The Federal Reserve

Let's play a game.  It's called "who is my daddy and what does he do"?  (Kindergarten Cop)

Who is the Fed and what does it do?

http://www.federalreserve.gov/

First of all, I find it odd that the web address extension is ".gov" since the Federal Reserve (the Fed) is owned by private banks, and not by the public.

Looks like the first lie so far.

Basically, the Fed is in charge of all the little federal reserve notes floating around this country in the form of computer code in the computer servers of the banks or in the form of "dollar bills".  The treasury prints the money, but only with the permission of the Fed.

Some days, a person, or group of people, in the treasury decides that we need more money to pay off government liabilites.  When this happens, the treasury creates treasury bills (this is a way of saying "the government promises to repay you with something of equal value plus interest") which are then purchased by the Fed.  These aren't purchased with money because the money doesn't exist at this point...remember, the whole point was to create new money in the first place.  The t-bills are purchased with purchasing power. This purchasing power doesn't actually exist either.  What happens is this:  the Fed assumes the purchasing power (pulls it out of thin air) and gives the treasury (a government entity) permision to print new money.  Then the treasury goes and hands out the money to people who produced no value in order to earn said money.

Please go look up the definition of "fiat".  It's a latin word.  I'm not talking about the car.

Now, I could be wrong on all this.  Maybe the Fed does actually own something or produce something that has value, but so far in my education of monetary policy I haven't found it.

Please enlighten me if anyone out there has the answer.


*This post does not even begin to consider the implications of such a fiat system.  I would venture to say that the entire economy is affected by cycles because of this.  Go check out http://atleastonewhy.blogspot.com/

Man of the year...

So it looks like Time is about as clueless as the guys who have been giving out Nobel Prizes lately.

First we had Paul Krugman win the prize for economics.  If you don't know about how wrong he is, go listen to Peter Schiff on youtube or read this comic by Irwin Schiff (Peter's dad).

Then we had Obama get a deposit on his future accomplishments with the Nobel piece Prize.  Now Time magazine has decided that Ben Bernanke is the man of the year.

This is due to a lack of education.  Or at the very least, a lack of reflection on the lessons of history.  Probably the single most responsible person for this whole crisis lasting as long as it will is Ben Bernanke, the head of the Federal Reserve...the man of the year.

Climategate...why haven't I heard about this?

Has anyone been following the biggest scandal of all time?  Climategate.

Supposedly, the existence of global warming is not supported by the data collected.  Anyone know much about this?  or have thoughts on it?  Why isn't the media making a big deal out of this?

Shouldn't people be very angry?  Please comment and share.

http://blogs.telegraph.co.uk/news/jamesdelingpole/100017393/climategate-the-final-nail-in-the-coffin-of-anthropogenic-global-warming/

http://www.foxnews.com/opinion/2009/11/24/john-lott-climate-change-emails-copenhagen/

a little piece of advice that's actually worth something in this dying economy...

Part 1:

Look up the definition of fiat money. http://en.wikipedia.org/wiki/Fiat_currency

You don't have to understand all of it, but you do need to understand two things:

1. The real purpose of money.

2. How fiat money is different from real money and what gives it value. (not the "value" of the dollar)

-----------------------------------------------------------

 

Part 2:

 

Find out who creates our money...our dollars.

 

 

Q:  Where does our money come from?  Is it a government entity? 

 

A:  The Federal Reserve (The Fed).  No it is not a government entity.  It is owned by its member banks - the banks to whom it freely gives money whenever it wants (cashing checks from company accounts to the owners with cash that didn't exist yesterday).

 

 

Q:  Who is in charge of the Fed?

 

A:  Congress sorta tells the Fed what its job is, but that's about it.  The Fed messes with the money supply whenever it wants to create short terms booms in the economy...at the expense of long term crashes.

 

 

Q:  Why does this matter to me?  I can still buy a gallon of milk for $4.99.

 

A:  It matters because the Fed creates/controls artificial inflation.  Yeah, $4.99 huh?  Well milk used to cost $1.00 a gallon.  No, it is not that much more expensive to produce milk.  The price is driven up by inflation (created only by the Fed).  The increase in the price of milk is not price inflation, per se.  The cause of the increase in the price of milk is inflation.

 

Any questions?