Posted on 09/08/2009 4:31:01 AM PDT by SeekAndFind
To many observers, the Federal Reserve has never looked more heroic than it does right now. This past winter, America’s financial system faced the prospect of utter ruin. And, while the economy has suffered plenty in 2009, the worst did not come to pass. The banking system that lends to our employers, thereby allowing our economy to function, never did collapse. Now, many of the accolades for averting catastrophe are going to the Fed. President Obama himself ratified this analysis last week when he renominated Fed chairman Ben Bernanke for a second term. Bernanke, the president told reporters, had marshaled “his background, his temperament, his courage, and his creativity” to help prevent a second Great Depression.
What these words of presidential praise obscured was that the Fed may well have mitigated our current crisis by sowing the seeds for the next one. All modern economies need a financial system that can connect people who want to save with those who have good investment projects. This is essentially what banks do. But, unfortunately, this process often goes wrong. And that is precisely what is happening now. Our banks have gotten into the habit of needing to be rescued through repeated bailouts. During this crisis, Bernanke--while saving the financial system in the short term--has done nothing to break this long-term pattern; worse, he exacerbated it. As a result, unless real reform happens soon, we face the prospect of another bubble-bust-bailout cycle that will be even more dangerous than the one we’ve just been through.
(Excerpt) Read more at tnr.com ...
Just heard on Bloomberg radio this morning an analyst who said Japan has basically no hope to avoid bankruptcy. The new party taking control now is exposing hidden financial problems by the prior administration. Their debt is now 2 times GDP (ours is soaring close to 1x) and will go to at least 2.5x GDP within just a couple years. At that point, the analyst pointed out that demographics virtually guarantee that debt in japan will climb faster than GDB “forever”, meaning at some point nobody will buy their bonds anymore and it’s curtains.
Not sure if his opinion represents the consensus but he sounded like he knew what he was talking about.
The yen has tanked this morning so other people must be coming to the same conclusion.
This shows you where the USA will be a few years from now if we keep trying to “spend our way out of recession”. That is precisely what the Japanese have been doing for the past 10 to 15 years. Although our demographic problems are not as bad as Japan’s, you can’t spend with abandon and not face any consequences.
Similar to what this -13bama admin is doing with the USA and its economy - taking it for a ride, one that could spell doom for alot of good people that may have voted for a set of clowns, but not to do what they are doing.
the yen hasn’t tanked this morning. it continues to get stronger against both the dollar and the euro...
Scott Sumner, an economics professor and author of The Money Illusion blog, thinks the Fed actually caused the recession to be as nasty as it is as well as making the finanical system problems far worse than they had to be by ignoring the contraction of the monetary base between the beginning and mid 2008.
It’s an interesting hypothesis that fits well with Milton Friedman’s macroeconomic theories. If what he says is true, it’s rather shocking that the Fed made basically the same mistake as it did back in the 1930s by not accomidating the demand for money while the economy takes a free fall over a cliff.
Here’s a link to his blog:
http://blogsandwikis.bentley.edu/themoneyillusion/?page_id=1785
“the Fed may well have mitigated our current crisis by sowing the seeds for the next one”
That’s what thwy were created to do in the first place.
Congressman Lindbergh said on that historic day, to the House:
“This Act establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed. The trusts will soon realize that they have gone too far even for their own good. The people must make a declaration of independence to relieve themselves from the Monetary Power. This they will be able to do by taking control of Congress. Wall Streeters could not cheat us if you Senators and Representatives did not make a humbug of Congress. . . . If we had a people’s Congress, there would be stability.
The greatest crime of Congress is its currency system. The worst legislative crime of the ages is perpetrated by this banking bill. The caucus and the party bosses have again operated and prevented the people from getting the benefit of their own government.”
There was a book out a number of years ago, maybe back during Clintoon, where the author called himself an economic hitman. He went in and convinced countries to buy infrastructure projects they could ill afford. They would purchase them from US financing using US companies. But in the end bankrupting the country.
Back then I laughed it off. Today, I look around and see, we've done the exact same thing to ourselves.
MOST of todays leaders are members of the Council on Foreign Relations. The CFR's goal is a one world government, with one worldwide currency.
What better way of removing national sovereignty than selling it away piece by piece. Then when enough is sold, then you just borrow and indebt the people, to the point they could never payback.
If the US economy is weakend enough, by our debt being so huge, it makes our money worthless. Just as Germany's was prior to WWII.
Along comes Hitler, who takes the old German mark, which is useless already, and throws it out. Creates a NEW German mark, arbitrarily making it worth more, and wiping out all debt. Making all the German people happy thinking he has just saved them.
Russia did something similar creating a new Ruble back in the 80's or 90's.
Basically a giant reset button.
Now look over the world and you see that many "LEADING" nations are on the brink of financial collapse.
At some point basically EVERYBODIES money is worthless, opening the opportunity for all the worlds leaders to basically say we need to hit a worldwide reset button. Throw out EVERYBODYS worthless money, and create an all new money, that is actually worth something.
The problem is when that happens, NOBODY owns theirown house or car or anything. Its owned by the government, and your paycheck goes for food and clothing and utilities and maybe entertainment. But you yourself OWN nothing of value.
Over the past century, we have moved away from a system where bank shareholders and senior executives paid dearly for bad management--and toward a system where fired bank bosses make off with fortunes or launch brilliant political careers. No one is on the financial hook, other than the taxpayer.
Find it? It is the taxpayer! Central banks are bad but the government having unlimited access to your income is the fount of all other financial evils.
Yep on everything you said.
I would go past MAYBE to DEFINITELY.
After all if it looks like a duck, walks like a duck, quacks like a duck ...
“This shows you where the USA will be a few years from now if we keep trying to “spend our way out of recession”.”
I think it is already too late; they have spent us into insolvency. We just have not been exposed like Japan has been exposed. This is why the Fed does not want Congress auditing it’s books. If that is done, the US bankruptsy will be exposed. Currently we are like the family in debt who uses credit cards to pay credit cards.
That is right.
We gave them the power to use us and our labor as financial assets owned by the government which the government uses as collaterial on debt. We are became the government’s property. Slaves.
Read Tonight BUMP!
Read Tonight BUMP!
Obama and his cronies are COUNTING on the next crisis.
You are correct, and it will come by the middle of November, in my humble opinion.
An old feller from the BOOTHEEL of Missouri used to tell me __ “They” let us move up for twenty years at a time, THEN “They” pull the rug out and WE start all over...This from a guy who never knew what a soda was until age thirteen....
If not before, but by then we should know, and the Federal Reserve might fail.
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