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Category Archives: Federal Reserve

Letters From the Past I


Silver Certificate vs FRN [courtesy Google Images]

Silver Certificate vs FRN–which one is “money”?
[courtesy Google Images]

Most people suppose that the concept of “money” is easy-peasy. What more do you need to know besides how to count it?

Well, there’s a lot more to money than mere counting. If all you know about money is how to count it, you don’t really have a clue.

The relevant information is deep, obscure, profound and confusing. The confusion isn’t accidental. The Powers That Be don’t want you to understand the nature of money because, if you did, you’d know that your government is mostly a racket.

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What follows is an analysis of the first of three letters written to the Treasury Department from people who wanted to understand our monetary system.

In the 1990s, I had photocopies of these three letters allegedly written by officials of the U.S. Department of The Treasury discussing the nature of Federal Reserve notes (FRN’s). Those copies disappeared in a house fire. I can’t prove the photocopies were legitimate, but I have no doubt that they were. They were (and are) important because they helped fuel my interest in learning about the nature of money.

The dates on the first two letters were A.D. 1977 and A.D. 1982; the third letter’s date was unclear. Assuming these letters were legitimate and the statements they contain accurate, they offered some surprising insights into the realities of our current money system.

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An English Politician’s View of Central Banks


Is criticism of central banking an idea whose time has come?

video      00:01:55

 

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“Helicopter Money”


Helicopter Money [courtesy Google Images]

Helicopter Money
[courtesy Google Images]

Control of the economy is based on two sets of powers:

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1) The Federal Reserve wields the monetary powers which include control over interest rate and over the supply of currency.

2) The U.S. government wields the fiscal powers which include raising or lowering taxes, raising or lowering borrowing, and increasing or decreasing government spending on benefits, subsidies and wars.

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For the past year, we’ve heard the Federal Reserve say repeatedly that:

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1) The Federal Reserve has exhausted its monetary powers and is no longer capable of using previous, “conventional” monetary strategies like QE (Quantitative Easing; printing and injecting more currency into the economy) and ZIRP (near-Zero Interest Rate Policy) to stimulate the economy back to a “recovery”.

I believe the Federal Reserve’s claims that it’s currently helpless to do much more to “stimulate” the economy with monetary policy are true.

If the Fed’s not fibbing, then only the U.S. government remains to engineer an economic “recovery” by means of its fiscal policy. However,

2) The U.S. government is unwilling or unable use its fiscal powers to raise taxes and/or borrow more currency to provide enough additional “stimulation” to cause an economic recovery.

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Fed delayed rate hike but claimed to “keep its options open”


Maybe We Won't Have to "End The Fed"--Maybe it Will End On It's Own, Under the Weight of its Own Lies, Fraud and Declining Power. [courtesy Google Images]

Maybe We Won’t Have to “End The Fed”–Maybe it Will End On It’s Own, Under the Weight of its Own Lies, Fraud and Declining Power.
[courtesy Google Images]

I wrote the following article in June just after the Federal Reserve announced that it would not raise interest rates.  It wouldn’t been more timely, if I’d published then.  But, it was lost in the piles.  However, even though the article is late, there’s still an insight to be gained from reading it.

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In June, the Federal Reserve declined to raise interest rates.  In response, Yahoo Finance reported:

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The Federal Reserve pushed back its plans to raise its benchmark short-term interest rate, a widely expected move following a series of mixed US economic reports.

After a two-day policy meeting, the Federal Open Market Committee unanimously voted to hold the federal funds rate between 0.25% and 0.50%, citing weakness in recent employment data.”

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That “weakness” was a surprising jobs report that, although economists had generally expected about 162,000 new jobs to be created in May, only 38,000 jobs were actually created—”the lowest level in six years.”

Although the unemployment rate has declined, job gains have diminished,” the central bank wrote in its statement.

Say whut?

Does it make sense that the “unemployment rate declined” at the same time that the number of “jobs gains diminished” from an expected 162,000 to just 38,000? I won’t say that’s impossible, but it seems odd that, even though expected “job gains” fell by 76% (from 162,000 to an actual 38,000), the unemployment rate nevertheless continued to decline.

If the unemployment rate really declined, it sounds more like 124,000 people (who were expected to get new jobs but didn’t) simply “disappeared” from the unemployment rolls. They didn’t get jobs. Instead, they were simply deleted from unemployment calculations.

Result? Unemployment rates fell mathematically, but not actually.

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Posted by on July 12, 2016 in Employment, Federal Reserve, Unemployment

 

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Government and the Federal Reserve—In the End, can there be Only One?


Highlander1You might remember Highlander—an A.D. 1986 film that starred Christopher Lambert and Sean Connery. The film described an ages-old battle between “immortal” warriors. Its tagline, “There can be only one”, meant that all of the various “immortals” were destined to fight and kill each other until only one “immortal” survived.

In this article, I’m exploring the hypothesis that our two institutional “immortals” (the Federal Reserve and U.S. government) are destined (like Highlander’s “immortals”) to fight each other until only one remains.

Conventional wisdom tells us that the Federal Reserve and U.S. government work hand-in-glove and without fundamental conflict. However, when you stop to think about it, it appears that the current relationship between these two institutions should be so fundamentally adversarial that, in the end, only one can survive.

 

Debtors love inflation since it allows them to repay their debts with “cheaper” dollars. Almost every American who’s bought a new home since WWII has been encouraged to take out a 20- or 30-year mortgage by the promise of being able to repay their debt with “cheaper” dollars. Inflation is the force that renders dollars “cheaper” and thereby encourages us to borrow and spend.

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Our Debt-Based Monetary System


The Rules of a Debt-Based Monetary System [courtesy Google Images]

The Rules for a Debt-Based Monetary System
[courtesy Google Images]

What follows is mostly speculation.

I’m going to explore several premises and, using my version of “logic,” build on those premises.

I’m not claiming that my premises are necessarily true. I’m not claiming that my “logic” is necessarily logical.

I am claiming that these premises and my “logic” lead to some hypothetical conclusions about our debt-based monetary system that are at least interesting and perhaps surprising.

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“Political” Limits on the Fed’s Ability to Print More Fiat Currency?


Printing "Monopoly Money" to Stimulate the Economy [courtesy Google Images]

Printing “Monopoly Money” to Stimulate the Economy
[courtesy Google Images]

Most people believe that the Federal Reserve has an unlimited capacity to print more fiat dollars and disperse them into the US and global economies.  Most people believe that the Fed will soon start another round of Quantitative Easing (“QE”; fiat currency printing) to support our sagging economy.

I have my doubts.  

Over the past several months, I’ve written more than once that I suspect that there’s a limit to the amount of fiat currency that the Fed can print.  More, I suspect the Fed is already encountering that limit and has lost its capacity and/or will to mass-produce more fiat dollars for another round of QE.

I can’t prove it and wouldn’t necessarily bet on it, but I’m unconvinced that we’re going to see another round of QE in the next few years.  

Some of the people who read this blog have posted comments that disagreed with my speculation about “limits” on the Fed’s ability to print more fiat currency.  I started to reply briefly to one of their comments but my reply grew in size until I realized that I was writing an “article” rather than a “comment” and might as well post it for all as an article on this blog:

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Posted by on May 28, 2016 in Federal Reserve, Fiat Currency, Fraud

 

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