helpful, it's a fantastic piece.

Cordially,

Centurion

 

Sat, 04/21/2012 - 14:10 | 2363802 ekm
ekm's picture

I've read Tyler's post and yours twice. I think I have to read both of them at least 3 more times, but my initial opinion is that your post complement's Tyler's logic, rather than opposing it.

Sat, 04/21/2012 - 14:41 | 2363845 blindman
blindman's picture

Lesson 2 Revisiting Economics 101
http://csper.org/lesson-2.html

Sat, 04/21/2012 - 17:48 | 2364050 ekm
ekm's picture

Thx a lot

Do NOT follow this link or you will be banned from the site!