IPFS
Straight Light
Edwin Sumcad
More About: Federal ReserveII. Federal Reserve And I.O.Us.: Hard To Countenance Perceptions Mistaken As Facts
There is always a self-styled “guru” attracted to our financial debacle so generous in giving public statements of “facts” in monetary economics. Hardly are those established as facts but only theoretical assumptions!
It started with Joe the Plumber. It is only proper that we respect his negative opinion on President Barack Hussein Obama’s wealth distribution plan. However, Joe tips those prone to go over the edge with nothing to contribute but mistaken assumptions. A carpenter or auto mechanic mistakes the “given” as hard fact or assumes that his personal conclusions are “facts”.
For example, it is proclaimed with so much bravado, that the Federal Reserve is at liberty to “print money to destroy the economy”. This is not a statement of “facts”. It is an intentional “misdeclaration” of assumption, probably to air out a personal grievance or to incite the public to stage a general protest against some Treasury and Fed officials or even against anyone or anything only God knows.
First, it is the Department of Treasury that prints money, not the Fed. The Fed “creates” money. Unlike the Treasury, the Fed does not use a printing machine – it uses the computer. The Fed buys a “bond or mortgage-backed security” from banks. In return, the Fed issues a “credit” to the banks’ accounts. The banks would then lend this Fed-backed credit to generate more money!
In effect, money is created in the form of credit. This is all done through a computerized network of financial transactions.
Second, the National Treasury prints money when new money is required by the government, i.e., to replace old notes and to stabilize the financial system, while at the same time the Fed sees to it that the functions to print, create and use money do not destabilize the system and destroy the economy.
The Federal Reserve is a private institution, comes another declaration with so much audacity based on perception. It is supposedly owned by the 12 regional Federal Reserve banks, which “each in turn owned by a combination of regional banks, commercial banks, foreign banks, and miscellaneous individuals …” This is fiction, not “facts”. It is rather a convoluted presentation of facts if at all.
The facts: Fed is the Federal Government AND the participating private banks. The Federal Government [the Fed] is a composite of the Executive branch of government and Congress. The American people dictate the operation of the Fed through their representation in Congress and the president they elected to office that decide on what banking policies to formulate and implement. They all act through the Board of Governors.
The 12 regional banks do not own the Fed. The law does not say so. Rather these are the Fed’s regional arms. The Fed performs a governmental function, not a private function, and the participating bankers in the region are not there to enrich themselves in any way they want and anytime they like.
When a nosey face diagnosed the ills of our financial system at an arm’s length and faulted them all on the Federal Reserve, it presents a problem because hardly out of the "facts" discussed by "street experts" so far, were relevant to central banking, much more related to the role of the United States Federal Reserve in the national economy.
The problem here is that it reminds us of this old adage that “little knowledge is dangerous”. There is no space to explain this in details to those who need to know. The uninitiated has no fear of contradiction and will invade any territory of knowledge to cover up the absence of knowledge. Just like when the blind is fearless when crossing a busy street.
The blind can only feel but cannot see the danger ahead. If you believe the blind who tells you that he sees no danger ahead every time he crosses a busy street, you just missed the point -- the guy is blind!
Another reality check: Our gargantuan debts will continue to increase and will just remain I.O.Us. as the years go by, for as long as the United States of America continues to grow and grow. In this capitalist free enterprise society, the opportunity to grow is limitless … in Genesis, it ends at Alpha X [the beginning of infinity].
Another reality check: Our gargantuan debts will continue to increase and will just remain I.O.Us. as the years go by, for as long as the United States of America continues to grow and grow. In this capitalist free enterprise society, the opportunity to grow is limitless … in Genesis, it ends at Alpha X [the beginning of infinity].
And why some people are shocked by the immensity of our national debt? It is because the educated guess of how “big” is this existing I.O.Us. is usually exaggerated. The conclusions derived from those exaggerations are viewed in a distant time at the wrong end of the telescope.
Even prices in a certain basket of goods and services that are centennial old, are compared to today’s CPIs to drop one’s jaw and create an alarming distress among the worrying segment of the population – our propensity to spend “beyond our means” is going out of control and we are navigating our future down the road to perdition!
We need to be disciplined, no doubt about that … to be frugal and parsimonious in the way we live our Starwar lives. But we must not also be extravagant in exposing that which we hardly know. It is obviously ludicrous if not appalling for limelight-huggers to mislead the public how bad we Americans had become – a conclusion which when compared to grandma’s gritting teeth is definitely neither normal nor true!
Those I.O.Us. are the material and social capital cost of what the United States of America had become to this day – the approximate worth of this wealthiest, mightiest and greatest nation ever seen on the planet at any given time.
In monetary measurement, the United States of America is now worth $63 trillion of consumer “investable” assets and/or total assets alone. Total wealth in the United States is published by the Federal Reserve in a report titled, Flow of Funds.[81] At the end of fiscal year 2007, total wealth of all U.S. households and non-profit organizations was $57.718 trillion.
This neither includes intangibles and limitless potential callable capital resources that jump out of the book of accounting, nor does it include immeasurable natural endowments that are untapped on the surface and those that lie beneath.
There will be no collapse of the economy that toothless tigers pictured as worse than that of the 1920s. This gigantic U.S. economy is “unsinkable”, given what we have already gone through.
This preposterous claim that the national economy will go under may be categorized as a fantasy, a science fiction that if it persists to grind in the rumor mill may be filmed and nominated for this year's Academy Award! #
© Copyright Edwin A. Sumcad. Freedomsphoenix.com access January 23, 2009.
The writer is an award-winning journalist. Know more about the author by reading his published editorials and feature articles or you may e-mail your comment at ed.superx722@yahoo.com.sg
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9 Comments in Response to II. Federal Reserve And I.O.Us.: Hard To Countenance Perceptions Mistaken As Facts
That is Prize-worthy.
In total awe, :-)
charzhome
If American people control own money, they not be subjected to outside forces spending trillions of dollars of money they no have when Fed give beaucoup dollars to already rich foreign banks. They laugh as they stick it to regular American. "Ha Ha douchebag", they say.
This leave American people very, very sad and in debt forever. Maybe cause collapse of entire system and lead to revolution.
So, essence of arguement is, no Federal Reserve, no revolution. Then no problem. You see now?
See what I mean? Read your latest comment again. Where the hell can you find our discussion of the Federal Reserve? You are using this Forum to discuss love for your Mother – for heavens' sake!
Molly, my six-year-old grandchild who loves her mother so much can, hands down, beat you to it! But we are not going there, and you cannot make me go there where you lost yourself.
The topic – or to help put you back into the line of discussion when you strayed and relished on personalities, the SUBJECT of this online debate -- is MONETARY ECONOMICS-cum-FEDERAL RESERVE. Author Sumcad wrote down a lot of eye-openers about this subject out of his experience in the field of discipline and from the academe. And you sounded too condescending on what he wrote on his essay. SHOW US WHAT YOU GOT on monetary economics and the Federal Reserve. If you cannot come up with something relevant to the subject, I suggest this space should be given to others who need it.
To show you how to start a talking point outside of the personal bias towards personalities – this does not belong here – read my comments and yours. Two-copy comment was posted on purpose to make you read it twice.
Compare them to yours. You will see the difference … yes, you can. That's what you need. It will guide you to what you are supposed to do in this Forum!
Don't thank me as of yet … maybe later. We need to talk about our economic debacle. How nice is your Mom to you – we will talk about it in some other time.
Let it be known; my Mother taught me right. I know how to be civil, polite even, and I am for the most part. That being said, I can't even to pretend to care who gets offended by something I say in the comment section of a "freedom" website. That's what it's for - a forum to state your opinion on what you've read.
It speaks volumes about a person who would become so indignant over two sentences, so much so that they would take the time and effort to write not one, but two lengthy letters in reply.
Hmmmm, It makes me wonder if the responder is:
a) the Government
b) Edwin's over-protective Mom, or
c) Edwin's henpecking wife/life partner
I stand firmly by the fact that my reply wasn't foul. The only thing that's foul is the "pee-e-yew" that's been created by the replier.
Normally, I wouldn't even reply to such an obtuse fusion of smarmy editorial ass-kissery and milquetoast parley, but I'm not going to sit by idly while some self-righteous gasbag tries to force-feed me political-correctness like I'm some gape-mawed eaglet. Be offended, be offended all you like.
That is all.
To JetL.ex-RN: After reading the editorial, you concluded that you know who is paying the author's bills. You also jumped to a rather acerbic and rush conclusion that the author is "nothing more than a New World Order Confidence Artist"!
This comment is on the person of the writer rather than on the issues he brought up in his editorial. It is bordering on what is "crude" or "lewd". I once more serve notice to the editorial management that if this continues, this kind of personal attack violates the website's guideline and should be deleted.
Lowering the ax on the neck of the author rather than confront him on those issues he brought up in his written editorial may be a source of sadistic enjoyment but it violates the published standard of editorial decency and civility aside from the fact that the comment itself is absurd. The rush conclusion proceeds from the wrong premise, that the author is a "New World Order Confidence Artist". This is a derogatory insinuation, not a fact. The author does NOT advocate the formation of the "New World Order", and falsely projecting him as such by your insinuation is clearly injurious.
If you are against the "New World Order", that is your privilege. You have the freedom of choice like any of us. But because Bill Ayers, the notorious American bomber on record, is heading a campaign against the "New World Order", it does not necessarily mean that he is paying your bills, does it?
I am demonstrating to you the absurdity of your comment.
Sumcad, the author, just published another editorial: II. Federal Reserve And I.O.Us.: Hard To Countenance Perceptions Mistaken As Facts http://www.freedomsphoenix.com/Editorial-Page.htm?InfoNo=044466. It is about rushing into a judgment where perceptions such as yours are mistaken as facts. It misleads the public. I am sure if you read this enlightening editorial, something can be learned from it.
To JetL.ex-RN: After reading the editorial, you concluded that you know who is paying the author's bills. You also jumped to a rather acerbic and rush conclusion that the author is "nothing more than a New World Order Confidence Artist"!
This comment is on the person of the writer rather than on the issues he brought up in his editorial. It is bordering on what is "crude" or "lewd". I once more serve notice to the editorial management that if this continues, this kind of personal attack violates the website's guideline and should be deleted.
Lowering the ax on the neck of the author rather than confront him on those issues he brought up in his written editorial may be a source of sadistic enjoyment but it violates the published standard of editorial decency and civility aside from the fact that the comment itself is absurd. The rush conclusion proceeds from the wrong premise, that the author is a "New World Order Confidence Artist". This is a derogatory insinuation, not a fact. The author does NOT advocate the formation of the "New World Order", and falsely projecting him as such by your insinuation is clearly injurious.
If you are against the "New World Order", that is your privilege. You have the freedom of choice like any of us. But because Bill Ayers, the notorious American bomber on record, is heading a campaign against the "New World Order", it does not necessarily mean that he is paying your bills, does it?
I am demonstrating to you the absurdity of your comment.
Sumcad, the author, just published another editorial: II. Federal Reserve And I.O.Us.: Hard To Countenance Perceptions Mistaken As Facts http://www.freedomsphoenix.com/Editorial-Page.htm?InfoNo=044466. It is about rushing into a judgment where perceptions such as yours are mistaken as facts. It misleads the public. I am sure if you read this enlightening editorial, something can be learned from it.
This is very important to ignore because this country is in trouble and we need to publicly communicate to each other amicably, clearly, fairly and squarely the problems that bugged us, and with fresh and new ideas respond to the call of the day. We need to be part of a responsible – not irresponsible – Media, where the space we write on is too narrow to accommodate personal attacks that when allowed would only lead us to nowhere. Once again, sirs, thank you.
To RickStone: You want Paul and Sumcad to debate on Sumcad's turf background-wise. That might not be fair to Paul. Paul is an MD. Medicine or healthcare is not the issue in the debate you have in mind. He has no formal background in advance economics whereas Sumcad's background in development economics is extensive, and as a UN-ILO-World-Bank specialist on monetary economics of which the subject of central banking is his bread and butter, his commanding authority in this discipline is not only impeccable but overwhelming to Paul.
The Congressman from Texas is a Libertarian politician whose values are too radical towards the left, and his views are not even coming from mainstream Conservative and Republican values. Nobody wants to debate with him and just waste time.
In the Iowa Republican Caucus on taxation even his colleagues in the Republican Party wanting to debate the important issue of taxation banned him from participating. Don't just rely on what I am stating here. Surf the Web. And this is not without a cogent reason.
Who do you think would debate with a politician who blames America – not the Al Qaeda terrorists – for the wanton destruction and mass murder of more than three thousand Americans in 9/11? Just recently, Fed Chairman Ben Bernanke deliberately evaporated from the House Financial Services Committee hearing when informed that Paul was attending. Bernanke's presence would have been ornamental to Paul's YouTube baby that's now playing in the Web and I have no doubt that the Fed Chairman would have hated it. I mean, I like Paul because his supporters are beating the Libertarian campaign drum that he is a gentleperson. I believe he is because my son is also a doctor who is quite gentle to life he is saving in the practice of medicine. I even receive e-mails asking to support Paul's libertarian crusade, whatever that is or might be. But his ideas, philosophical deportment and ideology are too extreme many think he is a jolly odd fellow.
But I do understand why no one wants to debate with him. From those coming from a high profile list of public figures, I also doubt if Sumcad would debate with him. They are not fairly matched, at least for two reasons: One, the debate would only be a learning process for Paul because the esoteric subject of the debate which covers economic development and monetary economics is not his forte, and two, the debate will just be a teaching moment for Sumcad because he will not be debating – he will just be lecturing like he used to in the academe! It would be so boring that no sponsor will come forward to host the public encounter.
However, this is just my considered opinion on the matter. If you have a better one … please don't hesitate – fire.
To refer to your own "bio";
He was a UN-World Bank-ILO scholar that specialized on monetary and fiscal policies, multilateral trade negotiations and regional economic cooperation.
and;
retired diplomat and former deputy permanent representative to the United Nations.
I would love to see a public debate with Ron Paul and Mr. Sumcad. The truth would come out and all this disinformation would be transparent to anyone listening. The fed needs to go and quit bleeding our country dry.