A Warning of Economic CollapseTraditional Catholic Bishop Richard Williamson’s latest missive should be a wake- up call for those who naively believe that the worst is behind for the US and Western economies after the March financial sell off and the long-anticipated implosion of the bubble economy. His Excellency asserts that the US and much of the world are on a financial precipice:
At this moment the United States has been brought to the brink of a tremendous economic crisis, and with the USA, the rest of the world.*Bishop Williamson contends that it has not only been the response to the virus, but more importantly, the response to the bursting of the financial bubble, created by the Fed, which will ultimately lead to a cataclysmic collapse:
By 2019 as the public was more and more hooked on fantasy money, the Fed’s public balance sheet took off into complete unreality, seven trillion dollars and counting, and it is now crashing the real economy with the corona-panic, then ‘paying’ the crash debts that everybody gets into with its unreal trillions, but turning the whole world into real slaves.The bishop’s brief analysis of the history of the Fed is right on as he explains that the central bank has been the engine of monetary mischief since its inception:
These money men had promised that the Fed . . . would solve the problem of reoccurring economic crises. . . . It did nothing of the kind. On the contrary, it made them even worse, like the Great Depression of 1929 and the years following, and now the Depression of the 2020s which risks making 1929 look like a picnic, and risks stripping the United States of its prosperity and enslaving its liberty by making all American citizens into debt-slaves. The middle class will soon be no more.One quibble: Bishop Williamson rightly sees the problem of the money supply controlled by “private individuals” (central banksters):
It is not normal for private citizens to control their State’s money because they risk doing so in their own interests, and not for the common good.Yet, the alternative – State control – is no better and, under “democratic conditions,” maybe even worse considering the State’s horrific record in the debasement of money, the creation of booms and busts, hyperinflations, the destruction of savings, etc. The only economically sound, morally defensible monetary system is one based on gold/silver where money and credit cannot be created “out of thin air” and where competing gold and silver producers vie with one another to produce the “best money.” Such a system requires no central bank while fractional-reserve banking is prosecuted as fraud. The creation of money is what is mined out of the earth not government and central bank fiat. America’s current financial condition has ominous parallels to ancient Jerusalem before its destruction by the forces of Vespasian and Titus. A couple of years before its final destruction, a Roman army, under Cestius Gallus, had stationed troops under the walls of Jerusalem posed to launch an assault. Yet, Gallus did not attack and ultimately pulled back. This was a clear fulfillment of Christ’s prophecy about the city’s destruction:
And when you shall hear of wars and seditions, be not terrified: these things must first come to pass, but the end is not yet immediately. [St. Luke Ch. XXI; vs. 9] And when you shall see Jerusalem compassed about with an army: then know that the desolations thereof is at hand. [Ibid., vs. 20]Rome’s hesitation – a clear result of Divine intervention – gave Christians a chance to escape the coming conflagration which many wisely took advantage of:
Then let them that are in Judea, flee to the mountains: and let them that are in the midst thereof depart out: and let not them that are in the countries, enter into it. [Ibid., vs. 21]Destruction of Jerusalem Since the March lows, Americans have been in a situation not unlike the denizens of ancient Jerusalem. The relief programs and bailouts of businesses (mostly large corporations and banks) has staved off an even greater downturn, however, this has come at a tremendous cost as the Fed has had to print trillions, the consequence of which will mean either a collapse of the dollar or, at the very least, a dramatic loss in its purchasing power. At present, it does not appear that the US has much time before the final unraveling of the economy takes place. The current debt levels and the new debt that will have to be created to maintain the status quo will lead to a monumental monetary crisis. Many have interpreted Jerusalem’s fall as a punishment for its sins. Likewise, the coming collapse can also be seen as retribution for the US’s crazed monetary and fiscal policies which have bankrupted the nation while enriching the few at the expense of the many. While Jerusalem’s destruction had little reverberations on the wider Roman Empire at the time, the demise of the dollar will have global implications since it is the world’s reserve currency. Like those who heeded the Divine prophecy two millennium ago the present generation should take Bishop Williamson’s words to heart and prepare for the coming financial storm. *His Excellency Richard Williamson, “Economic Reality,” Eleison Comments, 12 September 2020. https://stmarcelinitiative.com/eleison-comments/ Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com posted 9-16-’20
Pope Francis the TaxmanOn the heels of calling for a Marxist economic conference this coming March (“Economy of Francesco”), Jorge Bergoglio (a.k.a. “Pope Francis”) has once again opined on financial matters. The purported head of the Catholic Church has now designated “tax cuts” as sinful behavior on a par, apparently, with stealing, lying, and adultery:
Today’s structures of sin include repeated tax cuts for the richest people, often justified in the name of investment and development.*Bergoglio did not mention what category of sin advocacy for tax cuts falls under – venial or mortal. Maybe the details of how such a policy ranks in offending Divine Justice will be hammered out at the upcoming Economy of Francesco Commie confab! In Bergoglio’s collectivist mind, those who try and keep their wealth from the ravenous demands of the State are somehow denying the poor their just due:
Every year hundreds of billions of dollars, which should be paid in taxes to fund health care and education accumulate in tax haven accounts, thus impeding the possibility of the dignified and sustained development of all social agents.What Bergoglio and his fellow socialists do not understand is that tax cuts lead to economic growth, whether they are for higher or lower income groups. The less wealth that the State confiscates, the more is available to be used for saving and investment – two keys to economic growth. The rich do not horde their money but expand and create businesses which leads to more and better paying jobs for lower income groups who supposedly Bergoglio wants to help. The poor will only be uplifted by greater production where more goods and services are available at lower prices. Redistribution of income via taxation does not create new wealth, but simply transfers existing wealth from the productive class. Moreover, taxation has the deleterious effect of making individuals produce less since their efforts are siphoned off at the point of a gun. More taxation means less production and, thus, less and more expensive goods for the poor. Of course, this is basic economic theory that any sane person can understand unless one has matriculated to a Western university or college or pays attention to economic ignoramuses like Jorge Bergoglio! Bergoglio’s constant attention to the plight of the poor along with other social issues (“climate change,” the environment, immigration) does not align with the vision that the Entity, which created the office that Bergoglio currently holds, had in mind. On at least two occasions, He counseled His followers to focus their attention on spreading the “good news” instead of earthly concerns:
For the poor you have always with you: but me you have not always. [Mt. 26:11] Let the dead bury their dead, but go thou, and preach the kingdom of God. [Lk. 9: 60]While the Church has always sought to protect and help the poor, widows, orphans, and the downtrodden, its primary mission is to preach the Gospel. Since the time of the Second Vatican Anti-Council, 1962-65, and especially during the “reign” of Pope Francis, evangelization has been condemned and, like tax cuts, is now considered sinful activity. Bergoglio’s criticism of tax reduction is, no doubt, aimed at the Trump Administration’s plan for an additional round of tax cuts. Tax reduction, however, without cuts in government spending will further explode budget deficits which are now even beyond sustainable. Without corresponding spending reduction, tax cuts will mean that the Federal Reserve will have to make up for the short fall with further money printing. One cannot have Big Government and tax cuts simultaneously. The inevitable monetary crisis will, unfortunately, be blamed on tax cuts and will play into the hands of Bergoglio and his fellow travelers. That Bergoglio spends most of his time as a social justice warrior instead of the supposed “vicar of Christ” on earth shows the state of the modern Church. Worse, when he does speak on matters of faith, his words and actions are riddled with heresy. For all those concerned, it is best that “Pope Francis” should be ignored not only for the falsehoods he spreads about Christianity, but also as a social theorist. His pronouncements on the latter will only lead to further impoverishment of the poor and the rest of society while inciting class conflict between those who seek to keep their wealth and those who want to confiscate more of it. *https://www.teaparty.org/tax-the-rich-pope-francis-calls-for-global-wealth-redistribution-427517/ Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com posted 2-17-20
The Ethics of a Gold StandardThe efficacy of a metallic monetary system is beyond dispute at least among real economists which eliminates just about 95% of whom are now engaged in the “profession.” Money, which gold is, allows for specialization, the division of labor, and provides the means for mankind to escape from barter and, thus, a primitive existence. Like free trade, money naturally integrates mankind both among and between peoples. A system of central banking with an unbacked paper currency is the antithesis of a gold standard. Manipulation of currencies by central banks, mostly through debasement, hinders trade, creates distortions, and ultimately leads to the dreaded business cycle. Murray Rothbard aptly describes the baneful results of state intervention in the monetary system:
. . . government meddling with money has not only brought untold tyranny into the world; it has also brought chaos and not order. It has fragmented the peaceful, productive world market and shattered it into a thousand pieces, with trade and investment hobbled and hampered by myriad restrictions, controls, artificial rates, currency breakdowns, etc. It has helped bring about wars by transforming a world of peaceful intercourse into a jungle of warring currency blocs.*While the economic efficiency of a gold standard is important, the ethical case for it is more compelling and was the reason why gold, as money, lasted as a medium of exchange for so long. Gold/money has to be created through honest-to-goodness production and exchange. The often dangerous mining of gold takes labor, capital goods, and land. Turning raw gold into coinage is another process which requires a high level of specialization and production techniques. Both are honest and morally sound activities which make for the betterment of life all around. The ethical standing of central banking and its issuance of unbacked currency as money through the printing press, stroke of a computer key, or via the expansion of credit cannot stand similar scrutiny. By any appraisal, central banking is immoral. Through the creation of money, banks stealthy transfer wealth to those who control the money supply and those closely associated with it. The ability of central banks to create unlimited amounts of money and credit has been the greatest redistribution scheme ever conceived. The process ultimately leads to class conflict as the wealth disparity between the politically well-connected and those outside that nexus invariably widen. Under a gold standard, none of this would take place. Because of their lack and often distain for economic doctrines, in particular, monetary theory, “economic nationalists” (really “economic ignoramuses”) have wrongly focused on trade as a factor in the continued decline of the middle and working classes. China’s supposed unfair trade practices was a staple of President Trump’s campaign rhetoric and has continued through much of his first term. The focus on trade has deflected attention from the real cause of worsening economic conditions for American workers and the enrichment of Wall Street. Despite the blatant transfer of wealth via the Fed’s policies of suppressed interest rates and money printing since the 2008 Recession, economic nationalists continue to applaud President Trump’s tariff policies while the President continues to browbeat the Fed to do more of the same even calling for negative interest rates and more Quantitative Easing. The Left rightly speaks out of the vast and growing inequality of wealth distribution, but like those who espouse economic nationalism, they fail to understand the reason for why the societal imbalance has occurred. One remedy they propose – a “wealth tax” – will not address the problem. Moreover, their “soak-the-rich” schemes would snare in their plunder (not that Leftists particularly care) many of the wealthy outside of the banking and financial sector of their legitimate, just gains. The case for honest money must be made on ethical grounds. The current system must be exposed and shown for the scam that it is: a massive redistribution scheme enriching the political elites and their closely aligned business and financial allies. While it is undeniable that a gold standard would lead to enormous prosperity, its reinstatement would remedy one of the great injustices that plague the world – central banking! *Murray N. Rothbard, What Has Government Done To Our Money? BN Publishing, 2012: 84. Antonius Aquinas@antoniusaquinas https://antoniusaquinas.comhttps://antoniusaquinas.com posted December 27, 2019
Is Bitcoin a Diversion from the Natural Monetary Order?As modern man continues to wantonly deviate, flaunt, and reject the natural law and the Divinely-created order from which it derives, it is not surprising that illusions like Bitcoin and other crypto currencies have captured the imagination of many and have provided a vehicle for scammers to rip off their fellow man. Crypto currencies are a more complex, yet still devious derivative of the immoral, economic destructive, and social debilitating system of central banking. In response, Bitcoin pumpers have craftily tried to portray digital currencies as a “decentralized” alternative to the present fiat, paper-money standard. While this has attracted many libertines and “fast buck” speculators, Bitcoin is more similar to the present fractional-reserve monetary order than a real honest-to-goodness money and banking system based on 100% redeemable currency. Moreover, crypto currencies’ initial allure was that they could be used as a general medium of exchange, but as time has gone on, their sycophants have had to concede that none of these Ponzi schemes can act as money. Unlike a metallic monetary order where gold and silver have to be mined and brought into use through land, labor and capital, Bitcoin, like paper money, is created out of thin air. In this sense, however, paper money is superior to Bitcoin because it can be used for other purposes albeit severely limited – wall paper. Bitcoin, instead, has NO intrinsic, or “use” value, as precious metals did prior to their use as general medium of exchanges. Crypto currencies also fit nicely in the on-going efforts by the Establishment and monetary authorities to eliminate cash in transactions. Despite the talk of “decentralization” and privacy that crypto currencies’ supposedly provide, all transactions on the computer and across the Internet can be recorded and traced which governments will use to spy on their tax slaves. In direct contrast, gold and silver carried on one’s person or stored for safe keeping is the most private and secure means of wealth preservation ever known. The banksters have been pushing a cashless world to reduce their operating costs as Bank of America’s CEO Brian Moynihan recently called for:
We want a cashless society. We have more to gain than anybody from a pure operating cost (perspective).*If anyone believes that the only reason banksters like Moynihan want a cashless society is to reduce costs, they are incredibly näive. Banks and other credit institutions have, from orders of the surveillance arms of the national security states across the globe, de-platformed and tried to silence all sorts of alternative and politically incorrect websites and groups by shutting down their bank and credit card accounts. If cash is outlawed, it will have a devastating effect on dissonant outlets and true free speech in general. The efforts to get rid of cash has been a long held goal by the ruling class that began with the introduction of paper notes which were granted legal tender status. Irredeemable notes for specie followed and outright confiscation and prohibition of gold ownership took place in America and other jurisdictions in the 20th century. Internationally, gold was finally severed from monetary use with President Nixon’s insane decision to no longer redeem US dollars for gold in 1971. More importantly, and what infuriates Left-Libertarians of the crypto movement is that the precious metals were created by Divine Providence to be used by His creatures to augment their lives and eventually create sophisticated societies. The qualities and quantity of gold and silver were designed in their optimal amounts to serve as a medium of exchange. There are ample historical episodes of the social and economic disasters which have occurred when “natural money” was replaced by a man-made substitute. The powers-that-be are certainly aware of this historical “law” and have long understood that to maintain their hegemony gold and silver must not be a part of a monetary order. The contemporary world is in a state of perpetual crisis because it has persistently violated the natural law. The creation of more illusions such as Bitcoin and other crypto currencies is not a solution, but are diversions which prevent mankind from returning to a natural monetary order. *Rey Mashayelchi, “Bank of America CEO: ‘We Want a Cashless Society.'” MSN.com, 19 June 2019. Antonius Aquinas@antoniusaquinas https://antoniusaquinas.comhttps://antoniusaquinas.com
“We’re All Socialists Now!”Despite being probably robbed of the Democratic Party’s nomination by the Clinton political machine, the success of the Bernie Sanders’ 2016 campaign with his advocacy of “democratic socialism” was an ominous sign of things to come and, in some sense, more telling of the political climate than Donald Trump’s improbable victory in November, 2016. The millions of votes garnered by Sanders in the Democratic primaries has emboldened other socialists to seek political office while socialist ideas are openly spoken of with little fear of political recriminations. Sanders has doubled down on his advocacy of democratic socialism in a recent speech at George Washington University, calling for the completion of Franklin Delano Roosevelt’s New Deal of the 1930s:
Today I am proposing we complete the unfinished work of Franklin Roosevelt and the Democratic Party by putting forth a 21st century economic bill of rights.*Even supposedly “moderate” Democrats are trying to tout their “progressive” credentials, such as creepy Joe Biden who recently said:
I’m told I get criticized by the New Left. I have the most progressive record of anybody running for . . . anybody who would run.**While Sanders’ chance of becoming the Democratic nominee in 2020 is still uncertain, President Trump has already indicated what is going to be a centerpiece of his election strategy: oppose socialism. The first hint of the strategy came at this year’s State of the Union address when the President declared:
America will never by a socialist country.***While President Trump will espouse his supposed accomplishments (tax cuts, deregulation, trade) as a contrast to democratic socialism, his emphasis will also deflect attention away from his most solemn campaign pledge which has not been achieved – a border wall and a crack down and deportation of illegal immigrants. Whether this is a winning formula remains to be seen. If the Democrats are led by Bernie Sanders in 2020, they will probably lose, unless the economy falls off a cliff (very possible) or the Donald follows the suicidal advice of the war- mongering team of Messrs Bolton and Pompeo and start a war with Iran. While the Trump campaign narrative for 2020 may convince the masses who may still not be ready to vote for outright socialism, the country, like most of the Western world, has long ago imbibed and adopted many of the philosophy’s tenets. Frank Chodorov, one of the most perceptive and courageous writers of what was affectionately known as the “Old Right,” pointed out over a half century ago that America had enacted many of the ideas which were enumerated in Marx and Engels’ Communist Manifesto. Chodorov constantly chided the Cold War warriors of his time, such as William Buckley, that communism had come to America without one shot being fired by the Soviets. In one of his most penetrating essays, “How Communism Came to America,”* Chodorov incisively pointed out the “long-term objectives of communism:”
Among them are government ownership of land, a heavy progressive income tax, abolition of inheritance rights, a national bank, government ownership or control of communication and transportation facilities, state-owned factories, a government program for soil conservation, government schools, free education.He trenchantly asked: “How many of these planks of the Communist Manifesto do you support? Federal Reserve Bank? Interstate Commerce Commission? Federal Communications Commission? Tennessee Valley Authority? The Sixteenth (income tax) Amendment? The inheritance tax? Government schools with compulsory attendance and support?” Further in his piece, Chodorov describes how the American economy, even at the time, had taken on many features of state capitalism: deficit financing, insurance of bank deposits, guaranteed mortgages, control of bank credits, regulation of installment buying, price controls, farm price supports, agricultural credits, RFC loans to business, social security, government housing, public works, tariffs, foreign loans. He again asked: “How many of these measures . . . do you oppose?” The next financial downturn, which is starring America in the face, will be far more devastating than the last since nothing has been resolved financially while the cause of the Great Recession – the Federal Reserve – continues to operate with impunity. As things continue to deteriorate, there will be even greater calls and support for more socialism. The free market will be blamed. Despite the collapse of communism in the Soviet Union and the present day economic basket cases of North Korea and Cuba, socialism continues to be espoused throughout the West. Despite its historic and current failures, socialism survives because it was never debunked philosophically within Western academia. The main reason for this is that the intelligentsia derives much of their influence, power, and position from a socialistic society. Until the ideology of socialism is shown to be the morally corrupt, economic destructive, and de-civilizing social system that it has always been, the likes of Bernie Sanders will continue to be a nuisance and quite possibly the new rulers of America. *Stephen Dinan, “Sanders Proclaims Democratic Socialism as Answer for America.” The Washington Times. 13 June 2019, A1. **David Krayden, “Biden Says He’s The ‘Most Progressive’ Democrat as He Almost Announces His 2020 Candidacy,” The Daily Caller, 17 March 2019. https://dailycaller.com/2019/03/17/biden-most-progressive-democrat-2020/ ***Dinan, “Sanders Proclaims Democratic Socialism as Answer for America.” ****Charles Hamilton, ed. Fugitive Essays: Selected Writings of Franck Chodorov. Carmel, IN.: Liberty Fund, 1980, pp. 186-89. Antonius Aquinas@antoniusaquinas https://antoniusaquinas.comhttps://antoniusaquinas.com
Savings – Not Tariffs Will Make America Great Again
While the farcical Kavanaugh confirmation hearings dominated the news cycle for the past couple of weeks, little mention was made of a disturbing economic headline – the August US trade deficit. Despite all the bluster from the Trump Administration about “winning trade wars” and “trade wars are easy,” America’s trade imbalances for August were the highest ever and its deficit with its most contentious partner – China – reached an all-time high.
Some highlights or low lights for the Trump Administration and the clueless economic nationalists were:
- August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
- August imports of automotive vehicles, parts, and engines ($31.7 billion) were the highest on record.
- August imports of other goods ($9.1 billion) were the highest on record.
- August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).*
These numbers will probably mean that the Trump Administration will push for more and stiffer tariffs, although the President is set to meet with Chinese President Xi Jinping next month. Yet, if anything comes out of the meeting, it will have little impact on US trade imbalances or the economy overall.
President Trump does not have to meet with the Chinese President or, for that matter, any other head of state, for the cause of US trade problems emanate right where he currently resides – Washington, D.C. The US trade deficit is the culmination of years of ruinous Congressional and Presidential polices of high taxes, onerous regulations, and deficit spending which have gutted the nation’s manufacturing base. The US simply does not produce goods like it used to and has been kept afloat by its status as the world’s reserve currency. “King Dollar” has allowed America to consume without having to produce.
Instead of trying to strong-arm trading partners into better “deals,” the Trump Administration should be creating an environment for the re-industrialization of the American economy. The first step in such a policy must start with savings which is the key to economic growth.
Before production takes place, savings must be accumulated. The creation of goods takes place over time and savings provide the means for production – land, labor, capital – to be implemented. The more sophisticated goods require greater amounts of savings since they take longer to produce. Production, and thus, economic growth are intimately linked to savings.
Since savings are fundamental for economic growth, policies which encourage it should be advanced. Since the act of saving involves sacrifice, compensation for such behavior – “interest” – should not be tampered with or suppressed which will discourage saving.
The Federal Reserve’s policy since the financial crisis has been to artificially lower interest rates as it has tried to revive the economy by money printing and bank-credit expansion. The result has been the creation of massive asset bubbles, exploding federal deficits, and a debt–ridden economy.
While President Trump may prefer low interest rates, the exact opposite should be advocated. A free-market rate of interest (higher than current levels) would encourage savings, and while higher rates would pop asset bubbles, they are the necessary, albeit, painful fix to readjust the economy.
Once the bubbles are deflated, real economic growth can take place based on actual savings which will lead to capital formation and the creation of goods. America could start again to become productive and create goods to exchange with its trading partners. Such a transition, however, will not take place over night, nor will it be pleasant.Below market interest rates has enabled the federal government to engage in its profligate spending, much of which is done through borrowing. Instead of badgering the Chinese and others, President Trump should be attacking Congress to rein in spending. Of course, he is a major culprit in this area, having signed off on the latest massive budget which included insane increases to unproductive and destructive “defense” spending of some $700 billion which he lobbied for!
Trade deficits are a symptom of a bigger problem with the economy and are an excuse to deflect from dealing with real issues. Until the current “bubble economy” is deflated and savings and investment become the foundation of American economic life, trade deficits will continue and the ensuing trade wars may then escalate into actual shooting ones.
*Tyler Durden, “US Trade Deficit With China Hits New All Time High,” Zero Hedge. 05 October 2018.
The Gold Standard: Protector of Individual Liberty and Economic Prosperity
The Fed’s “Inflation Target” is Impoverishing American Workers
Fed Chair Jerome Powell apparently doesn’t see the pernicious effects of inflation
For workers in ‘production and nonsupervisory” positions, the value of the average paycheck has actually declined in the past year. For those workers, average ‘real wages’ – a measure of pay that takes inflation into account fell – from $22.62 in May 2017 to $22.59 in May of 2018.*While the decline in nominal wages is not significant, the manner in which the government now calculates inflation has been skewed to understate its impact. Under the previous calculation, the current US inflation rate is probably closer to 5%. Wage stagnation is not new. Average real wages peaked more than 40 years ago and have fallen in real terms ever since. Not surprisingly, the drop in wages in real terms began soon after the US went off the last vestiges of the gold standard in 1971. As sound theory has long ago demonstrated, the idea of economic growth through money printing is absurd. Increases in living standards and real wages can only come about through savings, investment, and capital accumulation. Workers who have superior tools and equipment are obviously more productive than those that do not. Yet, capital goods have to be produced and production takes place over time. Savings allow for the production process. The level of wages are also closely linked to savings. The greater savings an economy has enables entrepreneurs to bid for workers and increase wage rates. This is how wages rise – competition for labor among businessmen pushes up wage rates. The more savings entrepreneurs have, the higher they can bid for employees. How and why wage rates rise and how employment is created had been understood by economists of yesteryear. Today, however, the profession is dominated by “inflationists” and monetary cranks who believe that nearly every economic problem can be solved by the printing press. Anyone who holds such ideas cannot be taken seriously. While the Federal Reserve may think an inflation target will create prosperity, the reality for real wages is quite the opposite. The laws of economic science have not been repealed. An inflation target will lead to the impoverishment of not just workers, but lower living standards for all. *Jeff Stein and Andrew van Dam, “For the Biggest Group of American Workers, Wages Aren’t Just Flat. They’re Falling.” The Washington Post. 16 June 2018 A10. Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com
“Strong Dollar,” “Weak Dollar,” What About A Gold-Backed Dollar?The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronoucements and reversals which will take place in the coming months/years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset. The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide, “Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”* Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks. President Trump weighted in on the matter saying, “Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.” While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:
I must be honest, I’m a low interest rate person. If we raise rates and if the dollar starts getting too strong, we’re going to have some very major problems.**Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless. That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are. If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals. Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar. These two acts would guarantee a strong dollar and insure that the dollar would remain the world’s reserve currency. Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures. A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency. Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe. Gold-backed money will not only have positive international effects, but domestic benefits as well. Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past. Prices in a gold-backed currency will actually fall, raising living standards for everyone. Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with. And, without the Fed’s purchasing of US debt, the government would be forced to make cuts in spending. Spending cuts would have to be deep and across the board. Happily, under such a scenario, reduction in spending would mean a pull back in the American Empire. The US would simply not have the resources to maintain bases abroad or involve itself in the countless conflicts and wars it is now engaged in. It is more likely that when the American Empire comes to an end, it will not be because of a military defeat, but because it can no longer be sustained financially. Sadly, under current ideological conditions, a return to gold money is not on the financial horizon. It will most likely take a collapse of the irredeemable paper monetary system before commodity-backed money is re-established as a general medium of exchange. It is clear from the recent exchange among Trump Administration financial officers that the same dollar policy will continue, which will lead to an inevitable dollar crisis and certain political disaster for the President. * “Trump Wades Into the Currency Uproar, Favours ‘Strong Dollar,’ Government & Economy.” Brit Asian News 26 January 2018. http://britasiannews.com/en/2018/01/25/trump-wades-into-currency-uproar-favours-strong-dollar-government-economy/ **”Inflation Alert: Trump Also Favors Low Interest Rates, Weak Dollar.” Weekly Market Wrap. 6 May 2016. https://www.moneymetals.com/podcasts/2016/05/06/trump-supports-weak-dollar- Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com
What President Trump and the West Can Learn from ChinaInstead of a demonstration of its overwhelming military might intended to intimidate tiny North Korea and pressure China to lean on its defiant communist neighbor, President Trump and the West should try to learn a few things from China. The President’s trip to the Far East came on the heels of the completion of China’s 19th National Congress where the current president, Xi Jinping, has cunningly positioned himself as China’s unchallenged leader. In an address at the opening of the Congress, Xi cautioned that the country faced “challenges” that are “extremely grim” yet, despite these, the nation’s future is “extremely bright.”* While Western politicos and pundits bemoan the lack of political pluralism that exists within China and President Trump complained about bad trade “deals,” they miss an important factor as to why China has transformed itself from a socialist basket case some three decades ago into an economic powerhouse which now boasts over a third of the world’s billionaires! China’s economic ascendancy can be attributed not only to the implementation of market reforms in the 1990s, but also its lack of “political competition.” As a one-party state, resources, time, energy, and capital are not allowed to be channeled into wasteful political processes, but instead are used and “invested” in wealth-creation activities – construction, factories, plants, equipment, research, technology – all of which leads to more and cheaper consumer goods. The US and the West spend too much on elections, campaigns, polling, political consultation, etc., which diverts scarce resources away from the private wealth sectors of society. For example, in her last failed presidential campaign run, the Wicked Witch of Chappaqua alone spent over a half of billion dollars. Under Western democratic pluralism, public debt and state spending have increased to unsustainable levels. In the US alone – history’s greatest debtor nation – the national debt is in excess of $20 trillion, while its total debt officially is $68 billion with a federal deficit (GAAP) running yearly at $5 ½ trillion. Such staggering numbers are the result, in part, from political parties seeking public office and once elected exploiting their position to enrich themselves, their constituents, and create dependent classes among the ever shrinking productive segments of society. China’s foreign policy – an extension of politics – has also been conducive for wealth creation. Instead of wasteful spending on military hardware, the maintenance of a far-flung global empire, and involvement in incessant wars, China has a rather meek military compared to its national income and has conducted a pretty much non-interventionist foreign policy – witness its diplomacy with North Korea. The US is almost the polar opposite. It spends more on “defense” than the next eight countries combined.** Instead of the production of useful consumer goods, billions are siphoned off into the military/security industrial complex. Not only does this impoverish Americans at home, but it leads to never ending involvement in wars, conflicts, and disputes, most of which are created or exacerbated by US spy organizations. After meeting with Chinese leadership, President Trump tweeted:
I don’t blame China, I blame the incompetence of past Admins for allowing China to take advantage of the U.S. on trade leading up to a point where the U.S. is losing $100’s of billions. How can you blame China for taking advantage of people that had no clue? I would’ve done the same!Making better trade deals will not revitalize the moribund US economy. Instead, there should be less politicization of society and adoption of market reforms as China has done. The most important plank of such a policy would be the encouragement of real savings – not the creation of bank credit – through the normalization of interest rates. This would begin the arduous process of capital accumulation, the basis upon which any economy can be built. Another sign of the divergence between the two is China’s continued push to make the yuan the world’s reserve currency with apparently some sort of gold backing to it. Contrarily, the Trump Administration has continued the same disastrous policies of its predecessors and has chosen a Janet Yellen clone to head the Federal Reserve with a continuation, no doubt, of the suppression of interest rates. On the other hand, China continues to import massive quantities of gold and encourages its citizens to own the yellow metal while the West is in the midst of a crypto currency mania, another fraudulent monetary scheme. China’s economic miracle, while certainly impressive, would not look as astounding if Western economies had not been in a state of stagnation and decline over the past half century. It was not political liberalization that led to China’s phenomenal growth, but economic freedom which used to be a staple of Western life. The lesson that should be taken from President Trump’s trip is less politics domestically and more free markets. *Chris Buckley, “Xi Jinping Opens China’s Party Congress, His Hold Tighter Than Ever.” The New York Times, 17 October 2017. https://www.nytimes.com/2017/10/17/world/asia/xi-jinping-communist-party-china.html **Peter G. Peterson Foundation. “US Defense Spending Compared to Other Countries.” 1 June 2017. https://www.pgpf.org/chart-archive/0053_defense-comparison Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com
Bitcoin: A Tower of Monetary BabelThe promoters of crypto currencies have gushingly touted them as the mechanism by which the present central banking cabal and the system of nation states which derive much of their power from will be brought down and replaced by digital money. Despite their meteoric rise as speculative “assets,” there are fundamental economic reasons why they will never act as a general medium of exchange despite the wild enthusiasm for them by the crypto-currency cultists. Money – a general medium of exchange – is the most marketable (exchangeable) commodity in an economy. As a good, money is not sought after for its direct use – to satisfy individual wants – but to satisfy wants indirectly through exchange for other goods. Over time, one good becomes money since it possesses qualities superior to all other goods as a money. When gold became demanded not for its “use value,” but for its “exchange value,” it became a general medium of exchange – money. As a consumer good, gold possessed a value or a “price” prior to it becoming a money, as the eminent monetary theorist Murray Rothbard explains:
. . . embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers’ or producers’ goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium to the previous demand for direct use (e.g., for ornaments in the case of gold.)*Thus, Bitcoin’s “price” is not in terms of its original commodity price, but its price is in terms of dollars, Euros, yuan, etc. In the dollar’s case, it was at one time linked to gold, but has since been severed from it while Bitcoin has had no such relationship. Once money is established, then prices are expressed in terms of it and thus economic calculation can rationally take place and the division of labor and specialization can be expanded. Rothbard continues:
The establishment of money conveys another great benefit. Since all exchanges are made in money, all the exchange-ratios are expressed in money, and so people can now compare the market worth of each good to that of every other good.**Once gold became money, the price of goods became expressed in gold not in other elements – nickel, zinc, lead, etc. With the proliferation of crypto currencies, there will be a myriad of different price ratios for each good. There will be a Bitcoin price for a car, an Ethereum price for a car, a Dogecoin price of a car, and so on. This is the antithesis of the purpose of money – one unit of account that reflect prices for all commodities as Rothbard shows:
Because gold is a general medium it is most marketable, it can be stored to serve as a medium in the future as well as the present, and all prices are expressed in its terms. Because gold is a commodity medium for all exchanges, it can serve as a unit of account for present, and expected future, prices. It is important to realize that money cannot be an abstract unit of account or claim, except insofar as it serves as a medium of exchange.*** [my emphasis]Crypto currencies, therefore, directly violate one of the main principles of monetary theory. The vast array of digital money, all with unique price ratios (to say the least of their volatility), would make economic calculation and rational planning next to impossible. In this sense, the current world of fiat dollars would be preferable to a Tower of Monetary Babel that digital currencies would create. Central banks and governments do not fear crypto currency challengers to their monetary hegemony. They, of course, jealously monitor the crypto market worried that any gains accrued may not be subject to tax. Central banksters do fear gold for it remains, despite being demonetized, the last check on profligate central bank monetary expansion. And, because countries who wisely understand gold’s importance and seek to get out from under the yoke of King Dollar (most notably China and Russia), continue to voraciously accumulate the yellow metal. The return of true prosperity will only come about when gold is once again at the center of the monetary order and fiat currencies such as the dollar, Euro, and now Bitcoin are forgettable memories of a misguided and corrupt age. *Murray N. Rothard, What Has Government Done to Our Money? Novato, CA.: Libertarian Publishers, 8th printing, January 1981. **Ibid., 4-5. ***Ibid., 5. Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com
Bitcoin in an Illusionary AgeIt is altogether fitting that crypto currencies, in particular Bitcoin, have witnessed a meteoric rise in this illusionary age. Not only has their monetary value gone to dizzying heights, but they are now being touted as the destroyer of the current, crumbling monetary order and the next paradigm upon which a new money and banking system will emerge. In an era where sacrifice, hard work, loyalty, ingenuity, tradition, and independent thought are considered anathemas, while affirmative action, sloth, effeminacy, office seeking, and something-for-nothing schemes are endemic in every walk of life, it is not surprising that non-tangible, computer-generated currencies would become a “natural” feature of such a world. While it has always been a haven for charlatans, traitors, cheats, thieves, liars, and serial adulterers, contemporary political life has become even more of a sham. The most glaring example of politics’ utter corruption can be seen in the recent departed chief executive officer of the US. Unless one abandons all critical thinking, Obummer was unqualified to be president because of the obvious fact that he was not born on American soil. Not only did this disqualify him, but his educational and professional backgrounds have not been verified. Neither his collegiate records nor his supposed teaching career at the University of Chicago Law School have ever been exposed to public scrutiny. From the few utterances he has made about his supposed specialty – constitutional law – it appears that he has only a rudimentary knowledge of the subject. Cultural life has descended to the basest of levels and has abandoned nearly all of Western Civilization’s glorious achievements. Consider music. The dominant form of what passes as music today is not the works of the great maestros of the past – Bach, Mozart, Beethoven – but instead, noise in the form of rock, hip hop, rap, grunge, or whatever the latest degenerate trend is in vogue. Modern democracy is also a fallacy. Being sold to the masses as a system where the people rule and personal liberties are guaranteed, democratic governance is anything but, and has instead been craftily used by the elites to amass state power to an unprecedented extent not witnessed in human history. The much maligned monarchial age even during its “absolutist phase” could not come close to the scope and intrusiveness that democratic governments possess today. Religion, too, is not immune from its share of hypocrisy. Not only is the supposed head of the Catholic Church a manifest heretic who almost daily blasphemies the Divine Majesty, but he is not qualified to occupy the august chair in which he sits. Jorge Bergoglio was neither ordained as a priest nor consecrated as a bishop in the traditional, Apostolic rite of Holy Orders. He is, therefore, an imposter not a priest, nor the bishop of Rome, and scandalously not a true pope. Now enter crypto currencies. Not only will they never become money – a general medium of exchange – as gold and silver once were and will become once again, but cryptos lack the necessary requirements to be money. Yet, their “development” is systematic of the times. Cryptos are another variant of fiat currencies which digitally can be created by a stroke of a computer key or in cryptos’ case, a code. Gold and silver – real money – must be mined from the ground, minted and “marketed” before they can be used to facilitate exchange. This is an arduous, capital-intensive process which takes resources, labor, and time to accomplish. Something as important as money should require an elaborate procedure not be created out of thin air as are all fiat currencies as well as cryptos. Money must originate as a tangible, sought-after commodity – the great Misesian insight that crypto enthusiasts do not know or do not understand – then, over time, be recognized as having a “second feature” as a good sought after for “exchange value.” Once a good is demanded for its use primarily to facilitate exchange, it then becomes a “money.” In a fundamental sense, crypto currency cultists are rebelling against the natural order of things. The precious metals were created in their quantity and quality by Divine Wisdom for a purpose – to act as money. While governments have habitually corrupted the monetary order through coin clipping, fractional-reserve banking, and other nefarious schemes, it does not undo this primordial fact. It is for the intellectually honest opponents of monetary chicanery to point this out and decry all governments and banksters’ attempts to eradicate gold and silver as money, not attempt to create another unnatural and false monetary order that mirrors the current fiat system. Money, like all other institutions of society, will reflect its belief system. Decaying cultures will most likely have debased monetary units. A turnabout in the status of money will only happen when Western Civilization returns to what money is – gold and silver – and abstains from trying to create illusions of it through computer software schemes. Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com
The Student Loan Bubble and Economic Collapse
- The US has around $1.3 trillion in non dischargeable loans to students
- Over 120 billion in student loans are already in default
- 27% of students are a month behind on their payments*
The Ultimate Financial Regulatory Reform: Abolish Fractional Reserve Banking!
- Community financial institutions – banks and credit unions – are critically important to serve many Americans
- Capital, liquidity and leverage rules can be simplified to increase the flow of credit
- We must ensure our banks are globally competitive
- Improving market liquidity is critical for the U.S. economy
- The Consumer Financial Protection Bureau must be reformed
- Regulations need to be better tailored, more efficient and effective
- Congress should review the organization and mandates of the independent banking regulators to improve accountability***
Donald Trump is an Economic Ignoramus!
Donald & the Dollar
Donald and the “Maestro”
Mario Draghi and THE Issue of Our TimesEurope’s Counterfeiter-in-Chief Europe’s Counterfeiter-in-Chief, Mario Draghi, President of the European Central Bank (ECB), has again demonstrated why the Western world will never get out of its depressed condition until the likes of Draghi are deposed and the institution in which he heads is abolished. Draghi actually believes that there has been improvement – “the ongoing recovery” – across Europe’s economic landscape. Such a statement, which flies in the face of reality, is couched with a “warning” that could derail Draghi’s fantasy scenario of the Continent’s economic condition. Draghi, and, for that matter, every other central bankster believes that “low inflation” will stunt economic progress. In a recent speech given in Amsterdam, Draghi said: “a rise in the exchange rate [of the Euro], all else being equal, implies a tightening of monetary conditions, a downward impact on inflation and potentially a threat to the ongoing recovery.” Like all good sophists, Draghi obfuscates terms in order to bamboozle his audience (something that is quite easy to do in this era of widespread economic ignorance). To him, “inflation” is meant as a rise in prices instead of its traditional and more correct meaning as an increase in the supply of money. The perversion of the meaning of inflation has been a favorite tactic of counterfeiters like Draghi who then can intentionally distort cause and effect. Inflation – an increase in the money supply – is the cause of rising prices. Overall price increases are not inflationary, but the consequence of money printing, which Mario Draghi, Janey Yellen, Ben Bernanke and all central bankers wholeheartedly engage in. What Mario the Moneyprinter actually wants to say is that if inflation (rising prices) is too low, it could stall the recovery and it will then be up to the ECB and other monetary authorities to generate more inflation which they will vigorously undertake. This, he contends, will continue the recovery and lead to economic growth. Such a statement is pure idiocy and shows that one of the most important monetary officials in the entire world is basically an ignoramus! What Draghi will not openly admit is that they will achieve their purpose – increase in prices – by expanding the amount of currency they have under their monopolistic control. This, of course, will mean a fall in the purchasing power of the Euro and eventually will lead to all sorts of economic chaos. Contrary to Mario the Moneyprinter’s imbecilic statements, rising prices are the antithesis of a robust economy. A vibrant economy is one of generally falling prices and costs, as the production of goods and services increase and the purchasing power of money increases at the same time. Falling prices are synonymous with high standards of living; money printing, rising prices and unemployment are signs of stagnation and eventual collapse. For Draghi and the other politically-connected financial elites rising prices are good because they enhance, at least nominally, the value of equities and banking assets. While the balance sheet of banksters and those of Wall Street have shown record profits, everyone else suffers from higher consumer good prices, most importantly food and energy. The ongoing and deepening economic crisis has been the direct result of the crazed monetary policies of central banksters such as Mario Draghi. Not only have they created the problem in the first place, but their supposed remedies have solved nothing but have led to unprecedented indebtedness, economic regression and social turmoil. It is well past the point where Draghi and his cohorts can be simply ignored, they must be removed and the offices and institutions they hold liquidated so that the massive wealth transference and the ruination of so many lives over the past few years will be repeated never again. May 5, 2014 Antonius Aquinas@AntoniusAquinas
Minimum Wage ChicaneryIn one of the most callous and insensitive acts as chief executive, President Obama has called on Congress to increase the minimum wage from $7.25 to only $10.10 per hour! If he were truly compassionate, the president would seek an increase to at least $20 per hour instead of the paltry sum of ten bucks. Come to think of it, if he really wants to help the poor and unskilled, the minimum wage should be raised to $50 per hour!
Such reasoning, of course, is idiotic which is why economic ignoramuses like Obummer advocate such nonsense as when he recently said: “You’ve got a choice. You can give America the shaft, or you can give it a raise.” More illogicality followed, during, not surprisingly, a campaign stop with a fellow Michigan democrat: “It [a minimum wage hike] would lift millions of people out of poverty right away. It would help millions more work their way out of poverty right away.”
Minimum wage legislation, like rent control and all other forms of government price fixing, has had the opposite effect of what it is supposed to do. Minimum wage laws lead to the destruction of jobs while making business less competitive and consumer friendly as sound economic theory and numerous empirical studies have demonstrated.
If Obummer, or those who are supporting such hikes, had any sense, they would understand that increasing the price of any good, in this case wages, above the “market level,” will ultimately lead to a surplus – an increase in the unemployed. What if the government did raise the minimum wage to $50 per hour? Then, nearly everyone would be unemployed!
Yet, this is the predictable outcome of minimum wage laws. Those whose skill sets are below the mandated rate will not be employed as businesses will simply eliminate positions and jobs. A notable example of this is gas station service. At one time, nearly all gas station pumps were “full service” where an attendant not only filled up the tank, but offered to clean windows, check oil and fluid levels and tire pressure. As the minimum wage increased, jobs like these fell by the wayside and consumers had to pump their own gas and tend to their own maintenance. Naturally, automation played a part in the elimination of some of these jobs, but without minimum wage laws, many more gas stations would be offering “full service.”
While service stations are hampered in providing customers with better service, the loss of employment is worse. Having a job (especially for the young) is more than just monetary reward, for employment provides invaluable work experience, instills discipline and responsibility all of which makes the employee more marketable. Yet, when such jobs are eliminated by governmental decree, not only is there financial loss, but these other “benefits” disappear.
Of course, any rational thinking person (which leaves out all politicians) understands that wages and the level of employment cannot be “raised” through the edict of the state. Wages and employment rates are determined by the amount of savings and capital accumulation that is available. Why wages and the standard of living in the Western world were so high for so long was due to the massive accumulation of capital and savings that took place primarily because of the low levels of taxation, monetary debasement, and regulation. Capital accumulation provided better tools and equipment which allowed workers to be more productive while the vast savings allowed businessmen to pay higher wages when competing for workers in the marketplace.
Tragically, this magnificent trend is coming to a very bleak end with little hope of a turnabout.
If Obummer and his fellow sociopaths would truly like to see real wages rise while lowering the level of unemployment, they would do all in their power to foster the growth of savings and the expansion of the capital base. This would mean a reduction in the criminally excessive tax burden, the elimination of burdensome regulations, and the cessation of monetary debasement through the Federal Reserve’s crazed “QE” policy which artificially lowers interest rates which, thus, discourages saving. Unfortunately, none of these policies will be forthcoming under the current despotic regime or any other one that will likely follow.
A further detrimental aspect of minimum wage legislation which is often overlooked is that their enforcement leads to bigger government. Those who are prevented from working at a mutually agreed upon wage will typically take part in some part of the welfare state, be it unemployment compensation, job training, food stamps, etc. The big winner in such a scenario are the politicians who get to rule over a larger dependent class and the bureaucrats who administer the welfare programs. The obvious losers in this vicious cycle are the taxpayers.
All in all, minimum wage laws are a detriment to society. This, of course, does not prevent politicians from calling for such measures which makes them appear compassionate and caring to their constituents. At one time, there was a segment of the financial press and academia that understood basic economic principles and would expose such nefarious thinking, this, however, is no longer the case. Until such ideas are ridiculed and those who advocate them identified as charlatans, the plight of wage earners will continue to plummet.First published 4-9-’14 Antonius Aquinas@AntoniusAquinas
Meet the New Boss… Same as the Old BossYellen: “I am a sensible central banker.” As expected, the new Federal Reserve Chairwoman, Janet Yellen, is continuing the same destructive polices of her infamous predecessor, the counterfeiter-in-chief, Benjamin Bernanke. While Bernanke and now Yellen’s polices have, so far, been devastating for the vast majority of Americans (especially savers), their actions have been a boon for the banking, governmental, and financial establishments not only in America, but around the globe.
Like “Helicopter Ben,” Yellen has been masterful in obfuscating, distorting, and lying about the actual reality of the U.S. economy. Of course, this is why she was, in part, chosen as Fed chair to provide “intellectual cover” and “spin” of the facts in order that the real manipulators of the economy – the mega banks and financial houses – continue to receive a goodly amount of the Fed’s monthly “stimulus” program.
In Congressional “testimony,” Yellen considers “inflation” to have been kept in check, “Inflation is running well below our 2% target. . . . ” Yet, as everyone knows prices for nearly every commodity have gone up significantly since the beginning of the crisis in 2007. And, Ms. Yellen failed to mention, nor did any of the gullible politicians who questioned her know, that the Fed’s “measurement” of prices no longer includes energy or food prices! Gasoline prices have nearly doubled since Obummer has taken office while food prices have soared over the same period.
Ms. Yellen surpassed her doozie on inflation with her statement on unemployment or, more accurately, the lack of meaningful employment throughout the economy. While she acknowledges that the economy has not achieved “maximum employment” (whatever that means), she amazingly added: “there has been substantial job creation.” One wonders what piece of data Ms. Yellen is using to substantiate such a ridiculous claim. Maybe she should ask some recent college graduates about “job creation” where most have either moved back home with their parents or are working at jobs which do not require overpriced “higher education.”
Perhaps, no group has been more negatively affected by the Fed’s monetary policy than retirees. Yet, to Yellen, and Bernanke before her, the lack of interest on saving for those who have to rely on it for their independence and survival is not thought of as dire by our financial masters, but as if one’s favorite sports team lost a championship game. “A low-interest-rate environment is a tough one for retirees” was the response when the subject was posed to the Madam chairwoman. She compounded her lack of concern with a nonsensical explanation for the abnormally low rates: “There’s an excess of saving relative to the demand for those savings for investment purposes.”
If Yellen were honest, she would explain that the Fed’s “zero interest rate policy” is deliberate so that the Federal government can borrow money at virtually no cost in order to sustain its massive deficit spending and to provide “liquidity” to the insolvent banking system in order that it does not collapse. Period.
What Americans have to realize is that the primary purpose of the Fed from its surreptitious founding until the present day has been to protect the “solvency” of the banking system. Unemployment, the “price level,” trade imbalances, or the overall health of the economy are secondary concerns for the Fed. While Yellen and her predecessors may fret about the level of employment or inflationary “targets,” it is simply theatre to placate the clueless in Congress and among the financial press where not a few reside.
Until the Federal Reserve is liquidated and replaced with a monetary order of sound money – gold/silver – the chance of any real sustainable economic growth is nil. Sadly, the likelihood of a return to a system of sound money will not take place until there is a general economic collapse or a severe financial crisis. The ruling power structure will not relinquish a primary source of their dominance.
While there will, in all likelihood, be a financial collapse, it is not a given that there will be a return to sound money in the aftermath of such an event. The power elite will more than likely impose severer financial controls. Sound money and its corollary – economic growth – will only come about when there is an “intellectual turnabout” where central banking is discredited and shown as an engine for the betterment of the financial and political elite at the expense and misery of everyone else. Until that glorious day when the scourge of central banking is eradicated, Americans and all those living under its suzerainty will continue to face economic and social decay.First published 3-16-’14 Antonius Aquinas@AntoniusAquinas