Money

Rampant Inflation In 2011? The Monetary Base Is Exploding, Commodity Prices Are Skyrocketing And The Fed Wants To Print Lots More Money

Are you ready for rampant inflation?  Well, unfortunately it looks like it might be headed our way.  The U.S. monetary base has absolutely exploded over the last couple of years, and all that money is starting to filter through into the hands of consumers.  Commodity prices are absolutely skyrocketing, and it is inevitable that those price increases will show up in our stores at some point soon.  The U.S. dollar has already been slipping substantially, and now there is every indication that the Fed is hungry to start printing even more money.  All of these things are going to cause a rise in inflation.  Not that we aren’t already seeing inflation in many sectors of the economy.  Airline fares for the holiday season are up 20 to 30 percent above last year’s rates.  Double-digit increases in health insurance premiums are being reported from coast to coast.  The price of food has been quietly sneaking up even at places like Wal-Mart.   Meanwhile the U.S. government insists that the rate of inflation is close to zero.  Anyone who actually believes the government inflation numbers is living in a fantasy world.  The U.S. government has been openly manipulating official inflation numbers for several decades now.  But we really haven’t seen anything yet.  As increasingly larger amounts of paper money are dumped into the economy, we are eventually going to see the worst inflation in American history.  The only real question is how far down the road are we going to get before it happens.  

Take a few moments and digest the chart below.  It shows just how dramatically the U.S. monetary base has been expanded recently….

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Up to this point this dramatic expansion of the U.S. monetary base has not caused that much inflation because U.S. government borrowing has soaked most of it up and U.S. banks have been hoarding cash and have been building up their reserves.

However, this situation will not last forever.  Eventually all this cash will make its way through the food chain and into the hands of U.S. consumers. 

But what is even more troubling is the dramatic spike in commodity prices that we have seen in 2010. 

Wheat futures have surged 63 percent since the month of June.  Wheat has recently been selling well above 7 dollars a bushel on the Chicago Board of Trade.

But wheat is far from alone.  In his recent column entitled “An Inflationary Cocktail In The Making“, Richard Benson listed many of the other commodities that have seen extraordinary price increases over the past year….

*Agricultural Raw Materials: 24%

*Industrial Inputs Index: 25%

*Metals Price Index: 26%

*Coffee: 45%

*Barley: 32%

*Oranges: 35%

*Beef: 23%

*Pork: 68%

*Salmon: 30%

*Sugar: 24%

*Wool: 20%

*Cotton: 40%

*Palm Oil: 26%

*Hides: 25%

*Rubber: 62%

*Iron Ore: 103%

Now, as those price increases enter the chain of production do you think that there is any chance that they will not cause inflation?

Do you think there is any chance at all that producers and retailers will not pass those costs on to consumers?

It is time to face facts.

Those cost increases are going to filter all the way through the system and your paycheck is soon not going to stretch nearly as far.

Inflation is coming.

Many savvy investors understand what is going on right now.  That is one reason why gold and silver are absolutely soaring at the moment.

The price of gold set another record high on Friday for the sixth straight day.   

Silver has also experienced extraordinary gains recently, and the U.S. Mint has officially raised their wholesale pricing above spot on American Silver Eagles from $1.50 to $2.00.

Meanwhile, there are even more rumblings that the Fed wants to print lots more money.  On Friday, the president of the Federal Reserve Bank of New York, William Dudley, stated that the high unemployment and the low inflation that the United States is experiencing right now are “wholly unacceptable”….

“Further action is likely to be warranted unless the economic outlook evolves in such a way that makes me more confident that we will see better outcomes for both employment and inflation before long.”

During his remarks, Dudley even mentioned what the effect of another $500 billion increase in the Fed’s balance sheet would be.

Now keep in mind, this is not just another “Joe” who is making these remarks.

This is the president of the Federal Reserve Bank of New York – the most important of all the regional Fed banks.

In recent weeks it is almost as if you can hear Fed officials salivate as they consider the prospect of flooding the economy with even more money. 

Up to this point, very little has worked to stimulate the dying U.S. economy.  The Federal Reserve and the Obama administration are getting nervous as the American people become increasingly frustrated about the economic situation.

So will flooding the economy with even more money and causing even more inflation do the trick?

Well, no, but what inflated GDP figures will do is enable Obama and the Fed to say: “Look the economy is growing again!”

But if a flood of paper money causes the value of goods and services produced in the U.S. to go up by 5 percent but the real inflation rate is 10 percent, are we better off or are we worse off?

It doesn’t take a genius to figure that one out.

So don’t get fooled by “economic growth” numbers.  Just because more money is changing hands doesn’t mean that the U.S. economy is doing better. 

In fact, many American families are going to be financially shredded by the coming inflation tsunami. 

Just think about it.

How far will your paycheck go when a half gallon of milk is 10 dollars and a loaf of bread is 5 dollars?

Already, it is incredibly difficult for the average American family of four to get by on $50,000 a year.

So how much money will we need when rampant inflation starts kicking in?

And do you think that your employers will actually give you pay raises to keep up with all of this inflation?

Not in these economic conditions.

In fact, median household incomes are declining from coast to coast all over the United States.

Earlier this year, Ben Bernanke promised Congress that the Federal Reserve would not “print money” to help the U.S. Congress finance the exploding U.S. national debt.

Did any of you believe him at the time?

Did any of you actually believe that the Federal Reserve would act responsibly and would attempt to keep the money supply and inflation under control?

The reality is that the entire Federal Reserve system is predicated on perpetual inflation and a perpetually expanding national debt. 

Whatever wealth you and your family have been able to scrape together is going to continue to be whittled away month after month after month by the hidden tax of inflation.

And unfortunately, as discussed above, inflation is about to get a whole lot worse.

So is there any room for optimism?  Is there any hope that we will not see horrible inflation in the years ahead?  Please feel free to leave a comment with your opinion below….

Winners And Losers

When you mention the word “globalism” to most people, they think of something that is going to happen someday in the future.  But the truth is that globalism is already here.  At this point we essentially already have a one world economy.  Goods and services flow across national borders more freely today than at any other point in human history.  A major economic event on one side of the world instantly affects financial markets on the other side of the world.  Labor has become a truly global commodity.  You can go to the exact same fast food restaurant or buy the exact same iPod on six different continents.  A whole host of international trade agreements are making national borders economically irrelevant.  Today our “big box” stores and shopping malls are jammed full with products that have been made overseas and it is becoming increasingly difficult to find American-made products.  The reality is that it has now become undeniable that globalism has arrived and we are now part of a world economy that is integrating at lightning speed.  Unfortunately, all of this globalism has created some very clear winners and losers.  But most middle class Americans are in such a deep sleep that they don’t even realize that they are the losers.

The sad truth is that as work has become a global commodity, middle class American workers have been placed in direct competition with the cheapest labor in the world.  For years the U.S. economy was so strong that nobody really noticed that it was bleeding thousands of jobs every single month.  But now that 14 million Americans are unemployed and the U.S. economy is literally hemorrhaging jobs people are starting to sit up and take notice.

Let’s take a look at one recent example.  Ford Motor Company has just announced the closure of a facility that produces the Ford Ranger in St. Paul, Minnesota.  Approximately 750 good paying jobs are going to be lost.

But isn’t Ford doing better these days?

Sure.

Don’t people still need Ford Rangers?

Of course they do.

Minnesota Governor Tim Pawlenty even offered Ford a multi-million dollar incentive package full of tax cuts and job creation incentives to keep the factory going.

Basically, Pawlenty did everything except get down on his hands and knees and beg Ford to keep the plant open.

But it wasn’t good enough for Ford.

So where is Ford going to make those Ford Rangers now?

Well, the statement issues by Ford did not say, but it did offer some clues….

“Ford continues to concentrate on implementing the plan we initiated four years ago to streamline our plant operations and better leverage our global platforms. At this time, the Twin Cities Assembly Plant does not fit into our global manufacturing strategy.”

Did you notice that the world “global” was used twice there?

In other words, Ford plans to move their factory some place where labor is cheaper.

But the truth is that this is happening in every industry.

Between 2004 to 2008, tire imports from China increased 215 percent by volume and 295 percent by value.

During that same time period, tire manufacturing in the United States fell by 25 percent.

It turns out that there are lots of people who are willing to make tires for near slave labor wages in China.

In our new “global economy”, American workers are just far too expensive.  So middle class manufacturing jobs are fleeing our shores at a staggering pace.

Since 1979, manufacturing employment in the United States has fallen by 40 percent.

Are you alarmed yet?

You should be.

The truth is that we did not have to merge our economy with nations like China.  China does not have the same minimum wage laws that we do.  China does not have the same environmental protection laws that we do.  In China, companies can treat their workers like crap.  As a result of open trade with the United States, scores of shiny new factories have opened all over China while once great manufacturing U.S. cities such as Detroit have degenerated into rotting war zones.  We continue to expand trade with China even though their communist government stands for things that are absolutely repulsive and has a list of human rights abuses that is seemingly endless.

But politicians from both parties swore up and down that globalism would be so good for us.  Now we have created a network of free trade agreements that would be virtually impossible to unwind.  The following are just some of the free trade agreements in force around the world right now….

The ASEAN Free Trade Area (AFTA)
The Central American Integration System (SICA)
The Central European Free Trade Agreement (CEFTA)
The Common Market for Eastern and Southern Africa (COMESA)
The Commonwealth of Independent States Free Trade Agreement (CISFTA)The G-3 Free Trade Agreement (G-3)
The Greater Arab Free Trade Area (GAFTA)
The Gulf Cooperation Council (GCC)
The North American Free Trade Agreement (NAFTA)
The Southern African Development Community (SADC)
The South Asia Free Trade Agreement (SAFTA)
The Trans-Pacific Strategic Economic Partnership (TPP)

Of course the most important trade organization of them all is the World Trade Organization (WTO) which is constantly working to expand world trade and further integrate the economies of the world.

But the American people don’t understand all this.  They just want the U.S. government to do something to create more jobs. 

But whenever the U.S. Congress tries to do something nice for U.S. workers like raising the minimum wage or requiring companies to give them more benefits it ends up backfiring.

Why?

Because those things make American workers even more expensive and it gives companies even more incentive to send our jobs overseas.

We have recklessly merged our economy with economies around the world that are far less developed than our own.  Unless this thing is reversed, it is inevitable that the standard of living of American workers will be forced down until it approximately matches workers in the rest of the world.

Already, millions of high-paying manufacturing jobs are being replaced by low-paying service jobs.

The U.S. Labor Department’s 2009 Occupational Employment and Wages report found that retail sales, cashiers, general office clerks, food preparation and service workers, and nurses were the occupations with the highest levels of employment in 2009.

Retail sales and food service workers?

Those are jobs for 17 year old kids.

But today apologists for this flawed system tell us that we just need to suck it up and take two or even three low paying jobs because things will never go back to how they used to be.

So has globalism created any winners?

Of course.

As I noted yesterday, the folks down on Wall Street are doing quite well.  New York state Comptroller Thomas DiNapoli says that Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

The reality is that the exploitation of very cheap foreign labor has enabled many large global corporations to make insane amounts of money.  Things are very good if you are at the top of the food chain.  According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

In addition, our elected officials are doing quite nicely these days.  According to an analysis by The Hill, the 50 wealthiest members of the U.S. Congress saw their collective fortunes increase 85.1 million dollars to $1.4 billion in 2009.

Yes, it is very profitable to be part of America’s ruling class.

Meanwhile, tens of millions of average Americans continue to suffer.  Recently a user on Unemployed-Friends named Jim shared his tragic story….

My Name is Jim and I was laid off last June.

My whole department was outsourced.

There was talk of it and when I heard it from my boss (the CFO) when I went home I started to send out resumes.

Then the day came when the layoff came.

So in 1.3 years I have sent out 160K resumes, between blasting, send out from job boards and e-mailing my resume blindly to companies HR departments.

I was on 5 interviews.

I want to work badly.

Everyday I send out resumes but lately I have been getting depressed, I found out who my real friends and family are now.

I have been kicked down substantially in these 1.3 years.

I feel like I’m staring into an abyss of no jobs, will I ever work again? IDK.

When I used to talk to “Friends” and “Family” they all say “Things will get better” “Don’t worry”, Yeah right.

I feel so alone and worthless.

I wish I had at least 1 GOOD friend but it seems like no-a-days the dog eat dog world is worst than ever.

I’m NOT suicidal, not at all.

Then I found this site.

I have been saying we are in a depression for 2 years but nobody listened and people have dismissed what I have said.

The sad thing is it seems like we are on the verge of an economic collapse or worst.

So that is my story

Americans like Jim don’t understand why they can’t get jobs anymore.

They feel like failures, but it is actually the system that is failing.

Globalism is not good for middle class American workers.

Democrats can continue to pass law after law that attempts to help American workers, but unless something is done to protect American jobs they are going to continue to be shipped overseas.

Republicans can pass tax break after tax break, but unless those tax breaks are linked to jobs the ruling elite and the big global corporations will just pocket those tax breaks and will continue to ship jobs overseas in order to make bigger profits.

What both parties should be doing is trying to figure out ways to keep American jobs in America, but at this point both parties are completely sold out to globalism.

Globalism was the official policy of the Bush administration and it is the official policy of the Obama administration.

Unless something dramatic changes, the U.S. economy is going to continue to lose huge numbers of jobs and people like Jim are going to continue to wonder what in the world happened to their lives.

But in 2010, most Americans are so busy drinking beer, watching sports, keeping up with Lady Gaga and Justin Bieber, and obsessing over the new cast of Dancing With The Stars that they aren’t even aware that things are literally falling apart all around them.

It is really sad.

The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions

Are we witnessing the slow but certain death of cash in this generation?  Is a truly cashless society on the horizon?  Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?

The truth is that we now live at a time when people who use large amounts of cash are looked upon with suspicion. In fact, authorities in many countries are taught that anyone involved in a large expenditure of cash is trying to hide something and is probably a criminal.

And yes, a lot of criminals do use cash, but millions upon millions of normal, law-abiding citizens simply prefer to use cash as well.  Should we take the freedom to use cash away from the rest of us just because a small minority abuses it?

Unfortunately, the freedom to use cash is being slowly stripped away from us in an increasingly large number of countries.

In fact, as countries like Mexico “tighten the noose” around big-ticket cash purchases, our freedom to use cash is going to erode rather rapidly.

The following is a summary of some of the very tight restrictions being placed on large cash transactions around the globe right now….

Mexico

In Mexico, a bill before the legislature would completely ban the purchase of real estate in cash.  In addition, the new law would ban anyone from spending more than MXN 100,000 (about $7,700) in cash on vehicles, boats, airplanes and luxury goods.

$7,700 is not a very high limit, and this legislation has some real teeth to it.  Anyone violating this law would face up to 15 years in prison.

Greece

In Europe, some of the “austerity packages” being introduced in various European nations include very severe restrictions on the use of cash.

In Greece, all cash transactions above 1,500 euros are being banned starting next year.  The following is a comment by Greek Finance Minister George Papaconstantinou at a press conference discussing the new austerity measures as reported by Reuters….

“From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards”

Italy

Even Italy has gotten into the act.  As part of Italy’s new “austerity measures”, all cash transactions over 5,000 euros will be banned.  It is said this is being done to crack down on tax evasion, but even if this is being done to take down the mafia this is still quite severe.

The United States

The U.S. government has not banned any large cash transactions, and hopefully it will not do so any time soon, but it sure has burdened large cash transactions with some heavy-duty reporting requirements.

For example, your bank is required to file a currency transaction report with the government for every deposit, withdrawal or exchange over $10,000 in cash.

Not only that, but if a bank “knows, suspects, or has reason to suspect” that a transaction involving at least $5,000 is “suspicious”, then another report must be filled out.   This second type of report is known as a suspicious activity report, and it is also filed with the government.

But the reporting does not stop there.  As Jeff Schnepper explained in an article for MSN Money, if you are in business and you receive over $10,000 in cash in a single transaction you must report it to the IRS or you will go to prison…..

If you’re in a business and receive more than $10,000 in cash from a single transaction, or from related transactions within a 12-month period, you have to file Form 8300 and report the buyer to the IRS. Don’t file, and you go to jail.

The IRS isnt kidding. I had a client who was a dealer in Corvette sports cars. He told me he didnt have time to file the forms. I told him several times to file. He thought he knew better. He went to jail. So did his children who were involved in the business.

This is very, very serious.

Just because someone forgets to file a certain form with the IRS, that person can go do serious jail time?

Yes.

According to Schnepper, quite a few Americans have already received very substantial sentences for this kind of thing….

In fiscal 2004, the Internal Revenue Service initiated 1,789 criminal investigations. There were 1,304 indictments and 687 convictions — and an 89.1% incarceration rate. The average sentence: 63 months.

In fiscal 2005, the IRS started 4,269 investigations, winning 2,406 indictments and 2,151 convictions and an 83% incarceration rate. Average sentence: 42 months.

The reality is that governments around the world are getting very, very sensitive about large amounts of cash and they are not messing around.

They don’t want all of us running around with big piles of cash.  They want our money in the banks where they can track it, trace it and keep a close eye on it.

On the one hand, it is a good thing to catch criminals and terrorists, but on the other hand how much privacy and freedom are we willing to lose just so that we can feel a little safer?

And as cash becomes criminalized, are all of us going to be forced into the banking system whether we like it or not?  If we cannot pay for things in cash, what other choices are we going to have?

The truth is that the more you think about this issue, the more disturbing it becomes. 

So what do you think about all of this?  Feel free to leave a comment below.

Bancor: The Name Of The Global Currency That A Shocking IMF Report Is Proposing

Sometimes there are things that are so shocking that you just do not want to report them unless they can be completely and totally documented.  Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works.  Not anymore.  A paper entitled “Reserve Accumulation and International Monetary Stability” by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the “Bancor” and that a global central bank be established to administer that currency.  The report is dated April 13, 2010 and a full copy can be read here.  Unfortunately this is not hype and it is not a rumor.  This is a very serious proposal in an official document from one of the mega-powerful institutions that is actually running the world economy.  Anyone who follows the IMF knows that what the IMF wants, the IMF usually gets.  So could a global currency known as the “Bancor” be on the horizon?  That is now a legitimate question.

So where in the world did the name “Bancor” come from?  Well, it turns out that “Bancor” is the name of a hypothetical world currency unit once suggested by John Maynard Keynes.  Keynes was a world famous British economist who headed the World Banking Commission that created the IMF during the Breton Woods negotiations.

The Wikipedia entry for “Bancor” puts it this way….

The bancor was a World Currency Unit of clearing that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system, but has not been implemented.

The IMF report referenced above proposed naming the coming world currency unit the “Bancor” in honor of Keynes.

So what about Special Drawing Rights (SDRs)?  Over the past couple of years, SDRs have been touted as the coming global currency.  Well, the report does envision making SDRs “the principal reserve asset” as we move towards a global currency unit….

“As a complement to a multi-polar system, or even—more ambitiously—its logical end point, a greater role could be considered for the SDR.”

However, the report also acknowledges that SDRs do have some serious limitations.  Since the value of SDRs are closely tied to national currencies, anything affecting those currencies will affect SDRs as well.

Right now, SDRs are made up of a basket of currencies.  The following is a breakdown of the components of an SDR….

*U.S. Dollar (44 percent)

*Euro (34 percent)

*Yen (11 percent)

*Pound (11 percent)

The IMF report recognizes that moving to SDRs is only a partial move away from the U.S. dollar as the world reserve currency and urges the adoption of a currency unit that would be truly international.  The truth is that SDRs are clumsy and cumbersome.  For now, SDRs must still be reconverted back into a national currency before they can be used, and that really limits their usefulness according to the report….

“A limitation of the SDR as discussed previously is that it is not a currency. Both the SDR and SDR-denominated instruments need to be converted eventually to a national currency for most payments or interventions in foreign exchange markets, which adds to cumbersome use in transactions. And though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries.”

So what is the answer?

Well, the IMF report believes that the adoption of a true global currency administered by a global central bank is the answer.

The authors of the report believe that it would be ideal if the “Bancor” would immediately be used as currency by many nations throughout the world, but they also acknowledge that a more “realistic” approach would be for the “Bancor” to circulate alongside national currencies at first….

“One option is for bancor to be adopted by fiat as a common currency (like the euro was), an approach that would result immediately in widespread use and eliminate exchange rate volatility among adopters (comparable, for instance, to Cooper 1984, 2006 and the Economist, 1988). A somewhat less ambitious (and more realistic) option would be for bancor to circulate alongside national currencies, though it would need to be adopted by fiat by at least some (not necessarily systemic) countries in order for an exchange market to develop.”

So who would print and administer the “Bancor”?

Well, a global central bank of course.  It would be something like the Federal Reserve, only completely outside the control of any particular national government….

“A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing.”

In fact, at one point the IMF report specifically compares the proposed global central bank to the Federal Reserve….

“The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity.”

So is that what we really need? 

A world currency administered by an international central bank modeled after the Federal Reserve?

Not at all.

As I have written about previously, the Federal Reserve has devalued the U.S. dollar by over 95 percent since it was created and the U.S. government has accumulated the largest debt in the history of the world under this system.

So now we want to impose such a system on the entire globe?

The truth is that a global currency (whether it be called the “Bancor” or given a different name entirely) would be a major blow to national sovereignty and would represent a major move towards global government. 

Considering how disastrous the Federal Reserve system and other central banking systems around the world have been, why would anyone suggest that we go to a global central banking system modeled after the Federal Reserve?

Let us hope that the “Bancor” never sees the light of day.

However, the truth is that there are some very powerful interests that are absolutely determined to create a global currency and a global central bank for the global economy that we now live in. 

It would be a major mistake to think that it can’t happen.

Look What Surprises They Snuck Into The Financial Reform Bill

Even just a decade ago, major pieces of legislation in the U.S. Congress would be just a few dozen pages long.  But today, it seems like every time Congress passes an important bill it ends up being over a thousand pages long.  In fact, the final version of the new financial reform law was over 2,300 pages.  Overall, as we wrote about extensively in a previous article, this much-ballyhooed new law does a whole lot of nothing, but it turns out that lobbyists and special interests were able to insert a few nasty surprises that we are just now finding out about.  But it was the same thing with the health care reform law.  It was only after it was passed that most of us learned that it contained a provision that will force U.S. small businesses to collectively produce millions more 1099 tax forms each year.  Now small businesses from coast to coast are screaming bloody murder about that provision but it is too late – the law has already passed.  Unfortunately, there are some surprises in the recently passed financial reform law that are nearly just as bad.

So just what are those surprises?

Well, first let’s talk about what the financial reform law does not do.  The financial reform bill was supposed to “fix” Wall Street and the financial system, but it did not do much of anything….        

-It does nothing to address the problems with Fannie Mae and Freddie Mac.

-It does not eliminate “too big to fail”.

-It does absolutely nothing to eliminate the horrific bubble in the derivatives market.

-It does nothing to reform the organization most responsible for the recent financial crisis – the Federal Reserve.  In fact, this new law actually gives the Federal Reserve even more power.

But it does create a ton of new paperwork and a bunch of new government organizations.

Oh goody!

But was there any major law that Congress has passed over the last several years that did not increase the size and scope of government?

That is a good question.

In any event, let’s get to some of the nasty surprises contained in the new financial reform law….

*Barack Obama has been running around touting how this new law will “increase transparency” in the financial world, but it turns out that a little-noticed provision of the new law exempts the Securities and Exchange Commission from virtually all requests for information by the public, including those filed under the Freedom of Information Act.

Not that the SEC was doing much good anyway.

But now the SEC’s incompetence and the nefarious actions of those they are investigating will be hidden from public view.

So what makes the SEC so special that they get to block the public from seeing their records while other government agencies still have to comply with FOIA?

Talk about ridiculous.

But there is actually another little surprise contained in the new law that is even more nasty….

*Another little-noticed section deeply embedded in the financial reform law actually gives the federal government the authority to terminate government contracts with any “financial firm” that fails to ensure the “fair inclusion” of women and minorities in its workforce.

This section of the law, written by U.S. Representative Maxine Waters, is 1,261 words long and it establishes “Offices of Minority and Women Inclusion” in the Treasury Department, the Federal Reserve, the Securities and Exchange Commission and more than a dozen other finance-related agencies.

The directors of these new departments are tasked with developing standards that “ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts.”

The maximum extent possible?

That sounds pretty strong.

 So what kind of firms does this section apply to?

Well, according to Politico, this section is going to apply to just about anyone who has anything to do with the financial industry….

This applies to “services of any kind,” including investment firms, mortgage banking firms, asset management firms, brokers, dealers, underwriters, accountants, consultants and law firms, the legislation states. Every contractor and subcontractor must now certify that their workforces reflect a “fair inclusion” of women and minorities.

The truth is that this small section of the law represents a fundamental change in employment law in the United States.

And it is written so vaguely that firms are going to be tempted to go above and beyond in complying with it just so they are safe.  In fact, many analysts are already saying that it could lead to an unofficial quota system.

In any event, hundreds of new federal government bureaucrats will be watching to make certain that these vague new regulations are fully implemented.

*It also looks like the new financial reform law is going to end the era of free checking accounts.

Why?

Well, it turns out that the new law really limits the amount of fees that banks can charge and the way that they charge them.

So banks have got to make their money somewhere.  Wells Fargo and Bank of America have already announced new fees on checking accounts, and other banks are expected to follow their lead shortly.

What a mess.

Can’t Congress do anything right these days?

At this point Congress is so incompetent that if they would just sit there and do nothing that would be a vast improvement.

But that isn’t going to happen.

So what do you all think about this new financial reform law?  Feel free to leave a comment with your opinion below….

Created Out Of Thin Air – That Is Where The Federal Reserve Got The 1.3 Trillion Dollars That It Bought All Of Those Mortgage Backed Securities With

When the mainstream media told the American people that the Federal Reserve was going to “help” the housing industry by buying up hundreds of billions of dollars worth of toxic mortgage backed securities, very few people probably even stopped to wonder where all of that money was going to come from.  Well, the truth is that it did not come from anywhere.  It was made up out of thin air.  In fact, a total of 1.3 trillion dollars was just “printed into existence” so that the Fed could soak up these problematic securities (and help their buddies down on Wall Street in the process who were desperate to dump them).  During a recent Joint Economic Committee hearing on Capital Hill, U.S. Representative Ron Paul directly confronted Federal Reserve Chairman Ben Bernanke about this 1.3 trillion dollars.  As Ron Paul described how this 1.3 trillion was just created out of thin air, all Bernanke could do was nod his head.  Why?  Because it was the truth.

Of course we all know that the Federal Reserve creates money out of thin air all the time, so that is not new, but what is new is the recklessness and openness with which they are going about doing it.

Need to help your buddies down on Wall Street by buying up a tsunami of bad mortgage securities?

Just zap another trillion dollars into existence!

Need to bail out the mortgage giants Fannie Mae and Freddie Mac?

Just get the magic money printing machine ready!

Wouldn’t it be nice if the rest of us could create money out of thin air?  It would make life so much easier.

A video clip of the exchange between Ron Paul and Bernanke at this hearing is posted below.

The key moment comes when Ron Paul makes this statement….

“Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system.”

As you watch this video, you will notice that at that moment Bernanke nods his head up and down repeatedly….

So who does all of this money printing benefit?

Well, it benefits the Federal Reserve and the big financial institutions on Wall Street that have financial ties to the Federal Reserve.

It certainly does not benefit the rest of us.

No, in fact Bernanke says that the rest of us need to get ready to pay higher taxes and have a lower standard of living in order to pay for the big financial mess that our politicians and the Fed have gotten us into.

So while there are lots of smiles going around in Washington D.C. and on Wall Street these days, the same cannot be said for the rest of the good ole U.S.A. as the following video illustrates….

The reality is that the United States is a nation that does not even have control over its own currency.  If the United States government wants more money, it has to go ask the Federal Reserve to create it.  Unfortunately, the Federal Reserve does not also create the interest that will ultimately be paid on that new money that is being created.  So where will the money come from to pay the interest?  Well, by creating even more money (debt) in the future.  It sounds like insanity, but that is the U.S. financial system.  It is a perpetual debt machine that was created to have an ever expanding national debt that is mathematically impossible to pay off.

Just because the folks down on Wall Street do not dress up in gang colors or try to sell drugs to our children does not mean that they are not corrupt or that they are not criminals.  In fact, the truth is that the corruption in our financial system is hitting unprecedented levels.

But most Americans have no idea what in the world is going on in the financial system.  All most of them know is that things are getting bad and they want somebody to “fix” the problems.

Unfortunately, the folks that the American people are expecting to “fix” things are the very same ones who got us into this mess in the first place.

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”
-Senator Barry Goldwater

“A great industrial nation is controlled by it’s system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world–no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
-President Woodrow Wilson

“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.”
-Franklin Delano Roosevelt

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”
-Abraham Lincoln

“Give me control of a nation’s money and I care not who makes it’s laws”
-Mayer Amschel Bauer Rothschild

Revealed!

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