By William Haupt III | Haupt’s Take
“The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.” (Sen. Barry Goldwater)
The Federal Reserve is doing the unthinkable: They are destroying our Republic without firing a shot. They are using our money as a weapon to bring us to our knees! They are printing so many dollars; we will soon need a wheelbarrow full of them to buy a fast food hamburger. We were led to believe The Fed was founded supposedly to protect the consumer. They were to provide transient liquidity to banks that found themselves unable to redeem deposits for cash.
But the real cause of bank illiquidity was never addressed. Loaning funds makes banks accountable to depositors. If they are unable to redeem accounts when people demand their money they are in a dilemma. And now the government is forcing banks to make risky loans The Fed bails them out not the depositor.
“Every Congressman knows what causes inflation (It is The Fed) but won’t support reforms to repeal of the Federal Reserve Act. This is because it could cost him his job.” (R. Heinlein)
America was once the land of the free market. But the unprecedented intrusion into our economy by the Federal Reserve since 2008 is quickly bringing an end to the greatest capitalistic enterprise in the world. Free market capitalism is disappearing faster than Bill Clinton can catch a new intern. Our markets are no longer free markets. They have become robots taking their marching orders from the U.S. government who is now controlling every move they make.
Unemployment rates and corporate profits were the wheels that used to drive our investments. But now they are no longer accountable to us but the “Big Brother Money Machine”, The Fed! The entire investment market is now controlled by a “highly questionable independent” army of money changers.
“If the Fed is not the left arm of the government, why is it called “The Federal Reserve?” (N. Kahn)
The Fed is now injecting over $85 billion into U.S. markets every month through a critically suspect and questionably legal program called Quantitative Easing. This is just another word for “printing money” to bail out the government’s lack of ability to adjust to a down turned economy that never reversed direction. They are now on the third phase of QE3. I guess we are fortunate that the first two phases were limited in dollar amounts and in the duration of destruction they were allowed to do.
But the current phase, announced after the last election when it was clear that we had made no real progress towards a legitimate recovery, has zero limits! Informed economists are now calling it “QE Infinity!” The Fed even admitted this:
“The U.S. government has a technology, called a printing press that allows it to produce as many U.S. dollars as it wishes at no cost at all.” (Ben Bernanke)
Even the most ardent optimist has to confront the consequences of low interest rates. The federal economists are trying to justify the damage they are doing to our economy in any way they can. But they never take into consideration the struggle of ordinary consumers or retirees. Instead they use convoluted logic that defies common sense in the real world of finance.
Ask any saver: Would you rather have high interest on you’re saving accounts or a promise that someday you will benefit from putting money in a bank and paying a fee for the privilege to let them loan it out? Our once resident genius economic adviser Ben Bernanke told us:
“Low interest rates actually help savers. If we quit QE, the economy will collapse; home values would plummet along with other investments.”
This deceptive dishonesty that the Fed fosters beneficial monetary measures, which encourage job growth and a vigorous housing market, defies logic and shows no evidence that it is affecting a real recovery at all. Sure, housing prices are artificially inflated and builders are working on borrowed time.
But when the economic circus has left town, there will be no more clowns to entertain them while they are crying the blues. And the saver will not be there to bail them out. Because they have been watching their money’s value evaporate daily for the last seven years. Prices have jumped at rates far in excess of the official CPI. Have you been to the grocery store lately? This is a legacy of the 2007 financial meltdown. It was this inability to distinguish between illiquid assets and the need to pay for real expenses that only cash flow magicians master.
“Belief in magic has fooled many into believing that the Fed’s financial shell game can fix everything wrong today.” (Tom Robin)
This fanciful perception that the masses benefit from central banking driving down and suppressing interest rates to negative levels is an absurd concept developed by political bankers. This fools the public into a false sense of sagacity. They convince us that our nation which has been borrowing, begging, and stealing its finances and emptying the pockets of taxpayers for years, is a benefit to us in some mysterious way?
But when the people ask for accountability, the government’s “financial mother hen,” The Fed, now bails them out so they do not have to face public scrutiny. And the only way they can survive is to print more cash. And they justify this by “bastardizing” the cost of living index. By rigging the inflation formula everything looks great on paper. The CBO has mastered the art of conjuring up false statistics.
“The conjuror promises to deceive, and he does.” (Karl Germain)
Consumers pay income tax on interest earned regardless if rates are positive or negative. The result is many Americans are paying income tax on negative interest rates! This discourages savings and investors, and steals money out of the pocket books of hard working middle class citizens. While it is true that negative interest rates hurt all savers, these rates are especially damaging to the elderly and those on fixed incomes.
Retires no longer live the lives they were promised when asked to put their faith in government savings accounts and in building American companies. They invested with loyalty and dedication during good times and bad, cultivating the foundation of American industry. Now their pensions are going into receivership and returning pennies on the dollar. Loyalty used to be unique to the American worker. But it is scarce today. It has become apparent that
“Nothing is nobler, nothing more venerable, than loyalty.” (Cicero)
Cato the Elder of the Roman Republic ended every speech proclaiming: “Delanda est Carthago” (Carthage must be destroyed). He viewed them as a continual threat and Rome would never be safe until they were destroyed. He ended every public event with this rhetorical statement.
Maybe it’s time our politicians adopt a similar phrase to remind people we face a similar threat from the Federal Reserve. “Delosala est in Susidium Foederatum Bank”! “The Federal Reserve Bank must be dissolved!” Like Carthage, it cannot be controlled, restrained or reinvented.
“I believe that banking institutions are more dangerous to our liberties than standing armies.” (Thomas Jefferson)
America needs positive growth now! We need a real recovery without asterisks. We need a strong unrestricted free market to bring the workforce back and ameliorate The Feds intervention. We’re facing long-term structural problems and must start resolving them now!
This year’s candidates from the incumbent’s party will have a hard time running on an economy that is so fragile that the Fed dare not touch it, for fear it will shatter into a million pieces. The time is ripe for electing a new president who will be both a great commander in chief as well as a prodigious CEO. We need a leader not a follower of The Fed! We need someone who will manage our economy, not let the Fed destroy it!
“It is well that the people of the nation do not understand our banking and monetary system. If they did, I believe there would be a revolution before tomorrow morning.” (Henry Ford)