Conservative Political Commentary

...anti-socialist, anti-globalist, and usually with an attempt at historical and economic context

Thursday, August 4, 2011

Thoughts on the Federal Reserve and the Banking Cartel (OK, a Rant)

Mayer Amschel RothschildImage via Wikipedia
Mayer Amschel Rothschild

“Give me control of a nation's money and I care not who makes her laws.”   – Mayer Amschel Rothschild (1744-1812), “founder of the Rothschild family international banking dynasty….”

The well-known formula for making money, “buy cheap and sell high,” is practiced to the extreme by the Federal Reserve, which has monopoly control of the nation’s currency. They literally “make,” i.e., create, money out of nothing, and then loan it out at interest. As Ron Paul has reminded us, the U.S. owes $1.6 trillion to the Fed (a “debt” which he has introduced a bill to cancel). A nice business to be in, and the private banks that own the Federal Reserve system likely wouldn’t trade it for anything. The big banks are able to rely on the Federal Reserve for bailouts, if needed, allowing them to keep their earnings privatized, but socializing their losses, i.e., charging them to the taxpayers, if they get into trouble from, say, high-risk transactions.

And the Fed and the Treasury Department are all too ready to come to the rescue if needed, as they did in 2008. They even forced some banks to take money whether they wanted to or not. That way, they could keep secret the identities of banks that were actually in big trouble. The bailouts also included some foreign banks. One can’t help wondering why Lehman Brothers was allowed to fail, but others were not.

Well, that’s water under the bridge now, I suppose, except it really isn’t. Nothing prevents further bailouts, and there are still entities “too big to fail.” It must be nice being part of a cartel where profits are assured, and if for some reason they don’t happen, government, or the Federal Reserve, or both, step in to save the day. Within months, the situation is well in hand, and executives who drove the organizations to near-bankruptcy are (with some exceptions) back to receiving their large bonuses, and waiting for the next bubble to burst.

With the government’s gracious assistance, the Fed has to its credit numerous booms and busts, the Great Depression, the abolishment of the gold standard (and therefore, the end of sound money), the confiscation of citizens’ gold, the dollar’s continuing shrinkage in value, the meltdown of 2008, big bailouts, the dollar’s currently threatened status as the world’s reserve currency, and the current sour economy that shows very little sign of improving much any time soon. Yet the computers of the Fed continue to create whatever quantity of money might be desired, often with the stated hope of creating inflation. The ideal level of inflation is zero. Anything above that steals purchasing power from everyone who holds dollars. The ideal interest rate is that set by the free market. The artificially low rates rob savers of any appropriate return on savings, yet retains high-interest costs of commercial bank credit, e.g., credit cards, etc.

It seems the government wants everyone in a state of fear or anxiety over what government fiscal and domestic policy is going to turn out to be, leading to the likely conclusion that the government authorities are perfectly OK with the economic and social turmoil they create, as long as it helps increase and bolster government control of the economy, and expands citizen dependence upon government. I have about given up on thinking that either the Fed or the Obama Administration is really interested in improving the economy, and am inclined to think that they are accomplishing what they set out to do, that is, impoverish and control people more and more. If this is not the case, they must be hopelessly inept. But they are very willing to cooperate and plan things together, things which now threaten to topple our currency and our economy.

I am optimistic that, with strong and sustained effort, this trend can be reversed; but there will be no cooperation from the Fed or the current administration, and success is far from assured. It’s either staying optimistic or studying those conspiracy theories more.

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