Posted on 09/19/2017 7:24:05 PM PDT by Tolerance Sucks Rocks
I recently had the opportunity to read "The Creature from Jekyll Island" by G. Edward Griffin, a prodigious tome dealing with the circumstances surrounding the creation of the U.S. Federal Reserve System. I was taken aback by some of its provocative assertions.
One that stood out is that over successive generations, people with concentrated wealth have sought to use the American military and the purse power of the taxpayer for personal gain. In fact, Griffin argues, the creation of the current iteration of the Federal Reserve System was a political act designed to hide the fact that a private banking cartel would manage the U.S. currency.
The Federal Reserve, as Griffin explains, is neither "federal" nor a "reserve." It is not owned by the federal government, and it does not hold real assets in reserve. In reality, it is a giant debt factory backed by the "full faith and credit" of the government, or taxpayers.
One thing is clear. In the aftermath of the global recession of 2008, America and the world have been swimming in debt. America’s national debt alone has skyrocketed. While the Fed continues to justify flooding the market with cheap "reserve notes" based on the theory that it must supply these notes in order to support asset prices, the overall effect has been to debase the currency and prolong the pain of the American people.
As an entrepreneur who owns real assets — real estate, spectrum licenses and a publishing library, among others — I was able to benefit, at least on paper, from the Fed’s asset inflation strategy. I have been able to refinance my debt at attractive rates, and I've seen asset prices (but not necessarily values) climb. But others, especially workers (who derive the bulk of their income from salary instead of capital appreciation) and savers (retirees living on a fixed income), have lost under this post-recession scheme.
Workers lost because their spending power diluted drastically over the past 10 years. The costs of housing and energy have continued to rise in areas where the highest concentrations of jobs are located. For example, a young college graduate who wants to earn a high salary in the tech industry has to live in Silicon Valley, where even a base salary of $100,000 won’t enable them to afford to purchase a home there. Home prices are so out of line with average salaries that cities like San Francisco and Los Angeles are seeing an epidemic of homelessness never experienced since the Great Depression of 1929.
Savers have lost because the interest income they were counting on earning from their lifetime of saving has dwindled to less than nothing. These days, in most cases, you actually have to pay the bank to keep your money there. And so many retirees have had to tap into their home mortgages or take on additional consumer debt merely to survive. As America faces the largest retirement boom in its history — the retiring baby boomers — more than two-thirds of them do not have enough savings to retire comfortable. And on top of that, the Social Security system that was to be a back-stop against poverty for older Americans is practically insolvent.
The unwieldy national debt also causes friction for entrepreneurs. Governments have sought to increase taxes, regulations and fees on entrepreneurial activity in order to service the ballooning debt. This has sucked critical capital out of the system that entrepreneurs need in order to grow businesses and drive employment. With consumers still reeling from the great recession, demand for goods and services is lagging employment growth by a significant margin, further constraining opportunities for entrepreneurs.
The great project to rescue the American economy by the Fed has hit an obvious wall. The debt it used to goose the economy is now gumming up the system and constraining real growth. The looming question of what actually happens when the debt bubble finally bursts is one that not even the soberest economists at the Fed have been able to confront effectively. Unless we deal finally with the false notion that "central economic planning" can replace actual capitalism as the driver of American growth, we may be in store for far, far worse.
Armstrong Williams (@ARightSide) is author of the brand new book, "Reawakening Virtues." He served as an adviser and spokesman for Dr. Ben Carson's 2016 presidential campaign, and is on Sirius XM126 Urban View nightly from 6 p.m. to 8 p.m. Eastern.
More tariffs and less income taxes.
Like another author once wrote if something can’t go on forever it won’t. The endless printing of dollars is eventually going to render dollars worthless, and when that happens the economy collapses. The real question is when does the day of reckoning occur? The US dollar is the worlds reserve currency, so that acts to protect its value and add support time while people trade dollars for a substitute, until a tipping point is reach where paper dollars are untradeable. The date and cause of the tipping point is anyone’s guess.
Just repealing the 16th amendment would fix a lot of issues.
That is the way to do it, but how are we going to do it? The public is ignorant of how their currency is created and the inevitable default that is in store and that govt granted right to print money out of thin air is damn near priceless - it will not be given up without a fight.
Post proof that banks can lend money for your mortgage out of thin air.
And then explain how any banks that could do that could ever fail.
Only because they are.
banks operate on fractional reserves.
Yes.
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is only required to hold reserves equal to a fraction of its deposit liabilities.[1] Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.[2]
banks must keep that fraction of their outstanding loans in reserve.
No. They reserve a portion of deposits, not a portion of their loans.
Thanks. You're very helpful.
Fed Chairman Ben Bernanke admitted the central bank created $1.3 trillion out of thin air
Central banks can create money out of thin air. It's the reason they are created.
Now if you look at my claim in post #28....
Post proof that banks can lend money for your mortgage out of thin air.
You didn't get your loan from Ben Bernanke, did you?
Is that what you meant here?
If they loan more than the deposits they hold, how do they have any reserve, let alone 10%?
So, how were these loans "fully funded" if with one million dollars of assets the bank can make ten million dollars of loans?
Because they can't.
One million in deposits would only allow $900,000 in loans.
That’s a number most humans cannot fathom, but it’s completely true.
For your example to make sense, the bank would need over $11 million in deposits in order to loan $10 million and hold reserves of their deposits of 10%.
Only the loans where 90% of the loan's value is created out thin are subject to the reserve requirement.
Commercial Banks don't create money out of thin air.
Only central banks can do that.
You really should read The Creature From Jekyll Island
I started it.
The silly errors early in the book showed it was a waste of time to continue.
Yes, I got your confusion much earlier in the thread.
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