Thursday, January 10, 2013

The Fed and Indentured Citizens

In 1913 Congress abdicated its Constitutional responsibility over currency on behalf of the people when it created the monster called The Federal Reserve System. In creating a private joint stock entity, Congress not only surrendered jurisdiction over the dollar, it also relinquished control, oversight, and authority over the institution intended to manage the citizens’ currency. Decisions hastily made in environments of illiteracy, panic, and fear, and driven by energies with ulterior motives, rarely turn out well for those who succumb.

Section 2A of The Fed’s Monetary Policy Objectives states, “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” This ill-defined and loose agglomeration of feel-good nonsense might have tasted better if someone had appended “and preserve motherhood and apple pie,” but such addition would not have improved it. When we consider such additional elements as the fact that, as originally established, the notes issued by The Fed were obligations of the U.S. Treasury (read taxpayer) rather than that of the member banks, well, what could go wrong? 

The Fed’s ‘objectives’ reads as if it was written by The Fed so that no repercussions could possibly result from its own failures. Well beyond the bounds of sanity and far from purview of effective diligence, an isolated institution was formed and exists to command and supervise the currency of the most powerful Nation on Earth. This authority reports to no one. It plays footsies with Congress and with the Administration, but it acts in its own best self interest, as all human endeavors are wont to do. As some of us strongly suspected just prior to the last Presidential election, and as we can now with hindsight confirm, Bernanke and The Fed used their capacity to print dollars in an undisguised effort to support the re-election of pro-Bernanke-pro-Fed-pro-free-money Barack Obama. There is no question that the most powerful financial institution on Earth has strayed well beyond any of the intentions which created it, regardless how unenlightened they might have been. 

 If America was a company and you were its CEO, would the above noted Section 2A provide sufficiently focused objectives for your currency? Not if you were capable of simultaneously walking and chewing gum it wouldn’t. Monetary policy should have One objective – Stability. Simple, clear, unambiguous, stability. And inflation? 0%. Not 1.0% or 4.5%, but zero. 

 Who should be in control? The people. Who represents the people? Congress. Who is in control? A small group of individuals running a small group of too-big-to-screw-up international banks. No-one could possibly mount an intellectual or intuitive argument supporting the assumption that such individuals, their desires and the desires of the institutions under their charge, hold dear the altruistic benevolence of their “fellow human beings.” I cannot say “their fellow Americans” since some of the “owners” of The Fed are not American institutions. Go figure. 

Still, is this any way to run a railroad? Not if we look at the state we are in. Not if we critically assess the reality which has been created over a long process of fiscal mismanagement. Not if we understand that unprincipled individuals have too long politicized the dollar, which was easily done once it was unhooked from the hard commodity, gold. Not if we critically appraise the devastation which The Fed has rendered on a Nation with the complicit approval of self-servers in Washington. 

Politicians of the Congressional and White House variety have evidently been more than enthusiastic in allowing inflation and devaluation of the dollar to proceed apace since the de-coupling of the dollar. The banks behind The Fed controlled the game and were only too eager to comply (as in, OK fine, we’ll go along with it but it’s your idea). There were hundreds of billions to be made through debt guaranteed by taxpayers. There were new illiterate and willing generations to be converted to serfdom with the help of standard wavers such as the New York Times. A bigger chicken in every pot and a larger roof over every head, all acquired through debt. The bigger the debt, the greater The Fed’s profits. And what of the savers? . . . Completely destroyed and pushed toward risky investments. 

The dollar has not been stable and in fact has moved in direct opposition to the best interests of all Americans. It has steadily lost value over the long term. For example, when we are provided obfuscating rationales for the high price of oil (up 400% in a decade), we are being lied to. The truth along the vector of veracity is much closer to the reality that the dollar is dropping in value, however such realization might instill doubt of our long term trends toward prosperity. 

It has been in the best interest of the banks which own The Fed and all member banks, to manipulate interest rates to their advantage. The trends of the dollar (read: your earning power) through the past half century against hard assets such as gold or oil tell a tale of unrelenting plundering and evidences the failure of misguided interventionism. Nevertheless, the worst consequence has been an acceptance of indebtedness. Indebtedness has contaminated all human enterprise. From personal debt, to corporate debt, to State debt, to National debt, the burden overwhelms current and future intents to repay. Total debt floats somewhere well North of $100 trillion. 

In a country where the term “Freedom” has resonated profoundly from its very inception, and throughout its history, the citizens of The United States of America now find themselves subservient to a foreign entity they have no control over. Without economic freedom, freedom is simply an ephemeral concept promoted and repeated as a feel-good mantra mesmerizing the population. Awaking to overwhelming indebtedness is tantamount to waking up to enslavement. 

As we wait for the moment when it becomes widely evident that The Fed has become completely ineffective and we are forced to confront the unavoidable crisis of debt yields rising significantly, some alternatives should and must be considered. 

The ubiquitous nature of today’s technologies, software, computers, phones, and networks, present us with possibilities which brilliant economic minds of the past could not dream of, and too many current ones refuse to. We should no longer regard the current monetary system as the sacred and hallowed domain of a few bankers. Congress should immediately mount a full frontal attack on The Fed and retrieve the control it long ago held. Once Congress has recuperated full jurisdiction and authority over the Nation’s currency, it should then enact laws allowing for the formation of competing bank notes including digital currency to be issued by private entities in an open and fee market. But first, let’s get back mastery over that most critical instrument so pervasive in all human activity – our currency. America should not be the only developed country in the world without sovereignty over its currency.

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Statist Wistful Admiration Of China’s Communist Party

China’s ascendance in our consciousness has been growing steadily for a generation, and we wonder what more impact it will have than has already been felt by our economy and our society. We cannot accurately predict China’s future or its actions going forward, but as it flexes its newfound powers to reshape global conventions, we should remain vigilant that our own perceptions not be warped by ideologically, or otherwise tainted assertions.

Our enthusiastic media collectively extol the moral legitimacy of China’s communist model of political rule which controls 1.3 billion people, and predicts that China’s surpass of the U.S. economy is just over the horizon – scarcely visible as that may be through the toxic haze. Should untarnished freedom be a fundamental human right nurtured within a true democracy, then such adoration of China by our leaders, scholars, pundits and so many others, challenges the core tenets at the heart of the Constitution. 

Defenders of the ethos imposed through coercion within China, rationalize that stomping all over individual rights is a necessity which protects the needs of the collective. Somehow when such justification is vaunted by our own self-anointed intelligentsia, with the always present caveat that, “after all, how else can you rule over 1.3 billion people?” . . . . we capitulate. All the while, our internal turbulence leaves us in visceral disarray. The virtuosos of the PR machines make it all right that we send (through spending), trillions of our dollars to enrich a regime which recent history (1950s and 1960s) has evidenced as the most ruthless in human history. 

As China today shuffles its leadership, we are provoked into accepting that the shifting of nameplates is founded on meritocracy, and not on handpicked automatons perpetuating dictatorship. The reality that much of the current Chinese leadership is formed by the natural laws of heredity and that the sons of well-known revolutionaries today take up the mantel, does not appear to trouble our cognoscenti in the West. Xi Jinping, who will be shortly confirmed as China’s leader is one such “princeling.” We should remember that in China, the Communist Party controls the army, and one only touches the levers of power after having held very senior military posts (read: demonstrated ruthlessness). 

Should we accept the propaganda (East and West) that virtue rises to the top, and that China’s leadership is genetically virtuous and molecularly superior? How affected are we when our media refers to China’s “Communist era,” as if it was some unfortunate ephemeral occurrence of the past, or simply a fading authoritarian dragon which lost its repressive teeth? Just because the Communist Party has carefully allowed some private sector to coexist with state controlled enterprises, it has not relinquished any authority over business, over media, over education, and it is on guard against any de-politicization of the country’s vast military machine. The secretive Organization Department of the Communist Party of China Central Committee controls ‘assignments’ in government and industry. 
The boot is firmly on the neck. 

Recent leaks which the Central Propaganda Department missed, suggest that the high level of corruption within the Communist Party is pervasive. The submissive population cannot react since it knows the potential of the beast camouflaged behind smiles. It knows the despotic force which controls its nation. This is the virtuosity that is so confident that it siphons its billions off-shore, acquiring hard assets like real estate in safe havens like San Francisco, Sidney and Vancouver. The pretence of stability provided by the virtuous Communist Party may not be so well founded given that it cannot explain why so many of its wealthiest have ensured themselves foreign ‘pieds-a-terre?’ It is incapable of explaining why so many of the wealthy have moved their families offshore while they continue to amass personal wealth within China. One acquaintance close to such events reminded me that it is very expensive to move money offshore from China because there are so many hands which have to be taken care of on the way out. Is this virtuosity so prevalent that millions of people, both rich and not as rich, leave the country for foreign shores as soon as they possibly can? 

Before we look at what some of our statist virtuosos of the ‘beau monde’ are selling us about China’s version of communism, we should remind ourselves that any government’s legitimate function is to protect the individual’s rights. 

In 2009 Thomas Friedman, the writer for the oracle of all that is socialistically holy, wrote, ”One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages.” This self-asserted sophistication upholding the concept of the benevolent dictator surely must know something which lesser minds cannot comprehend. Or is it more likely an uninformed observation from a philosopher-king wannabe, lost in ideological nonsense attempting political correctness? Whatever its motivation, this claim evidences a complete lack of insight into human nature’s tendencies and desires for self-actualization. Such ignorant percepts miss the fact that stifling people and frustrating their desire for fulfillment of their potentialities deprives them immeasurably. The result is emotional disturbance and psychological pathology. Long term, the consequence is broad based despondency. This socio-economic transport of a Nation into the elitist controlled utopia is the ultimate pinnacle of arrogance. Is this the ‘down river’ that our media is attempting to sell us? 

Confucius once informed, “What the superior man seeks is in himself; what the small man seeks is in others.” 

Let’s take a look at a rather ideal example of someone who would do well to read Confucius – President Obama’s Chairman of Jobs and Competitiveness, Jeffrey Immelt, who moralized on the Charlie Rose Show this past week, . . . . 

Immelt: “State-run Communism may not be your cup of tea, but their government works.” 
Charlie Rose: “They get things done.” 

Well, three cheers for state-run communism. Right? When you instill fear in people to perform your will, you “get things done.” Right Charlie? Charlie may be a herring mindlessly drawn by the statist current which enriches him, but Immelt is not. He is head of a global corporation doing $146 billion and employing a little under a third of a million employees. 

Immelt is self-serving and rationalizing his shift of some General Electric manufacturing facilities to China, knowing full well that the Communist Party makes the decisions on who ‘gets in.’ For now we won’t argue with him whether he could have managed increases in productivity in America instead of moving, but does he really believe what he is saying? Any of it? Does he understand what he is selling? 

The mind behind the visage of Obama’s Job Council seems not to grasp the seriousness of his message, nor its impact. Or perhaps he doesn’t care – there’s a personal empire to build, who cares about the country? Notice that in this interview, as in others, he has no idea what to do about jobs? None. He is evidently only interested in his own. Where is the wisdom? He certainly seems to know how to get taxpayer dollars, warming the Oval Office into the purchase of unproductive and unprofitable windmill farms. He can buy influence and taxpayer cash, with taxpayer cash. 

We cannot forget the enforcement of the population’s conversion to Immelt’s green-technology-made-in-China CFL light bulbs. Don’t ask him what you should do with the toxic mercury in those bulbs once they burn out well before their due date, just take them to the dump. We do not need to question why Immelt’s statist views are supported by GE’s tentacles in NBC, MSNBC, CNBC, NBC Sports, Universal Film Studios. We know why. We also will not bother inquiring into GE’s relationship with the U.S. tax system, since we already know it manages to sidestep that annoying tax thingie. Immelt knows how to ride the East-West fence, and statists applaud him as he promotes the socialist message. 

The Immelts and Friedmans advocate that we too could find success if only we had top down power of overreaching government following the Chinese model as the symbol of perfection. It is unfortunate there are some already in power here who dream of holding reigns of omnipotent influence over the masses. It is doubly unfortunate that these same individuals influence our media. Do they really long for a Chinese version of governance? They and their mouthpieces are certainly selling us hard on it, lying about the realities that lie hidden under the propaganda. 

Individuals like Immelt should be promoting America, encouraging its freedom, and the beauty of its Constitution. They should be praising and protecting the country which provided them their opportunities and their wealth. Sadly they represent a broad element across the Nation, too ready to do away with protection of fundamental individual rights. After all, it works over there, doesn’t it?

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