Showing posts with label banking. Show all posts
Showing posts with label banking. Show all posts

Wednesday, March 14, 2012

FED Up


At a basic level the idea of a central bank and clearinghouse for the United States of America makes sense. It seems apparent that big banks, medium-sized banks and small banks will from time to time need a ready supply of cash to offset short-term or momentary needs. Just as many retailers rely on wholesalers to stock and supply their products, a bank accepts deposits and loans money at a profitable rate of interest. Their cash reserves rarely equal their deposit totals, so they may find themselves short of cash even with an outstanding portfolio of performing loans. It should be apparent, however, that the Federal Reserve Bank has abused its charter and its purpose. It has become a tool of the government and global banking interests.

The elementary problem with the FED as it has been designed is that Congress has subordinated its constitutional responsibility for the coining (printing) and valuing our money to a consortium of private bankers. Odd isn’t it that despite all the overreaching by government into the private sector, it is a constitutionally mandated role or obligation that Congress chose to privatize? Why banking? Why money? The entire FED revolves around debt. As money is loaned out by individual banks, they go to the FED to restore their reserves. The FED must print the money and LOAN it to the banks. Without debt the FED would not have a real function other than the constitutional coinage one that Congress gave to it. So the bottom line is that the powers for printing money and creating debt reside with a cabal of private mega-bankers. Cheery thought, huh? You might ask “how do they create debt?” When a bank seeks additional funds for loaning, the FED creates it digitally. In other words if the local banks didn’t have the funds for additional lending, borrowers would have to go elsewhere for funds but the money supply would be more stable.

The unceasing printing (digitizing) of money expands our indebtedness and our money supply…thus generating de facto inflation. Without a corresponding surge in production of goods and services every dollar created increases the number of dollars ‘chasing” a finite supply of products or labor. More dollars chasing fewer things means higher costs. Increasing debt and inflated/lower-valued money are not recipes for a prosperous nation. In the short-term inflation may lull the unsuspecting into assuming that prosperity is flourishing, but will have the opposite effect after a time as goods and property become more difficult to purchase because of escalated prices and higher interest rates.

The FED because it is private uses the resources and wealth of the United States as its own “net worth” as it props up other national currencies and governments. The value of the dollar is directly related to the productivity of the United States, the number of dollars in circulation and the confidence that the indebtedness will be repaid. If any of those three factors experience some slippage, the corresponding effect will negatively impact the U. S. economy. If any of the three major factors underperforms, the government must collect additional revenue to maintain some level of equilibrium to avoid massive runaway inflation, excessive interest costs or severe reductions in productivity. Thus, the FED with full compliance from the government through its policies practically insures higher levels of taxation for American taxpayers. Taxes collected through force are theft. Taxes that stifle economies and intrude on individual freedom are tyrannical. Because of its power over our productivity, our indebtedness and our money supply, the FED, in effect, controls our economy. Our government increasingly controls our lives, and the Federal Reserve manipulates our livelihoods.

It should be dawning on you that as debt problems increase, taxes go up. When interest rates begin to ratchet upward due to inflated money driving the cost of borrowing higher, the governments’ needs for debt service will grow astronomically, the resultant tax increases will stifle the economy and higher taxes plus lower economic productivity joined with massive debt leads to catastrophe. It is an inescapable cycle that can at the best be postponed for a while but becomes worse during the delay. In their efforts to manipulate the market, the currency and debt, the FED will create economic bubbles that will enlarge and eventually burst. As the FED scheme and rig the system, shrewd investors will seek other avenues for avoiding the FED action….thus the bubbles will be created.

Compounding the problem of the FED’s unhealthy and unconstitutional control of the basics of our fiscal and economic systems is the fact that they operate with impunity. We the people have no standing to audit the Federal Reserve or to insist on transparent accountability. In 1913 Congress handed the keys and the car to the Wall Street manipulators and self-serving big bankers. Now Congress lacks the courage to reclaim its constitutional duty yet continues to meddle in a plethora of other unconstitutional arenas. We are now on the precipice of economic collapse. Although the nation and its people will suffer, you can wager your home and all your worldly goods that the Fed governors, their favored bankers and career politicians will emerge unscathed. Obviously….I’m FED Up.



  

Monday, January 23, 2012

Side Effects and Disclaimers


If you watch television or listen to radio, you are familiar with the disclaimers that follow pharmaceutical ads, automobile ads and banking commercials. The pharma spots include side effects and warnings about the impact of the drug. Automotive commercials inform you about the terms, down payments and warranty issues. The banking and occasional ads for investment services warn of minimum deposits and note which federal agency insures you from total loss. The disclaimers substitute for the multiple “whereas” clauses you might have in a contract if you decided to engage in one. They are intended to be cautionary and provide some measure of full disclosure. But do they?

To me the pharmaceutical commercials are particularly annoying. They use approximately 20 seconds extolling the wondrous aspects of the super drug then follow it with ten high-speed, barely discernible seconds of potential side effects and deadly outcomes. “Your headache will be gone, but your arms and legs will fall off.” Listening to them makes one wonder about the true value of medicated state today. Have we minimized the initial problems only to be plagued by a number of dangerous side effects? Is the trade off worth it? Our interactions with government operate in a similar manner. We may believe that we have an immediate solution to a pressing problem, but are the long term consequences ultimately more harmful than the original issue. When you invite the monster into the house, the monster takes over the household, eats all the food and defecates wherever he wishes.  So when we take the government remedy, the side effects are huge.

The automobile solicitations create another type of disclaimer issue. The data are factual “a new car for $139.00 per month,” but the devil is in the details….$3500.00 cash or trade down for 72 months plus tax and title. Again we have a similarity to how our various levels of government operate. The sale….the sizzle…looks great and sounds great, but when the REAL cost is factored, we discover the government deal is not so hot after all. Government always sells us the benefits of a given program and never discloses the downside or actual cost over the long term. To continue our analogy….government begins to add new accessories to our car shortly after the sale is made thus adding to the cost. They fail, however, to tell us about the negative impact of the add-ons and the long-term ramifications of the additional costs.

The banking and investment disclaimer is a different type. It basically is targeted to assure you that if the bank or firms fails, the “government” insures the account holder. Think about it. Government regulates banks and brokerage houses. Government tells them how to operate and function. Government monitors them with strict reporting requirements. If they fail despite all the government involvement and oversight, the taxpayers will make the investors or depositors “whole.” Why? Is the insurance necessary because bankers and brokers are inherently corrupt? Is the insurance required because the extensive government regulatory structure is inept or incompetent? Why must the taxpayer be on the hook? Why not practice caveat emptor and allow the free market to reign?

Once again we have a circumstance wherein government requires the private sector and citizens to comply with obnoxious rules, regulations and laws that the government itself does not have to obey. Shouldn’t every proposed law include its constitutional justification plus it’s never ending list of potential side effects and consequences?  Should not every rule, regulation and law have a realistic assessment of the actual costs incurred plus the costly impact on other sectors? If government is going to micro manage and regulate so many aspects of our lives, should not the taxpayer be held “faultless” if the government itself was responsible for fraud or failure?

Hey…I know I’m blowing smoke here. I know that our imperial government will NEVER accept responsibility for its actions and the resulting unintended consequences of its actions. I know government will never project the true cost of anything for two reasons: they are incapable of cost-factoring complexity and they cannot pass the noxious rule or law if the people are aware of the real cost. I also know that when government errs, we pay….and pay…..and pay. Unfortunately you and I know too much. When government is small (constitutionally small), its negative reach and impact is minimized. When government is small, projects and initiatives are more modest and more easily cost-factored. When government is small, it is the referee that protects the rulebook, but insists that the players assume their own risks. When government is small, the people prosper and freedom reigns.


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