The Federal Reserve…..

Hey Peachtree City, I’m just returning or I should say my computer is just returning after taking a long week off fighting a virus.  Hmmm…I always thought a trojan was used for protection.  speaking of which, is it just me or does it seem like everyone is looking for some sort of protection these days.  Job safety.  How about a safe haven for our savings and 401k.  And to think you actually thought the Feds were going to give us the answer!

Yes, I know everyone is pissed off to the highest pistivy (is that a word!) about the bait and switch the Feds pulled on us.  I won’t say I told you so cause many of us were on that same bus…screaming Hell to the Naw!  Anyway, our ace at the Fed, Ben Bernanke, is on record stating that he has spent almost his entire life studying what went wrong in the United States in the ’30s and in Japan during those disastrous ’90s.  So he’s determined not to let it happen again… at least not on his watch.  And so, Bernanke is taking the American central bank to height (or lows) where no central bank has ever gone before!!!

So who are these demi-gods the Federal Reserve.  It’s truly amazing that the US did everything we could to defeat attempts to allow our money to be controlled by a central bank.  That is until Woodrow Wilson was elected. The Glass-Owens bill (signed while most members were on holiday) created the Federal Reserve as well as the 16th amendment.  Yes, the birth of income Taxes.  Also, there is an unusal statement in that bill that says the right to amend, appeal, or alter the bill is strictly reserved.  My question is,”Reserved for who?” Additionally, from its founding day in 1913, the Fed’s assets the foundation capital of the U.S. banking system..grew to $1 trillion on the 24th of September, 2008.

Then…something extra-ordinary happened. In the next six weeks, the Fed added another trillion dollars!! Then the head of the Dallas Branch of the Fed said that he expected to add another trillion before the end of 2008.  How does the Fed do it you say?  Easy, it buys them. Where does it get the money to buy them?  Touche’ my friends. The Feds create it.  It makes it up.  It conjures it out of nothing.

Okay, so you’re not Harry Potter fans but this ain’t no illusion either.  Okay, I see the show of hands from Missouri too.  So now if it comes from nothing you say, what could it be worth..if anything?  Well, there is no short answer to that question folks.  But the more pertinent question would be “If it was that easy, how come the Fed didn’t do it before?”

Elementary my friends… The answer to that is because when the Fed inflates the money supply it risks inflating consumer prices.  People don’t like seeing gas or grocery prices go up!  However, we like it when assets like our homes or stock prices go up.  But guess what?  Right now no one is worried about consumer prices. Is anyone buying?  Yeah, but our friends at the Fed are worried about deflation…about prices falling. Bernanke knows what happens when consumer prices begin to tumble.  That’s right, Consumers stop spending knowing that they will be able to get a super deal in the future.  That further depresses the economy.  Next thing you know it’s the ’90s all over again and you’re front and center, back in Tokyo.  So the Fed has begun a huge program of monetary inflation, intended to offset the market’s price-cutting measures.  More questions?  Why I can almost hear all the cynics, “Isn’t there some risk that the Fed will overdo it?”

Hmmm..not a question that would make are you smarter than a 5th grader but definately not a pick for Jepody either.  Okay, remember what happened during the slump of the early 2000s?  Yes you do!  Alan Greenspan must have tried crack and liked it because he cut rates to 1% and left them there for more than a year. Then he passed the pipe on to the marketplace and delivered a such a Cheech & Chong-sized hit that it set off the biggest bubble in history.

Today folks it’s a different kind of slump.  They call it a credit slump. However once again the Fed is Johnny on the spot like a quack doctor at the side of a heart-attack victim.  Although this time the Rx is for stronger medicine…not just a 1% lending rate, but actual monetary inflation. Trillions of dollars worth of it. We are hostile witnesses that watch the Market daily taking away dollars faster than the Fed is replacing them. That could continue for a few months or even for a few years. But I guarantee it won’t continue forever.

So here we are once again with our unshakablefaith in the people who promise to lead us back to prosperity. They are trying to cause inflation.  I guess eventually they will get the hang of it. Maybe they will shoot for about 2% per year.  Chances are however, they are sure to overshoot. It seems Money printers always do.

So who are the Feds?  Well for us Georgian it all started right here in a secret meeting held on Jekyll Island featuring the Rothchilds, J.P. Morgan, and Kuhn, Loeb, & Co.  Names sound familiar?  Additional research found that the Act was only suppose to be in place for 20 years.  Ok, Here’s a few more clues.  On September 26, 2002 our hero Alan Greenspan was knighted by the Queen of England. (Check CNN.com) Folks he is no Sir Elton John but he can add the initials KBE (Knight Commander for the British Empire) behind his name.  That was probably a reward for not changing anything in the Fed when the Sarbanes-Oxley Act was passed in 2002. 

Folks, do your own research but the fact are there.  We just don’t want to believe it.  There is a strategy in place by the Federal Reserve.  The Darth Vader will not come in a pressurised suit and a laser sword.  The real destruction is happening thru currency debasement. 

More on the Fed and their connections and strategies later my friends!