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Old November 25th, 2009 #61
-JC
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Default The train headlight at the end of the tunnel...

"Are there any Republicans who might just be smart enough, forceful enough, young enough, and appealing enough to the voters, to capture the White House in 2012? So far, I'd take Texas Governor Perry and Sarah Palin. If Republicans are smart enough to change their voting habits and reform themselves, it is possible that both Houses could be re-captured in 2010. Will it happen, or should we just forget about politics, and concentrate on protecting ourselves? I'm ever an optimist maybe, but I am ordering "Perry/Palin in '12" bumper strips and will send out one with each order till the thousand run out, and then maybe I'll order more. Perry is a young, handsome guy, deep voice, excellent speaker, a conservative who has threatened to take Texas out of the union if they don't behave, and Sara is just great. There simply has to be a light at the end of this dark, Democratic tunnel."

On YouTube at her most embarrassing:

_______________________________

The Goddess of Implicit Whiteness: A Review of Going Rogue
Richard Hoste
November 25, 2009


The Sailer worldview:
Sarah Palin’s intelligence = blank slate
Every other person in the entire world’s intelligence: biologically determined.
-Annonymous commentatorat Steve Sailer’s blog

It has been suggested that Sarah Palin is a sort of Rorschach test for Americans. The attractive, religious and fertile White woman drove the ugly, secular and barren White self-hating and Jewish elite absolutely mad well before there were any questions about her qualifications. The loyalty she inspires in the White masses is similarly based on gut feelings rather than rational analysis.

The latest chapter in the Palin saga is her book Going Rogue. I usually don’t like to read these kinds of ghostwritten works by politicians who still have ambitions for higher office. You’re not hearing the candidate speak about what he believes or getting a sense of his own style, but reading what he thinks he should say to be politically acceptable to the masses filtered through the diction of a nobody.


Indeed, there is much in this book that would be hard to imagine coming out of the author’s mouth. Take the second sentence.


With the gray Talkeetna Mountains in the distance and the first light covering of snow about to descend on Pioneer Peak, I breathed in an autumn bouquet that combined everything small-town America with rugged splashes of the Last Frontier.


At other points the author quotes Plato and Aristotle. Near the end, she even discusses economics with Bristol, the kid who got knocked up. We're informed that this daughter dreams of opening a coffee shop with her cousin. After Palin explains to the teenager that Obama is destroying capitalism, Bristol the economist replies:



"You're always preaching that government 'can't make you happy, healthy, wealthy, or wise.' Business owners are smarter than politicians give them credit for, and President Obama is wrong to think more government control is the answer. Pay attention to the tea parties, Mom. You're not alone in this. That's what they're saying."


Bristol's barista wage: $7.25 an hour.

Her advice to the president (and her mom): priceless.



Despite the drawbacks inherent in a book like this, the Palin phenomenon says so much about modern day America that ignoring her autobiography would be to miss a major cultural event. And combing through Rogue may shed light on who has the ear of the lady who may very well be our president in a few years.



Not a Typical National Politician


The first three chapters tell the story of Sarah Palin’s life up until she was selected to be John McCain’s running mate. Chapter four is the 2008 campaign and five is what has happened since. Chapter six is a short fourteen pages that sum up the author’s political philosophy.


Sarah Heath was born in Idaho. Her father was a schoolteacher and the Alaskan gold rush had created a demand for professionals to serve the growing population of the 49th state. She arrived in Skagway, population at the time 650, as a three-month-old. From then on she had a typical American upbringing.


Sarah met Todd when she was a senior in high school. He had come to Wasilla for his last year of school to play on the basketball team. Sarah admired his work ethic and was impressed by how polite he was to her parents. But then she tells us that he chewed tobacco, didn’t go to church and cussed. When Todd informs Sarah that he’d been baptized at a sports camp a few years before meeting her, she knows that he’s the right man for her.



Sarah graduated from high school with the goal of being a sports journalist. She took five years to finish college not because she was dumb, as some have suggested, but because she had to pay her way and would occasionally take a semester off. At eighteen she supposedly read the platforms of both the major political parties and decided to become a Republican due to her love of America, beliefs in individual rights and capitalism, and her “respect for equality.”



According to Sarah, Todd was the first and only boy she ever kissed. When he tried to put the moves on her for the first time she jumped out of the car. The Palins got married at a courthouse and had their wedding dinner at Wendy’s. Unlike the Obamas, as young adults they had real jobs. Finding one that paid $14 an hour would be a cause for celebration. Years later when accused of having a conflict of interest because her husband was employed by the oil industry, Governor Palin would explain to her state that “Todd’s not in management. He actually works.”



As a politician, Palin claims to always have been looking out for the best interests of her constituents. She rose to become the mayor of her hometown and from there went on to the governorship of the state. The way she tells it, Palin was a completely disinterested public servant who fought corruption wherever she found it.



There seems to be some truth in her account. In 2006 the FBI served almost twenty search warrants on the offices of state legislators, most of whom were Republicans. Palin herself would be untouched during the corruption investigations and no impropriety was found after she came back to Alaska after the 2008 campaign. This is despite the fact that she and her family would go $500,000 in debt defending herself against ethics complaints, which could be filed at no cost to the accuser.



Less believable are Palin’s claims that when her family moved into the Governor’s Mansion they fired the private cook to save the state money. If this is true and it wasn’t a gimmick, the woman is a saint.
It’s quite charming to hear accounts of how Palin balanced her numerous pregnancies and the needs of her children with her political duties. When Frank Murkowski was elected governor of Alaska in 2002, he had to resign his Senate seat and pick a replacement. Mayor Palin was on the short list. Todd drove her out to Anchorage to interview for the position and rode around the parking lot to keep the Ford Bronco warm as his wife met with the governor. She didn’t get the job, but the parents got home in time to watch Bristol's basketball game and Track’s hockey practice. Governor Palin had an approval rating in the 80s when she joined the McCain team.



The Disastrous McCain Campaign


Palin went to Arizona in the summer of 2008 to interview for the number two spot of the Republican ticket. She met with senior campaign strategist Steve Schmidt,[1][[1]i] who had also worked for W. His favorite issue was the Iraq war and he would give Palin books and videos on the subject. There was an assumption that the conflict would be the center of the McCain campaign. The only thing more disturbing than the fact that the McCain team thought they could win on this issue is that they actually believed in the war.
Schmidt asked her about gay marriage. Palin said that her college roommate was a lesbian and that even though she thought that marriage was between a man and a woman, she loved her friend dearly. Then they asked about evolution. Palin replied that she believed that although there was evidence for microevolution, there was none for macroevolution.



I didn’t believe in the theory that human beings ... originated from fish that sprouted legs and crawled out of the sea. Or that human beings began as single-celled organisms that developed into monkeys who eventually swung down from the trees; I believed we came about through a random process, but were created by God.



The last sentence makes absolutely no sense, but then again, it’s coming from a woman that doesn’t believe in evolution.



Palin's reputation would take its biggest hit in her interview with Katie Couric. Someone on the campaign convinced the governor to do it by explaining that Couric had low self-esteem and simply wanted to be liked.



Palin throws cheap shots like this throughout the book at those that have crossed her. Here’s some more: The McCain people were completely cynical and scared to death of unscripted moments. An Alaskan Democratic state legislator was laughed at by soldiers for claiming to have had experience in the army after taking a few weeks’ military course. Schmidt wore sunglasses on the top of his bald head in the middle of the night.



As for the famous CBS interview, Couric and her team shot hours of footage and then unfairly decided what fraction went on TV. Palin would accuse them of picking the worst of the worst to broadcast. It sounds like a just criticism until you realize that twenty minutes out of a few hours is a pretty significant portion. If you picked out the worst sixth of my writing, it wouldn't be representative but at the same time it wouldn’t be the disaster that was the Palin interview. Granted, if you took my worst sentence I may look like a fool, but CBS News didn’t do anything close to that.



Couric famously asked Palin which newspapers she read that formed her worldview. Here’s how Palin explains her humiliating answer.


It’s not that I didn’t want to — or as some have ludicrously suggested, couldn’t — answer her question; it was that her condescension irritated me. It was as though she had suddenly stumbled on a primitive newcomer from an undiscovered tribe.



You can watch the segment for yourself
and decide if Palin’s characterization of Couric’s tone is correct. The question isn’t unreasonable and the interviewee’s answer says more about her insecure and paranoid nature than anything else.



Palin is like a Black person who responds to normal human interactions with “It’s because I’m Black, right?” Except with her, it goes “It’s because I’m not from New York and don’t have an Ivy League degree, isn’t it?”



This isn’t to absolve the McCain campaign of anything. I have nothing but contempt for people who would work for that disgusting and horrible man. Nor do I have any love for the liberal elite.



But Palin doesn’t have the IQ to run an effective political campaign or be a passable representative for White America. In fact, part of the reason that the proles relate to her is that they’re also resentful of those smarter than themselves. Sure, they dislike the liberalism of the ruling class, but there’s still old fashioned jealousy.



Intelligence Is Overrated in a President



Picking a president isn’t like choosing a doctor or an engineer. A political leader decides what his agenda is going to be. You don’t have to be a genius to read and believe in the 10th amendment. Palin mentions it twice favorably in her book.



On the other hand, it does take some intelligence to not consistently embarrass and discredit the ideology you represent. After eight years of a Republican president who couldn’t put a grammatical sentence together, the last thing conservatism needs is a creationist with an IQ a standard deviation below those she disagrees with ideologically and must debate.



Sarah Palin writes that the media picked on her and her family. She asks us to



imagine if your family were the subject of relentless attention from a hostile press. Surely there is at least one person or incident the press could seize on to embarrass your loved ones... If your extended family doesn’t fit that description, count your blessings. I’ve never met anyone like you.



The reason that she hasn’t is because everybody she knows is a prole. They didn’t need to go to the extended family to find disgraced relatives either. Bristol was pregnant at 17. Her sister’s husband tasered his 11-year-old stepson. Palin takes John Kerry to task for his joke about those who don’t study getting “stuck in Iraq,” but the story of her own son proves that he was right (or would’ve been, if insulting soldiers was actually his intention). Track joined the military after deciding that he didn’t want to bum around after high school like his friends. This implies that he wasn’t smart enough for college. He got two tattoos before he left: a Jesus fish and the state of Alaska. Maybe this sounds heartwarming at a town hall meeting in Wasilla, but to the educated public it’s trashy.
As far as Palin’s ideology goes, she does embrace the too-many-loans-to-poor-people explanation for the housing crash, without the racial aspect of course. And in the final chapter she names [Black man] Thomas Sowell’s
A Conflict of Visions A Conflict of Visions
as a work that influenced her.



But the most important thing of all is that there isn’t a word about either legal or illegal immigration in the book. And even if she managed to have her way on taxes and welfare, it would eventually be repealed by the soon-to-be majority of Mexicans and other NAMs.



She says we have a responsibility to “complete our missions” in foreign lands and ensure America remains the strongest military power in the world. And the always innocent and wonderful state of Israel is singled out twice as a foreign country that especially deserves American support.(Here’s
of Palin saying that Israel should build even more settlements on Palestinian land because, after all, Israel has a rapidly growing population. If only we had politicians to consider the demographic future of the majority people of America!)



Although one would have a hard time telling from this review, I really like Sarah Palin. She is as good a person as can get on a presidential ticket in today’s America. But that isn’t enough. There will never be a rising up of “Middle American Radicals” who seize power. If the American elite is ever to be replaced, it will have to be done by people of comparable ability.


Palin takes the McCain campaign to task for not emphasizing Jeremiah Wright during the campaign. She was told to be quiet on the subject. The girl has guts and unlike McCain would’ve cared more about winning than not being called racist.



But the end result of a Palin victory in 2012 would simply be a globalist that the masses relate to instead of one whom they resist. That’s the problem with hoping for the “Joe the Plumbers” to save the White race. Being deficient in intelligence, they’re easily led in any direction [by their staffers, frequently Jews]. Whites voted for the Bush that promised a humble foreign policy in 2000 and they died for him in the sands of Iraq from 2003 on.



If there’s one lesson from the last Republican president, it’s that if someone has the loyalty of conservative Whites, it’s important that he actually carry out policies that are good for Whites. It’s too easy to fall under the spell of a pretty face and then wake up to find that your country is gone. Not for nothing did Sam Francis refer to the failure of conservatism under Reagan.


Sarah Palin would make a wonderful neighbor or midlevel manager. But a Palin presidency would give us little more than “invade the world, invite the world.”


And when the country goes under thanks to these foreign wars and increasing number of low-IQ welfare dependents, “conservatism” and maybe even nativism will be blamed.



In the end though, I’ll be rooting for Palin just so I can watch liberals’ heads explode after the goddess of implicit Whiteness beats their messiah. Anyone who thought seeing Kerry lose to Bush was tough on the Left hasn't seen anything yet.


If it's going to be a long time until a White awakening, we may as well be entertained while we wait.

[1][i]Schmit would go on to say that a Palin candidacy would be disastrous for the Republican party in 2012. She likewise bashes him in Rogue as unprincipled and incompetent.


Richard Hoste (email him) writes on race, immigration, political correctness and modern conservatism. His articles have appeared at VDARE.com, The Occidental Observer, The Occidental Quarterlyand TakiMagamong other places. His blog is HBD Books, where he regularly reviews classic and modern works on these topics.


Permanent URL:http://www.theoccidentalobserver.net...ste-Rogue.html

Last edited by -JC; November 25th, 2009 at 10:54 PM.
 
Old December 27th, 2009 #62
alex revision
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Default Rewarding failure at the Fed

Rewarding failure at the Fed

While millions of Americans have lost their jobs, Washington allows Federal Reserve chairman Ben Bernanke to keep his

http://www.guardian.co.uk/commentisf...-reappointment

The Senate finance committee overwhelmingly voted to approve Ben Bernanke for another four-year term as Federal Reserve board chairman. This is a remarkable event since it is hard to imagine how Bernanke could have performed any worse during his last four-year term. By Bernanke's own assessment, his policies brought the US economy to the brink of another Great Depression. This sort of performance in any other job would get you fired in a second. But for the most important economic policymaker in the country it gets you high praise and another term.

There is no room for ambiguity in this story. Bernanke was at the Fed since the fall of 2002. (He had a brief stint in 2005 as chair of President Bush's council of economic advisors.) At a point when at least some economists recognised the housing bubble and began to warn of the damage that would result from its collapse, Bernanke insisted that everything was fine and that nothing should be done to rein in the bubble.

This is worth repeating. If Bernanke knew what he was doing, he should have been able to see as early as 2002 that there was a housing bubble and that its collapse would throw the economy into a recession. It was also entirely predictable that the collapse could lead to a financial crisis of the type we saw, since housing was always a highly leveraged asset, even before the flood of subprime, Alt-A and other nonsense loans that propelled the bubble to ever greater heights. Of course as the bubble expanded, and the financial sector became ever more highly leveraged, the risks to the economy increased enormously.

Through this all, Bernanke just looked the other way. The whole time he insisted that everything was just fine.

To be clear, there was plenty that the Fed could have done to deflate the bubble before it grew to such dangerous proportions. First and foremost the Fed could have used its extensive research capabilities to carefully document the evidence for a housing bubble and the risks that its collapse would pose to the economy.

It then should have used the enormous megaphone of the Fed chairman and the platform of the institution to publicise this research widely. The Fed could have ensured that every loan officer who issued a mortgage, as well as all the banks officers who set policy, clearly heard the warnings of a bubble in the housing market, backed up by reams of irrefutable research. The same warnings would have reached the ears of every potential homebuyer in the country. It's hard to believe that such warnings would have had no impact on the bubble, but it's near criminal that the Fed never tried this route.

The second tool that the Fed could have pursued was to crack down on the fraudulent loans that were being issued in massive numbers at the peak of the bubble. It is absurd to claim that the Fed didn't know about the abuses in the mortgage market. I was getting emails from all over the country telling me about loan officers filling in phony income and asset numbers so that borrowers would qualify for mortgages. If the Bernanke and his Fed colleagues did not know about these widespread abuses, it is because they deliberately avoided knowing.

Finally, the Fed could have had a policy of interest rate hikes explicitly targeted to burst the bubble. Specifically, it could have announced that it will raise rates by half a percentage point at every meeting, until house prices begin to fall and it will keep rates high until house prices approach their pre-bubble level.

This is what a responsible Fed policy would have looked like. But Ben Bernanke did not pursue a responsible Fed policy. He insisted that everything was just fine until he had to run to Congress last September, saying that if it didn't immediately give $700bn to the banks through the Tarp programme then the economy would collapse.

How on earth can you do worse in your job as Fed chair than bring the economy to the brink of a total collapse? If this is success, what does failure look like?

But, in Washington no one is ever held accountable for their performance. The economic collapse is treated like a fluke of nature – a hurricane or an earthquake – and not the result of enormous policy failures.

So, it is the 15 million unemployed that go without work, not Ben Bernanke. Instead, many of the senators praise Bernanke to the sky and thank him for his service. The running line in the Senate is: "It could have been worse."

That is the way Washington works these days. And, everyone should be very very disgusted.
 
Old December 29th, 2009 #63
Alex Linder
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It’s going to be much worse than what happened in Germany or Zimbabwe. This is a couple orders of magnitude greater seriousness and it seems to me that this is almost certain to happen with a monumentally stupid person like Bernanke steering the ship of state into a reef.

http://www.lewrockwell.com/casey/casey35.1.html

[Much worse? Than wheelbarrows full of worthless notes and starvation?]
 
Old December 29th, 2009 #64
Trevor Dermott
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[A different take on the future of the US dollar.]

http://exiledonline.com/reverse-repo...the-oligarchs/

Quote:
It is all about taking care the already-mega-rich Wall Street bankers and foreign investors who want to protect the value of all the money they plundered from America. They want to ensure that the trillions they were handed by Paulson and Bernanke and Summers are still worth the same trillions next year…and to do that, they’re going to apply a simple law of supply and demand: drain out $1 trillion from us, and the value of their trillions holds its value.
 
Old December 29th, 2009 #65
N.B. Forrest
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Quote:
But, in Washington no one is ever held accountable for their performance. The economic collapse is treated like a fluke of nature – a hurricane or an earthquake – and not the result of enormous policy failures.

So, it is the 15 million unemployed that go without work, not Ben Bernanke. Instead, many of the senators praise Bernanke to the sky and thank him for his service.
Being total failures themselves at everything except getting re-elected, those whores can always be relied upon to support a "financial genius" Fed kike, no matter how many millions of real Americans he ruins. If one of those Empty Suits dared to utter the word "accountability", it would be considered a far greater affront than if he'd jumped up and screamed "MOTHERFUCKERS!!"
 
Old June 26th, 2010 #66
Rick Ronsavelle
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Default Is the Fed Too Big Too Fail?

Is the Fed Too Big To Fail?

by Gary North


The mark of political sovereignty is legal immunity from failure. For example, the government of the United States cannot be sued without its consent. It is above the law. It must consent to expose itself to the possibility of failure in a court.

In school, we are taught about an ancient idea that is long out of favor: the divine right of kings. What did it mean? I think most people would find it difficult to say. It meant that there was no earthly court of appeal above the king. The king's judicial word was law, because no higher authority could lawfully overturn his word.

The two revolutions of the seventeenth century brought that doctrine to an end in England and the colonies. First Cromwell (1649), then Parliament (1688) removed kings from their thrones. Over the next century, the West substituted a new doctrine: the divine right of legislatures. This sovereignty was never called divine right, because in the era of the Enlightenment, intellectuals have been hostile to the idea of a God who interferes in history. Civil governments have claimed autonomy, which is another word for divinity. Maybe we can say that divinity abhors a vacuum.

Officially, there is a right of revolution. The People – capital P – are said to be sovereign. This is a convenient legal fiction. It keeps the citizenry satisfied and subdued. All civil governments have made armed revolution illegal. Every revolutionary movement claims the right of revolution. In all cases, when a revolutionary movement topples the previous regime, the right of revolution officially ceases within the formerly revolutionary camp.

Maybe you think this: "If the sovereignty of the citizens is a legal fiction, then why are they allowed to vote?" Answer: for the same reason they were allowed to vote in the Soviet Union. Voting provided the Communist government with a bogus sense of legitimacy. In Western political theory, the process of voting supposedly legitimizes the despotic regime. The choices on the ballot were screened by the Communist Party. So, the citizens' votes counted for only one thing: to provide a religious sanction from the official god who then submitted, namely, the People. The People was a phony collective god without meaningful sanctions.

Conclusion: the agency that imposes final sanctions in terms of its own final word is the god of a society.

This brings me to the topic at hand: central banking.

CENTRAL BANKING

The advent of the Bank of England in 1694, just six years after Parliament's "Glorious Revolution," added a new factor to the doctrine of political sovereignty. To what extent is a central bank sovereign? That is, to what extent is it immune from lawsuits? To what extent is it its own court of final appeal? To what extent can it impose autonomous sanctions?

Over the last three centuries, battles have raged between central banks and legislatures for the title of "final sovereign." Central banks have usually won the war over the last century.

The Bank for International Settlements is the representative institution of this victory. It was established in 1930. It operated during World War II as a way for central banks to conduct business with each other despite the deaths of 60 million people. The cause of central banking triumphed over the competing causes of the battlefields.

We are seeing this battle being played out in the United States. This is the first surfacing of the battle ever since the Federal Reserve System was created by the government in the last days of December 1913. Ron Paul persuaded a majority of the House of Representatives to demand that the Government Accountability Office audit the Federal Reserve System. The FED resisted. The senior members of Congress resisted. The bill was killed. The new financial reform bill gutted the original bill.

Here is another example. Last year, Bloomberg LLC sued the Board of Governors of the Federal Reserve to produce evidence of which banks received TARP loans. The FED refused to comply. A Federal judge last August told the FED to comply. The FED appealed the case. On March 19, the appeals court told the FED to comply. The FED has not complied. I have been unable to find out what the status of the case is today. Bloomberg has not mentioned it as far as I can discover on Google. The FED has hired Lawyer Delay. He seldom loses a case. Bloomberg has hired Lawyer Silence. He rarely wins one.

This is functional sovereignty. Legally, the Board of Governors is a Federal agency and is therefore under the provisions of the Freedom of Information Act. Yet in fact, it is almost as sovereign as the CIA or the NSA ("No Such Agency"). The latter have guns. The FED does not. This is most peculiar.

How can this be? Because the FED has the authority to make or break a bank that gets into trouble. The FED holds the hammer over the economy, because the big banks are at the center of the economy. It is the lender of last resort.

The FED is not legally required to buy Treasury debt. It does, or rather used to. These days, it sits on old Treasury debt – not much – and Fannie Mae and Freddie Mac debt: lots. It sits on toxic assets that it swapped at face value for Treasury debt in order to restore the big banks' balance sheets to official solvency. The FED answers to no one about its balance sheets. It keeps all assets at whatever price it chooses. Gold is held at $42.22 per ounce. Toxic assets are held at face value.

The Federal Reserve System possesses so much sovereignty that it holds the U.S. Government's gold in trust. Anyway, it says it does. There has been no government audit of the gold since 1951. No one in government knows how much gold there is in Fort Knox and the vault of the Federal Reserve Bank of New York, a private bank. The government does not assert its right to know.

The FED reigns supreme over commercial banks. It is going to be granted far more authority if the proposed bank reform bill passes. Bernanke recently praised the bill in a June 16 speech.

The Federal Reserve System is universally regarded as too big to fail. Put another way, it is beyond negative sanctions. It therefore possesses what was once called divine right. It is beyond legal constraints. It is beyond market constraints. It answers to no one. It is autonomous.

Nice work if you can get it. The Board of Governors got it.

Also, only 12 private entities in the United States possess comparable sovereignty: the regional Federal Reserve Banks. They are under the legal umbrella of the Board of Governors. Nice work if you can get it.

Federal Reserve sovereignty is premised on two things: (1) the government's refusal to exercise Constitutional authority over the FED, which was created by the government; (2) the FED's ability to create money. It decides who is too big to fail and who isn't. This is the mark of sovereignty.

WHO WINS? WHO LOSES?

Year after year, decade after decade, century after century, we hear warnings about banking institutions that are too big to fail. This goes back decades before British author Walter Bagehot wrote "Lombard Street" (1873). He argued that the Bank of England should serve as a lender of last resort. In an economic crisis, the Bank should make credit available.

As it turned out, no such policy was adopted by the Bank for over 50 years, yet there were no major financial crises until after World War I. That was when the Bank began serving as the lender of last resort. The result was the suspension of the gold standard in 1931. Without the threat of a drain of gold, the Bank could then function as the lender of last resort by creating fiat money at will.

This is what the phrase "lender of last resort" really means: the creation of fiat money by the central bank. It means breaking the normal rules of the fiat money game. It means bailouts.

The problem of moral hazard was seen by Bagehot. If the central bank stays in the background as the lender of last resort, the commercial bankers' need for prudence and restraint is reduced. They will get bailed out if their investment portfolios shrink due to unforeseen conditions.

Then there is the question of questions: Which banks or institutions will get bailed out? The answer in both theory and practice is the same: big banks. Why? Because they could take down the fractionally reserved banking system if they were to suspend payment and default on their contractual obligations.

With the central bank ready to bail out the big banks, the senior managers of these banks can put their banks' capital at risk by investing in high-return, high-risk investments. Think "derivatives." Then think "toxic assets." Then think "exchange our toxic assets at face value for liquid T-bills." This is what the Federal Reserve did for the major banks.

The result? The six largest American banks have been highly profitable in 2010 – far more so than in 2009. But they have made their money through trading, especially high-risk derivatives. They did not make it by lending to businesses. In short, they are back to the pre-2008, pre-TARP world. Happy days are here again! For them.

This is why Wall Street is on the fast track to Easy Street, while Main Street remains on the detour. The FED decided who would win and who would lose. Main Street is losing. But this is nothing new. This is as old as the Federal Reserve System.


THE POWER TO DESTROY

In the case that established the sovereignty of central banking in the United States, "McCulloch v. Maryland" (1819), Chief Justice John Marshall wrote the famous words, "The power to tax is the power to destroy." Because historians have never read the actual trial documents, they are unaware of the context.

The state of Maryland was trying to tax a branch of the Second Bank of the United States. The Bank was refusing to pay, on this legal basis: its sovereignty as an agency of the government. Its lawyer was the ever-indebted Daniel Webster.

The following never makes it into the textbooks. The state's attorney argued that the Bank did not possess Federal sovereignty, because it was a private agency. The Court rejected this argument, 7 to 0. We still live under the burden of that decision.

John Marshall stole Webster's slogan: "The power to tax is the power to destroy." He saw his opportunity, and he took it. It is his most famous aphorism. Yet it came from the lawyer who was defending the sovereignty of the central bank.

Here are some additional powers to destroy:

The power to inflate is the power to destroy.

The power to deflate is the power to destroy.

The power to subsidize members of one group by transferring wealth from members of another group is the power to destroy.

The power to keep large bankrupt institutions from failing, yet let other institutions just like it fail, is the power to destroy. In short, anything that places the power to manipulate the economy into the hands of salaried bureaucrats who do not personally bear the consequences of their actions is the power to destroy.

Such power will eventually be used.

The Federal Reserve System has created the boom-bust cycle, just as Ludwig von Mises described it in 1912. The FED's prior policies of monetary inflation created the boom. Its policies of monetary stabilization created the bust. It then doubled its balance sheet (the nation's monetary base) in October 2008. The only thing keeping this from doubling the money supply and possibly doubling consumer prices is the fear of commercial bankers. They refuse to lend the money they are legally entitled to create. They are hoarding digital money at the FED. To put this in terms even a central banker can understand:

Commercial bankers, acting on their depositors' behalf, are hiding the depositors' digital money under the mattress: the FED's excess reserve account.


FUNDING THE FEDERAL DEFICIT

At some point, lenders will refuse to lend money to the Treasury at low rates. At some further point, the Federal debt will have to be funded by the FED in order to keep rates from rising.

If the FED keeps funding the Treasury, this will produce monetary inflation. This will go to mass inflation: over 20% per annum. If it continues, this will go to hyperinflation.

That will destroy the dollar. The power to inflate is the power to destroy. The FED will transfer massive, comprehensive destruction to the general population.

To stop this from happening, it will have to cease buying Treasury debt. It will stabilize the money supply. That will create the great depression.

At that point, we will see who is sovereign: Congress or the FED. If Congress nationalizes the FED and inflates, then the FED will have failed. It will be proven for all to see that it was not too big to fail.

On the other hand, if the FED refuses to buy the Treasury's debt, the Federal government will default. It will be proven as not too big to fail.

CONCLUSION

For freedom's sake, both should be allowed to fail: the FED's fiat money and the Federal debt. The very concept of too big to fail rests on the idea of coercive wealth redistribution by the state. Such power is the power to destroy.

The problem is this: to get people to act like the People will take a lot of failures of very large banks. The big banks will fight this outcome. The FED will fight on their behalf. Central banks have won this battle for over 300 years.

This is why there is going to be a great deal of economic destruction.

June 26, 2010

http://www.lewrockwell.com/north/north859.html
 
Old January 20th, 2011 #67
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Default The Fed controls the economics profession

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.

Despite all this, Bernanke has been nominated for a second term by President Obama.
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In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.

Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."

So who seduced them?

The Fed did it.

Three Decades of Domination

The Fed has been dominating the profession for about three decades. "For the economics profession that came out of the [second world] war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s," says University of Texas economics professor -- and Fed critic -- James Galbraith. "The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn't a culture of consulting, and it wasn't the same vast network of professional economists working there."

But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and "officers" -- who are generally also economists -- the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.

Just how dominant is the Fed today?

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation [and] aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.

Robert Auerbach, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, "Deception
and Abuse at the Fed". A chapter in that book, excerpted here, provided the impetus for this investigation.

Auerbach found that in 1992, roughly 968 members of the AEA designated "domestic monetary and financial theory and institutions" as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it's fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field.

Auerbach concludes that the "problems associated with the Fed's employing or contracting with large numbers of economists" arise "when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications."

Gatekeepers On The Payroll

The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank's money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.

"Try to publish an article critical of the Fed with an editor who works for the Fed," says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.

The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it's just the Fed.

Being on the Fed payroll isn't just about the money, either. A relationship with the Fed carries prestige; invitations to Fed conferences and offers of visiting scholarships with the bank signal a rising star or an economist who has arrived.

Affiliations with the Fed have become the oxygen of academic life for monetary economists. "It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

Robert King, editor in chief of the Journal of Monetary Economics and a visiting scholar at the Richmond Federal Reserve Bank, dismisses the notion that his journal was influenced by its Fed connections. "I think that the suggestion is a silly one, based on my own experience at least," he wrote in an e-mail. (His full response is at the bottom.)

Galbraith, a Fed critic, has seen the Fed's influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.

They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. "The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed," Galbraith says.

Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.

And while most academic disciplines and top-tier journals are controlled by some defining paradigm, in an academic field like poetry, that situation can do no harm other than to, perhaps, a forest of trees. Economics, unfortunately, collides with reality -- as it did with the Fed's incorrect reading of the housing bubble and failure to regulate financial institutions. Neither was a matter of incompetence, but both resulted from the Fed's unchallenged assumptions about the way the market worked.

Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: "I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results," Friedman wrote.

Greenspan told Congress in October 2008 that he was in a state of "shocked disbelief" and that the "whole intellectual edifice" had "collapsed." House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Calif.) followed up: "In other words, you found that your view of the world, your ideology, was not right, it was not working."

"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

But, if the intellectual edifice has collapsed, the intellectual infrastructure remains in place. The same economists who provided Greenspan his "very considerable evidence" are still running the journals and still analyzing the world using the same models that were incapable of seeing the credit boom and the coming collapse.

Rosner, the Wall Street analyst who foresaw the crash, says that the Fed's ideological dominance of the journals hampered his attempt to warn his colleagues about what was to come. Rosner wrote a strikingly prescient paper in 2001 arguing that relaxed lending standards and other factors would lead to a boom in housing prices over the next several years, but that the growth would be highly susceptible to an economic disruption because it was fundamentally unsound.

He expanded on those ideas over the next few years, connecting the dots and concluding that the coming housing collapse would wreak havoc on the collateralized debt obligation (CDO) and mortgage backed securities (MBS) markets, which would have a ripple effect on the rest of the economy. That, of course, is exactly what happened and it took the Fed and the economics field completely by surprise.

"What you're doing is, actually, in order to get published, having to whittle down or narrow what might otherwise be oppositional or expansionary views," says Rosner. "The only way you can actually get in a journal is by subscribing to the views of one of the journals."

When Rosner was casting his paper on CDOs and MBSs about, he knew he needed an academic economist to co-author the paper for a journal to consider it. Seven economists turned him down.

"You don't believe that markets are efficient?" he says they asked, telling him the paper was "outside the bounds" of what could be published. "I would say 'Markets are efficient when there's equal access to information, but that doesn't exist,'" he recalls.

The CDO and MBS markets froze because, as the housing market crashed, buyers didn't trust that they had reliable information about them -- precisely the case Rosner had been making.

He eventually found a co-author, Joseph Mason, an associate Professor of Finance at Drexel University LeBow College of Business, a senior fellow at the Wharton School, and a visiting scholar at the Federal Deposit Insurance Corporation. But the pair could only land their papers with the conservative Hudson Institute. In February 2007, they published a paper called "How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?" and in May posted another, "How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions."

Together, the two papers offer a better analysis of what led to the crash than the economic journals have managed to put together - and they were published by a non-PhD before the crisis.

Not As Simple As A Pay-Off

Economist Rob Johnson serves on the UN Commission of Experts on Finance and International Monetary Reform and was a top economist on the Senate banking committee under both a Democratic and Republican chairman. He says that the consulting gigs shouldn't be looked at "like it's a payoff, like money. I think it's more being one of, part of, a club -- being respected, invited to the conferences, have a hearing with the chairman, having all the prestige dimensions, as much as a paycheck."

The Fed's hiring of so many economists can be looked at in several ways, Johnson says, because the institution does, of course, need talented analysts. "You can look at it from a telescope, either direction. One, you can say well they're reaching out, they've got a big budget and what they're doing, I'd say, is canvassing as broad a range of talent," he says. "You might call that the 'healthy hypothesis.'"

The other hypothesis, he says, "is that they're essentially using taxpayer money to wrap their arms around everybody that's a critic and therefore muffle or silence the debate. And I would say that probably both dimensions are operative, in reality."

To get a mainstream take, HuffPost called monetary economists at random from the list as members of the AEA. "I think there is a pretty good number of professors of economics who want a very limited use of monetary policy and I don't think that that necessarily has a negative impact on their careers," said Ahmed Ehsan, reached at the economics department at James Madison University. "It's quite possible that if they have some new ideas, that might be attractive to the Federal Reserve."

Ehsan, reflecting on his own career and those of his students, allowed that there is, in fact, something to what the Fed critics are saying. "I don't think [the Fed has too much influence], but then my area is monetary economics and I know my own professors, who were really well known when I was at Michigan State, my adviser, he ended up at the St. Louis Fed," he recalls. "He did lots of work. He was a product of the time...so there is some evidence, but it's not an overwhelming thing."

There's definitely prestige in spending a few years at the Fed that can give a boost to an academic career, he added. "It's one of the better career moves for lots of undergraduate students. It's very competitive."

Press officers for the Federal Reserve's board of governors provided some background information for this article, but declined to make anyone available to comment on its substance.

The Fed's Intolerance For Dissent

When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.

Take the case of Alan Blinder. Though he's squarely within the mainstream and considered one of the great economic minds of his generation, he lasted a mere year and a half as vice chairman of the Fed, leaving in January 1996.

Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. "Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant," says Johnson.

In closed-door meetings, Blinder did what so few do: challenged assumptions. "The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he'd come out and say, 'Well, that's not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.' And it just created a stir inside--it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was
disrupted."

It didn't sit well with Greenspan or his staff. "A lot of senior staff...were pissed off about Blinder -- how should we say? -- not playing by the customs that they were accustomed to," Johnson says.

And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. "I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him," Krugman said of Greenspan in a 2007 interview with Pacifica Radio's Democracy Now! "Nobody really wants to cross him."

An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you're a certified member of the club. Even Krugman seems a bit burned by the slight. "And two years ago," he said in 2007, "the conference was devoted to a field, new economic geography, that I invented, and I wasn't invited."

Three years after the conference, Krugman won a Nobel Prize in 2008 for his work in economic geography.

One Journal, In Detail

The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.

HuffPost interns Googled around looking for resumes and otherwise searched for Fed connections for the 190 people on those mastheads. Of the 84 that were affiliated with the Federal Reserve at one point in their careers, 21 were on the Fed payroll even as they served as gatekeepers at prominent journals.

At the Journal of Monetary Economics, every single member of the editorial board is or has been affiliated with the Fed and 14 of the 26 board members are presently on the Fed payroll.

After the top editor, King, comes senior associate editor Marianne Baxter, who has written papers for the Chicago and Minneapolis banks and was a visiting scholar at the Minneapolis bank in '84, '85, at the Richmond bank in '97, and at the board itself in '87. She was an advisor to the president of the New York bank from '02-'05. Tim Geithner, now the Treasury Secretary, became president of the New York bank in '03.

The senior associate editors: Janice C Eberly was a Fed visiting-scholar at Philadelphia ('94), Minneapolis ('97) and the board ('97). Martin Eichenbaum has written several papers for the Fed and is a consultant to the Chicago and Atlanta banks. Sergio Rebelo has written for and was previously a consultant to the board. Stephen Williamson has written for the Cleveland, Minneapolis and Richmond banks, he worked in the Minneapolis bank's research department from '85-'87, he's on the editorial board of the Federal Reserve Bank of St. Louis Review, is the co-organizer of the '09 St. Louis Federal Reserve Bank annual economic policy conference and the co-organizer of the same bank's '08 conference on Money, Credit, and Policy, and has been a visiting scholar at the Richmond bank ever since '98.

And then there are the associate editors. Klaus Adam is a visiting scholar at the San Francisco bank. Yongsung Chang is a research associate at the Cleveland bank and has been working with the Fed in one position or another since '01. Mario Crucini was a visiting scholar at the Federal Reserve Bank of New York in '08 and has been a senior fellow at the Dallas bank since that year. Huberto Ennis is a senior economist at the Federal Reserve Bank of Richmond, a position he's held since '00. Jonathan Heathcote is a senior economist at the Minneapolis bank and has been a visiting scholar three times dating back to '01.

Ricardo Lagos is a visiting scholar at the New York bank, a former senior economist for the Minneapolis bank and a visiting scholar at that bank and Cleveland's. In fact, he was a visiting scholar at both the Cleveland and New York banks in '07 and '08. Edward Nelson was the assistant vice president of the St Louis bank from '03-'09.

Esteban Rossi-Hansberg was a visiting scholar at the Philadelphia bank from '05-'09 and similarly served at the Richmond, Minneapolis and New York banks.

Pierre-Daniel Sarte is a senior economist at the Richmond bank, a position he's held since '96. Frank Schorfheide has been a visiting scholar at the Philadelphia bank since '03 and at the New York bank since '07. He's done four such stints at the Atlanta bank and scholared for the board in '03. Alexander Wolman has been a senior economist at the Richmond bank since 1989.

Here is the complete response from King, the journal's editor in chief: "I think that the suggestion is a silly one, based on my own experience at least. In a 1988 article for AEI later republished in the Federal Reserve Bank of Richmond Review, Marvin Goodfriend (then at FRB Richmond and now at Carnegie Mellon) and I argued that it was very important for the Fed to separate monetary policy decisions (setting of interest rates) and banking policy decisions (loans to banks, via the discount window and otherwise). We argued further that there was little positive case for the Fed to be involved in the latter: broadbased liquidity could always be provided by the former. We also argued that moral hazard was a cost of banking intervention.

"Ben Bernanke understands this distinction well: he and other members of the FOMC have read my perspective and sometimes use exactly this distinction between monetary and banking policies. In difficult times, Bernanke and his fellow FOMC members have chosen to involve the Fed in major financial market interventions, well beyond the traditional banking area, a position that attracts plenty of criticism and support. JME and other economics major journals would certainly publish exciting articles that fell between these two distinct perspectives: no intervention and extensive intervention. An upcoming Carnegie-Rochester conference, with its proceeding published in JME, will host a debate on 'The Future of Central Banking'.

"You may use only the entire quotation above or no quotation at all."

Auerbach, shown King's e-mail, says it's just this simple: "If you're on the Fed payroll there's a conflict of interest."

UPDATE: Economists have written in weighing in on both sides of the debate. Here are two of them.

Stephen Williamson, the Robert S. Brookings Distinguished Professor in Arts and Sciences at Washington University in St. Louis:
Since you mentioned me in your piece on the Federal Reserve System, I thought I would drop you a note, as you clearly don't understand the relationship between the Fed and some of the economists on its payroll. I have had a long relationship with the Fed, and with other central banks in the world, including the Bank of Canada. Currently I have an academic position at Washington University in St. Louis, but I am also paid as a consultant to the Federal Reserve Banks of Richmond and St. Louis. In the past, I was a full-time economist at the Bank of Canada and at the Federal Reserve Bank of Minneapolis.

As has perhaps become clearer in the last year, economics and the science of monetary policy is a complicated business, and the Fed needs all the help it can get. The Fed is perhaps surprisingly open to new ideas, and ideas that are sometimes in conflict with the views of its top people. One of the strengths of the Federal Reserve System is that the regional Federal Reserve Banks have a good deal of independence from the Board of Governors in Washington, and this creates a healthy competition in economic ideas within the system. Indeed, some very revolutionary ideas in macroeconomics came out of the intellectual environment at the Federal
Reserve Bank of Minneapolis in the 1970s and 1980s. That intellectual environment included economists who worked full-time for the Fed, and others who were paid consultants to the Fed, but with full-time academic positions. Those economists were often sharply critical of accepted Fed policy, and they certainly never seemed to suffer for it; indeed they were
rewarded.

I have never felt constrained in my interactions with Fed economists (including some Presidents of Federal Reserve Banks). They are curious, and willing to think about new ideas. I am quite willing to bite the hand that feeds me, and have often chewed away quite happily. They keep paying me, so they must be happy about the interaction too.


A former Fed economist disagreed. "I was an economist at the Fed for more than ten years and kept getting in trouble for things I'm proud of. I hear you, loud and clear," he said, asking not to be quoted by name for, well, the reasons laid out above.

Elyse Siegel, Julian Hattem, Jeff Muskus and Jenna Staul contributed to this report

http://www.huffingtonpost.com/2009/0..._n_278805.html
 
Old February 4th, 2011 #69
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Just listened to a lunch meeting, where Ben Bernanke spoke.

Ben Bernanke: "Our [US] economy is overheated".

I have no words.
 
Old February 23rd, 2011 #70
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OWNERSHIP OF THE FEDERAL RESERVE


Most Americans, if they know anything at all about the Federal Reserve, believe it is an agency of the United States Government. This article charts the true nature of the "National Bank."
 
Old April 27th, 2011 #71
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The Fed has its first-ever press conference. Ben Shalom Bernanke trotted out to do some "explaining" to the sheep. I am watching it now (er, listening) and he sounds like a street corner kike trying to get someone in to the porn movie or play some three card monte.

http://www.zerohedge.com/article/wat...tion-free-here
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Old April 28th, 2011 #72
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Now it's called "quanitative easing". Before it was called printing money. It's the main reason behind soaring gas and commodity prices.
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Old May 29th, 2011 #73
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jewsign The Fed Behind the Greatest Fraud in History

'"........................You would have to be stone dumb not to recognize the rampant inflation in the US, England and Europe. Gasoline and petroleum derivative products and food costs have gone up substantially. Not only in the regions but also worldwide. As a result inflation will be 14% in the UK and US by yearend and 8% on the Continent.

It is not only the federal government that is broke, but so are the states and municipalities in the US. Europe and England have the same problems. More than 40 states are struggling to balance their budgets. Most will, some will not and they’ll default on the interest payment on their bonds and probably have to pay vendors with IOU’s.

There could be another federal bailout but we doubt it due to the battle over budget cuts in Washington. As these problems stand in the forefront the government’s debt dilemma is not going to go away anytime soon and over the next two years the US could experience a downgrade in its credit rating. Unfunded liabilities are $105 trillion and they are unfunded. Although stretched over years they still have to be paid unless benefits are adjusted.
"


http://www.theinternationalforecaste...aud_In_History
 
Old June 27th, 2012 #74
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Default Audit The Jew Advances in House

6/27/2012
quote
Audit the Fed Bill Passes CommitteeHistoric Legislation Set for House floor vote in July

On Wednesday, the U.S. House Oversight and Government Reform Committee passed Congressman Ron Paul's H.R. 459, the Federal Reserve Transparency Act, by a bipartisan voice vote. Republican leadership has promised a vote on the bill, more popularly known as "Audit the Fed," on the House floor this July.

Audit the Fed would require the Government Accountability Office (GAO) to conduct the first thorough audit of the Federal Reserve in the central bank's nearly 100-year history. A Rasmussen poll conducted in late 2010 showed almost 80% of the American people supported requiring such transparency from the Fed.

http://www.marketwatch.com/story/aud...tee-2012-06-27
 
Old July 27th, 2012 #75
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End the Fed! Whether Congress Wants Us To or Not!

by Michael Boldin
Tenth Amendment Center

Today was a big day for supporters of Sound Money – as Ron Paul’s Audit the Fed Bill passed the House 326-99. But, it still needs to get through a very hostile Senate, where it will likely never see the light of day. So in closing tonight, a new approach – Ending the Fed. Whether Congress Wants us to or Not!

Since its inception, the Federal Reserve’s monetary policies have led to a decline of over 95% in the purchasing power of the U.S. dollar. As a result, there have been several attempts to reduce or even eliminate the Federal Reserve’s powers.

Louis T. McFadden led efforts in the 1930s. Wright Patman pressed again in the 1970s. Henry Gonzalez got things moving in the 1990s. And, Ron Paul has led the charge for more than twenty years now. In nearly eighty years, though, none of these efforts have succeeded.

And, even with House passage of Ron Paul’s Audit the Fed bill earlier today, it’s highly unlikely that the imperial Senate would ever allow light to be shed on the actions of its financial backer. Resistance to these efforts is seriously entrenched.

But yet, a large number of people across the political spectrum want to know what goes on behind the Fed’s curtain. And with calls to audit the federal reserve reaching a fevered pitch, it’s a good time to ask the basic question – is this even a worthy effort?

Not to say that you should want a secret national bank, but rather – is this kind of activism the best place for you to put your energy...and hope? Will lobbying the Senate get Harry Reid to allow a vote? Will calling Mitch McConnell change anything? Will Barack Obama or Mitt Romney allow such a bill to pass without their veto?

I believe the answer to all these questions is a big, fat NO.

PULLING THE RUG OUT

On the other hand, in contrast to attempts to put a stop to the Fed at the national level, a paper that William Greene presented at the Mises Institute’s “Austrian Scholars Conference” proposes an alternative approach to ending the Federal Reserve’s monopoly on money. The “Constitutional Tender Act” is a bill template that can be introduced in every State legislature in the nation. Passage would return each of them to the Constitution’s “legal tender” provisions of Article I, Section 10:

“No State Shall...make any Thing but gold and silver Coin a Tender in Payment of Debts”

Such a tactic would achieve the desired goal of abolishing the Federal Reserve system by attacking it from the bottom up – pulling the rug out from under it by working to make its functions irrelevant at the State and local level.

Under the Constitutional Tender Act, the State would be required to use only gold and silver coins – or their equivalents, such as checks or electronic transfers – for payments of any debt owed by or to the State. This includes things like taxes, fees, contract payments, and the like.

All such payments would be required to be denominated in legal tender gold and silver U.S. coins, including Gold Eagles, Silver Eagles, and pre-1965 90% silver coins. The market would then require that all State-chartered banks – as well as any other bank acting as a depository for State funds – offer accounts denominated in those types of gold and silver coins, and to keep such accounts segregated from other types of accounts such as Federal Reserve Notes.

But that’s not all! Not only would the use of Federal Reserve Notes by the State be made illegal; the use of legal tender U.S. gold and silver coins would be encouraged amongst the general population too – by eliminating sanctions against its use.

HOW IT PLAYS OUT

Passage of the Constitutional Tender Act would introduce currency competition with Federal Reserve Notes by outlawing their use in transactions with the State. Ordinary people, being required to pay their State taxes in gold and silver coins, would find it necessary to conduct some transactions with metal – including the use of checks and debit cards based on bank accounts denominated in such coins

All businesses operating within the State, being required to pay their State sales taxes and license fees in gold and silver coins, would need to do the same. Most importantly, though, in order for businesses to acquire the amount of gold and silver needed, they find it necessary to offer their goods and services in “dual currency” denominations, where customers could choose to pay in Federal Reserve Notes or gold and silver coins.

This kind of “bottom up” approach to ending the Fed will have a greater likelihood of success than the “top-down” approaches we’ve seen over the years for two major reasons:

1. The top-down approach has been an utter failure. While it has succeeded greatly in an educational role, it has simply not worked tactically.

2. It’s decentralized. Political opposition won’t be as strong or well-funded on a state level. Strategies and tactics can be adapted much quicker. And, most importantly, success in one state can be a far greater educational tool – and a source of courage – for people of a neighboring state, than endless calls to a Congress which almost never does what’s right.

BYE BYE

Greene tells us that use of sound money would drive further use. He writes:

“Over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the State’s treasury, an influx of banking business from outside of the State – as people in other States carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve Notes for any transactions.”

Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.

Without a single act of Congress, the Federal Reserve system can be brought to its knees.

EDITOR'S NOTE: Get the model legislation, the Constitutional Tender Act, HERE. Read William Green's full Scholar's Conference paper HERE.

July 27, 2012

Michael Boldin [send him mail] is the founder of the Tenth Amendment Center. He was raised in Milwaukee, WI, and currently resides in Los Angeles, CA. Follow him on twitter – @michaelboldin, on LinkedIn, and on Facebook.

http://www.lewrockwell.com/boldin/boldin22.1.html
 
Old September 2nd, 2012 #76
Alex Linder
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[what? jewish bankers not allowed to counterfeit money? how horrible would that be? anti-semitic too!]

At Jackson Hole, a growing fear for Fed's independence

by Pedro Nicolaci da Costa

JACKSON HOLE, Wyoming | Sun Sep 2, 2012 4:04pm EDT

(Reuters) - Increasing political encroachment on the Federal Reserve, particularly from the Republican Party, could threaten the central bank's hard-won independence and undermine confidence in the nearly 100-year old institution.

That was the pervasive sentiment among economists gathered at the Fed's annual monetary policy symposium in Jackson Hole, Wyoming. Against the dramatic backdrop of the Grand Teton mountain, many said a closely-contested presidential race has turned the monetary authority into a political football.

"I do fear for it a bit if the election comes out that way, especially if some of the more radical voices, that happen to be Republican voices nowadays, get reelected," said Alan Blinder, Princeton economics professor and a former Fed vice chairman, adding that historically opposition to the U.S. central bank had come predominately from the left.

"There's a lot of hostility," said Blinder, who was appointed to the Fed by former president Bill Clinton.

The primary topic of conversation at the rustic mountainside resort was whether or not Fed Chairman Ben Bernanke and his colleagues would deliver another round of monetary stimulus soon.

But, when probed on the issue on the sidelines of the meeting, many participants voiced concern about the heated political rhetoric aimed at the Fed, including a bill that would audit the conduct of monetary policy that is gaining increasing traction among Republicans.

Republican presidential nominee Mitt Romney has said the Fed should be audited and that he would not reappoint Bernanke, himself a Republican who was originally picked for the job by George W. Bush, to a third term when his current one expires in early 2014. Still, he has pledged to respect central bank independence.

The Fed is already subject to regular audits, but congressman Ron Paul's bill would remove an exemption for monetary policy deliberations.

For some observers, that pressure is already affecting the Fed's behavior, preventing it from pushing more aggressively for stronger economic growth following the sharp blowback received back in 2010, when policymakers announced their last large scale bond purchase program.

Some analysts outside the Fed's inner circle -- the ones that weren't invited to Jackson Hole -- argue top central bank officials brought some of the political heat on themselves. By backing bank bailouts that came with few strings attached and allowing some of the chief culprits of the financial crisis to continue doing business as usual, these critics say, the Fed was seen as too close to Wall Street, making it an easy political target.

LONE RANGERS

Ironically, the complete political gridlock that characterizes U.S. fiscal policy has left the Fed in the difficult position of being "the only game in town."

Both the Fed and the independent Congressional Budget Office have said a looming "fiscal cliff" of spending cuts and expiring tax breaks at the end of this year could shove a fragile economy into a new recession.

In response to the financial crisis and deep recession of 2007-2009, the Fed cut interest rates to effectively zero and bought some $2.3 trillion in government bonds and mortgage debt to keep borrowing costs down and stimulate investment. Despite such aggressive efforts, growth remains subpar, registering an annual rate of just 1.7 percent in the second quarter, a level seen as too tame to bring down the country's 8.3 percent jobless rate.

Bernanke, during his keynote speech here on Friday, spent much time outlining the benefits of recent Fed policies, arguing they prevented a much deeper slump and helped put unemployment on a downward trajectory.

But many Republicans in Washington have cried foul, berating the central bank for risking high inflation in the future -- even if there has been little sign of substantial upward price pressures from the expansion of the Fed's balance sheet five years after officials started cutting rates.

Critics also contend the Fed's loose monetary policy has made it easier for the government to run large deficits.

"Central banks are under a lot of scrutiny right now," said Karen Dynan, a former Fed economist now at Brookings Institution. "It's partly because they are using these unconventional measures that people don't really understand and don't really trust."

Romney's choice of Paul Ryan -- an ardent Fed critic who supports "sound money" -- as his running mate appeared to ratchet up the potential for a possible Romney administration to tighten the screws on the central bank.

Such an attack would most likely come in two forms: support for Texas libertarian Ron Paul's Audit the Fed bill, which Bernanke has said would be a "nightmare" for Fed independence, and an attempt to curtail the Fed's mandate and force it to focus solely on inflation rather than giving equal weight to unemployment.

Fed officials including Bernanke have warned that monetary policy cannot go it alone in supporting the economy, and yet there is little prospect of any resolution to Washington's long-running showdown over fiscal policy and the budget.

"Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve," Bernanke said in his Jackson Hole remarks.

UPSIDE DOWN

Historically, the notion of political interference in monetary affairs boiled down to fears that, if politicians with short-term horizons had their way, they would always have central bankers crank up the printing presses in order to juice up growth -- leading, in extreme cases, to hyperinflation.

In the current case, however, opposition has emerged against a proactive central bank that has been forced to widen its range of policy tools in a zero interest rate environment.

Susan Collins, professor of economics at the University of Michigan's Gerald R. Ford School of Public Policy, stressed the dangers of political interference in monetary policy of either stripe.

"Compromising that (independence), maybe not immediately but over the medium- to longer-term, would have some really unfortunate consequences," said Collins.

These could include a loss of market confidence that perversely pushes borrowing costs higher and tarnishes the central bank's credibility.

"I absolutely hope that some wiser council would prevail should that issue come to the fore," added Collins.

Comments from Romney advisor Martin Feldstein, also attending the Jackson Hole event, suggested a more Fed-friendly tone could yet reemerge from Republican side. Feldstein, a Harvard professor who would likely be on Romney's short-list to replace Bernanke at the Fed, downplayed the Republican push to strip the Fed of its dual mandate.

"I don't think that is a realistic idea," he said, noting that even central banks with single mandates have to pay close attention to growth and employment. "I don't think the dual mandate has handicapped them in their focus on keeping inflation down."

(Additional reporting by Alister Bull; Editing by Theodore d'Afflisio)

http://www.reuters.com/article/2012/...88109Q20120902
 
Old September 2nd, 2012 #77
Solskeniskyn
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...
Quote:
These could include a loss of market confidence that perversely pushes borrowing costs higher and tarnishes the central bank's credibility.
Oh no, wouldn't that be a perverse turn of events? Higher interest rates than the ones we have today? Ridiculous! I mean, what? That it should actually cost money to borrow when adjusted for inflation? Absurd. Ben B and his fellow clever brethren better keep this kind of goyish lunacy in check, with violence if need be!

Quote:
Comments from Romney advisor Martin Feldstein, also attending the Jackson Hole event, suggested a more Fed-friendly tone could yet reemerge from Republican side. Feldstein, a Harvard professor who would likely be on Romney's short-list to replace Bernanke at the Fed, downplayed the Republican push to strip the Fed of its dual mandate.
Yes, the Fed has sure been treated badly these last years by the conspiracy theorists. First demanding an audit, and now to strip the dual mandate? The audacity... Time to lighten up the tone and leave them to it. Feldstein, Harvard professor mind you, knows what he is talking about.
 
Old September 2nd, 2012 #78
N.B. Forrest
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Quote:
Comments from Romney advisor Martin Feldstein, also attending the Jackson Hole event, suggested a more Fed-friendly tone could yet reemerge from Republican side. Feldstein, a Harvard professor who would likely be on Romney's short-list to replace Bernanke at the Fed, downplayed the Republican push to strip the Fed of its dual mandate.

"I don't think that is a realistic idea," he said, noting that even central banks with single mandates have to pay close attention to growth and employment. "I don't think the dual mandate has handicapped them in their focus on keeping inflation down."
"Oy, relax, ya bastids - it's all just smoke & mirrors ta blind the shtupid goyim at election time. I've got my hand so far up the Mormon puppet's ass I work his lips with my fingas, heh heh!"

Political "interference" with the Fed's "historic independence".....these goddam kikes....
 
Old October 8th, 2012 #79
littlefieldjohn
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Default From Zero Interest Rate to Zero Retirement: How the Fed Doomed Elderly Americans to Endless Work

Submitted by Tyler Durden on 10/08/2012 quote


The math of what happens when assumed rates of return go down, driven by a pro-active ZIRP from the Fed, is pretty straightforward. To make up for this, PIMCO notes that those approaching retirement have three choices: a) save more, b) work longer, or c) tighten their belts in retirement. Each of these are clear, individual family choices, but what happens when the whole of society is faced with the same dilemma? What works for one household can be grossly sub-optimal for society.

For now, let us assume that Americans would reject the idea of pre-commitment to significant future belt tightening. They may find that when they get to retirement they have little choice, but this is not something it seems they would rationally choose before having to do so.

If everyone saves more, we consume less, and therefore GDP growth slows down. Anemic growth leads to a Fed on hold for a prolonged period. If expectations for how long the Fed will be on hold are extended, low interest rates – particularly real ones – are the end result.

Given that the personal savings rate is a low 4.2%, significantly below the 6.9% average over the past 50 years, it is hard to argue that we are experiencing the paradox of thrift – at least not yet. We believe that there is a distinct wedge between households’ desired savings and actual savings driven by budget constraints. Less explored is the linkage between “working longer” and interest rates. The right side of Figure 1 shows a possible feedback loop for that cycle – which has the same end result as the Paradox of Thrift, but gets there through a different mechanism.

http://www.zerohedge.com/sites/defau...008_PIMCO1.png
Here we see low rates leading to longer periods in the work force which would lead to a higher fraction of older Americans continuing employment.

By construction, if labor force participation goes up, unless jobs go up proportionately, unemployment will rise. Given the Fed’s dual mandate – 1) fight inflation, 2) stimulate growth/lower unemployment – the central bank’s natural response will be to keep rates low, thus completing the circle.

The crux of the argument hinges on two things. First, if elderly labor force participation goes up and there is not an offsetting drop among other age groups, and second, whether there is empirical proof that low rates can be linked to higher labor force participation among older Americans.

With respect to the first item, if there were a compensating drop in labor supply among other age cohorts, causing the unemployment rate to be unchanged, that would be unambiguously bad as these individuals are of prime working age.

This would indicate serious structural issues and would likely be paired with slow economic growth. Figures 2 and 3 present support for the argument that low interest rates go hand-in-hand with high labor force participation among the elderly.

http://www.zerohedge.com/sites/defau...008_PIMCO2.png
Figure 2 shows a 50-year history of 10-year Treasury yields versus labor force participation for those Americans over age 65.
The axis for labor force participation is inverted to highlight the relationship. Over a long period, as yields rise, participation falls, and vice versa.

http://www.zerohedge.com/sites/defau...008_PIMCO3.png
Figure 3 regresses participation on the level of the 10-year rate and its squared value, as the relationship is distinctly non-linear.

Elderly labor force participation displays a “convexity” of sorts – the lower rates go, the greater the inertia of the elderly to stay in the workforce. Note the relationship is not perfect, and critics of this argument can point to structural issues in social programs that can give explanation to the time series relationship.

It makes sense that elderly participation fell in the 1960s given the passage of Medicare under the Johnson Administration and fell further still given more generous benefits granted in Social Security during the Nixon years. Increases in the Social Security normal retirement age phased in after reform legislation in 1983 induced gradual lengthening of working careers.

Intuitively, low rates leading to longer work lives just makes sense – especially in an era where fewer retirees will draw defined benefit pensions. For those relying more and more on IRAs and 401(k) plans for retirement, the income produced is simply a product of portfolio yield and account balances. They alone bear the risk of market volatility and their own mortality. If anything, we would expect this to tie labor force participation more strongly to yield levels.

This is why some of us are wondering if the Fed is spinning its wheels by sticking to the old model of trying to stimulate growth. Maybe instead of pushing harder on the credit demand side of the ledger by doggedly keeping rates low, central bank policymakers might benefit by looking at other parts of the equation. Specifically, those parts of the puzzle that become more important as America ages.

Work a little longer. Save a little more. Get by with a little less. It’s like each of our numbers is tied to a hot air balloon that seems to rise higher as we get a little closer. Given our outlook for growth and the Fed’s renewed commitment to keeping rates at ”exceptionally low levels” at least through mid-2015, it could be quite a while before those numbers are within reach.


http://www.zerohedge.com/news/2012-1...s-endless-work
 
Old October 17th, 2012 #80
Alex Linder
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Money Mistakes

by Thomas E. Woods, Jr.

As I noted not long ago, I find myself in serious disagreement with a portion of the end-the-Fed movement. This is the segment of the movement whose complaints are that the Federal Reserve is “privately owned,” that the Fed does not inflate enough, that interest payments are unjust or inherently unpayable all at once, etc.

This is not nit-picking. I am not interested in replacing the Fed with something as bad or worse. The problem with the Fed is not that it isn’t socialistic enough. The problem with the Fed is that it is a creation of Congress and operates with special privileges granted by the government. If only the Fed were truly private, with no government-granted privileges. Then it could do no damage whatever.

As I also noted, I recently asked an antagonist on Facebook to write out his ten propositions on money, so we could try to get to the bottom of our differences. I posted them last week. Right now I’ll reply to this one:

“Monetary deflation benefits the private bankers who wish the People to default in order to seize collateral with, or without govt force.”

This is clearly incorrect. In addition to not wanting the hassle of trying to unload collateral in a potentially illiquid market, no bank would want to seize collateral during a deflationary period at all! When asset prices are falling, why would banks want to grab assets? Who would want an asset that’s in the middle of seeing its price fall?

Ah, but couldn’t the banks coordinate the deflation together, and then when it hits bottom, grab all the assets at that moment, when their prices have nowhere to go but up? Even assuming that bankers would adopt such a far-fetched strategy, there is no way for them to know at what point in the deflationary process the defaults are going to occur.

If there’s something we’re supposed to fear from banks, this sure ain’t it.

http://lewrockwell.com/woods/woods205.html
 
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