Donald Trump is an Economic Ignoramus!
Not surprisingly, Donald Trump has followed in the infamous footsteps of his presidential predecessors in the transition from candidate to chief executive. Invariably, every candidate for the presidency makes a whole host of promises, the vast majority of which are horrible and typically only exacerbate the problems they attempt to resolve. Among the proposals, however, there is an occasional bright spot. Yet, once elected the stupid polices are eagerly pursued while the good ones are quickly discarded.
What was somewhat unique about Donald Trump was that he was the first candidate in a long while who had a number of refreshing and much needed proposals – border wall, “drain the swamp,” criticism of Ma Yellen and the Fed, rapprochement with Vladimir Putin and Russia, a deescalation of U.S. imperialism overseas. There were bad ones, too, but the good ones were enough to lead him to a smashing win over the Wicked Witch of Chappaqua.
Even before being sworn in, however, the president-elect began to downplay his most positive positions and emphasize the worst. At the top of this list, and what Trump has been consistently wrong about since the inception of his political career, and even prior to it, has been “trade.”
Trump considers himself an “economic nationalist” in the mold of Patrick Buchanan. Both, however, are simply wrong in this regard demonstrating that they do not have a grasp of the most basic of economic principles.
The latest Trump tirade on trade was reported during his recent trip to Europe and a meeting with high-ranking officials. Trump is reported to have lashed out at German auto makers who the President accused of being “very bad” because of the “millions of cars that they sell in the U.S.” The Donald bemoaned, “Terrible, we’re going to stop that” and added “I don’t have a problem [with] Germany, I have a problem with German trade.”*
Such talk makes Trump sound like a fool. What is “bad” about providing American consumers with first-class automobiles that they apparently want in large quantities and are voluntarily willing to pay for? And what of American workers employed with Mercedes Benz, BMW, and Volkswagen? What is so horrible about the jobs and income that is provided by German firms to these workers?
Instead of berating German car manufactures, Trump should direct his ire at the immigration policies of psychopathic politicians like Frau Merkel. Candidate Trump was very vocal about this and criticized European leaders for allowing their countries to be turned into multicultural cesspools.
The benefits of free trade and the baneful consequences of protectionism have long ago been elucidated by right-thinking economists, while the historical record has shown that lands which engage in “free trade” are decidedly richer than those that do not. That Trump could spout off such nonsense about the evils of German trade shows how far the level of economic understanding has fallen.
Not only does free trade allow for the extension of the division of labor and specialization, but it has very important non-economic fruits. When trade is unregulated, there is less of a tendency of trading partners to engage in bellicose actions toward each other. Free trade and peaceful coexistence among nations are synonymous. It is when trade is prohibited, skewed by governments to “protect” favored industries, which creates tensions among peoples.
Free trade does not require measures such as NAFTA or negotiated deals by politicians. Instead, producers of one region are free to sell their goods at whatever prices or quantities to consumers of other areas that agree to buy them. Ultimately, trade is up to individual producers and consumers in what they contractually agree to exchange, there is no need for political involvement.
Trump’s lambasting of the German auto makers, however, underscores a more fundamental problem with the U.S. economy. America no longer produces goods that the world’s consumers desire, but instead, produces military hardware that it sells to despotic regimes which enables them to remain in power and wreck havoc on their enemies. Predictably, this escalates tensions abroad while, domestically, the standard of living of Americans fall as scarce resources that could have been used in the production of useful consumer goods are diverted to the creation of murderous military armaments.
Trump has repeatedly boasted about his and his appointees’ abilities to negotiate great trade “deals.” His bashing of the German auto makers right after his multi-billion dollar arms sales to the Saudis show not only that he is clueless in regard to the immense benefits of free trade, but that he is just another adherent, like his predecessors, to the ideals of crony capitalism.
*Tyler Durden, “Trump Slams ‘Very Bad’ Germans for Selling Millions of Cars in US: ‘We Will Stop This.'” Zero Hedge 26 May 2017. http://www.zerohedge.com/print/596683
Antonius Aquinas@AntoniusAquinas
Donald & the Dollar
Since money is the lifeblood of an economy, any hope that one can be turned around without a stable monetary order is, to say the least, delusional. If president-elect Trump and his policy makers do not realize this, they will be severely disappointed in the years to come. Sound money allows for the accumulation of savings and capital formation, the essential elements of the market economy and the only basis upon which real economic growth can occur. More savings and capital are needed to boost production and create employment, not supposedly wiser and more competent international trade negotiators.
Talk of currency devaluation is what is typically heard from banana republics, it should not be advocated by those who have aspirations of making their country great again.
*Tyler Durden, “Dollar Tumbles After Trump Calls Currency ‘Too Strong,’ Slams Border-Adjustment Tax.” Zero Hedge. 17 January 2017.
Antonius Aquinas@AntoniusAquinas
Donald and the “Maestro”
We’re not in a stable equilibrium. I hope
we can all find a way out because this too
great a country to be undermined, by how should
I say it, crazies.*
Well, if there is anyone who knows how to “undermine” an economy, it is the Maestro, since it was his “crazed” policies that brought about the 2008 financial crisis which ushered in the Great Recession that continues to this very day.
In a demonstration of how truly clueless Greenspan is about economic conditions, he cautioned that the U.S. is “headed toward stagflation – a combination of weak demand and elevated inflation.” Memo to the Maestro: stagflation is already here and has been for quite a while, especially when real economic gauges are used instead of the phony baloney numbers routinely lied about by the BLS and other corrupt state agencies.
The “crazies” that Greenspan refers to are, of course, the “deplorable” Trump supporters and The Donald himself, who the Maestro contends is responsible for “the worst economic and political environment that I’ve ever been remotely related to.” Oh, poor Alan has to suffer through an election where one of the candidates has not been approved by the ruling class. Too bad.
Instead of carping about the current state of political affairs which, at least financially, he and his successor, Helicopter Ben Bernanke, largely contributed to, Greenspan should be grateful that he has had no reprisals for the financial crimes, chaos, and misery that he has afflicted upon the world. Instead of significant jail time or worse, Greenspan is free to pontificate on current events, receiving hefty financial remuneration, and just as important for top members of the governing elite, ego-enhancing hosannas!
While Ben Bernanke has been a lifelong committed Keynesian and inflationist, Alan Greenspan, at least in his younger days as a member of Ayn Rand’s circle, was a free marketer who spoke positively about the efficacy and moral soundness of a gold standard. That he abandoned these beliefs to go over to the Dark Side is further cause for retributive justice.
Greenspan’s betrayal was similar to those economists of the 1930s (Lionel Robbins most notable) who were followers of the teachings of Mises and Hayek, yet were swept away by the fanciful Keynesian deluge of the day and abandoned their economic senses and conscious for similar allurements which seduced the Maestro. Had these economists as well as Greenspan stuck to their original principles, the world may not be in its current financial mess.
While Greenspan was lamenting the state of political affairs, the head “crazy,” Donald Trump, commented on the Maestro’s former place of employment. Unlike the Maestro, the financial media, and just about every other politician, Trump had some perceptive things to say about the nation’s central bank, showing again that the billionaire businessman’s political acumen is quite good:
The Fed is being totally controlled politically because
Obama wants to go out with no stock market disruptions.**
The Republican Presidential hopeful could have easily added that the Fed’s policy is being deliberately carried out to ensure his Democratic opponent’s victory this fall. A booming stock market is perceived by most as an indication of a vibrant economy.
Trump does not buy the supposed “independence” of the Fed from political influence and the conduct of monetary policy solely for the well being of the economy:
If it was a choice between the right decision and a political
decision… The Fed would choose the political decision.
Throughout the campaign, Trump’s instincts on political and economic matters have been quite good and hopefully if he does become chief executive those instincts will translate into positive change.
A Clinton Presidency would assuredly mean a continuation of the ruinous policies of Greenspan and his successors. The election of Donald Trump could not only mean a new direction in monetary policy, but the public demotion of the likes of Alan Greenspan who will hopefully fade into the sunset never to be heard or seen from again.
*Rich Miller, “Greenspan Worries That ‘Crazies’ Will Undermine the U.S. System.” Bloomberg. 14 September 2016. http://www.bloomberg.com/news/articles/2016-09-14/greenspan-worries-that-crazies-will-undermine-the-u-s-system
**Tyler Durden, “Trump Slams ‘Totally Politically Controlled’ Fed, Sees No Rate Hike Until Obama Has Left.” Zero Hedge. 15 September 2016. http://www.zerohedge.com/news/2016-09-15/trumps-slams-totally-politically-controlled-fed-sees-no-rate-hike-until-obama-has-le
Antonius Aquinas@AntoniusAquinas
John Maynard Keynes’ General Theory Eighty Years Later
To the economic and political detriment of the Western world and those economies beyond which have adopted its precepts, 2016 marks the eightieth anniversary of the publication of one of, if not, the most influential economics books ever penned, John Maynard Keynes’ The General Theory of Employment, Interest and Money. Sadly, even to this day, despite its thorough refutation by lights such as Henry Hazlitt and other eminent scholars, The General Theory, which spawned “Keynesianism” and its later variants, remains supreme in academics, financial markets, and public policy.
Despite its outlandish theoretical flaws and nonsensical economic jargon and the catastrophic empirical evidence of its failure to prevent financial downturns or “stimulate” sustainable growth, Keynesianism remains the ruling paradigm of economic thought.
Why?
A number of trenchant reasons have been given for the General Theory’s continued dominance, however, one stands above all else: Keynesian economics provides the intellectual justification for economists, statisticians, technocrats, bureaucrats, and policy wonks in their exalted positions as “fine tuners” of economies the world over. Since markets are to Keynes and his disciples inherently unstable from erratic investment spending and aggregate demand, it is up to these theoreticians steeped in the knowledge of their master’s teachings to ameliorate any economic fluctuations.
The General Theory came on the scene at a propitious time during the height (or more accurately the depth) of the Great Depression, which in 1936, despite Roosevelt’s New Deal and other Western nation states’ initiatives, had not improved conditions. Keynesianism was actually a “middle way” between all out Soviet-style central planning and that of laissez-faire capitalism. Primarily through fiscal policy, the economy would be kept on an even keel under the astute management of Keynesian-trained economists. Naturally, this appealed to academics and intellectuals the world over who correctly envisioned positions of power and influence in expanded state apparatuses.
As history has shown, Keynesianism was to become more than a remedy for the Depression, but would be applicable after the crisis dissipated. The General Theory was based, in part, on the (false) notion that the capitalist system is inherently unstable and is, therefore, in need of state intervention. Keynes deliberately ignored the scholarship at the time, which demonstrated that the instability was not a “market failure,” but a monetary disorder caused by artificial credit expansion generated by the central banks, especially the Federal Reserve.
The enthusiasm for The General Theory came at first from younger economists while it was (rightly) dismissed by many of their elders as incomprehensible. Yet, its lack of clarity was appealing to the novices, since they would become the Creed’s interpreters.
Not all, however, were entirely overwhelmed by their mentor’s magnum opus as Paul Samuelson candidly admitted:
[The General Theory] is a badly written book:
poorly organized. . . . It abounds in mares’ nests
of confusions. . . . I think I am giving away no
secrets when I solemnly aver – upon the basis of
vivid personal recollection – that no one else in
Cambridge, Massachusetts, really knew what it
was all about for some twelve to eighteen months
after publication.*
Despite such an assessment, Keynesianism was never seriously challenged by its adherents, it opened too many lucrative policy making doors to be refuted.
That Keynesianism continues to reign supreme, despite its theoretical and empirical bankruptcy, speaks volumes of the state of Western intellectual and academic life. Instead of the pursuit of truth and the refutation of error, Western intelligentsia is primarily concerned with securing privilege and power for itself. At one time such status was gained by honest inquiry into social questions and issues, now it is obtained in the justification of the expansion of state power. Very few turn down such enticements!
Societies are the product of ideas. Since the release of The General Theory, the Western world has been under the destructive sway of Keynesianism, which has resulted in stagnation, financial turmoil, and eventual collapse. Until Keynes and his nutty theories have been refuted, the economic malaise will continue.
Quoted in Murray N. Rothbard, “Keynes, the Man.” In Mark Skousen, ed., Dissent on Keynes: A Critical Appraisal of Keynesian Economics. New York: Praeger Publishers, 1992, p.184
Antonius Aquinas@AntoniusAquinas
“A Date Which Will Live in Infamy:” President Nixon’s Decision to Abandon the Gold Standard
Franklin Delano Roosevelt called the Japanese “surprise” attack on the U.S. occupied territory of Hawaii and its naval base Pearl Harbor, “A Date Which Will Live in Infamy.” Similar words should be used for President Nixon’s draconian decision 45 years ago this month that removed America from the last vestiges of the gold standard.
On August 15, 1971 in a televised address to the nation outlining a new economic policy entitled, “The Challenge of Peace,” Nixon instructed the Treasury Department “to take the action necessary to defend the dollar against the speculators.”*
Nixon continued:
I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interests of monetary stability and in the best interests of the United States.**
Of course, any objective student of history knows that this was a lie and that it was not “speculators” which were causing monetary instability, but the U.S.’s own crazed inflationary policy which attempted to fund its imperialistic endeavor in Vietnam while expanding the welfare state at home. This resulted in the Treasury losing an alarmingly amount of gold reserves to other central banks who rightly sought real value in exchange for depreciated American greenbacks.
In essence, Nixon’s decision ended gold redemption and placed the U.S. and the rest of the world on a purely fiat paper standard for the first time in recorded time. By doing so, the U.S., in effect, became a deadbeat nation which no longer honored its obligations and was set on the road to its current banana republic status.
Instead of impeachment proceedings and his ultimate resignation for the juvenile break in at the headquarters of the nation’s other ruling crime syndicate, Nixon should have been imprisoned for this deliberate and destructive act which has led, in large measure, to the nation’s crushing and insurmountable debt burden, reoccurring booms and busts, and now economic stagnation.
Nixon’s disastrous decision had precedent. FDR had his own day of monetary infamy in 1933 when, by Executive Order 6102, he outlawed the private ownership of the precious metal while eliminating gold redemption by banks for dollars. Ostensibly, the order was instituted as an emergency measure to combat the Depression, but in reality, it was done to allow the Federal Reserve greater “flexibility” in inflating the money supply.
While Roosevelt and Nixon’s decisions would backfire economically, their actions highlighted the totalitarian direction that the federal government and its executive branch were heading throughout the 20th century. Moreover, the lack of opposition or protest to blatant executive dictatorial decrees by either the legislative or judicial wings of the federal government demonstrates again the flawed and frankly naive argument put forth by Constitutionalists of every ideological persuasion on how the celebrated “separation of powers” theory checks tyranny.
Nixon’s final abandonment of the gold standard had far greater ramifications than simply bad economics. Without the discipline of hard money, central banks could, and did, create massive quantities of paper money and credit, which enriched the politically connected financial elites and the governments which they were aligned. Such power was used, in time, to control, spy on, and regulate the subject populations to a degree never seen before. The power of the state has swelled mostly through bank credit expansion without worry of gold redemption.
Despite what is taught in social science courses, a true gold standard is a greater protector of individuals’ economic well being and, ultimately, their political liberty than any legislation or “rights” document ever penned. Hard money limits state power!
While it is painful to quote from an ardent opponent of sound money, the international bankster Baron Rothschild said it best when he described the relationship of money and power: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”
Richard Nixon’s elimination of the last remnant of the gold standard over four decades ago combined with FDR’s earlier decree has fulfilled to the detriment of the American and world economies Baron Rothschild’s adage to a tee. The return of prosperity and individual liberty will only come about when these two heinous acts are eradicated.
*Richard M. Nixon. “Address to the Nation Outlining a New Economic Policy: ‘The Challenge of Peace.’” The American Presidency Project. 15 August 1971. http://www.presidency.ucsb.edu/ws/?pid=3115
**Ibid.
Antonius Aquinas@AntoniusAquinas
Don’t Expect a Return to a Gold Standard Any Time Soon
Despite trillions of paper currency units poured into the world economies since the start of the financial crisis, there has been no recovery, in fact, all legitimate indicators have shown worsening conditions except, of course, for the pocketbooks of the politically -connected financial elites. Yet, despite the utter failure of the current money and banking paradigm to resolve the situation, the chance of a return to a commodity based monetary order is highly unlikely especially when one looks at the anti-gold bias found in typical college economics textbooks.
Macroeconomics: Principles, Problems and Policies by McConnell, Brue and Flynn is a leading introductory level college text which has been through, to date, some 20 editions. Until the financial crisis of 2008, the subject of a commodity- backed money was not discussed, however, after the crisis and the popularity of gold standard enthusiasts like former Congressman and Presidential candidate Ron Paul, the authors of Macroeconomics obviously felt the need to address the resurgence in the interest of metallic money.
McConnell and company’s critique of the gold standard is full of fallacious reasoning that monetary cranks have employed for generations, all of which have been easily refuted by eminent economists. Yet, the lies and distortions about commodity money continues in academia.
The authors admit that:
To many people, the fact that the government does
not back the currency with anything tangible seems
implausible and insecure.
This logical sentiment and realization of the fraudulent nature of unbacked currency by those outside the economics profession is brushed aside by the esteemed trio:
But the decision not to back the currency with anything tangible was made for a very good reason.
Yes, and we know what that reason was: so that the state and central banksters could have a ready and unlimited access to the creation of money to solidify and expand their power. The gold standard was always an impediment to this cherished dream of the political elites – the establishment of an irredeemable, paper monetary order.
The authors, not surprisingly, see things differently:
If the government backed the currency with something
tangible like gold, then the supply of money would
vary with how much gold was available. By not backing
the currency, the government avoids this constraint and
indeed receives a key freedom – the ability to provide
as much or as little money as needed to maintain the
value of money and to best suit the economic needs of
the country.
By all means, the state and central banksters should be given as much “freedom” as possible for we all know that governments would never abuse such license and would always act in the best interests of their citizens. Certainly, the authors are not aware of any cases in history where such “freedom” was ever abused.
Nearly all today’s economists agree that managing the
money supply is more sensible than linking it to gold or
to some other commodity whose supply might change
arbitrary and capriciously. . . . if we used gold to back the
money supply so that gold was redeemable for money . . .
then a large increase in the nation’s gold stock as the
result of a new gold discovery might increase the money
supply too rapidly and thereby trigger rapid inflation. Or
a long-lasting decline in gold production might reduce the
money supply to the point where recession and
unemployment resulted.
Volumes have been written debunking such stupidity. The point, however, is that millions of minds have been exposed to such thinking and while most will not become economists (thank goodness!), what is taught in college and university classrooms about the gold standard is negative, to say the least. Moreover, those who continue in a career in finance or economics will unlikely ever be presented with an accurate assessment of the gold standard.
A return to a sound and just monetary order will only take place after the ideological groundwork has been first laid, just as fiat money and central banking came about after years of proselytizing by inflationists. It is also not enough to show the economic efficacy and moral soundness of commodity money, the ideas of crackpots like McConnell, Brue and Flynn need to be exposed for what they are.
Under the current academic environment, as generations have been misinformed, deceived, and lied to, it is unlikely that a return to a gold standard will take place. Until the intellectual battle is won, paper money and the central banksters that manage it will continue their reign of financial terror.
Antonius Aquinas@AntoniusAquinas
Jailing Banksters Will Not Resolve the Economic Crisis
Last week, an Irish court sentenced three prominent banksters for their roles in the 2008 financial crisis. Judge Martin Nolan, who pronounced judgment, said that the bansksters had committed “a very serious crime.” He continued, “The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions.”*
A number have criticized the judge’s sentence for its mildness in light of the catastrophic damage that the banks have done to the economy. Irish taxpayers have bailed out the banks five times since 2011, while it has been estimated that it will take up to 15 years, if ever, to recover.
While Irish banksters and the political class who have enabled them are certainly deserving jail time and much worse, whether they or other banksters who have committed similar crimes are punished will not prevent a reoccurrence of further economic crisis, undo the harm done to the Irish economy, nor will it pull Ireland or the rest of the Western world out of its economic malaise.
The seminal cause of the economic crisis of 2008 and almost every one preceding it has been the fraudulent expansion of the money supply by the banking system through the practice of fractional reserve banking. Until this economy wrecking and social destructive scheme, along with the central banks that oversee and protect the nefarious practice, are abolished, the economic crisis will continue and deepen no matter how many banksters are jailed.
Simply put: fractional-reserve banking, for those who do not know, which includes 99.9% of the financial press, is the practice by which banks keep only a fraction of their deposits on hand and “invest” or loan out the rest at interest. Of course, if any other warehouse or storage facility engaged in such a practice it would be rightly considered fraud.
The process is augmented by central banks, which expand the money supply through the deposits that individual banks keep with them. In fact, the main purpose for the creation of central banking in the first place was to enable individual banks to engage in this fraudulent undertaking which leads to all sorts of monetary mischief.
The beautiful part of outlawing fractional reserve banking is that it requires no creation of regulatory agencies, commissions, or convoluted legislation. All that is needed is a simple universal prohibition of the nefarious practice applicable at all times and all places: any bank or financial intermediary which engages in fractional reserve banking or similar practices will be condemned and prosecuted with its perpetrators punished up to and including torture and death!
The judicial system is culpable too in this process. Courts that actually prosecute banksters are not trying to get to the root of the problem, but are merely saving face with the public by doling out prison time or uttering harsh rebukes at the banksters. Of course, as an arm of the state, the courts have a vested interest in not seeking the truth, since doing so would expose the actual method upon which nation-states obtain a good deal of their power. Fines, jail time (usually reduced or suspended) to placate the angry populace is as far as the judicial system will typically go.
Naturally, a financial order devoid of fractional reserve banking would, as Providence had intended, consist of gold and silver, where paper currency and notes would most likely be of limited if any use. The only significant hanky-panky which would occur with metallic money would be the old ploy of “coin clipping” which, although deplorable, was limited as compared to the inflations that have taken place under a pure paper, fiat standard. To keep coin debasement in check, however, the same punitive measures should prevail as with those who engage in fractional reserve banking.
Punishing banksters for their monetary transgressions years after their dastardly deeds have taken place is comparable to buying fire insurance after a house has burned down. If the Irish and the rest of the world’s populations want to eliminate the monetary chaos and the declining living standards which have ensued over the past half dozen years or so, they need to look at the ultimate cause of the crisis – eliminate fractional reserve banking and the central banks which condone and engage in the practice.
*Tyler Durden, “Ireland Jails 3 Top Bankers Over 2008 Collapse . . . Instead of Bailing Them Out.” Zero Hedge. 30 July 2016.
Antonius Aquinas@AntoniusAquinas
The Gold Standard: Friend of the Middle Class
It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. A gold standard is not only economically superior to any paper money scheme, but is morally just, which is why it is hated by the politically well-connected, academics, politicians, and the rest of the Establishment.
Often not discussed, however, even by its proponents is the beneficial effect that “hard money” has for the middle class.
It is not a coincidence that since the U.S. left the last vestiges of the gold standard in 1971with President Nixon’s nefarious decision to no longer redeem international central bank payments in gold, real wages for Americans have stagnated. Nixon’s decision to put the nation on an irredeemable paper money standard set it on a course of economic ruination, which is why he should have been hounded from office not for his role in the bungled, petty cover up at the Watergate.
Stagnating wage rates have been confirmed by a number of studies, take, for instance one from the Pew Research Center which states that “today’s average hourly wage has just about the same purchasing power as it did in 1979. . . . [I]n real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.”*
While the absence of the gold standard has impoverished laborers, it has benefitted (not surprisingly) the very wealthy – hence, the reason why it was abandoned, as the Pew Study reports: “What gains have been made, have gone to the upper income brackets. Since 2000, usual weekly wages have fallen 3.7% (in real terms) among workers in the lowest tenth of the earnings distribution, and 3% among the lowest quarter. But among people near the top of the distribution, real wages have risen 9.7%.”**
Of course, this was part of Nixon’s plan: redistribution of wealth from the middle class and low income groups via money printing to the political class. Such a scheme, however, could have only happened if the gold standard was eliminated.
Since the start of the abominable Obama Administration in 2009, the adjusted monetary base of the U.S. rose from $1.772 trillion to $3.966 trillion as of March 16, 2016.*** Of course, even these unfathomable figures as well as all other information supplied by the dominant media and government cannot be trusted. It, therefore, can be safely assumed that the real money supply is more than officially reported.
Money, like every other good, is subjected to the immutable law of supply and demand. Every increase in the money supply reduces the purchasing power of the monetary units which are already in circulation. Naturally, since wages are paid in dollars, increases in the supply of them will decrease their purchasing power. Thus, while nominal wages have gone up as the Pew Study shows, real wages (what wages can purchase) have stagnated.
The decline in real wages over the decades from profligate money printing has resulted in lower standard of living for wage earners and those living on fixed incomes. The rise in two income families is, in part, a consequence of a paper money economy and the fact that the financial survival of families now requires two incomes. Two-income families have also profound cultural implications which are now manifesting themselves.
There has been much talk throughout the current presidential campaign about the financial decline of the middle class. Candidates on the Left naturally talk of subsidies and more redistribution of wealth while those on the Right have called for tax cuts. While tax reduction of any kind is always welcomed and leads to economic growth, a sound monetary policy is just as important for a revitalization of the middle class. Moreover, a return to honest money does not require any expansion of government spending or debt.
If policy makers truly want to improve the condition of the middle class, which consists primarily of wage earners, a return to a monetary order of “hard money” is an economic and moral necessity.
*Drew Desilver. “For Most Workers, Real Wages Have Barely Budged for Decades.” Pew Research Center. 9 October 2014.
**Ibid.
***Jerome R. Corsi, “Obama’s Latest Fraud: ‘Economic Recovery’ Disproven in Just 9 Charts.” WND Money. 3 March 2016.
Antonius Aquinas@AntoniusAquinas
This entry was posted in Central Banking, Economics, Federal Reserve, Gold Standard, Middle Class, Money, Political, Taxation, Uncategorized and tagged Central Banking, Economics, Economy, Federal Goverment, Gold Standard, Middle Class, Political, Taxation on July 5, 2016. Edit
A Morally Sound Tax Reform Proposal
The Oppressed U.S. Taxpayer
This year, Americans’ day of tribute to their federal overlords falls on April 18. As calculated by the Tax Foundation, the average American will work from January 1 to April 24 (Tax Freedom Day) to pay his share of taxes to all levels of government with some $3.3 trillion to be forked over to the federal government and $1.6 trillion to state and local jurisdictions.*
While any talk of tax cuts are verboten on the Democratic side of the presidential campaign, the remaining Republican contenders have offered their views on the matter suggesting a flat tax, reduction in corporate tax rates, and a call for the consolidation of the current tax bracket from seven to four.* Most of these and their variations have been trumpeted before and even if enacted would not permanently undo the crushing tax burden or prevent rates from escalating to even more confiscatory heights.
If real and lasting tax relief is ever going to come, a more fundamental alteration of tax policy needs to be taken, which has not been suggested by any of the presidential contenders, but had once been an integral part of the nation’s political thought.
One of America’s most neglected political theorists of the 19th century was South Carolina statesman John C. Calhoun, who wrote the important treatise, A Disquisition on Government. Calhoun perceptively saw that politically, society is divided between two distinct groups: taxpayers and taxconsumers. Obviously, taxpayers are the ones who “pay” taxes while taxconsumers, such as government employees, welfare recipients, state contractors, and all others that receive income from the public trough, “consume” or live off taxation.
Naturally, when it comes to the issue of taxation, taxconsumers will be in favor, or, at least, want to maintain the status quo and, more than likely, would support notions of tax increases. Taxpayers, on the other hand, would oppose increases or enlargement of the tax base, since they are the ones “footing the bill.”
Of course, politicians of all stripes and colors try to blur this distinction that Calhoun so brilliantly made, especially on tax day by declaring how “they paid their taxes.” This, however, is sophistry.
In reality, politicians are just returning some of the loot that they coercively took from their fellow citizens. Federal government employees in essence do not pay federal taxes! Nor do individual state employees pay state taxes. This is merely an accounting gimmick to bamboozle the public. And, this is one of the reasons that, for the longest time (and wisely so), citizens of the District of Columbia could not vote in federal elections since most of them were government employees and would, in their self interest, oppose tax cuts or public spending reductions.
When government was limited and the welfare state effected only a small group, voting and levels of taxation did not have a significant correlation. However, with the number of people working for the government in the millions and those dependent on state largesse in the tens of millions, who votes, and in what numbers is extremely important.
It has been recently estimated that of the total U.S. adult population of some 260 million, only one third (some 79 million) can be said not to be dependent on state support for their existence while 70% of the adult population or 57% of the total population is dependent on some form of state aid. And, unfortunately, all indicators point to more and more headed for the dependency category, primarily due to the destructive economic policies of the Obama Administration.
All of those who seek to lower the oppressive levels of taxation not only in America but throughout the Western world are foolish if they allow those who parasitically live off others to have a voice in choosing candidates or initiatives in regard to taxation. Democracy does not trump human nature. State dependents will vote for those they perceive will continue their subsidies.
Instead of lobbying for the redress of phony grievances against Politically Correct victims and groups, social justice warriors should direct their energies to the long suffering U.S. taxpayers and demand that those who live off them should have no say in either how much taxpayers are to pay or how their confiscated wealth is to be dispersed.
*”No Emancipation This Year.” The Washington Times. Friday, April 15, 2016, B2.
**Ibid.
Antonius Aquinas@AntoniusAquinas
Falling Oil Prices Not the Reason for U.S.’s Economic Woes
The dramatic fall in the global price of oil is being cited by the financial press, government officials, and academia as the catalyst for the recent abysmal U.S. economic data which shows that the economy is, in all likelihood, sliding into a recession or worse.
While falling oil prices sound like a plausible explanation for the abysmal financial numbers, anyone with a modicum of economic sense (which excludes much of the financial Establishment) can see that it is merely a smokescreen to obfuscate the real culprit.
The fall in oil prices, while detrimental to many oil producers, should actually be a boon for the rest of the economy, especially those industries that are heavily reliant on energy. Lower fuel prices mean lower production costs leading to, ceteris paribus, greater output.
For consumers, lower oil prices mean lower utility bills and cheaper gasoline, both of which mean more disposable income for either savings or more consumption. Why would greater disposable income lead to a recession?
Naturally, lower prices are not good for oil producers. But a decline in one sector of the economy (albeit an important one), does not lead to a general collapse. While the energy sector may be contracting, industries that use fuel should be able to expand as their production costs fall.
The Federal Reserve’s Quantitive Easing (QE), Zero Interest Rate Policy (ZIRP), Operation Twist (OT), and their variations have created a massive bubble in asset prices which is now beginning to burst. All of these polices have been undertaken to save the banking system from collapse after the crisis of 2008. Since the start of the Great Recession, none of the problems that have led to it have been addressed.
Not only has the stock market been artificially inflated by the Federal Reserve, but it has come at a devastating cost in the decimation of savers, as the return on their money has dropped to next to nothing. This, of course, has had debilitating consequences on retirees and seniors.
The Obama Administration, with little opposition from Republicans, has increased the federal deficit to nearly $20 trillion from the $4 trillion it had inherited with little or no hope of any reduction. Its wasteful stimulus program of a few years ago has done nothing to improve conditions while its collectivist health care initiative has placed crushing burdens across the economic spectrum.
What is even scarier is that Obummer is apparently clueless about current economic conditions, as he mindlessly demonstrated in his (thankfully) last State of the Union Address: “Anyone claiming that America’s economy is in decline is peddling fiction. What is true – and the reason that a lot of Americans feel anxious – is that the economy has been changing in profound ways, changes that started long before the Great Recession hit and hasn’t let up.”
Obama is correct in one sense: there is a “profound change” that is happening in the economy, however, it is a change for the worse which he and his harmful policies have created.
Not surprisingly, in their rebuttal to the speech, the Republicans offered little in substance. Instead, they chose a spokesperson whose only claim to fame was her infamous decision as governess of South Carolina to remove the Confederate flag from state buildings. Needless to say, the choice of Nikki Haley met with disgust among the party’s base. The GOP is not called the “stupid party” for nothing!
Unfortunately, for the vast majority of Americans, there is little likelihood that the present Administration or the next, be it of a different party, will turn things around. Instead, there will probably be more of the same.
Until there is a change in ideology where the corrupt notions of money and credit creation via the printing press and the running of gargantuan deficits are debunked, American living standards will never improve.
Antonius Aquinas@AntoniusAquinas
“Black Friday:” Symbol of America’s Economic and Cultural Decline
The day after Thanksgiving in recent times has become known as “Black Friday,” a day where retail businesses who have been in the red recoup losses while profitable firms widen their income margins. The day is also a supposed boon for consumers where goods are significantly discounted and new products are first displayed.
The Establishment has long since been a promoter of Black Friday, encouraging Americans, with often patriotic rhetoric, of their duty to frequent shopping malls and the like despite economic conditions or safety concerns from either domestic unrest or international threats.
While not explicit about post-Thanksgiving Day shopping, President Obama made it a point to reassure Americans about their security in light of the recent Paris attacks: “It’s understandable that people worry something similar could happen here. As we go into Thanksgiving weekend, I want the American people to know that we are taking every possible step to keep our homeland safe.”*
The financial press and academia are also big proponents of Black Friday since they are under the mistaken Keynesian belief that consumer spending is the most important component of economic life and the key indicator in the measuring of growth. Thus, retail sales over this period and up until Christmas are closely monitored by financial commentators.
Like most things in the modern world, however, such thinking belies logic and common sense, but typifies why society is in its current deplorable state both economically and culturally.
Despite what clueless politicians may say or what the dominant media may espouse, economic growth does not come about through greater amounts of consumer spending. Instead, prosperity can only be achieved through production and exchange, which itself can only take place when savings have been accumulated. Since production takes place over time, savings are the necessary means for this process to take place, the end result of which is consumer goods.
Without production, there can be no consumer spending. An economy, as for the individual, must first “produce” in order to “consume.” Most economists and politicians have it backwards.
Yet, the Obama Administration has wantonly put up impediments for the creation of wealth with its crazed regulatory policies, profligate spending, confiscatory taxation, and its epic money printing, all of which has done nothing to improve conditions, but have made them considerably worse.
Instead of encouraging people to go out and spend money, which many do not have, the chief executive should be promoting and enacting polices that lead to greater savings and investment. One simple step would be to immediately replace Janet Yellen with a Federal Reserve chairman that would allow interest rates to rise to market levels, which would induce people to save.
Besides financial betterment, the act of saving reinforces commendable human traits, such as self reliance and discipline, characteristics that are sorely lacking in America and most Western nation states. A true progressive society is not “consumer oriented,” but one which rewards producers and savers.
Black Friday is the start of the “holiday shopping season,” which has replaced the legitimate meaning of this time, which is Advent. If the world had its priorities in order, it would be preparing to commemorate the birth of the Divine Savior. Advent is a penitential season, one of sacrifice and self abnegation, not that of gluttonous and often drunken partying and needless purchases of the latest consumer good fad.
None in the dominant media have put forth the possibility that the recent Paris attacks were retribution for the nearly complete secularization of what was once a holy season. Was it just a coincidence that one of the attacks took place at a concert hall where the California based rock band, Eagles of Death Metal, was in the midst of performing a “song” whose title was “Kiss the Devil?”
While most of the modern world continues to ignore it, the Incarnation is the seminal event in human history. Only misery, hardship and despair awaits those who persist in denying this fundamental truth.
Until America, and, for that matter, the Western world recognizes the absurd notion that consumer spending is not a pathway to economic wellbeing and, more importantly, remembers the significance and importance of Christmas, the economic and cultural rot will only continue.
*Pamela Engel, “Two Days After Massive Terror Alert, Obama Says There’s No ‘Credible’ Threat to U.S.” Business Insider. 25 November 2015.
Antonius Aquinas@AntoniusAquinas
The Deteriorating U.S. Economy
Despite doubling the national debt and the expansion of the money supply to some $8 trillion since the beginning of Obummer’s misbegotten presidency, the U.S. economy is once again in a free fall. Actually, there has been no real recovery, but a continual deterioration of living standards despite the lies and distortions from the financial media and government authorities.
Conditions, however, are now descending at an even faster pace.
Recently, the leading manufacturer of heavy equipment, Caterpillar, announced that job cuts would exceed 10,000 through 2018. Up to 5,000 employees will receive pink slips between now and the end of 2016. Retail sales for the manufacturing giant have slumped 11% between June and August.*
While Caterpillar’s contraction is an ominous sign, a more telling indicator of worsening economic conditions came from the Federal Reserve’s refusal to raise interest rates at its latest FOMC meeting. Many commentators had speculated that the Fed would raise rates at least a quarter of one percent on the belief that the economy was strengthening.
The Fed, of course, based its refusal to raise rates on “international concerns” – China’s stock market selloff. The real reason is that the nation’s central bank understands, although it will not publicly admit it, that the economy is far too weak to “absorb” a rate hike, no matter how infinitesimal.
More importantly, the Fed cannot raise rates to any significant degree because the entire financial system, which is built on “cheap money,” would immediately plunge into a significant downturn similar to that of 2008, or worse. The federal government and many of the states and municipalities would default since they could not continue to finance their current profligate borrowing and spending patterns with higher interest rates.
Thus, the Fed is trapped in a world of zero interest rates for the foreseeable future. As economic conditions continue to worsen, the central bank will more than likely turn to another round of money printing like its infamous “QE” program.
While the Fed is locked into a zero interest rate policy, the Obama Administration and Congress remain oblivious to economic reality. A few years back, Obama and the one time Democratically-controlled Congress tried a “stimulus” program which did nothing, but increase the national debt. Also weighing down the economy is the disastrous Obamacare program which will only become more burdensome as time passes.
Just as troubling, none of the current crop of presidential hopefuls, with one possible exception, has proposed or suggested any credible measure that will improve matters. None of the fundamental problems that are crippling the economy have been seriously addressed.
The reason why there has been no recovery is that the malinvestments and bubbles created during the last boom have not been allowed to contract and or burst. Instead, the Fed pumped massive amounts of “liquidity” (money printing) into the markets which kept these institutions (mostly banks) and their assets afloat.
A credit implosion will not come about “voluntarily.” The Fed will not increase interest rates nor will the Obama Administration or Congress have the courage to cut spending to relieve pressure on the Fed to finance its unsustainable deficits and continue to inflate the stock market.
Instead, there eventually will be a monetary crisis surrounding the dollar which will force interest rates to rise which will lead to widespread defaults and bankruptcies and an ensuing depression which will dwarf every previous economic downturn in American history.
Alternative financial analysts have, for some time, pointed to the declining living standards not only in the U.S., but throughout the Western world. Egon von Greyerz of Matterhorn Asset Management has predicted some very unpleasant times in the not too distant future: “The coming years will not be easy. I wrote an article a few years ago called ‘The Dark Ages Are Here’ and I now really think they are imminent. These will be difficult times for most of us.” **
Ultimately, the only way the U.S. economy will be turned around is through a change in ideology. The ideas and policies upon which not only the U.S., but the Western world’s economies are predicated upon must be debunked. Until the principles and beliefs of the current economic system are intellectually discredited, the U.S. economy will continue to stagnate and eventually collapse.
* Matt Egan, “Caterpillar to Cut More Than 10,000 Jobs.” CNN Money. http://money.cnn.com/2015/09/24/investing/caterpillar-job-cuts-china-oil/index.html 24 September 2015.
** Egon von Greyerz. “A Stock Market Collapse and Surge in Gold is Imminent. What will be the Trigger?” Gold Switzerland. https://goldswitzerland.com/a-stock-market-collapse-and-surge-in-gold-is-imminent/ 10 October 2015.
Antonius Aquinas@AntoniusAquinas
Mario Draghi and THE Issue of Our Times
Europe’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 Chicanery
In 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 Boss
Yellen: “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
