The Federal Reserve is supposed to be independent, I am beginning to wonder. In addition to Obama's stimulus of almost $900 billion, in the past few years the Federal Reserve has had two rounds of "quantitative easing", yet nothing has changed in the economy. Quantitative easing is a fancy name for printing money to buy government bonds so the government can pump more money into the economy. During the past several years the Fed has "printed" almost a trillion dollars, unfortunately the stimulus and none of this quantitative easing has had any effect; the poor economy is the same as it was two years ago.
Although the Fed is supposed to be "independent", today they announced a third round of "quantitative easing" to help the economy, I am beginning to wonder if this isn't political. The fed will start "printing" money and buy $40 billion in US bonds every month until the economy "begins improving". This is a farce and in my opinion purely political less than 60 days before the election.
Between the media, the unions, the entertainment industry, and now the Fed, there is a full scale effort to get Obama re-elected. It didn't help the Republicans when Romney said if he was elected he would fire Bernanke the Chairman of the Fed.
Most people don't even understand what the Fed is, I didn't myself when I was younger. Currency is only useful if it can maintain its ability to act as a
temporary storage vehicle for wealth, and be exchanged for a
good or service. So the Fed "supposedly" was established to make sure banks were honest, the economy was stabilized, etc. That is a sham.
Printing unlimited money destroys the value and
usefulness of currency and can be a precursor of hyperinflation. I am not a fan of Ron Paul but he is right; "The Fed should be abolished and we should go back to the gold standard".
This is such a confusing issue most Americans ignore it (like many readers of this Blog will probably do). But here is the bottom line - when the Fed simply prints money out of thin air your buying power is reduced - it's called inflation and sooner or later when you pay $10 for a gallon of gas or $10 for a loaf of bread you will understand that when the Fed "creates" money we all lose, and ironically the middle and lower classes lose the most - the "folks" the Democrats claim to protect. .
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9 comments:
I hope the comment on the Gold Standard was made tongue in cheek. Currency should reflect the ability of a country to produce goods and services. Holding currency at some fixed amount as the population grows depressed the economy. There may be a better way to manage it but using gold as a measure of National wealth is more than just bad fiscal policy, it's rediculous.
A primary advantage of a gold standard is to put physical limits on the rate of money creation thereby limiting a government's ability to abuse its population with inflation. Realistically it is probably too late to go back to a gold standard since there is not enough gold in the world to cover all the "printed dollars". So fasten your safety belt and get ready for inflation.
By the way anonymous - here's how to spell "ridiculous" :)
The United States started with a Silver standard for the US Dollar. We need to get rid of the fiat fractional reserve system. We need to allow competing currencies. American politians will say they are for free-market competition and then allow this banking monopoly to exist. The Fed fixes interest rates in the same manner as Soviet-style central economic planning advocated by Karl Marx. In fact one of the top 10 dictates of communism is the institution of a central bank money mechanism. It allows the economic planners to control the economy. I'm not that fond of a gold standard because gold has little intrinsic value. Are you going to work all day for one tiny fleck of gold? I'm not! I'd rather have an oil standard. But don't get me wrong, a gold std is better than nothing. Notwithstanding the spelling typo, the point was a good one. You want a monetary rule which grows at the rate of the economy's production capacity - and in a clumsy way that can be measured by population. However it's better to look at domestic productivity excluding foreign trade. If you want to learn more about the Federal Reserve read "The Creature From Jekyll Island" by G. Edward Griffin.
I hate using a smart phone for email because I inadvertently allow the word substitution feature to "rule", and spelling has never been my strong suit anyway. Thanks for pointing out my errors, that is always helpful. The word depressed should have been depresses.
I agree that population is a crude way of estimating production capacity but its hard to manipulate it. In any case, gold has little intrinsic value, and can be manipulated as easily by the producers as currency can be by Governments. Case in point is the current unrealistic price of gold due to stockpiling by the major producers. Should they choose to release it the value of gold will drop worse than the stock market on its worst day. At least a currency should be based on the value of goods and services from a given economy, and the good faith of the revelant Government to correctly represent that. We elect our Government and we are ultimately responsible for our current condition.
Anonymous - You have used a lot of words there, but then what is your solution? Just keep printing money? There has to be some control and restraint on the money supply. These things have long time constants and I believe we are looking at a short term boost VS a long term disaster.
The solution is that the Government needs to reflect the Governed. It may be that this Government does, and the result may well be a financial disaster down the road. One thing is certain, electing a President that represents a minority view is neither possible or prudent. I think this electoral process has actually worked to some extent this time. Romney has been faced with tough questions and not answered them......spin isn't working very well. He has portrayed himself, with his own words, as an elitist, who is out of touch with the society he wants to lead. He lacks a valid worldview and he is not a Nationalist at any level. He is like every Mormon I know......the Church, Family, Self are important.....in that order.........and everyone not of his faith is there to be exploited to the benefit of the Church. If anyone believes otherwise they are a member of the deluded masses. It doesn't mean he is evil, or dishonest.....its just the mentality of those fully committed to that faith and the associated culture. Obama will likely be re-elected, and Congress will likely stalemate legislation for another 4 years. Obama has no plan either, so the status quo will continue and America gets what it deserves......continued inaction by the Government because of the disproportionate power of various special interests, which only serves to stalemate society as a whole. Hopefully, in 2016, people will wake up to the fact that this is a very complex society, with diverse needs and no one solution fits all. We need a good old fashioned Nationalist who waves the flag, promotes American business development over foreign investment, and who pulls back from the rest of the world for a while. Let the rest of the world settle into their own petty wars and financial mismanagement. Our markets, production capacity, ability to innovate and 300+ million people are a self-sustaining society. The President in 2016 should take a rational view of every issue and act, hopefully with the support of a like minded Congress. A good example is the border issue. Close the damn thing, tight as a vice.....nothing crosses for a year. Force businesses to adapt to US production resources. At the same time, provide a path to naturalization for evrryone here and take advantage of that labor resource.....which, by the way doesn't pay taxes now but would if they were legal. Pull out of the WTO and tax all imported finished goods at 100%, with raw materials at 0%. Tax any investment income based on less than one year at 90%, and any investment held over five years at 10%. Basically force investors to invest rather than speculate. Allow USA companies to repatriate profits tax free so long as they are re-invested domestically for a minimum of five years. I'm sure there are a million holes in what I suggest but its better than inaction.
Chuck, In reviewing older posts it appears I offended Louise and for that I sincerely apoligize. I would never knowingly offend you or any member of your family. You know that sometimes I use strong language to get a point across and "dumber than a post" was a bit strong for Sarah Palin. However, Sarah Palin was not then, nor is she now, qualified to be VP or President and that fact is what likely tanked the McCain bid for the White House. Louise's comment on the National Guard also pushed me to do some research. The entire Alaska National Guard consists of 1,850 soldiers, and the unit Louise refers to has 209 in its compliment. The chain of command for the 49th Missle Defense Battalion does not include the Governor of Alaska. That unit reports directly to the Commanding Officer of NORTHCOM, which reports to the Pentagon. It may be that Louise got her information from the spin that Palin puts out, and very few people take the time to look into it. That is the reason Governor Palin has had so much success on the speaking circuit, from where she gets much of her income. She was Governor for 2 1/2 years, and did some good in Alaska during her term. However, the State was notably corrupt and what she did was some serious fiscal cleanup and elimination of corruption, thereby making her name as a fiscal conservative. Her ability to spin some basic accomplishments in a sparcely populated State into National noterity is a strong political skill. The problem has been that she is too far out there, and recognizes no limits in her level of personal attacks. She also lacks any substance on serious issues. It is notable that she wasn't invited to speak at the Republican Convention and that says a lot in itself. She is not, however, "dumb as a post".
Anonymous - I will make this short and sweet. Your comments about Palin's experience and capabilities could be applied directly to Obama when he ran for president. But he had a Chicago political machine behind him and an impressive ability to speak. I would also never call him "dumb as a post", but there is no doubt in my mind that he is an "empty suit".
To my readers: some of you have asked who "anonymous" is, but in the interest of his personal safety I won't reveal his name. Especially since he lives in Utah and is surrounded by Mormons :)
I agree with you on all points concerning his qualifications. It's too bad we have to suffer through his OJT. As to being surrounded by Mormons, there is good and bad to that. It's certainly been a learning experience, socially, culturally and politically. However, after ten years here I won't be surrounded much longer.
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