IPFS News Link • Federal Reserve
Wishing for the Fed’s End
• By ROGER LOWENSTEINShill for the BORG,
ROGER LOWENSTEIN talks about how our country would be in turmoil
without the benevolent Federal Reserve System. Ben S. Bernanke, the Federal Reserve chairman, faces a crisis of confidence. He is excoriated on the right
for debasing the currency, and blasted on the left for failing to
stimulate more than he has. It has gotten so bad that last week Mr.
Bernanke, who prefers to discuss monetary policy with erudite, otherwise known as very well educated BS artists and professors
like himself, submitted to the indignity of a news conference. Awe, how my heart cries Piss or you! Among the uninvited was Representative Ron Paul,
who is flirting with a presidential run, and who, if he took office in
2013, would like nothing more than to celebrate the Fed’s centennial by
... abolishing it.
Now thanks to the wonderful foresight of the Federal Reserve the value of the dollar has shrunk down to 4 cents. Great Job Guys!
And that got me to thinking: (Actually one of the BORG told him to write this swill) What if there were no Fed? Don’t rejoice; it
has happened before. The United States had a primitive central bank,
conceived by Alexander Hamilton, but President James Madison let its
charter lapse in 1811. A second such bank became the target of President
Andrew Jackson, who viewed it as a “hydra” and a “curse” upon the
nation. Jackson sought to decertify the bank and, in 1836, succeeded.
Never mind that the following year, the United States was plunged into a
serious financial panic. The Panic, Lowenstein conveniently forgot to mention, was caused by the interests that wanted the unlimited power provided by the creation of money. The curse had been lifted, not to reappear for
nearly a century.
Established in 1913, by the money interests of Nelson Aldrich, Paul Warburg, Frank Vanderlip, Henry Davison Charles Norton, Benjamin Strong Rothschild, the Fed was to be a banker to the nation’s banks,
controlling the money supply and, thus, the value of the currency.
Without a Fed, someone else would have to handle these (and other) tasks
of central banking.
“Money,” observes another paid shill for the Federal Reserve, a so called "historian", Allan H. Meltzer, “does not take
care of itself.” But who else could regulate the value of money? And
regulate its value in relation to what?
How convenient it is to have this Stooge who calls himself a "historian" and who's paycheck is created out of nothing to make a dumb-ass comment like that. This way the Sado-Masochist's who run the Federal Reserve can manipulate its value of money instead of having the Free Market do so.
In the coinage act of 1792, the United States defined the dollar by an
explicit weight of gold or silver. 371.25 grains of silver to be exact. During the first half of the 19th
century, state-chartered banks issued notes, preferably backed by metal,
that circulated much as dollar bills do today. But since these banks
were private, and differed widely in their standards, their notes were
accorded different values. In effect, the country had great deal of competing currencies
The United States moved to normalize the situation during the Civil War.
It restricted the issuance of notes to more uniform, federally
chartered banks, which were required to hold Treasury bonds (as well as
gold) in reserve.
Should the Fed be interred, this abbreviated history provides some clues
about alternatives. One solution would be for private banks to issue
money — perhaps bearing the likeness of Jamie Dimon and the seal of his
bank, JPMorgan Chase. Alternatively, the Treasury could do it.
But what will the money represent? Gold is the first obvious answer.
James Grant, the newsletter writer, author and gold bug par excellence,
asserts that gold money is superior to the “fiat” money of the Fed. By
fiat, he means that it has value only because the Fed says it does. These criminals actually will force you to accept their worthless paper that is backed by nothing
(Representative Paul, less diplomatically, refers to Federal Reserve
notes as “counterfeits” and to the Fed as a price fixer.)
Let us interject that in any monetary system, some authority must fix
either the price of money or the supply. McDonald’s can either set the
price of a hamburger and let the market consume the quantity it will —
or, it can insist on selling a specified quantity, in which case
consumer demand will determine the price.
The Fed has a similar choice with money. The Bernanke Fed, which is
trying to stimulate the economy, regulates the price of money — the
interest rate — presently 0.0 percent.
Paul Volcker, who assumed command
of the Fed in 1979, when inflation was rampant, chose the opposite
tactic. Mr. Volcker provided a specific (and, dare I say, miserly)
quantity of liquidity, letting interest rates go where the market
directed — ultimately 20 percent. There is an element of arbitrary
choice either way.
The gold standard, in effect, replaces the Fed chief with the collective
wisdom (or luck) of the mining industry. Rather than entrust the money
supply to a guru or a professor, money is limited by the quantity of
bullion. The law in the early 20th century stipulated that dollars be
backed 40 percent in gold. This fixed the dollar in relation to metal
but not in relation to things, like shoes or yarn, that dollars could
buy. This was because the quantity of bullion that banks had in reserve,
relative to the size of the economy, fluctuated. As a historian noted,
it was as if “the yardstick of value was 36 inches long in 1879 ... 46
inches in 1896, 13 and a half inches in 1920.”
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