MONEY: The creature from Jekyll Island – the Fed!

Thursday, April 2, 2009

http://www.lewrockwell.com/buchanan/buchanan108.html

Should We Kill the Fed?
by Patrick J. Buchanan

*** begin quote ***

Should not this creature from Jekyll Island, for all its manifold crimes and sins against the republic, also be summarily put to death?

*** end quote ***

The Federal Reserve Bank!

It’s neither ‘federal” since not even the US Congress can get its books audited.

It “reserves” nothing; it merely manipulates and prints.

And, it’s not a “bank”.

So what is it?

What is the creature from Jekyll Island?

(The name comes from the location of a secret collusion between bankers where the arrangement was hammered out.)

It’s a price fixing cartel a la OPEC for “american” banks.

As PJB alludes, Andrew Jackson must be rolling over in his grave, he killed one of it’s predecessors the “United States Bank”.

Of course, I agree that if we had commodity money, we would NOT have the artificial booms and busts that come with manipulating interest rates. Interest rates are the key indicator to business as to what projects are worth doing and what are not. AND, without a fiat currency, (where the Fed prints all the Congress can spend), the Congress would be restrained in its spending. AND, our poor and those on fixed income wouldn’t have to pay the brunt of the “inflation tax”.

Before leaving the Gold Standard in 1913 and before the FED embarked on manipulating us for the benefit of the rich and their banks, America was in decades of stable slightly declining prices. Money was a stable store of value.

(“Money is a matter of functions four, a medium, a measure, a standard, a store.” p116 in my novel “CHURCH 10●19●62”)

How does one plan in post WW1 Germany, Argentina in the 80’s, Zimbabwe today, or the USA in the next decade? Runaway inflation of the money supply and high interest rates are going to hurt everyone.

I have only heard one real objection and one minor objection to the Gold Standard.

Bob Brinker (bobbrinker dot com) had the minor objection that there would no ability for the government to supply stimulus to the economy with monetary policy. That’s is the problem, Bob; the politicians want inflation so they can spend to buy votes, reward their friends, and punish their enemies.

More substantially, Brinker objected to giving Congress the power to value money. He feared runaway inflation as the the COngress, as did the French Kings, inflate uncontrollably. That we agree on. Congress is like drunken sailors. Except their ship is always in.

Returning to the Gold Standard, where a dollar is defined as some amount of gold and / or silver, will impose discipline on the world.

How do we get there?

Let people be free to use whatever they want for money. The King, the government, the criminals in DC should just repeal the mandatory tender laws that force everyone to accept the dollar. The marketplace will quickly adjust.

And, Americans can get back to work.

# # # # #

Leave a Comment » | MONEY | Tagged: , , | Permalink
Posted by reinkefj

INTERESTING: Counterfeit aka fiat money messes up all calculations

Thursday, April 2, 2009

http://www.lewrockwell.com/orig9/shostak7.html

Would Cleansing Banks’ Balance Sheets Kick-start the US Economy?
by Frank Shostak

*** begin quote ***

Again, note that what makes the lending possible here is not money but the saved consumer goods. Money just serves here as a facilitator. Or we can say that the act of lending here is about the transfer of final consumer goods from lender to a borrower with the help of money.

The essence of credit will not be altered by the introduction of banks. Instead of lending money directly, John could now engage in lending through the intermediary. (John transfers his money to the bank. The bank lends the money to a borrower.)

Real savings determines the size of credit. What people really want is real stuff, i.e., real savings and not money as such. Hence, as long as banks facilitate credit that is fully backed by real savings, they should be seen as the agents in the transmission of wealth.

*** end quote ***

(Disclaimer: I’m an injineer that got D’s in economics.)

This little morality play about savings misses three factors that I think are significant.

The theft of money by inflation. It in effect “steals” from every dollar holder and acts as a hidden tax.

The interest rate controlled by the central bank “taxes” savings both when the rate is too high and too low.

The baker and all who consume bread are forced to “save” by virtue of these taxes.

When money is debased, all economic calculations are done with a “broken calculator”.

IMHO!

As I said I’m just a dumb old injineer!

# # # # #

Leave a Comment » | INTERESTING | Tagged: , , , , | Permalink
Posted by reinkefj

GOLDBUG: What is a dollar?

Tuesday, March 24, 2009

http://www.lewrockwell.com/murphy/murphy152.html

Defend the Gold Standard
by Bob Murphy

*** begin quote ***

I don’t trust central bankers to stick to a gold standard; that’s why I think the government should get out of the money industry altogether. Suppose we were starting in an initial state of pure laissez-faire in money and banking, and someone said, “Hey I know! Let’s give this Princeton professor – what was your name, sir, was it Ben? – a printing press, but be very stern that he can’t overdo it and allow the gold price to rise more than 1 percent from the day he starts. Does that sound like a good idea?” In response, I would obviously say, “No, that seems rather risky. I think we should stick to the current system, where the market determines how much new money is brought into the economy through gold production.”

*** end quote ***

We fall prey to these bozo bureaucrats when we let them mess with the money supply.

If we tie the value of a dollar to gold, then the Fed can’t just manufacture dollars out of thin air. And, congress critters can’t spend what they don’t take it.

It restores honesty to finances. It disciplines them into husbandry. It forces them to live with in OUR means.

After all in fiat currency, what is a dollar?

A toilet paper alternative?

Argh!

# # # # #

Leave a Comment » | GOLDBUG | Tagged: , , , | Permalink
Posted by reinkefj

MONEY: Ditch dollar movement?

Thursday, March 19, 2009

http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318

U.N. panel says world should ditch dollar
Wed Mar 18, 2009 11:16am EDT
By Jeremy Gaunt, European Investment Correspondent

*** begin quote ***

LUXEMBOURG (Reuters) – A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

*** end quote ***

The end of the US Dollar as the World’s reserve currency? That would be unbelievable. “Everyone” said that it could never happen! SO, what happens when it does? Are we on the road to being like Zimbabwe?

Why are we still funding the UN. We should ditch them!

Gold and silver — the Dead Old White Guys were right — The Palladium rounds (i.e., medallions — the Gooferment gets mad if you call them coins. But thy look like coins to me.) at about 300$/oz seem like a bargain. Rarer than Platinum at 1200$/oz.

But, plan for a Carter-like inflation; did you see Carter visited the Obama White House yesterday. Why? To get advice on how to print “Whip Inflation Now” buttons?

Will Obama on Leno distract everyone with how incredibly screwed we are? And what a good guy he is personally.

Humbly, I think he’s drowning us in the deep end of the pool while he tries to distract us. Ain’t gonna work. At least, I’m not distracted as to what this means to us low fixed income folks. I hope it’s not distracting the People or you.

# # # # #

Leave a Comment » | MONEY | Tagged: , , | Permalink
Posted by reinkefj

MONEY: Where are we going to be in 20 years?

Monday, March 16, 2009

http://insidecatholic.com/Joomla/index.php?option=com_content&task=view&id=5565&Itemid=48

The Money Meltdown: A Conversation with Thomas Woods Jr. by Brian Saint-Paul 3/11/09

*** begin quote ***  

Q: We’ve had bailouts and stimulus packages, and possibly more of both in the near future. If you were to look into a crystal ball, where are we going to be in 20 years? Where is all of this heading? Will we reach a point of total economic collapse? Or will we wind up as the newest Euro-style state?

It seems to me that the best-case scenario is a kind of European third-way stagnation: high unemployment, anemic growth (if any), and a whole bunch of people scratching their heads and wondering why this is happening. That could be our fate.

Of course, it could be worse. It may turn into something like what Japan endured in the 1990s and beyond — though at least Japan had some domestic savings as a cushion. Or there could well be a complete collapse of the system, with the dollar destroyed. This is all conditional, because it depends in large part on what the government does. Its cure is almost sure to be worse than the disease.

I’d love to think that if a collapse came, people would say, “Obviously, intervention doesn’t work, so let’s try what the Austrians have been suggesting.” But I think instead a demagogue would rise up to say — as usual — that the problem is not enough government involvement, and that he’s going to rescue us.

That’s the most likely outcome.

*** and ***

Thomas E. Woods Jr. is senior fellow in American history at the Ludwig von Mises Institute. He is the author of nine books, including two New York Times bestsellers: The Politically Incorrect Guide to American History and the just-released Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, as well as the award-winning The Church and the Market: A Catholic Defense of the Free Economy. Visit his new Web site.

* end quote *

Leave a Comment » | MONEY | Tagged: , , , , , , , | Permalink
Posted by reinkefj

MONEY: Zero debt is best

Saturday, March 14, 2009

http://www.lewrockwell.com/schiff/schiff7.html  

March 14, 2009
Credit Card Cancer
by Peter Schiff
Peter Schiff is president of Euro Pacific Capital and author

*** begin quote ***

Lastly, savings can always be relied upon whereas credit is ephemeral. Remarks this week from the Chinese premier Wen Jiabao should serve notice to all Americans that the day will soon come when the Chinese stop lending us their umbrellas. When that happens, the average American will be soaked to the bone.

*** end quote ***

One does NOT have to have a crystal ball to see the future.

The Chinese will stop buying Treasury debt. Interest rates to will go thru the roof. And, the economy will slow further.

The only defense is to have ZERO bad debt. That is nothing but a fixed rate mortgage that is well below 15% of your annual income.

Maybe Dave Ramsey is right. ZERO debt is best?

# # # # #

Leave a Comment » | MONEY | Tagged: , | Permalink
Posted by reinkefj

POLITICAL: Tax increases in a recession?

Sunday, February 22, 2009

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/21/AR2009022100911_pf.html

Obama’s First Budget Seeks To Trim Deficit
Plan Would Cut War Spending, Increase Taxes on the Wealthy
By Lori Montgomery and Ceci Connolly
Washington Post Staff Writers
Sunday, February 22, 2009; A01

*** begin quote ***

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

*** end quote ***

Companies don’t pay taxes; people do. So raising the corporate tax is essentially a tax increase for everyone; poor included.

Rich folks have the ability to defer income and shit it and even “coast”. Watch how revenues “fail to appear”!

Stupidity!

Ignores the lessons of Kennedy and Regan.

# # # # #

Leave a Comment » | ADMINISTRIVIA | Tagged: , , , , , , , , , , , , , , , , | Permalink
Posted by reinkefj

POLITICIAL: Ron Paul on Bill Mahr simple and direct!

Saturday, February 21, 2009

http://www.youtube.com/watch?v=M5lb0l3sYBo&eurl=http://www.lewrockwell.com/blog/lewrw/archives/025457.html&feature=player_embedded

Ron Paul rocks on Bill Mahr’s show!

# # # # #

Leave a Comment » | Political, Ron Paul | Tagged: , , , , , , , , , , | Permalink
Posted by reinkefj

GOLDBUG: Can we EVER get back to “honest money”?

Thursday, February 19, 2009

http://news.goldseek.com/JamesTurk/1232989200.php

Restoring Sound Money in America
By: James Turk, Founder & Chairman of GoldMoney.com
— Posted Monday, 26 January 2009 | Digg This ArticleDigg It! | Source: GoldSeek.com

*** begin quote ***

There is a determined grassroots movement in the United States seeking the restoration of sound money. There are many different groups comprising this movement, but all share the same aim. It is to restore gold and silver to its rightful role as the money of the United States, as mandated by the Constitution.

I have written about this movement before. In “The Quest for Sound Money in New Hampshire” in May 2005 I discussed the bill, called the “New Hampshire Sound Money Bill”, that was drafted by Constitutional scholar and lawyer, Dr. Edwin Vieira. It was presented to the New Hampshire legislature, but sadly, remains pending in committee.

If enacted, the bill will enable people to use gold and silver in their transactions with the state of New Hampshire. An article by me discussing this bill, the aims of its several sponsors and some important background information on the monetary provisions of the Constitution can be found at the following link: http://www.goldmoneybill.org/turk.html

*** end quote ***

Sad to say, imho, not without a revolution.

When the people realize that gooferment is funded with inflation of fiat dollars, then they might wise up.

Saving in gold ounces is one option still open to the average bloke.

Buy one or more gold coins from a “paperless source” and bury it in your backyard.

# # # # #

Leave a Comment » | GOLDBUG | Tagged: , , | Permalink
Posted by reinkefj

MONEY: What is a dollar?

Tuesday, February 3, 2009

http://www.lewrockwell.com/rajiva/rajiva12.html

Fiat Law and Fiat Currencies – the Relic of Barbarians
by Lila Rajiva

*** begin quote ***

The free market arose wherever there were laws and systems like that – whether in Europe or Africa or Asia. One way to think about this difference would be to see it as the difference between a fiat money, like paper, and a real store of value, like gold. You can print all the money you want, but if there’s nothing to back it up, then you’re in a bit of trouble. Your creditors are unlikely to put much store in you as a credit risk, just as the world’s wringing its hands today over the dollar. Pretty soon, they come calling for their loans with cudgels and pitchforks.

Gold does not have the same problem, because there’s a limited supply of it. It has to occur in nature. It has to be found somewhere underground and then mined and refined. It’s an expensive business – that takes risk, time, and money. There are costs attached to it that someone has to pay. Paper money, on the other hand, can be printed any time you want. Just ask Ben Bernanke. He’s dropping it by the helicopter load from the clouds.

*** end quote ***

They are “counterfeiting value” by printing more money electronically. It’s slight of hand. To understand, you have to understand the answer to the question: “What is a dollar?” and proceed from there.

The answer is it’s NOW an imaginary unit, backed by the belief that you can exchange a green peice of paper for something. A Keynesian (http://en.wikipedia.org/wiki/Keynesian) will never talk about what the definition of money is. An Austrian (http://en.wikipedia.org/wiki/Austrian_School) will insist that the pricing mechanism in the economy have commodity money. It USED to be tied to gold.

Sadly, as an Austrian, I think you are in for hard times. O is going to “finance” 2T$ in current spending. By monetizing it. A fancy word for counterfeiting. And, the value of the dollar is going down even further.

To understand, you have to go to Robinson Crusoe’s island, that economist’s use to simplify ideas. A fisherman, egg gatherer, and a fruit gatherer are on the island. (Magic; don’t ask questions yet!) They barter between themselves. After a while, 1 fish = 2 eggs = 4 coconuts. Due to the relative difficulty of effort. But the fisherman and fruit gatherer don’t deal directly. The egg gather is the middle man. Then a banker arrives. He creates money so that the Fisherman can deal directly with the Egg guy. He uses seashells. Then the value equation is 1 fish = 2 eggs = 4 coconuts = 8 seashells. The evil banker after a while introduces more seashells into circulation by spending them. So he get more stuff. Similarly through out the ages, the King (Government) seeks to enrich itself that way. When the currency is gold coins, it’s much harder. (I first learned this when I saw an exhibit at the Smithsonian of French Francs over time. The French Franc of Louis I was a gold hockey puck; Louis XIV’s was a very thin button. Inflation!) When the currency is pretty green pieces of paper, it’s much easier.

So there you have how O44 is goign to spend 2T$ that we don’t have.

Basically, it’s a “tax” on anyone who has a dollar or dollar denominated assets. By adding a “seashell”, the value of all the other seashells is adulterated. Watered down.

So who get’s screwed?

The Chinese have 5T$. There’s a lot of dollars out there. The poor and people on fixed incomes (i.e., the purchasing power of their few dollars goes down) get less for their money.

Who makes out?

The US Government mostly. People who have “valuable stuff”. Commodities, commodity producers, land owners, people who produce stuff that others want.

So that’s how O will spend what he ain’t got.

He’s betting that before the inflation comes, the economy will “restart” and we won’t notice. (Think LBJ and Carter!) It worked for Kennedy because he lowered taxes on the productive class and everyone was motivated to get to work. His quote was: “A rising tide raise all boats!”

Sadly, I don’t see O or his staff being that smart.

# # # # #

Leave a Comment » | MONEY | Tagged: , , , , , , , , , | Permalink
Posted by reinkefj

« Previous Entries
Next Entries »