Big Banks Profit While Main Street Suffers

Bankers v Main Street

 

 

 

 

 

 

If anyone doubts that the Western world’s monetary order is rigged to enrich the banking system, the first quarter financial reports of America’s top banks should disabuse any unbelievers.

The Financial Times reported that four of the five big U.S. trading banks had a combined revenue of $19.4 billion in the first quarter of 2015. Goldman Sachs had a 14.7 percent* return on its equity in the first quarter while J.P. Morgan, the nation’s largest bank, earned $5.91 billion or $1.45 a share, up 3.6% from a year earlier.**  Revenues for J.P. Morgan grew 4% to $24.8 billion.

The enthusiastic coverage of the big banks healthy first quarter proceeds and the chest-thumping of its bank executives left out, not surprisingly, the real reason for their windfall gains – the Federal Reserve. The big banks have been the chief beneficiaries of the Fed’s easy monetary policy since the start of the financial crisis.

The Fed’s “zero interest rate policy” (ZIRP) and its “quantitative easing” (QE) program have been the catalyst for the large banks’ recent record performance. Ostensibly, these policies were instituted to assist the economy in its recovery from the Great Recession, however, in actuality they have been done to save the big banks from collapse while the economy has been flooded with billions of increasingly worthless dollars causing significant price inflation.

Low interest rates have enabled the banksters and financial houses to borrow at next to nothing and invest in all sorts of ventures, many of which are highly risky. Easy money is also the cause for the huge run up in assets prices and the highs in nominal stock prices.

Worse, ZIRP has allowed the federal government to sustain its ridiculous level of spending, borrowing what it cannot raise in taxes at a near zero rate of interest.  When interest rates do rise, the federal government will most likely default, bringing the banks down with them.

While the big banks and Wall Street have done quite well from the Fed’s massive money printing, everyone else has suffered and have seen their standard of living plummet even from official estimates.

The Federal Reserve reported a slowdown in hiring in March, a big drop off in industrial production, and lower housing starts in the first quarter, to mention just a few troubling statistics. Things are getting to the point that the Fed is reconsidering whether it should raise interest rates in the second half of the year as it had hoped to do. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, admitted, “Data available for the first quarter of this year have been notably weak.”***

The first quarter sizable earnings of the big banks are an example of what a number of commentators have termed “crony capitalism.” Through government assistance, businesses earn wealth not by pleasing customers and satisfying their needs, but by currying favors from the state. In the banksters’ case, instead of making wise and prudent loans, they receive largesse in the form of billions of Federal Reserve notes.

Not only is such a system immoral, but it gives legitimate market activity – those firms that do not receive state assistance – a bad rap as profitable enterprises are lumped in with state favorites. This ultimately leads to greater regulation as calls for the government to tax “windfall profits” would affect all firms even those who earned rightful profits.

The solution to crony capitalism and the ill gotten gains of the banking system is not greater oversight, but instead, the abolition of the Federal Reserve and a return to sound money based on gold or silver. Under such a system, banks and financial houses would profit only if they satisfied consumers’ wants.

In the banks’ case, this would mean safeguarding depositors’ money and making prudent loans with the funds they were entrusted with to lend. For those financial institutions that succeed at such tasks, profits would be their reward; for those who do not and mismanage investment funds they would be out of business and allowed to fail. Banks would operate under the same economic laws as any other enterprise.

The prevailing system of crony capitalism which benefits the 1% must be exposed for the grand redistribution scheme that it has long been. Only when bankers earn their wealth as Main Street does will America return to a just and (sound) monetary order.

*Tom Braithwaite & Ben McLannahan, “Goldman in Robust Return on Equity Showing,” Financial Times, 17 April 2015, 14

**Ciaran MCEvoy, “JPMorgan Profit Beats Wall St. Views, As Does Wells Fargo by Shrinking Less,” Investor’s Business Daily, 15 April 2015, A1.

***Jon Hilsenrath, “Fed Shies Away from June Rate Hike,”  The Wall Street Journal,  17 April 2015.

Antonius Aquinas@AntoniusAquinas

 

 

Obama’s Call for Mandatory Voting

Obama mandatory voting

 

 

 

 

As if there have not already been enough signs pointing to a future totalitarian America, President Obama’s recent remarks on “mandatory voting” is further evidence of what is in store for those who continue to remain within the confines of the former “land of the free and home of the brave.”

In lamenting to a civics group about the amount of money which now accompanies most elections, Obummer suggested that mandatory voting requirements “would be transformative if everyone voted. That would counteract money more than anything.”* Naturally, he did not mention the vast sums of cash that the Obama re-election team spent during the 2012 presidential campaign, some of which has been estimated to have been on the north side of $40 million greenbacks!

The Dictator-in-chief uttered more hypocrisy when he suggested that the young, lower-income groups, immigrants, and minorities were being kept from voting by Republicans in some states: “There’s a reason why some folks try to keep them away from the polls.” While there has never been a shred of evidence of Republicans or conservative groups keeping any eligible voter from the polls in any recent election, there is plenty of eyewitness accounts and video footage of Obama’s re-election team’s Stalinist employment of black thugs in certain Philadelphia precincts intimidating white voters in the last presidential election farce.

Such a scheme coming from an avowed statist as Obama who brought coercive health care to America should be of no surprise. Yet, this is the natural outcome of social democracy and if trends are not reversed, compulsory voting will become a part of the U.S.S.A’s political landscape.

The two criminal, oligarchical political parties that have run this country into the ground over the last hundred years or so understand that mandatory voting will further legitimize their corrupt rule. With it, people will be forced to participate in the bread and circuses that the American political process has become, including the grand hoax that is conducted every four years to determine which demagogue will weasel and lie his or her way into the highest office in the land.

More fundamentally, if mandatory voting becomes a feature of American political life, it will mean that the modern democratic state born during and in the aftermath of the French Revolution will have achieved one of its most cherished goals in its quest at becoming mankind’s foremost “god.” Mandatory voting will require citizens (“subjects”) to pay homage to the state-god through the “sacred” process of voting. At such a point, its suzerainty will be nearly complete.

While critiquing Obummer’s latest draconian scheme is necessary, alternative and counter measures need to be proposed. Short of scrapping altogether the current constitutional republican system and returning to a more preferable one of a “confederation of states,” the following reforms (as a start) should be enacted to curb confiscatory mass democracy:

First, instead of enlarging the franchise, it should be severely limited with significant property qualifications for voting. Age requirements should be increased to at least thirty years. U.S. Senators should once again be appointed by state legislatures. Also, anyone who receives public monies, be they government contractors, welfare recipients, bureaucrats, elected officials or teachers, should be prohibited from voting. This would also include employees of the Federal Reserve and its member banks.

Above all else, the idea that voting and democratic elections are synonymous with freedom and liberty must be debunked. Mass democracy needs to be ideologically demystified as a force for social good and seen as a grand redistributive engine of wealth from the productive to the parasitical classes. It remains the greatest threat to private property, individual liberty and global peace that mankind faces.

Proponents of mandatory voting like Barack Obama need to be ridiculed and driven from the positions of power they hold for advocating such tyrannical notions. Mandatory voting is a bad idea whose time will hopefully never come.

David Jackson, “Obama Broaches the Idea of Mandatory Voting, ”  USA Today.  19 March 2015.

Antonius Aquinas@AntoniusAquinas

 

Don’t “Audit the Fed,” Abolish It

audit-the-fed-reserve-1207                  

 

 

 

 

 

In recent remarks to the Senate Banking Committee, Federal Reserve Chairwoman Janet Yellen was her typical evasive and non committal self when the topic of interest rate hikes were broached. When the subject of potential oversight of the Fed came up, however, Ms. Yellen became quite forthright in her response.

When asked about a bill introduced by Kentucky Senator Rand Paul to “Audit the Fed,” Ms. Yellen declared: “I want to be completely clear: I strongly oppose ‘Audit the Fed.'”*  Ms. Yellen defended her position on the grounds, which have been given by every previous Fed Chairman, that oversight would lead to politicized monetary decision making thus compromising the central bank’s “independence.”

Senate Banking Chairman, Richard Shelby (R., Ala.) countered the Chairwoman saying “there is an even greater need for additional oversight” of the Fed since the onset of the financial crisis in 2007.

Ms. Yellen, her predecessors, and every other Fed apologist are simply wrong when they assert that the central bank is an independent agency that is free of political influence. The Federal Reserve System was created by an act of Congress (1913) and can ultimately be “reformed,” altered, and or abolished by Congressional fiat if so desired.

That Congress does not oversee Fed policy is a result of its charter, which was originally crafted by the Big Banksters of the time (mostly the Rockefellers and Morgans) in concert with their bought for and paid politicians. The lack of oversight was a deliberate part of their plan to give bankers and financers free reign to conduct monetary policy for their own benefit.

The Federal Reserve is and has always been a political creature designed for the benefit of financial elites. It is a highly privileged cartel with monopoly control of the nation’s money supply. Unlike the propaganda which emits from Fed officials, the central bank was instituted to protect banksters from financial collapse and bank runs. Fine tuning the economy, reducing unemployment, or fighting inflation are all ancillary concerns for the Fed.

These are the simple facts which are deliberately kept from the public at large by the political establishment, academia and the media.

The Audit the Fed movement, which began in earnest with Ron Paul’s first presidential run, is a wrongheaded approach to solve the nation’s ongoing financial crisis. Senator Rand Paul’s bill is mostly grandstanding to bolster his status among the Republican Party’s populist contingent in his anticipated race for the nomination.

In fact, instead of meaningful reform, greater public oversight of the Fed would most likely lead to worse results. Every Congressman and Senator would be pressuring the central bank to fund their pet projects. Can one imagine what the growth rate of the money supply would be if 535 ravenous politicians had a say in the conduct monetary policy?!

Those who want to reverse the nation’s economic malaise should seek the Federal Reserve’s abolition and advocate its replacement with a de-politicized monetary order free of central banking. Such a system would most likely be based on a commodity (gold and/or silver) where “money producers” are free to engage in the creation of the “best money” and banking services to satisfy customers’ needs.

In such an order, banks would function as any other enterprise by profit and loss. If banks loan funds wisely, they will succeed; if not, they will fail and go out of business replaced in the marketplace by more savvy entrepreneurs. There will be no bailouts at taxpayers’ expense for reckless financial speculation. Money and banking would become a sound and honest undertaking.

To actually believe that an Audit the Fed initiative would become law is beyond naïve. The political establishment will never voluntarily relinquish or allow any legitimate oversight of one of its chief pillars of power.

Instead of seeking change via politics, reformers must first change the climate of public opinion which can only be accomplished when the prevailing ideology is debunked. Until the Federal Reserve is seen as an engine of inflation and the creator of economic disorder which needs to be eradicated, America’s financial woes will, unfortunately, continue.

* Jon Hilsenrath, “Yellen Puts Fed on Path to Lift Rates,” The Wall Street Journal, Wednesday, 25February 2015, A1, A2.

Antonius Aquinas@AntoniusAquinas

The Widening Wealth Gap

wealth gap

A recently released Pew Research Center study confirms what every thinking American has understood for quite some time: the wealth gap between rich and poor has widened considerably since the onset of the financial crisis in 2008. The study’s statistics probably underestimate the plight of struggling families and individuals compared to upper-income groups as the median wealth of upper- income families totaled $639,000 in 2013, 6.6 times the median wealth of middle- income families of $96,000. This compares with 4.5 times the gap In 2007 between the two groups.

Along with the widening wealth gap, the overall outlook for the middle and lower classes is decidedly bleak as stated in the report: “The latest data reinforce the larger story of America’s middle-class household wealth stagnation over the past three decades.” The study adds: “Middle- and lower-income families’ wealth levels in 2013 are comparable to where they were in the early 1990s.”

While the Pew study quantifies, to some extent, the declining financial status of the vast majority of Americans, it does not point to the actual cause of the widening gulf between upper and lower income groups. The reason for the wealth gap and for the financial crisis in general has been the Federal Reserve’s expansionary monetary policy (inflation) which began in earnest with “quantitative easing” under former Fed Chairman, Ben Bernanke.

As estimated by John Williams of ShadowStats, the U.S. money supply has almost doubled since the start of the crisis and shows little sign of abatement under the stewardship of current Fed Chair, Janet Yellen.

Inflation is always redistributive. Like any petty counterfeiter, the new money allows its creator (the Fed) to receive “free goods” without having to produce or exchange. Moreover, by the time the new money filters out into the economy, its purchasing power has been reduced as prices have gone up.

Inflationary monetary policy is devastating to those who receive their income in wages or are on a fixed income. Since wages are paid in money, each monetary unit that is received by wage earners is diluted by the expansion of its supply.  Although nominal wage rates may rise, their real purchasing power will decline. Real wages can only increase through savings and capital accumulation none of which is occurring in the era of quantitative easing.

Real wages, of course, have remained stagnate for decades. While the Pew study does not mention it, wages have not progressed since 1971 which, not surprisingly, coincides with President Nixon’s decision to abandon the last vestiges of the gold standard. Without the fiscal discipline of gold, politicians and central bankers have been unconstrained in their spending and money printing with the wealth gap expanding further and further.

Thus, when the Fed increases the money supply, the governing class and those financial elites and groups closely associated with it (Wall Street, banks, financial houses) benefit at the expense of everyone else. Those who are not directly connected with the Fed receive diluted or no new money at all. This is how America’s current financial and political oligarchy retains its status and power.

The Fed-induced wealth gap, will also lead to social antagonisms. As the disparity between rich and poor widens, blame will be indiscriminately thrown on all upper income groups instead of those who are creating the problem. There will be calls for putative taxation and regulatory policies to punish the well off. This, of course, will burden the “productive rich” those who honestly earn their wealth outside the banking/government sector.

It is quite simple to reverse the wealth gap: stop printing money. Or, better yet, return the monetary system to a gold and silver standard. The ultimate fix, which will not only lessen the wealth gap, but remedy a whole host of economic problems, is to completely de-politicize the money and banking industry.

For any of these recommendations to become a reality, however, there would first have to be a change in the prevailing ideology which glorifies central banking and fiat money. Until such a time when inflation is no longer tolerated and the monetary order consists of sound money (gold and silver), the wealth gap will continue to widen.

Antonius Aquinas@AntoniusAquinas

Political De-Centralization: the Model for Western Rejuvenation

Europe 1300

As the modern secular nation state becomes increasingly totalitarian, European history provides the model for the political reconstruction of the Western world. The above historical map of Europe circa 1300 should be the ideal for those opposed to the corrupt and now bankrupt nation state and the system of international political and financial governing bodies and organizations that seek the elimination of all regional and local sovereignty.

The map shows that Europe at the time and for many years afterwards was comprised of numerous political configurations – principalities, duchies, confederations, city states. Instead of a few centralized nation states that currently dominate the landscape, Europe was, for the most part of its history, politically decentralized which explains not only the Continent’s tremendous economic growth, but also its unparalleled cultural achievements.

Monarchical style governance was the most popular form of rule during the period and, despite the negative modern bias against kings and queens, there was far greater personal freedom than there has been in the “democratic age.” More importantly, warfare, when it was conducted, was far less destructive in loss of life and that of wealth and property than the horrific contests which have since taken place. Moreover, the monarchical age was one of metallic money which proved to be difficult to manipulate by the political classes.

Political and economic theory has long since shown that decentralization results in greater individual liberty and economic growth. A multitude of independent states and sovereignties is a far better check on tyranny than the supposed “checks and balances” of modern constitutional democracies. Even the much celebrated “separation of powers” concept adopted by most constitutional republics has not prevented the rise of the “total state.”

Numerous states provide the opportunity for the oppressed to “vote with their feet” expatriating from draconian regimes. The threat of population drain and thus a reduction in the tax base is a far superior check on state power.

A number of small states makes it unlikely that a fiat paper money system, in which the world currently suffers under, would emerge. It would be extremely difficult for a dominant monetary authority to coerce and get a multitude of states to agree to accept a single currency outside of their control. Even the Euro almost failed to come into existence, and had Europe been more decentralized the “Euro experiment” would have never been attempted.

Unfortunately, under the current ideological mindset, the breakup of the nation state into smaller units does not seem likely. Social change typical occurs after there has been an ideological shift and the present dominant political paradigm is that of statism. However, an economic collapse or the continuing fall in living standards could lead to the breakaway of regions from their nation-state overlords.

Those opposed to the current world order need to redirect their efforts away from “reform,” electoral politics, or lobbying for favorable court decisions and instead focus on the development of organizations, the forming of alliances and relationships whose end result is the creation of new autonomous entities outside the hegemony of the nation state.

As farfetched as the idea of a decentralized world might seem to be, there has been some recent examples of it. The collapse of the Soviet Union and the separation of the Baltic states shows that no matter how impregnable a regime may appear, political disintegration can happen. The severe economic crisis that led to the fall of Soviet Communism could take place in the United States or in any number of European regimes.

While the nation state is in perilous financial position, it will not relinquish its power voluntarily. The politically-connected financiers will do whatever it takes to keep the system afloat and will use any upcoming economic crisis to accelerate their drive for a New World Order. If a politically decentralized world is to come about, the groundwork for it must be now laid.

Lord Acton’s famous words about political centralization should be the mantra for those who seek a more peaceful and prosperous world devoid of the tyrannical nation state: “power tends to corrupt and absolute power corrupts absolutely.”

Antonius Aquinas@AntoniusAquinas

Secession and the Antifederalists

R.H. Lee

Richard Henry Lee, leading Antifederalist

One of the most exciting political developments in recent years has been the secessionist movement which has flourished among a number of American states and across the globe in places such as Venice and Scotland. The common thread in nearly all these movements has been opposition to the modern nation state which secessionists believe has become totalitarian and now hopelessly bankrupt.
Many secessionist groups draw their inspiration from American history in particular the country’s founding document, the Declaration of Independence, and the southern states’ valiant attempt to secede from the Union in the 1860s. While secessionists have pointed to America’s past for much of their inspiration, one group which they seem to have ignored, has been the Antifederalists.

The “Antifederalists” was the term given to those opposed to the ratification of the U.S. Constitution. They were not an insignificant segment of the population and consisted of such luminaries as Sam Adams, Patrick Henry, George Mason, and Richard Henry Lee, who wrote under the pseudonym of the “Federal Farmer.” Still under-appreciated to this day, Lee’s political thought equaled, if not surpassed, those of the more celebrated Founding Fathers.

The Antifederalists correctly predicted that the Constitution would usurp the sovereignty of the individual states and become a highly centralized national state. Moreover, they saw that it granted too much power to the executive branch.

A number of historians believe that at the time most Americans opposed ratification and had it not been for some shrewd and, quite frankly, underhanded tactics by their opponents, the Federalists, the Constitution would not have been ratified. Patrick Henry certainly thought so when he wrote: “Let me say, sir, that a great majority of the people even in the adopting states have been shockingly misled.”*

More than two centuries later their fears have turned into grim reality. History, however, is written by the victors and the Antifederalists and their perspicacious views have been largely forgotten.

For secessionists, the Antifederalist literature should be a prime reference point to be repeatedly invoked to justify their cause. For secessionists to succeed, the battle of ideas must be first won, and the writings of the Antifederalists provide ample ammunition for those who seek to break away from the corrupt and tyrannical nation states which dominate the globe.

The future of human liberty and economic well being depends on the success of the secessionist movements. The political parties of the world be they “liberal” or “conservative” have no interest in scaling back the size and scope of the state. Any chance of real reform through the current political system is hopeless since it is rigged to enrich the power and pocketbooks of the political elites.

Thus, all efforts – whether on a practical or an “intellectual” basis, which strengthen the secessionist cause – need to be encouraged and supported by those concerned about the future of freedom. Participation in politics or the electoral process is futile and counterproductive as the Antifederalists long ago recognized: “But, remember, when the people once part with power, they can seldom or never resume it again by force. Many instances can be produced in which the people have voluntarily increased the powers of their rulers; but few, if any in which rulers have willingly abridged their authority.”**

The globe’s ruling regimes will simply not allow their power to be undermined. Most likely, if secession becomes a reality, it will come only by the use of force and loss of life. The powers-that-be will not relinquish their control peacefully.

However, as daunting as state power appears to be, it can be negated by a coterie of committed and dedicated individuals. The advantage that secessionists possess is that they do not seek conquest, but simply wish to be left alone, free from tyrannical rule. Such a position is appealing and, if properly articulated, will garner public sympathy and support.

For those across the globe who are contemplating the weighty and possibly dangerous action of secession, the words of one of the Antifederalists’ mentors should be remembered:

Whenever any . . . Government becomes destructive
of these ends, it is the Right of the People to alter or
to abolish it; and to institute new Government, laying
its foundation on such principles and organizing its
powers in such form, as to them shall seem most likely
to effect their Safety and Happiness.
[From the Declaration of Independence]

 

*Paul Douglas Boyer. The Original Counter-Argument: The Founders’ Case Against the Ratification of the Constitution Adapted for the 21st Century. Copyright Paul Douglas Boyer, 2013, p. 250
**Kenneth W. Royce. Hologram of Liberty: The Constitution’s Shocking Alliance with Big Government. Javelin Press, 2012, p. 63
Antonius Aquinas@AntoniusAquinas

 

The World Bank and Rising Food Prices

world bank

A recent World Bank report warned of rising global food prices as if a study (no doubt an expensive one) is needed to explain what everyone who buys food or, for that matter, any commodity, is keenly aware of. “Food price shock,” the report cautioned, “can both spark and exacerbate conflict and political instability, and it is vital to promote polices that work to mitigate these effects.”

Naturally, the report fails to explain the real reason for increases in food prices. Like the lies, distortions, and half truths which used to emanate from the Soviet news agency, Pravda, the World Bank report misleads its readers citing “increasing weather concerns,” “import demand” pressure from China, and “geopolitical tension in the Ukraine” for the escalating food costs.

All of this, of course, is nonsense spoken to bamboozle the public and the naïve financial press who will swallow just about anything that a governmental authority shovels out.

The fundamental reason for skyrocketing food prices is the massive amount of money which has been issued since the start of the financial crisis by the likes of the World Bank, IMF, the Fed, Bank of England, and the ECB.

Not surprisingly, the report contradicts itself. Despite the reasons that it gives for the sharp rise in food prices, it admits that the supply of food worldwide is at an all time high: “. . . prices increased despite bumper crops in 2013 and continued projections of record grain harvests and stronger stocks expected for 2014.” It added that even the political turmoil in the Ukraine “have not disrupted exports so far.”

So, if supply is at record levels and demand has increased only significantly in China, what accounts for the massive price hikes across the globe? Simple: money creation.

The report, and others like it, speak of the devastating effect that high food prices have on the poor and impoverished. Instead of pointing the finger at themselves or the other international inflation generating agencies, the World Bank has in the past called for income redistribution which never help the poor, but just line the pockets of politicians and enlarge the balance sheets of the banksters.

Without the unprecedented money creation of the past half dozen years, food prices would have fallen. Instead, the trillions printed have done inestimable harm to the world’s economies while the banking and financial sectors have seen record “profits.”

If the World Bank was truly concerned about the impact of higher food prices, it would immediately fold up shop, call for the liquidation of all central banks and advocate a return to honest money based on a commodity be it gold or silver. Moreover, any bank or financial institution that did not maintain a reserve requirement of 100% would be shut down, charged with fraud and embezzlement while its perpetrators would be rounded up either scourged, tarred and feathered, or, at the very least, face a life time of hard manual labor.

Such measures are more than justified after what has taken place over the past decade and all of the mischief and ruination banks have committed throughout history. These or any other meaningful punishments will also act as a deterrent to anyone contemplating such nefarious activity in the future.

The solution to rising food prices is straight forward, however, its implementation is the problem. To achieve a sound monetary order, public opinion must be shown and then persuaded that the cause of most of the current financial difficulties stem from central and fractional-reserve banking practices. Until a majority is convinced of this evil, things will most likely not turn around.

Unfortunately, until food prices go a lot higher, or there is another crisis or general collapse, no significant alteration of the present fiat monetary system will take place. Nor can it be assumed that as things get worse, a “new system” or a “reform” of the present one will be necessarily better. Under the current statist ideological conditions, it will more than likely be a lot worse.

In sum, erroneous World Bank reports on escalating food prices will continue to be released.

Antonius Aquinas@AntoniusAquinas