Have Central Bankers Lost Control? Could The Bond Bubble Implode Even If There Is No Tapering?

Panic - Photo by Wes WashingtonAre the central banks of the world starting to lose control of the financial markets?  Could we be facing a situation where the bond bubble is going to inevitably implode no matter what the central bankers do?  For the past several years, the central bankers of the planet have been able to get markets to do exactly what they want them to do.  Stock markets have soared to record highs, bond yields have plunged to record lows and investors have literally hung on every word uttered by Federal Reserve Chairman Ben Bernanke and other prominent central bankers.  In the United States, it has been remarkable what Bernanke has been able to accomplish.  The U.S. government has been indulging in an unprecedented debt binge, the Fed has been wildly printing money, and the real rate of inflation has been hovering around 8 to 10 percent, and yet Bernanke has somehow convinced investors to lend gigantic piles of money to the U.S. government for next to nothing.  But this irrational state of affairs is not going to last indefinitely.  At some point, investors are going to wake up and start demanding higher returns.  And we are already starting to see this happen in Japan.  Wild money printing has actually caused bond yields to go up.  What a concept!  And that is what should happen – when central banks recklessly print money it should cause investors to demand a higher return.  But if bond investors all over the globe start acting rationally, that is going to cause the largest bond bubble in the history of the planet to burst, and that will create utter devastation in the financial markets.

Central banks can manipulate the financial system in the short-term, but there is usually a tremendous price to pay for the distortions that are caused in the long-term.

In Bernanke’s case, all of this quantitative easing seemed to work well for a while.  The first round gave the financial system a nice boost, and so the Fed decided to do another.  The second round had less effect, but it still boosted stocks and caused bond yields to go down.  The third round was supposed to be the biggest of all, but it had even less of an effect than the second round.  If you doubt this, just check out the charts in this article.

Our financial system has become addicted to this financial “smack”.  But like any addict, the amount needed to get the same “buzz” just keeps increasing.  Unfortunately, the more money that the Fed prints, the more distorted our financial system becomes.

The only way that this is going to end is with a tremendous amount of pain.  There is no free lunch, and there are already signs that investors are starting to wake up to this fact.

As investors wake up, they are going to realize that this bond bubble is irrational and entirely unsustainable.  Once the race to the exits begins, it is not going to be pretty.  In fact, the are indications that the race to the exits has already begun

During the month of June, fixed income allocations fell to a four-year low, according to the American Association of Individual Investors, as major bond fund managers like Pimco experienced record withdrawals for the second quarter. That pullback sent places like emerging markets and high-yield bonds reeling—just as the Federal Reserve signaled plans to taper its easy-money policies within the coming years. Benchmark bond yields ticked up on that news, and in an unexpected twist, the stock market nosedived as well.

A lot of people out there have been floating the theory that the Fed will decide not to taper at all and that quantitative easing will continue at the same pace and therefore the markets will settle back down.

But what if they don’t settle back down?

Could the bond bubble implode even if there is no tapering?

That is what some are now suggesting.  For example, Detlev Schlichter is pointing to what has been happening in Japan as an indication that the paradigm has changed…

My conclusion is this: if market weakness is the result of concerns over an end to policy accommodation, then I don’t think markets have that much to fear. However, the largest sell-offs occurred in Japan, and in Japan there is not only no risk of policy tightening, there policy-makers are just at the beginning of the largest, most loudly advertised money-printing operation in history. Japanese government bonds and Japanese stocks are hardly nose-diving because they fear an end to QE. Have those who deal in these assets finally realized that they are sitting on gigantic bubbles and are they trying to exit before everybody else does? Have central bankers there lost control over markets?

After all, money printing must lead to higher inflation at some point. The combination in Japan of a gigantic pile of accumulated debt, high running budget deficits, an old and aging population, near-zero interest rates and the prospect of rising inflation (indeed, that is the official goal of Abenomics!) are a toxic mix for the bond market. It is absurd to assume that you can destroy your currency and dispossess your bond investors and at the same time expect them to reward you with low market yields. Rising yields, however, will derail Abenomics and the whole economy, for that matter.

The financial situation in Japan is actually very similar to the financial situation in the United States.  We both have “a gigantic pile of accumulated debt, high running budget deficits, an old and aging population, near-zero interest rates and the prospect of rising inflation”.  In both cases, rational investors should demand higher returns when the central bank fires up the printing presses.

And if interest rates on U.S. Treasury bonds start to rise to rational levels, the U.S. government is going to have to pay more to borrow money, state and local governments are going to have to pay more to borrow money, junk bonds will crash, the market for home mortgages will shrivel up and economic activity in this country will slow down substantially.

Plus, as I am fond of reminding everyone, there is a 441 trillion dollar interest rate derivatives time bomb sitting out there that rapidly rising interest rates could set off.

So needless to say, the Federal Reserve is scared to death of what higher interest rates would mean.

But at this point, they may have lost control of the situation.

The Financial Markets Freak Out When The Fed Hints That It May Slow Down The Injections

Panic Button By John On FlickrU.S. financial markets are exhibiting the classic behavior patterns of an addict.  Just a hint that the Fed may start slowing down the flow of the “juice” was all that it took to cause the financial markets to throw an epic temper tantrum on Wednesday.  In fact, one CNN article stated that the markets “freaked out” when Federal Reserve Chairman Ben Bernanke suggested that the Fed would eventually start tapering the bond buying program if the economy improves.  And please note that Bernanke did not announce that the money printing would actually slow down any time soon.  He just said that it may be “appropriate to moderate the pace of purchases later this year” if the economy is looking good.  For now, the Fed is going to continue wildly printing money and injecting it into the financial markets.  So nothing has actually changed yet.  But just the suggestion that this round of quantitative easing would eventually end if the economy improves was enough to severely rattle Wall Street on Wednesday.  U.S. financial markets have become completely and totally addicted to easy money, and nobody is quite sure what is going to happen when the Fed takes the “smack” away.  When that day comes, will the largest bond bubble in the history of the world burst?  Will interest rates rise dramatically?  Will it throw the U.S. economy into another deep recession?

Judging by what happened on Wednesday, the end of Fed bond buying is not going to go well.  Just check out the carnage that we witnessed…

-The Dow dropped by 206 points on Wednesday.

-The yield on 10 year U.S. Treasuries shot up substantially, and it is now the highest that it has been since March 2012.

-On Wednesday we witnessed the largest percentage rise in the yield on 5 year U.S. Treasury bonds ever.  It is now the highest that it has been in nearly two years.

-It was announced that mortgage rates are the highest that they have been in more than a year.

-We also learned that the MBS mortgage refinance applications index has fallen by 38 percent over the past six weeks.

If the markets react like this when the Fed doesn’t even do anything, what are they going to do when the Fed actually starts cutting back the monetary injections?

Posted below is an excerpt from the statement that the Fed released on Wednesday.  Please note that the Fed is saying that the current quantitative easing program is going to continue at the same pace for right now…

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

So why doesn’t the Federal Reserve just stop these emergency measures right now?

After all, we are supposed to be in the midst of an “economic recovery”, right?

What is Bernanke afraid of?

That is a question that Rick Santelli of CNBC asked on Wednesday.  If you have not seen his epic rant yet, you should definitely check it out…

On days like this, it is easy to see who has the most influence over the U.S. economy.  The financial world literally hangs on every word that comes out of the mouth of Federal Reserve Chairman Ben Bernanke.  The same cannot be said about Barack Obama or anyone else.

The central planners over at the Federal Reserve are at the very heart of what is wrong with our economy and our financial system.  If you doubt this, please see this article: “11 Reasons Why The Federal Reserve Should Be Abolished“.  Bernanke knows that the actions that the Fed has taken in recent years have grossly distorted our financial system, and he is concerned about what is going to happen when the Fed starts removing those emergency measures.

Unfortunately, we can’t send the U.S. financial system off to rehab at a clinic somewhere.  The entire world is going to watch as our financial markets go through withdrawal.

The Fed has purposely inflated a massive financial bubble, and now it is trying to figure out what to do about it.  Can the Fed fix this mess without it totally blowing up?

Unfortunately, most severe addictions never end well.  In a recent article, Charles Hugh Smith described the predicament that the Fed is currently facing quite eloquently…

One of the enduring analogies of the Federal Reserve’s quantitative easing (QE) program is that the stock market is now addicted to this constant injection of free money. The aptness of this analogy has never been more apparent than now, as the market plummets on the mere rumor that the Fed will cut back its monthly injection of financial smack. (The analogy typically refers to crack cocaine, due to the state of delusional euphoria QE induces in the stock market. But the zombified state of the heroin addict is arguably the more accurate analogy of the U.S. stock market.)

You know the key self-delusion of all addiction: “I can stop any time I want.” This eerily echoes the language of Fed Chairman Ben Bernanke, who routinely declares he can stop QE any time he chooses.

But Ben, the pusher of QE money, knows his addict–the stock market–will die if the smack is cut back too abruptly. Like all pushers, Ben has his own delusion: that he can actually control the addiction he has nurtured.

You’re dreaming, Ben–your pushing QE has backed you into a corner. The addict (the stock market) is now so dependent and fragile that the slightest decrease in QE smack will send it to the emergency room, and quite possibly the morgue.

We are rapidly approaching a turning point.  We have a massively inflated stock market bubble, a massively inflated bond bubble, and a financial system that is absolutely addicted to easy money.

The Fed is desperately hoping that it can find a way to engineer some sort of a soft landing.

The Fed is desperately hoping to avoid a repeat of the financial crisis of 2008.

Federal Reserve Chairman Ben Bernanke insists that he knows how to handle things this time.

Do you believe him?

11 Reasons Why The Federal Reserve Should Be Abolished

The Federal ReserveIf the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately.  It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people.  The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years.  The Fed creates our “booms” and our “busts”, and they have done an absolutely miserable job of managing our economy.  But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place?  Wouldn’t our economy function much more efficiently if we allowed the free market to set interest rates?  And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.  So why is the Federal Reserve doing it?  Sadly, this is the way it works all over the globe today.  In fact, all 187 nations that belong to the IMF have a central bank.  But the truth is that there are much better alternatives.  We just need to get people educated.

The following are 11 reasons why the Federal Reserve should be abolished…

#1 The Greatest Period Of Economic Growth In The History Of The United States Happened When There Was No Central Bank

Did you know that the greatest period of economic growth in U.S. history was between the Civil War and 1913?  And guess what?  That was a period when there was no central bank in the United States at all.  The following is from Wikipedia

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873.  The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.

So if our greatest period of economic prosperity was during a time when there was no Federal Reserve, then why shouldn’t we try such a system again?

#2 The Federal Reserve Is Systematically Destroying The Value Of The U.S. Dollar

The United States never had a persistent, ongoing problem with inflation until the Federal Reserve was created in 1913.

If you do not believe this, just check out the inflation chart in this article.

The Federal Reserve systematically penalizes those that try to save their money.  Inflation is a tax, and the value of each one of our dollars goes down a little bit more every single day.

But over time, it really adds up.  In fact, the value of the U.S. dollar has fallen by 83 percent since 1970.

Anyone that goes to the grocery store on a regular basis knows how painful inflation can be.  The following is a list that shows how prices for many of the things that we buy on a regular basis absolutely skyrocketed between 2002 and 2012

Eggs: 73%

Coffee: 90%

Peanut Butter: 40%

Milk: 26%

A Loaf Of White Bread: 39%

Spaghetti And Macaroni: 44%

Orange Juice: 46%

Red Delicious Apples: 43%

Beer: 25%

Wine: 60%

Electricity: 42%

Margarine: 143%

Tomatoes: 22%

Turkey: 56%

Ground Beef: 61%

Chocolate Chip Cookies: 39%

Gasoline: 158%

Even the price of water has absolutely soared in recent years.  According to USA Today, water bills have actually tripled over the past 12 years in some areas of the country.

So how can the Federal Reserve get away with claiming that we are in a “low inflation” environment?

Well, what Ben Bernanke never tells you is that the way that the government calculates inflation has changed more than 20 times since 1978.

The truth is that the real rate of inflation is somewhere between five and ten percent right now, but you will never hear about this on the mainstream news.

#3 The Federal Reserve Is A Perpetual Debt Machine

The Federal Reserve system was designed to be a trap.  The intent of the bankers was to trap the U.S. government in an endless debt spiral from which it could never possibly escape.

But most Americans don’t understand this.  In fact, most Americans don’t even understand where money comes from.

If you don’t believe this, just go out on the street and ask regular people where money comes from.  The responses will be something like this…

“Duh – I don’t know.  I’ve got to get home to watch American Idol.”

This is why it is so important to get people educated.  I think that most Americans would be horrified to learn that the creation of more money in our system also involves the creation of more debt.

The following is a summary of money creation that comes from one of my previous articles

When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.

Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.

The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.

So what does the Federal Reserve do with those Treasury bonds?  I went on to explain what happens…

The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.

But wait.

There is a problem.

Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.

So where will the U.S. government get the money to pay that debt?

Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.

But that never actually happens, does it?

And the creators of the Federal Reserve understood this as well.  They understood that the U.S. government would not have enough money to both run the government and service the national debt.  They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.

Men like Thomas Edison and Henry Ford could not understand why we would adopt such a foolish system.  For example, Thomas Edison was once quoted in the New York Times as saying the following…

That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.

Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.

But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.

Unfortunately, today most Americans don’t even understand how the system works.  They just assume that we have the best system in the entire world.

Sadly, the reality is that the system is working just as the international bankers that designed it had hoped.  The United States has the largest national debt in the history of the world, and we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day in a desperate attempt to keep the debt spiral going.

#4 The Federal Reserve Is A Centrally-Planned Financial System That Is The Antithesis Of What A Free Market System Should Be

Why do we need someone to centrally-plan our financial system?

Isn’t that the kind of thing they do in communist China?

Why do we need someone to tell us what interest rates are going to be?

Why do we need someone to determine what “the target rate of inflation” should be?

If we actually had a free market system, the free market would be the one “managing” our economy.

But instead, we have become so accustomed to central planning that any alternatives seem to be absolutely unthinkable.

For example, CNBC cannot possibly imagine a world where the Fed (or some similar institution) was not running things…

But suppose the law were taken off the books? The Fed’s job—in simple terms—is to manage the nation’s money supply and achieve the sometimes-conflicting tasks of full employment, stable prices while fighting inflation or deflation.

How would the U.S. economy then function? Something has to take its place, right?

Global markets would also need some sort of economic direction from the U.S. The Fed manages the dollar — and as the world’s leading currency, a void left by a Fed-less America could throw those markets into chaos with uncertainty about who’s managing U.S. interest rates and the American economy.

I’ve got an idea – let’s let the free market “manage” U.S. interest rates and the American economy.

I know, it’s a crazy idea, but I have a sneaking suspicion that it just might work beautifully.

#5 The Federal Reserve Creates Bubbles And Busts

Do you remember the Dotcom bubble?

Or what about the housing bubble?

By dramatically distorting interest rates and financial behavior, the Federal Reserve creates economic bubbles and the corresponding economic busts.

And guess what?

Now it is happening again.

When will the American people decide that they have had enough?

If you can believe it, there have been 10 different economic recessions since 1950.  And of course the Federal Reserve even admits that it helped create the Great Depression of the 1930s.

Perhaps it is time to try something different.

#6 The Federal Reserve Is Privately Owned

It has been said that the Federal Reserve is about as “federal” as Federal Express is.

Most Americans still believe that the Federal Reserve is a “federal agency”, but that is simply not true.  The following comes from factcheck.org

The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks (chartered by the federal government) and those state-chartered banks that wish to join and meet certain requirements. About 38 percent of the nation’s more than 8,000 banks are members of the system, and thus own the Fed banks.

And even the Federal Reserve itself has argued that it is “not an agency” of the federal government in court.

So why is there still so much confusion about this?

We should not be allowing a private entity that is owned and dominated by the banks to make decisions that dramatically affect the daily lives of all the rest of us.

#7 The Federal Reserve Greatly Favors The “Too Big To Fail” Banks

Since the Federal Reserve is owned by the banks, should we be surprised that it serves the interests of the banks?

In particular, the Fed has been extremely good to the “too big to fail” banks.

Over the past several decades, those banks have grown tremendously in both size and power.

Back in 1970, the five largest U.S. banks held 17 percent of all U.S. banking industry assets.

Today, the five largest U.S. banks hold 52 percent of all U.S. banking industry assets.

#8 The Federal Reserve Gives Secret Bailouts To Their Friends

The Federal Reserve is the only institution in America that can print money out of thin air and loan it to their friends any time they want to.

For example, did you know that the Federal Reserve made 16 trillion dollars in secret loans to their friends during the last financial crisis?

The following list is taken directly from page 131 of a GAO audit report, and it shows which banks received secret loans from the Fed…

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America – $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland – $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion

If you will notice, a number of the banks listed above are foreign banks.

Why is the Fed allowed to print money out of thin air and lend it to foreign banks?

#9 The Federal Reserve Is Paying Banks Not To Lend Money

Did you know that the Federal Reserve is actually paying U.S. banks not to lend money?

That doesn’t make sense.  Our economy is based on credit, and small businesses desperately need loans in order to operate.

But the Fed has decided to pay banks not to risk their money.  Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on “excess reserves” that U.S. banks park at the Fed.

So the big banks can just send their cash to the Fed and watch the money come rolling in risk-free.

As the chart below demonstrates, the banks have taken great advantage of this tremendous deal…

Excess Reserves Parked At The Federal Reserve

#10 The Federal Reserve Has An Astounding Track Record Of Failure

Over the past ten years, the Federal Reserve has been an abysmal failure when it comes to running the economy.

But despite a track record of failure that would make the Chicago Cubs look like a roaring success, Barack Obama actually decided to nominate Ben Bernanke for a second term as the Chairman of the Federal Reserve.

What a mistake.

Just check out some of the things that Bernanke said prior to the last financial crisis.  The following is an extended excerpt from an article that I published previously

*****

In 2005, Bernanke said that we shouldn’t worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to “full employment”….

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets….

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

In 2006, Bernanke said that housing prices would probably keep rising….

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

In 2007, Bernanke insisted that there was not a problem with subprime mortgages….

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

In 2008, Bernanke said that a recession was not coming….

“The Federal Reserve is not currently forecasting a recession.”

A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure….

“The GSEs are adequately capitalized. They are in no danger of failing.”

*****

There are many, many more examples that could be listed, but hopefully you get the point.

And now it is happening again.  Bernanke is telling the American people that everything is going to be just fine and that no major problems are ahead.

Do you believe him this time?

#11 The Federal Reserve Is Unaccountable To The American People

What is the most important political issue to most Americans?

Survey after survey has shown that the American people care about the economy more than anything else.

So why do we allow an unelected, unaccountable entity that is privately-owned to make our economic decisions for us?

The Federal Reserve has become so powerful that it has been called “the fourth branch of government”.  Every four years, presidential candidates argue about who will be best at managing the economy, but the truth is that it is the Fed that manages our economy.

We are told that the “independence” of the Federal Reserve is absolutely critical, but don’t the American people deserve to have a say in the running of the economy?

Our system is broken.  It is a system that will continue to create more bubbles and more debt until the entire thing finally collapses for good.

Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

But instead of banning government borrowing, we have allowed ourselves to become enslaved to a system where government borrowing actually creates our money.

We do not need to have a central bank.  There are much better alternatives.  We just need to get people educated.

Please share this article with as many people as you possibly can.  These are things that every American should know about the Fed, and we need to educate the American people about the Federal Reserve while there is still time.

The Great Seal Of The United States - A Symbol Of Your Enslavement - Photo by Ipankonin

Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is Soaring

Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is SoaringYou can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market that we have seen in recent months.  When the Federal Reserve does more “quantitative easing”, it is the financial markets that benefit the most.  The Dow and the S&P 500 have both hit levels not seen since 2007 this month, and many analysts are projecting that 2013 will be a banner year for stocks.  But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting?  Of course not.  Just because the Federal Reserve has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape.  In fact, the truth is that things just keep getting worse for average Americans.  The percentage of working age Americans with a job has fallen from 60.6% to 58.6% while Barack Obama has been president, 40 percent of all American workers are making $20,000 a year or less, median household income has declined for four years in a row, and poverty in the United States is absolutely exploding.  So quantitative easing has definitely not made things better for the middle class.  But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street.  Profits are soaring at Goldman Sachs and luxury estates in the Hamptons are selling briskly.  Unfortunately, this is how things work in America these days.  Our “leaders” seem far more concerned with the welfare of Wall Street than they do about the welfare of the American people.  When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.

When QE3 was announced, it was heralded as the grand solution to all of our economic problems.  But the truth is that those running things knew exactly what it would do.  Quantitative easing always pumps up the financial markets, and that overwhelmingly benefits those that are wealthy.  In fact, a while back a CNBC article discussed a very interesting study from the Bank of England which showed a clear correlation between quantitative easing and rising stock prices…

It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.

Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.

Many said the BOE’s easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that  “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it.”

So should we be surprised that stocks are now the highest that they have been in more than 5 years?

Of course not.

And who benefits from this?

The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

Unfortunately, all of this reckless money printing has a very negative impact on all the rest of us.  When the Fed floods the financial system with money, that causes inflation.  That means that the cost of living has gone up even though your paycheck may not have.

If you go to the supermarket frequently, you know exactly what I am talking about.  The new “sale prices” are what the old “regular prices” used to be.  They keep shrinking many of the package sizes in order to try to hide the inflation, but I don’t think many people are fooled.  Our food dollars are not stretching nearly as far as they used to, and we can blame the Federal Reserve for that.

For much more on rising prices in America, please see this article: “Somebody Should Start The ‘Stuff Costs Too Much’ Party“.

Sadly, this is what the Federal Reserve does.  The system was designed to create inflation.  Before the Federal Reserve came into existence, the United States never had an ongoing problem with inflation.  But since the Fed was created, the United States has endured constant inflation.  In fact, we have come to accept it as “normal”.  Just check out the amazing chart in the video posted below

The chart in that video kind of reminds me of a chart that I shared in a previous article

Hyperinflation Weimar Republic

Not that I expect the United States to enter a period of hyperinflation in the near future.

Actually, despite all of the reckless money printing that the Fed has been doing, I expect that at some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.  The false stock market bubble will burst, major banks will fail and the financial system will implode.  It could unfold something like this…

1 – A derivatives panic hits the “too big to fail” banks.

2 – Financial markets all over the globe crash.

3 – The credit markets freeze up.

4 – Economic activity in the United States starts to grind to a halt.

5 – Unemployment rises above 20 percent and mortgage defaults soar to unprecedented levels.

6 – Tax revenues fall dramatically and austerity measures are implemented by the federal government, state governments and local governments.

7 – The rest of the globe rapidly loses confidence in the U.S. financial system and begins to dump U.S. debt and U.S. dollars.

I write about derivatives a lot, because they are one of the greatest threats that the global financial system is facing.  In fact, right now a derivatives scandal is threatening to take down the oldest bank in the world

Banca Monte dei Paschi di Siena, the world’s oldest bank, was making loans when Michelangelo and Leonardo da Vinci were young men and before Columbus sailed to the New World. The bank survived the Italian War, which saw Siena’s surrender to Spain in 1555, the Napoleonic campaign, the Second World War and assorted bouts of plague and poverty.

But MPS may not survive the twin threats of a gruesomely expensive takeover gone bad and a derivatives scandal that may result in legal action against the bank’s former executives. After five centuries of independence, MPS may have to be nationalized as its losses soar and its value sinks.

So when you hear the word “derivatives” in the news, pay close attention.  The bankers have turned our financial system into a giant casino, and at some point the entire house of cards is going to come crashing down.

In response to the coming financial crisis, I believe that our “leaders” will eventually resort to money printing unlike anything we have ever seen before in a desperate attempt to resuscitate the system.  When that happens, I believe that we will see the kind of rampant inflation that so many people have been warning about.

So what do you think about all of this?

Do you believe that Federal Reserve money printing is the real reason why the stock market is soaring?

Please feel free to post a comment with your thoughts below…

How Much Money Will They Print?

The Federal Reserve Shows Barack Obama Who The Real Boss Is

The Federal Reserve Shows Barack Obama Who The Real Boss IsBarack Obama has greatly expanded the powers of the presidency during his time in the White House, but there is one institution that he simply will not mess with.  There is one organization that is considered to be so sacred in Washington D.C. that Obama will not dare utter a single negative word against it.  That organization is the Federal Reserve.  Even though he has shown that he is unafraid to pick a fight with just about everyone else in Washington, Obama flat out refuses to criticize the Fed and he even reappointed Ben Bernanke for another term as Fed Chairman even though Bernanke has a track record of failure that would make the Chicago Cubs look good.  Perhaps Obama is aware of what has happened to other presidents that have chosen to tangle with the Fed.  In any event, it has become clear that Obama submits to anything that the Fed says without question, and the controversy over the “trillion dollar coin” is another perfect example of this.  For weeks, there has been much speculation in the mainstream media about the possibility that the Obama administration may print up a one trillion dollar coin that it would use to keep paying the bills of the federal government if an agreement to raise the debt ceiling is not reached.  But on Saturday the Federal Reserve killed that idea, and we shouldn’t be surprised by that because under no circumstances will the Fed ever accept a threat to their monopoly over money creation in the United States.  If the Federal Reserve had allowed Obama to print up a debt-free trillion dollar coin, that would have set a very dangerous precedent for the Fed.  The American people would have realized that the federal government can actually create debt-free money whenever it wants and that it does not actually have to borrow money from anyone.  That is something that the Fed probably would have moved heaven and earth to keep from happening.  But now we won’t ever know how far the Fed would really be willing to go to keep their monopoly over money creation, because Obama has no plans to challenge this latest ruling from “the real boss” of our financial system.

Sadly, most Americans don’t even realize that a private banking cartel has a monopoly over all money creation in this country.  In recent years they have abused this power by wildly printing money (“quantitative easing“), and by making more than 16 trillion dollars in secret loans to their friends during the last financial crisis.  Under our system, the private Federal Reserve creates money whenever they want, and nobody else gets to create money.  It is an insane system, but very, very few of our politicians will ever dare to question it.

At this point, the U.S. Treasury Department is essentially just an arm of the Federal Reserve.  That is why it was no surprise that the Fed and the Treasury Department issued a joint statement on Saturday.  According to Treasury spokesman Anthony Coley, both the Treasury and the Fed have come to the conclusion that under no circumstances should a trillion dollar coin be printed up by the Obama administration…

“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit”

But of course it was actually the Federal Reserve which made this decision.  The following is from a report posted by Zeke Miller of Buzzfeed.com

The Federal Reserve was responsible for killing a controversial proposal to circumvent the debt limit, a senior administration official told BuzzFeed Sunday.

On Saturday the Treasury Department released a statement ruling out the only remaining alternative to Congress raising the nation’s borrowing limit, which would utilize a loophole in federal law to mint a $1 trillion coin to be deposited in the Federal Reserve and ensure the federal government could pay all bills and debt obligations.

According to that Buzzfeed article, the Federal Reserve would have actually refused to recognize the trillion dollar coin if the Obama administration had tried to deposit it with the Fed…

But it was the Federal Reserve that killed the proposal, the official told BuzzFeed, denying a purely political rationale for the announcement, saying the independent central bank would not have credited the Treasury’s accounts for the vast sum for depositing the coin.

Wow.

So there you go.

The real boss has told Barack Obama how it is going to be, and Obama plans to meekly comply.

So why is the Federal Reserve so adamant about maintaining their monopoly over money creation?

Well, it is all about compound interest.  Albert Einstein once made the following statement about compound interest…

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

When the Federal Reserve system was initially created back in 1913, the bankers that created it intended for it to be a perpetual debt machine that would extract massive amounts of wealth from the U.S. government (and ultimately from all of us) through the mechanism of compound interest.  Each year, hundreds of billions of dollars of interest are transferred into the pockets of the wealthy bankers and foreign nations that own our debt.  This is one of the reasons why I preach about the evils of government debt until I am blue in the face.  The debt-based Federal Reserve system is a way to systematically steal the wealth of the United States, and it is happening right in front of our eyes, but very few people actually understand it well enough to complain about it.

Unfortunately, we are rapidly getting to the point where we have accumulated so much debt that it is threatening to collapse our entire financial system.  The following comes from a recent Zero Hedge article

By now most are aware of the various metrics exposing the unsustainability of US debt (which at 103% of GDP, it is well above the Reinhart-Rogoff “viability” threshold of 80%; and where a return to just 5% in blended interest means total debt/GDP would double in under a decade all else equal simply thanks to the “magic” of compounding), although there is one that captures perhaps best of all the sad predicament the US self-funding state (where debt is used to fund nearly half of total US spending) finds itself in. It comes from Zhang Monan, researcher at the China Macroeconomic Research Platform: “The US government is now trying to repay old debt by borrowing more; in 2010, average annual debt creation (including debt refinance) moved above $4 trillion, or almost one-quarter of GDP, compared to the pre-crisis average of 8.7% of GDP.

This is a key statistic most forget when they discuss the stock and flow of US debt: because whereas the total US deficit, and thus net debt issuance, is about $1 trillion per year, one has to factor that there is between $3 and $4 trillion in maturities each year, which have to be offset by a matched amount of gross issuance just to keep the stock of debt flat (pre deficit funding). The assumption is that demand for this gross issuance will always exist as old maturities are rolled into new debt, however, this assumption is contingent on one very key variable: interest rates not rising.

Do you understand what is being said there?

Not only is our debt rising by more than a trillion dollars a year, we also need to roll over trillions of dollars of federal debt each year.  If interest rates on that debt start rising, we are going to start feeling the pain very rapidly.

As I have mentioned previously, the average rate of interest on U.S. government debt was 6.638 percent back in 2000.  If we returned to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt.

The main thing keeping interest rates low right now is the fact that the U.S. dollar is the de facto reserve currency of the world.  If that ends, interest rates on U.S. debt will skyrocket.  The following is from a recent article by Chris Ferreira

The US Dollar is the reserve currency of the world. You need it to buy oil, a vital component of any economy. Since other countries like China cannot print US dollars at their leisure, they have to get it from somewhere. They get it from trade with the US. The US buys products in Asia and the rest of the world with US dollars, and in turn these same dollar surpluses are used to buy oil and US bonds, creating a much needed artificial demand for US dollars.

This is also how the enormous US 558$ billion trade deficit in 2011 was financed. The US has been in a trade deficit since the 1980′s and it continues the grow as jobs and manufacturing are being lost to more competitive nations. The trade deficit also accounts for the national debt. The financing of the debt creates artificial demand for US bonds which helps lower the interest rate and coincidentally helps to raise the debt levels even higher.

Unfortunately, the rest of the world is starting to move away from the U.S. dollar.  Over the past couple of years, a whole host of international currency agreements have been signed that are intended to start reducing the use of the U.S. dollar in international trade.  For much more on this, please see the following article: “The Giant Currency Superstorm That Is Coming To The Shores Of America When The Dollar Dies“.

Most Americans have absolutely no idea how very close we are to financial catastrophe.  The only way we can continue to service our enormous 16 trillion dollar debt is for interest rates on that debt to remain super low.  But the only way those interest rates can remain low is for the U.S. dollar to remain absolutely dominant in international trade.  Once the rest of the world rejects the U.S. dollar, the game is over.

We are headed for total system meltdown, but neither major political party is going to do a thing about it.  They are both just going to continue to meekly comply with the dictates of the real boss of our financial system – the Federal Reserve.

It is imperative that we educate the American people about these things.  Please share this article with as many people as you can, and the following is another great article for anyone that does not understand how the Federal Reserve is destroying our financial system: “10 Things That Every American Should Know About The Federal Reserve“.

The Great Seal Of The United States - A Symbol Of Your Enslavement - Photo by Ipankonin

Is There Going To Be A Stock Market Crash In The Fall?

Is the stock market going to crash by the end of this year?  Are we on the verge of major financial chaos on a global scale? Well, this is the time of the year when investors start getting nervous.  We all remember what happened during the fall of 1929, the fall of 1987 and the fall of 2008.  However, it is important to keep in mind that we do not see a stock market crash in the fall of every year.  Some years the stock market cruises through the months of September, October, November and December without any problems whatsoever.  But this year conditions certainly seem to be right for a “perfect storm” to develop.  Technical indicators are screaming that a stock market decline is imminent and sources in the financial industry all over the world are warning that a massive crisis is on the way.  What you are about to read should alarm you.  But it is not a guarantee that anything will or will not happen.  When Ben Bernanke gives his speech at the Jackson Hole summit on Friday he could announce to the rest of the world that the Federal Reserve has decided to launch QE3 and that the Fed will be printing up trillions of new dollars.  If that happened global financial markets would leap for joy.  So it is always a dangerous thing when anyone out there tries to tell you that they can “guarantee” what is about to happen in the financial world.  There are just so many moving parts.  But if we do not see major intervention by the governments of the world or by global central banks a major financial crisis could rapidly develop this fall.  The conditions are certainly right for a stock market collapse, and we could easily see a repeat of what happened back in 2008.

The truth is that the second half of 2012 looks a little bit more like the second half of 2008 with each passing day.

Just check out what Bob Janjuah of Nomura Securities has been saying….

Based on the reasons set out earlier and also covered in my two prior notes, over the August to November period I am looking for the S&P500 to trade off down from around 1400 to 1100/1000 – in other words, I expect over the next four months to see global equity markets fall by 20% to 25% from current levels and to trade at or below the lows of 2011! US equity markets, along with parts of the EM spectrum, will I think underperform eurozone equity markets, where already very little hope resides.

Others are issuing similar warnings.  For example, the following is what a couple of Bank of America analysts said in a report the other day….

Our strategists see an unusually high number of macro catalysts over the next 3-6 months that could take markets lower. We expect economic growth to disappoint in the second half of the year in anticipation of the fiscal cliff. This would exacerbate any slowdown from the deepening recession in Europe and decelerating growth in emerging markets. There is also the ongoing tension in the Middle East, the potential for a US credit downgrade and accelerating downward analyst estimate revisions. To top it off, September is seasonally the weakest month of the year for stock price returns.

There has been an unusual amount of chatter in the financial world about the September to December time frame.

That could mean something or it could mean nothing.

But is is very interesting to watch what some top financial insiders are doing with their stocks right now.

Dennis Gartman, the publisher of the Gartman Leter, has dumped all of his stocks at this point.

As I have written about previously, George Soros has dumped all of his stock in banking giants JP Morgan, Citigroup and Goldman Sachs.

Are they just being paranoid?

Or do they know something that we do not?

If you are looking for the next “Lehman Brothers moment” in the United States, you might want to watch Morgan Stanley.  Morgan Stanley was heavily involved in the Facebook IPO disaster, earlier this year their credit rating was downgraded, and now there are persistent rumors that Morgan Stanley is in big trouble and that it will be allowed to fail.  You can check out some of these rumors for yourself here, here and here.

But of course as I have said all along the center of the coming crisis is going to be in Europe, and many analysts agree with me.  For example, the following is what the chairman of Casey Research, Doug Casey, had to say during a recent interview….

Europe is a full cycle ahead of the U.S. Its governments and its banks are both bankrupt. It’s a couple of drunks standing on the street corner holding each other up at this point. Europe is in much worse shape than the U.S. It’s highly regulated, highly taxed and much more socially unstable.

Europe is going to be the epicenter of the coming storm. Japan is waiting in the wings, as is China. This is going to be a worldwide phenomenon. Of course, the U.S. will be in it, too. We’re going to see this all over the world.

Much of southern Europe is already experiencing depression-like conditions.  Unemployment in both Greece and Spain is well above 20 percent and both economies are steadily shrinking.

Money is flowing out of Spanish banks at an unprecedented rate right now.  Just take a look at these charts.  The only thing that is going to keep the Spanish banking system from totally collapsing is outside intervention.

But the truth is that all of Europe is in big trouble.  Even German companies are slashing job right now. For example, check out what Siemens is up to….

German engineering conglomerate Siemens (SIEGn.DE) is in early internal talks to cut thousands of jobs in response to a weakening economy, particularly in Europe, a German newspaper reported.

Decisions could be made in October or November, according to daily Boersen-Zeitung, which did not specify its sources.

A Siemens spokesman declined to comment.

We are living in the greatest debt bubble in the history of the world, and at some point that bubble is going to burst in a very messy way.

It is vital that people understand that our system is not even close to sustainable.

Knowing exactly when it will collapse is not nearly as important as understanding that a collapse is absolutely inevitable.

I think what former World Bank economist Richard Duncan had to say recently is very helpful….

“The explosion in credit drove economic growth in the U.S. and around the world, and now that’s the only thing that’s keeping us from collapsing in a debt/deflation spiral,” he said. “[What] I think everybody needs to understand is that the kind of economy that we have now, it’s not capitalism. It has very little in common with capitalism. Capitalism was an economic system in which the government played very little role …. Under capitalism, gold was money and the government had nothing to do with it. Now the central bank creates the money and manipulates its value.”

And he is very right.

We aren’t seeing a failure of capitalism.

What we are witnessing is the failure of debt-based central banking.

And if you think that the global elite are not aware of what is happening then you have not been paying attention.

This summer the global elite have been preparing very hard.  Either they are getting very paranoid or they know things that we do not.

If you want to catch up on what the global elite have been up to recently, check out these three articles that I have published previously….

-“Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?

-“Startling Evidence That Central Banks And Wall Street Insiders Are Rapidly Preparing For Something BIG

-“Jacob Rothschild, John Paulson And George Soros Are All Betting That Financial Disaster Is Coming

If you are waiting for the nightly news to tell you what to do, then you have not learned anything.

Did anyone in the mainstream media warn you about what was about to happen back in 2008?

Of course not.

The “authorities” insisted that everything was going to be just fine and many average Americans were absolutely wiped out.

So don’t expect someone to come along and nicely inform you that your retirement savings are about to be absolutely devastated.

In this day and age it is absolutely critical for people to learn to think for themselves.

Barack Obama is not going to save you.

Mitt Romney is not going to save you.

The U.S. Congress is not going to save you.  They are too busy living the high life at taxpayer expense.

The system is not looking out for you.  Nobody is really going to care if your financial planning gets turned upside down.  This is a cold, cruel world and you need to understand how the game is played.  The financial insiders are looking out for themselves and most of them usually are able to avoid financial disaster.

Average folks like you and I are normally not so fortunate.

There are lots of warning signs that indicate that this fall could be a very turbulent time for global financial markets.

Ignore them at your own peril.

Mainstream Reporter Tells The Truth About Audit The Fed And The Creation Of The Federal Reserve

When someone in the mainstream media goes out on a limb to tell the truth, then the rest of us should go out of our way to applaud that effort.  Reporter Ben Swann of Fox 19 in Cincinnati is one of the few local television reporters in the United States that consistently tackles the tough issues.  As you can see from his “Reality Check” archives, he regularly does reports on the Federal Reserve, the emerging police state, the loss of our freedoms and liberties, the advance of globalism, the economic collapse, political corruption, etc. etc.  That is one reason why his YouTube channel is rapidly approaching a million views.  In his most recent Reality Check, Ben Swann asked this question: “Is auditing the Federal Reserve really necessary?”  In just four minutes, Swann covered the creation of the Federal Reserve, where money comes from, the 16 trillion dollars in secret loans given out by the Fed during the last financial crisis, and why an audit of the Fed is so important.  It really was extraordinary to watch a local mainstream news reporter tell the truth about these things.  We could definitely use about 1000 more reporters just like him.

The video of Ben Swann’s recent Reality Check is posted below.  If you have not seen it yet, it is definitely worth the 4 minutes that it takes to watch it….

What in the world would this country look like if we had hundreds of other real journalists such as Ben Swann that were willing to tackle these kinds of issues head on?

Certainly nobody is perfect, but when a reporter like Swann is willing to go out on a limb and attack the Fed we need to applaud his efforts.

The mainstream media is supposed to hold those in positions of power accountable.

But most in the mainstream media treat the Federal Reserve with kid gloves.  It is incredibly rare to hear any real criticism of the Fed by mainstream reporters.

If the mainstream media was actually doing their job, then perhaps we could get some answers to some questions that have gone unanswered for a very long time.

For example, Zero Hedge has published a “smoking gun” that proves that the Federal Reserve was heavily involved in manipulating the price of gold long after the gold standard was abandoned.  If you have not read that piece yet, you can find it right here.

I would love to know to what extent this is still going on today, and why nobody ever asks Federal Reserve Chairman Ben Bernanke about this.

Another mystery that I would like to see addressed is the trillions of dollars of “off balance sheet transactions” that are unaccounted for at the Federal Reserve.  This was brought up once during a Congressional hearing, but nobody seemed to have any answers.  Video from this hearing is posted below….

As you can see from the video, nobody in the federal government seems to have any idea what is really going on over at the Fed.

But the Fed has more power over our economy and over our financial system than anyone else does.

Isn’t it about time that the American people got some answers?

The Federal Reserve is at the very heart of our debt-based financial system that was created by the big Wall Street banks and for the benefit of the big Wall Street banks.

The Federal Reserve (and virtually every other central bank in the world) is not accountable to the people.  The Federal Reserve has created a perpetual debt bubble that is designed to systematically transfer the wealth of the American people to the banks.  In this system, the total amount of money and the total amount of debt is designed to continually expand.

Since the Federal Reserve was created, the value of the U.S. dollar has declined by well over 95 percent and the U.S. national debt has gotten more than 5000 times larger.

But nobody seems to want to hold the Federal Reserve accountable for any of this.

Just what in the world is going on here?

In a previous article about auditing the Fed, I listed some more questions that I would like to see someone ask the Federal Reserve….

If the Federal Reserve is supposed to prevent shocks to our economy, then why have there been 10 different economic recessions since 1950 and why are we about to enter another one?

Was the Federal Reserve involved in the manipulation of Libor?

What role did the Federal Reserve play in creating the housing bubble that resulted in our unprecedented housing crash?

Why has the value of the U.S. dollar fallen by 83 percent since 1970?

Why is the Federal Reserve paying U.S. banks not to lend money?

Why did Barack Obama nominate Ben Bernanke for a second term as head of the Federal Reserve when Bernanke has a track record of failure that makes the Chicago Cubs look like a roaring success?

Why is the U.S. national debt more than 5000 times larger than it was when the Federal Reserve was created in 1913?

Why were the Federal Reserve and the personal income tax both pushed through Congress in the same year in 1913?

Why does the Federal Reserve argue that it is “not an agency” of the federal government in court?

Why do all 187 nations that belong to the IMF have a central bank?

Most Americans are pinning their hopes for an “economic turnaround” on the upcoming election in November.

But the truth is that until something is done about the Federal Reserve it isn’t going to matter very much who is in the White House.

As I wrote about yesterday, the total amount of all debt in America has grown from about 2 trillion dollars to nearly 55 trillion dollars over the past 40 years.

Yes, we should blame the American people for being really stupid about debt, but we also need to keep in mind that this is exactly what the debt-based Federal Reserve system was designed to do.

We have been enslaved by design and most Americans do not even realize what has happened.

Let us encourage reporters like Ben Swann to keep speaking out about the Federal Reserve, and the rest of us need to keep speaking out about the Fed too.

The Economic Collapse