After the deluge; Ron Paul

If you’re an average American – by that, I mean you get up and go to work everyday because you need to and pay your bills because no one else will – today is a very bad day for you.

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If you haven’t heard, the Federal Reserve slashed it’s ‘Fed Funds’ rate by three-quarters of a point this morning. Even if you have heard, you might not completely understand what that means.

 

The Fed has a few mechanisms for intervening in the credit markets. One is direct injection (or conversely, pulling out) of capital, which is accomplished by the Fed purchasing securities, thus adding ‘liquidity’ to the markets. This is done to influence the Fed Funds rate, the interest rates that banks charge one another for credit, usually on an overnight basis. Another tool is the discount window, where the Federal Reserve directly loans money to it’s members. The Fed Funds rate is what was lowered today.

 

You might be asking – why is this bad for me? Well, when the federal reserve devalues money (implicit in lowering the cost to obtain money), the value of any savings you have is immediately devalued. The purchasing power of your income is erroded. Every asset denominated in dollars will likely become more expensive, without some opposing market force at work. Loosening the availability of money and credit in the broader economy is one of the leading causes of inflation, the great decimator of the middle class.

 

So, if the Feds actions are so destructive to the wage earning members of our society, why on earth would they undertake such actions?

 

First of all, the Federal Reserve is a privately controlled corporation, who serves the interest of it’s member banks. It is part of it’s agreement with the congress that it must be constrained by striving for price stability, but there is no check that ensures that it actually pursues this goal, beyond Congresses ability to pull the charter should it see fit. Outside of that ne’er uttered threat, the Fed is autonomous, and acts solely in the interest of the biggest banks doing business in the US. Banks make trillions of dollars every year from a commodity – money – that they do not labor to produce and they do not create by special ingenuity. They make that money because they are a forced monopoly imposed by the Federal Government, with competition not allowed under penalty of law.

 

If it sounds nefarious, it’s because it is. The power to create currency – especially fiat urrency without intrinsic value – is the power to control. We have a system where we are forced to value our wealth in the Feds money, but they are allowed to manipulate the value of this commodity as they alone see fit. And that their ultimate interest lies in the continuation of this gravy train is apparent – when the question at hand is whether we devalue the savings and current earning power of the populace to bail out banks and financial institutions who made bad decisions, it is crystal clear where their heart is.

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All this, without discussing that the Fed is in fact responsible for the bad decisions made by the banks that are now in major trouble. Loose monetary policy is what created conditions where excess capital chases too few assets – and bubbles develop. The massive transfer of wealth happens because the excessive capital is piped in at the upper echelons of the system, to the big money banks and big-business interests who get their hands on the loot first, before it’s dillutorious effects are realizes and priced into the market. By the time the bubbles pop, those with first shot at the money have long since profitted, and in most cases moved the resulting wealth to a more stable and secure vehicle. Those who were late to the party – generally, the working stiffs – get hosesd with the bubble assets, and then get to pay increased taxes to underwrite the bailouts that eventually come from the Federal Government.

 

And as with every possible evil visited on us from Babylon on the Potomac, once the furor and bad taste has faded from the popular memory, we re-tool and repeat this process.

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Dr. Ron Paul knows about the evils inherent in forcing a monopoly over the nations money. He understands that to hand the ability to control the supply of money over to a private group is to trust our economic fortunes to their wisdom and good graces.

 

America has a tough road in the short term. The question is: do we just let them catch their breath and continue the plunder of our wealth by fiat, or do we elect a man who is, for the first in my lifetime, trying and bring free market sanity back to our nation?

 

I know what I’m gonna do…..

 

Here’s a short primer on the origins of the Federal Reserve System……..

You need to a flashplayer enabled browser to view this YouTube video

Here is another video that I have only previewed, but that purports to give a broader view of the purpose of money and the role the Fed plays in regulating our currency……

You need to a flashplayer enabled browser to view this YouTube video

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January 20th, 2015 at 8:47 pm

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