Category Archives: Federal Reserve Bank

Steve Forbes: Johnny-Come-Lately To Gold

Debt, Economy, Elections, Federal Reserve Bank, Media, Ron Paul

The mummified media, the financial press included, called Rep. Ron Paul a lunatic when he explained again and again that “a return to the gold standard by the United States would help the nation solve a variety of economic, fiscal, and monetary ills,” created when President Richard Nixon abolished the Gold Standard.

“Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending. … With a stable currency, it is ‘much harder’ for governments to borrow excessively. … Without lax Federal Reserve System monetary policies that led to the printing of too much money, the housing bubble would not have been nearly as severe.”

You don’t say?!”

Actually, these are Steve Forbes’ words, not Paul’s. Forbes is currently singing from the Paul hymn-sheet, and it is music to the ear.

Of course, this is not to say one should embrace Paul’s political opponents, just because they’ve arrived at the correct economic conclusion, now that it’s probably too late.

Goldbugs know that gold is a necessary financial hedge in the survival on the road to serfdom.

Watch out! Gold is bad for government health. Remember Executive Order 6102? FDR, idolized by BHO and many a Republican alike—by almost all offshoots of the duopoly, in fact—forbade “the Hoarding of Gold Coin, Gold Bullion and Gold Certificates” at pains of punishment: a fine of “not more than $10,000, or “imprisoned for not more than ten years or both.”

UPDATED: Barnanke is Stealing Your Wealth by Stealth

Debt, Economy, Energy, Federal Reserve Bank, Inflation

As Terence Corcoran of Canada’s National Post puts it, “The Fed’s claim … is that all that is happening in the world economy—rising commodity prices, a falling dollar, rising bond yields, price increases in developing nations and Europe—have nothing whatever to do with the Fed’s unprecedented trillion-dollar quantitative easings and monetary expansion.”

“The Fed has a bit of a credibility problem,” concludes Corcoran. My countrymen (I’m a naturalized Canadian) are known for the understatement. Corcoran continues:

It wouldn’t be the first time in economic history that growth and employment dragged while prices -due to monetary inflation -rose. This year, U.S. consumer prices in March rose at an annual rate of 6% and were 2.7% higher than a year ago. In a recent speech, Fed vicechairman Janet Yellin called the CPI gains “transitory” inflation. Meantime, producer prices are up almost 6% year over year and import prices -thanks to a falling dollar -are up almost 10%.
Despite this evidence, the Fed sees no real inflation and is waiting to see if price increases begin showing up in “inflation expectations.”

[SNIP]

The enormous increase in the stock of money—a deliberate and destructive policy pursued by Ben Bernanke, the man with the reverse-Midas touch—is responsible for the steady rise in the prices of all commodities, crude included.

Prices are rising because mounds of paper money are printed and credit expansion policies promoted in order to fund the government’s profligacy. More fiat currency in the system means that every unit is worth less. This is the essence of inflation—it is a hidden tax, another way for government to steal your wealth by stealth.

According to the post hoc illogic of others (Bill O’Reilly and Attorney General Eric Holder, for instance), you ought to blame gas speculators, “profiteers” or foreign producers for gas prices—anyone but your government. Apparently, they believes that the price of fuel is causing prices to rise.

This topsy-turvy chain of causality should not make a lick of sense to a sane individual.

UPDATE: Herschel, on Facebook, wants to know, “who has all this new money? Certainly not the people who are suffering under high prices.”

Exactly: When money markets are flooded, the first counterfeit down payment goes into the coffers of the selected government contractors and employees. And also to all the DC hacks. It spurs artificially created demand, causing suppliers to raise prices. It’ll take time, but the new money will generate price hikes throughout the economy. By the time you and I, politically unconnected suckers that we are, experience a meager rise in money income (but not in tangible wealth), rising prices will have obliterated the tiny gain.

UPDATE II: Pleasure Me, Now!

Debt, Education, Ethics, Federal Reserve Bank, Morality, Pop-Culture, Psychology & Pop-Psychology, The Zeitgeist

The following is from my new, WND column, “Pleasure Me, Now!”:

“Our society revolves around the pleasure principle. Unless something is pleasurable, it excites suspicion and is deemed unworthy of pursuit. This is one reason so many American youngsters entering the job market are dumb, difficult and will be, ultimately, dispensable. They’ve been taught, by parents and pedagogues — falsely — that learning and work must be jolly fun all the time. If your field of endeavor is no fun, quit it.

Anyone who has studied seriously, or worked to master a craft, knows that nothing worth learning or mastering is easy or enjoyable, at first — unless you’re a genius, a natural, or both. Most of us are not. For proof of the fact of mediocrity, look no further than the normal distribution, the Bell Curve.

With mastery, however, comes enjoyment. And mastery generally means hard work.

‘The value of hard work is overrated. Laziness is the mother of invention’: these were riffs offered up against my case by one of the bloggers at BarelyABlog.com. The writer, a physicist, makes my point for me: He happens to be a relative of Wolfgang Ernst Pauli, recipient of the 1945 Nobel Prize in physics!

No, not everyone can ‘work smart.’ Whereas graft is within each person’s reach; genius is not.

The pleasure principle is at play in the realm of both personal and public finances. Saving for the future is not fun. It means postponing pleasure for the sake of solvency or other more ambitious future gains.

Tellingly, a survey by the ‘National Foundation for Credit Counseling’ has revealed that … ’26 percent of adults in the U.S. admit that they’re spending more than they did a year ago. And 40 percent of consumers are still battling unpaid credit card debt month to month.'” …

Read the complete column, “Pleasure Me, Now!”, on WND.COM.

UPDATE I (April 22): In the Comments section, Annette makes important points. Running my own tiny enterprise, as I do, I agree with her. When us oldies die-out, the American workforce is close to toast! However, home-schooled kids give me hope. I’m working with one such gentleman (a kid, really) whose work ethic, method of problem solving, and cognitive skills match mine. As my husband would put it, “A normal person.” But the “mature” “professionals” who came before him, all with fancy offices downtown, gave new meaning to the concept of outsourcing.

Let me parrot, once again, “Your Kids: Dumb, Difficult And Dispensable”:

“The hybrid, hi-tech workforce ? comprised as it is of local and outsourced talent ? is manned, generally, by terribly smart older people with advanced engineering degrees. Yes, the people designing gadgets for our grandiose gimps are often Asians, many of whom are older. They beaver away under fewer, also terribly smart, older Americans. The hi-tech endeavor is thus all about (older) Americans and Asians uniting to supply young, twittering twits with the playthings that keep their brainwaves from flatlining.
My source in the industry tells me that the millennial generation will be another nail in the coffin of flailing American productivity. I am told too that for every useless, self-important millennial, a respectful, bright, industrious (East) Asian, with a wicked work ethic, waits in the wings.
Let the lazy American youngster look down at his superiors, and live-off his delusions and his parents. His young Asian counterpart harbors a different sensibility and skill; he is hungrily learning from his higher-ups with a view to displacing artificially fattened geese like Meghan McCain.”

UPDATE II (April 23): Myron, Right you are. My source behind enemy lines—one of the biggest, most prestigious American corporations—is reduced to working in his garage, where he has better lab equipment, solving the company’s technical problems.

UPDATE II: A Capsizing Debt

Debt, Economy, Federal Reserve Bank, Inflation, libertarianism, Republicans

“The United States is facing a crushing burden of debt – a debt that will soon surpass the size of the entire U.S. economy and ultimately capsize it if left on its present course. This is not the future of a proud and prosperous nation. It is the future of a nation in decline.” Republikeynesians have come a long way; this is their description of the debt crisis in “Path to Prosperity: Restoring America’s Promise” (PDF)—the House Republicans’ 2012 budget proposal, authored by the House budget committee’s chair, Paul Ryan (R-WI). And although the role of the Federal Reserve Bank in monetizing the debt is finessed—this is still more than we’ve come to expect from the GOP:

“The lenders who buy much of the federal government’s debt have noticed the disconnect between the government’s perilous fiscal situation and the low rates of interest it is paying on the bonds that constitute the government’s debts. Some have even decided to purge their portfolios of U.S. debt, and others are advising their clients to do the same.

“Through its interventions into the economy, the Federal Reserve has recently become the largest buyer of government debt in the country, and these purchases have helped keep interest rates low. But the Fed is scheduled to stop making these purchases this summer. Congress must show the market that it has a credible plan for getting the national debt under control, in order to ease concerns over the government’s creditworthiness and stave off an interest-rate spike.

… nearly every fiscal expert and advisor in Washington has warned that a major debt crisis is inevitable if the U.S. government remains on its current unsustainable path. The government’s failure to prevent this completely preventable crisis would rank among history’s most infamous episodes of political malpractice. …”

Of course, the actual steps proposed to ward off stagflation and hyperinflation are not nearly as drastic as they ought to be.

MORE.

UPDATE I (April 6): Vox Day, on Sean Hannity’s radio show, warns of “The Return Of The Great Depression.” A good reality check is my interview with Day, my WND colleague, “Great Depression 2.0’: An Interview with Vox Day.”

Mr. Hannity seemed eager to pick Vox’s brain about prudent investments during a depression. Asset protection, says Vox, is essential, over and above a focus on returns: metal and companies with a real business model; companies that also provide real services.

Listen to the interview. Notice the alarm in Sean Hannity’s voice. Austrian economists such as Vox Day have not wavered in the “apocalyptic” predictions they’ve been making. This column was warning in 2003, if not earlier, of the consequences of endless debt, credit expansion, and the dangers of hyperinflation. As did I explain to those who bothered to listen that production, not credit-fueled consumption, was whence came wealth.

UPDATE II: To Myron, below: Your cynicism alert and my point are not mutually exclusive. The GOP has come a long way, thanks to the Tea Party, in accurately describing the coming, and calamitous, effects of the debt. We both agree that it’s too little too late.