It's time to dump the Federal Reserve. If anything served to demonstrate the urgency of the need to get rid of this probably unconstitutional institution, Ben Bernanke's plan to monetize the debt serves as the gold standard-which might incidentally be something else we might want to look at getting back on. I think Nixon decided to get off it out of the desire for a more flexible system. Well, if that's true, remember that you can only stretch a rubber band so far before the damn thing snaps.
The problem is, not many people want to seriously discuss repealing the Federal Reserve Act, which to me is nothing more than a blatant attempt to hold US currency hostage to special interests. One of the biggest jokes ever perpetrated on the American people is the lie that the Fed is a non-political body, or that it is neutral. Yet, everybody that sits on the board is a political appointee. Which, if you have something like that, they probably should be, but that's beside the point. The best you can say about the fed is that it is made up of a balance of appointees from both major parties, and if a Chariman is appointed by a President from one party, he can't be removed by a President from the opposition party until his term expires.
Wait a minute, come to think of it, that is a problem in its own right, isn't it?
We don't need it. Without it, our elected leaders have far more impetus to control spending and stop tinkering with the economy. As long as you have a Fed Chairman willing and able to step in and artificially raise and lower interest rates according to the flavor of the month in terms of fiscal policies, no one has any incentive to reign in spending. The ugly secret is, no one cares about the short term impact on the finances of the average American. While they play a long game, the short term is enough to send most of us over the edge and into the poor house-or worse, into the streets.
That brings me back to Bernanke and his latest move to monetize the debt by purchasing 400 billion to a potential trillion dollars, by just willy-nilly printing money. Hey, I'm no financial expert, nor am I an Economist-though in my defense, I'm a pretty good Tarot reader, and when the opportunity presents itself I can on a good day discern the will of Zeus by the way the wind rustles in the trees. But one thing I know almost instinctively is that this move by Bernanke is dicey at best, and at worse it is-hold onto your seats, folks, its politically motivated.
Why do I say that? Let's walk it back, shall we? It became pretty obvious as long ago as two months before the election that not only were the Republicans going to make big gains in the election, they were almost definitely going to retake the House, and for a while it looked like they had an outside chance of taking the Senate as well. This has been in the works for a while, folks, due mainly not to the prospect of the GOP taking over, but because of the main impetus behind the sea-change in American politics-the Tea-Party. It was pretty obvious that most Tea Parties are deathly serious in their demands to severely curtail if not eliminate deficit spending, and when many of their chosen candidates won seats in the House, it became patently obvious that many non-Tea-Party Republicans were going to have to accommodate them. Witness Senate Minority Leader Mitch McConnell's recent road to Damascus conversion to the anti-earmark faction, fueled entirely by Tea-Party politics.
Usually, such talk is shelved almost as soon as the elections are over with, but now, we have in all seriousness a Congress made up in large measure of people who won't have it. So what does the Fed do? Out of fears that cutbacks in spending might lead to deflation, Barnanke decides he's going to monetize the debt in order to keep inflation up, and in so doing devalue the dollar.
A lot of people don't understand this, and I can barely wrap my head around it, but some people want the dollar to be weak. You wouldn't think so, but they do. I think it has something to do with international currency trading. A weak dollar has room to grow, whereas a strong dollar can mostly only go down. This gives greater emphasis for speculators to invest in the dollar, while those who own the dollar are either stuck or find themselves selling for a loss. In fact, this could lead to a massive dumping particularly by China, leaving some other faction to buy up that debt. In the meantime, main street America will find its purchasing power severely curtailed.
The end result-spending cuts become all the more imperative, yet at the same time, more unlikely than ever before. Worse, even if they are implemented, for all intents and purposes they will prove to relatively useless, and by and large unpopular, maybe even with vast segments of the Tea-Party. The political motivations behind this move are breath-taking.
Sarah Palin has been warning about the short-term and long-term impact of this move, this putting to rest the lie that she doesn't know what she's talking about. Well, to anybody with an open mind, that is. This should be a signature issue, not just for her but the Republicans in general. Say what you want about Ron Paul, but he has been beating this drum for years, and his son Rand, Kentucky's newest Senator and a Tea-Party member, has spoken out about it as well.
If the Federal Reserve Act is repealed, that would go a long way towards finally putting our fiscal house in order, simply because deficit spending will have to be severely curtailed, finally. The markets just won't be able to accommodate such policies without some dictatorial board of political appointees declaring interest rate levels as though by royal decree.
And that is precisely the reason why it was created to begin with, and why it will be a hard-fought battle to put an end to it. But it is a battle that would be well worth the fighting. It might even be worth a challenge in the courts based on its constitutionality. Nothing should have that much power over the countries finances and fiscal policies, especially something that has next to zero accountability. It's unconstitutional on the face of it. But then again, about half of the members of the Supreme Court itself is unconstitutional, so what do I know? It's at least worth a shot, and if it doesn't pan out, we can go the legislative repeal route. But something has to change.
