Posts Tagged ‘Federal Reserve’

The Aerographite Dollar

September 1, 2012 Leave a comment

In a Washington Post opinion piece written before Bernanke’s speech at Jackson Hole, James Grant describes how the Federal Reserve has steered off course and need to re-anchor the dollar to gold.

To achieve these desired ends [keep the economy growing, the workforce fully employed, stock prices rising, the banking system under surveillance and the inflation rate modulated] , the Fed manipulates interest rates, plays mind games with the stock market and creates hundreds of billions of dollar bills, with a few taps on a computer keyboard. The Bernanke dollar is lighter than air: a piece of paper or a swarm of pixels.

Sure enough, following the Fed Chairman’s comments below, both political metals began a steep climb when priced in paper dollars.

Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions.

It now looks like his “lighter than air” dollar is no longer good enough. He’s got competition from folks at the Universities of Kiel and Hamburg who used carbon-nanotube technology to produce the lightest solid material ever created - Aerographite. Very soon, he may have to start printing helicopter loads of Aerographite Dollars to support the weight of gold & silver; Unless he returns the Fed to its golden roots…


Ben Bernanke should return the Fed to its golden roots
By James Grant | Washintong Post

More important than anything that Ben Bernanke might say in his long-awaited speech Friday in Jackson Hole, Wyo., is the thing he won’t say, but should.

Positively out of bounds for the chairman of the Federal Reserve is the admission that he is in the wrong line of work. The institution he leads was created to conduct a central banking business. But Congress and he have steered it into the central planning business. In so doing, the Fed has exchanged a job it could do for one it can’t.

When the Fed opened its doors in 1914, its job was to lend against sound collateral to solvent banks and to protect the value of the dollar. The Founders gave no thought to empowering their brainchild to steer the course of the economy. The future would take care of itself if the dollar were sound and the banks were solvent, they reasoned. As for the dollar, it was legally defined as a weight of gold. You couldn’t just materialize it.

Today’s monetary mandate comes in innumerable parts, written and unwritten: to keep the economy growing, the workforce fully employed, stock prices rising, the banking system under surveillance and the inflation rate modulated (neither too high nor — oddly enough — too low). To achieve these desired ends, the Fed manipulates interest rates, plays mind games with the stock market and creates hundreds of billions of dollar bills, with a few taps on a computer keyboard. The Bernanke dollar is lighter than air: a piece of paper or a swarm of pixels.Wisely, the government keeps its hands off most prices most of the time. Adam Smith’s “invisible hand” does the work that the price-fixing bureaus of the communist economies of yesteryear failed to do.Free and mobile prices are the sine qua non of a successful economy. The Fed knows this bedrock truth as well as anyone. Yet it persists in pushing around the price of credit — interest rates — like a pea on a plate.It fixes one rate, the federal funds rate, the basic reference rate in the wholesale money market. It influences other rates and manipulates still others — the cost of mortgage money, for example. It rearranges short- and long-term rates to put its stamp on the yield curve, i.e., the structure of rates across time. Thus do a dozen public servants, who make up the policy-setting Federal Open Market Committee, lead the U.S. economy around by the nose.Command-and-control is 20th-century doctrine. Social collaboration is the way of the 21st. We moderns turn to the Web to share ideas and information (and, to be sure, misinformation). Want to solve a problem? Put it up on the Web and invite the world to take a crack at it.In the same collaborative spirit, we “discover” prices. That’s what all the shouting is about in the trading pits of the Chicago commodity exchanges. Unmanipulated prices, freely discovered, balance supply with demand. They’re what keep the store shelves stocked. They coordinate the moving parts of this infinitely complex economy.

The Fed was founded in a spirit of price discovery. Yes, the new central bank could impose an interest rate on the banking system, the “discount rate.” But it couldn’t just conjure dollars. Up until 1933, the currency in one’s wallet was exchangeable for gold on demand: an ounce for $20.67. Then as now, money went where it was treated well. Gold didn’t sit still. It entered or left the country as America’s financial attraction waxed or waned. Prices, costs, interest rates and politics either attracted or repelled it. While the government could certainly influence these monetary flows, it could hardly dictate them. Merchants, investors and savers the world over — a collaborative network long predating the invention of the computer — made money move by exercising their free choice.

But now that we have the computer — and the Web, the cloud and mobile networks — we’ve lost the collaborative network. In its place, we have brute force. Herbert Hoover, who knew a thing about monetary disorder, entered an eloquent warning in his memoir against the pure paper dollar. Currency convertible into gold at a fixed rate, he wrote, “is a vital protection against economic manipulation by the government. As long as currencies are convertible, governments cannot easily tamper with the price of goods, and therefore the wage standards of the country. They cannot easily confiscate the savings of the people by manipulation of inflation and deflation. They cannot easily enter into currency expansion for government expenditures.”

What the Bank of Bernanke might do next, one can only guess. Manufacture another half-trillion dollars through a third round of “quantitative easing”? Pledge to pin interest rates to the floor for another year or two? Or roll out an improvisation that the Fed’s bright young economists are only now dreaming up? We won’t find out until the chief mandarin holds forth in Jackson Hole.

With every new crisis, the Fed gathers new power. Better — to forestall new crises — that it start to relinquish power. Let interest rates be set free and the dollar be reanchored in gold.

Almost a century old, the Fed is living in the past.

Related Reads:

The Gold Standard Goes Mainstream

August 30, 2012 2 comments

By Seth Lipsky | WSJ

An under-reported development of this campaign season is the Republican Party’s decision this week to send Gov. Mitt Romney into the presidential race on a platform effectively calling for a new gold commission. The realization that America’s system of fiat money is part of its economic problem is moving from the fringes of political discussion to the center.

This is a sharp contrast from the last time a gold commission was convened, in 1981, a decade after President Nixon abandoned the Bretton Woods system and opened the era of a fiat dollar. The 1981 commission recommended against restoring a gold basis to the dollar. But two members, Congressman Ron Paul and businessman-scholar Lewis Lehrman dissented and outlined the case for gold.

The new platform doesn’t use the word “gold,” describing the 1981 United States Gold Commission as looking at a “metallic basis” for the dollar. But the metal was gold, and the new platform calls for a similar commission to investigate ways “to set a fixed value for the dollar.”

What has stayed with me from 198 1when I covered the commission as a young editorial writer for this newspaper is how momentum for a new gold standard faded amid the successes of the supply-side revolution. President Reagan pushed through his tax reductions and Federal Reserve Chairman Paul Volcker maintained tight money. Inflation was defeated. The value of the dollar, which had sunk below 1/800th of an ounce of gold during President Carter’s last year in office, soared.

The 1981 commission was also stacked against a gold-backed dollar from the start. The ruling philosophy was monetarism which, as propounded by Milton Friedman, seeks to keep prices steady by adjusting the money supply. The commission’s executive director was Anna Schwartz, co-author of Friedman’s “Monetary History of the United States,” and the Democratic-controlled House held firm to monetarist orthodoxy.

Today things have changed. Both Friedman and Schwartz died as heroes of capitalism and freedom, but monetarism lacks the sway it once had. Even Friedman before he died seemed to adjust his thinking on using the quantity of money as a target. Schwartz predicted that monetary instability would be a breeding ground for a restoration for the role of gold.

In the ferment within today’s Republican Party, the gold standard has become almost the centrist position. On the left would be those who favor a system of discretionary activism in which brilliant technocrats, such as Ben Bernanke at the Fed, use their judgment in setting interest rates. A bit to their right would be advocates of a rule, such as John Taylor’s rule linking interest rates to various conditions, or one that requires the Fed to target the price of gold but stops short of defining the dollar in terms of specie.

In the center would be advocates of a classical gold standard, in which a dollar is defined as a fixed amount of gold. These include, among others, Mr. Lehrman, James Grant of Grant’s Interest Rate Observer, publisher Steve Forbes, economist Judy Shelton, and Sean Fieler of the American Principles Project.

A bit further to the right would be partisans of the Austrian school of economics, including Rep. Paul. He advocates less for a gold standard than for an idea of Friedrich Hayek, the Nobel laureate who came to favor what he called the denationalization of money and a system centered on private coinage and currency that would compete with government-issued money. Further right are purists such as the radical constitutionalist Edwin Vieira Jr., who would simply price things in weights of gold or silver.

A good bit of overlap exists among the camps, but Congress has come alive to all points on this spectrum. Rep. Kevin Brady, a Texas Republican who is vice chairman of the Joint Economic Committee, is seeking to pass the Sound Dollar Act, which would end the Fed’s mandate to keep unemployment down, instead having the central bank focus only on stable prices. Rep. Paul is pressing the Free Competition in Currency Act, which would end legal tender and put Hayek’s ideas into practice.

In the Senate, Jim DeMint, Mike Lee and Rand Paul are offering the Sound Money Promotion Act, which would remove the tax on the appreciation in the value of gold and silver coins that have been declared legal tender by the federal or a state government. Utah has already made gold and silver coins legal tender in the state.

Then there is Mr. Romney. In Paul Ryan he chose a running mate who understands the idea of sound money. In June 2010, as chairman of the House Budget Committee, Mr. Ryan asked Mr. Bernanke what he made of record-high prices of gold. (The value of the dollar had just slid to below 1/1,200th of an ounce of gold; it has since plunged to below 1/1,600th of an ounce.)

“I don’t fully understand the movements in the gold price,” Mr. Bernanke replied. He confessed his belief that some people were hedging “against the fact that they view many other investments as being risky and hard to predict at this point.” No wonder the eventual House bill to audit the Fed passed with overwhelming bipartisan support.

This is the context in which Mr. Romney last week moved so pointedly to distance himself from a suggestion by one of his advisers, Glenn Hubbard, that Mr. Bernanke should be considered for another term. Mr. Romney made clear that he would be looking for a new Fed chairman, an important signal from a candidate who has made some mistakes such as suggesting that monetary policy should be kept away from Congress. In fact, it is precisely to Congress that the Constitution (in Article 1, Section 8) grants the power to coin money and regulate the value thereof.

The New York Sun, the online paper I edit, has warned that a gold commission could prove to be the graveyard for sound money on the principle that if one wants to bury an idea, one need but name a commission. But it’s possible that a well-conceived and well-staffed gold commission could actually sort out the debate.

It’s no small thing that Mr. Romney’s platform calls for a gold commission and an audit of the Fed. The last Republican to run on a platform calling for a dollar “on a fully convertible gold basis” was Dwight Eisenhower, who cast the promise aside once in office. That’s a strategic misstep for Mr. Romney, should he win in November, to avoid.


Mr. Lipsky is editor of the New York Sun. The recipient in April of a grant in the form of a lifetime achievement award from the Lehrman Institute, he is writing a book on the constitutional dollar, forthcoming from Basic Books.

Related Articles:

The Aerographite Dollar: Returning the Fed to its golden roots

Crime of the Millennium

August 9, 2012 Leave a comment

By Jeff Nielson | Silver Gold Bull

As few people in our societies even know, all of the world’s governments have (foolishly) granted exclusive monopolies for the printing of all the world’s currencies (our “money”) to a cabal of privately-owned corporations called “central banks” – given that name because it is a cabal exclusively owned/operated by bankers.

Understand that the monopoly to print money is nothing less than a license for economic rape. These private banks lend us all the paper that they print out of thin air (at zero cost to themselves). The result is that after roughly 100 years of this economic rape we have (collectively) paid these banks $trillions in “interest” for nothing, and currently owe them $10’s of trillions for nothing. History’s single greatest act of legal theft.

Indeed, these bankers have stolen such unimaginably huge sums of wealth from our societies that the Thieves now voluntarily return most of the additional amounts they steal each year. There are two reasons for this act of pseudo-remorse. To begin with, with the Little People drowning in debt individually, and with our nations drowning in debts collectively; the Thieves were/are worried that their Victims might actually notice them sitting on top of their mountains of (stolen) money.

However the second reason – the real reason – is that the countless $trillions that these central banks have stolen from us are literally just the tip of the iceberg during their reign of legal-crime. This private cabal of central banks has not only been given monopolies to print money out of thin air for their own benefit, but thanks to the abominable euphemism which they call “fractional-reserve banking”; they are allowed to delegate their License to Steal to other private banks.

Specifically, for each dollar that the central bankers lend to their other banker-friends (at zero/near-zero interest rates); these private banks are allowed to print ten more dollars out of thin air, and lend them to the Little People (at higher rates of interest). Thus the central banks don’t mind returning most of the additional money which they steal each year, since their own thievery only represents 10% of the total banker-plundering of the wealth of all economies.

What is the inevitable result of a capitalist system where every new dollar that is used to fuel the economy is lent into existence? Debt Slavery: the ultimate goal of every (paper) fiat currency system.

There is now somewhere in excess of $200 trillion in debt sloshing around the global economy, most of that debt being totally fraudulent, in that it is interest paid to bankers (literally) for nothing. Somewhere around 25% of every dollar earned by all of our Western economies is now paid to these banker-parasites as interest on their fraudulent debts. The bankers would like to steal even more, but already all of our economies are teetering on the verge of bankruptcy.

Greece was already forced to default, and the U.S. (the world’s largest Deadbeat Debtor) is only able to ward-off debt-default by fraudulently maintaining its own interest rate at zero percent. Put another way, if U.S. interest rates had ever reached the same level as those which were inflicted on Greece by Wall Street’s economic terrorists; the U.S. would have defaulted even faster than Greece. It would have required the U.S. government to quadruple tax revenues just to pay the interest on its own (fraudulent) debt.

Having enslaved us all with debt thanks to being granted their License to Steal, history’s greatest thieves  are also history’s greatest hypocrites. Whenever one of our (subservient) governments has the audacity to actually suggest taking a closer look at the bankers’ Theft Monopoly; the Thieves look down their noses, point their fingers at us, and accuse of us “threatening their independence.” Yes, there is no one who places a higher price on his own freedom than the Slave Master. What about our independence?

The latest example of this supreme hypocrisy comes from (surprise, surprises) Benjamin Shalom Bernanke. Feeling especially pleased with himself after his two-day love-fest with the banker sycophants of the U.S. Congress; B.S. Bernanke chose that moment to launch yet another attack at Rep. Ron Paul – and his “Audit the Fed” bill.

Bernanke’s specific accusation? As paraphrased by the Corporate Media, Bernanke whined that “the ability to review monetary policy decisions…could compromise central bank independence.” This is by no means a new argument. Indeed, it is the Big Lie which the banker-thieves have hid behind for a hundred years – since it has never had a shred of validity.

The Big Lie is based on the artificial/arbitrary distinction of all economic policies as being either “fiscal policy” (the realm of government) or “monetary policy” (the realm of private bankers). The obvious fiction here in attempting to create some invisible wall between the two groups of policy-makers is that there is only one economy.

Pretending that the fiscal policy of an economy can act “independently” of monetary policy (or vice versa) is precisely as absurd as suggesting that a car’s transmission could operate “independently” from the engine. Indeed, this metaphor is very useful since the analogy of the fiscal and monetary policy of an economy and the engine and transmission of a car is precisely parallel.

As with a car’s engine, fiscal policy “powers” any/every economy, since it represents the physical economy itself. Conversely, monetary policy is merely the throttle (or “transmission”) which regulates the speed of the economy. Obviously neither of these elements can ever possibly be fully “independent” of the other. It is equally obvious in both these pairings which must be the dominant component and which must be the subordinate component.

With every car, its transmission is clearly subordinate to its engine. It is transmissions which are designed to optimize engine performance, and not engines being designed to optimize any particular transmission. Similarly, it is monetary policy which must naturally/automatically be subordinate to fiscal policy, rather than fiscal policy being designed to cater to the whims of private bankers (i.e. the Thieves). The Tail cannot be allowed to wag the Dog.

Thus when B.S. Bernanke claims that central banks “must maintain their independence” he is not uttering some profound truth. Rather, he is merely repeating the bankers’ Big Lie, a vacuous fiction which as a matter of simple logic never could have any validity. It is a Lie with one very obvious purpose: to minimize scrutiny as a small cabal of bankers perpetrate theCrime of the Millennium.

With our nations (and most of their citizens) drowning in fraudulent debts while the bankers sit on their mountains of ill-gotten money, it literally adds insult to injury for these bankers to arrogantly maintain we (the ones who granted them their License to Steal) have no right to take a closer look at how they have been robbing us blind for the last century.

This would probably be a good time to remind the Thieves how History tends to (eventually) reward them for their deeds. Less than a week after a news item appeared out of Iran reporting that the Iranian government had executed several bankers for a multi-billion dollar act of serial fraud, an interesting article appeared (ironically) on the blog for the Wall Street Journal itself.

The writer of that article notes the following:

The Code of Hammurabi, more than 3,700 years ago, stipulated that any Mesopatamian who violated the terms of a financial contract – including the futures contracts that were commonly used in commodities trading in Babylon – “shall be put to death as a thief.”

…In medieval Catalonia, a banker who went bust wasn’t merely humiliated by town criers who declaimed his failure in public squares throughout the land; he had to live on nothing but bread and water until he paid off his depositors in full. If, after a year, he was unable to repay, he would be executed…Bankers who lied about their books could also be subject to the death penalty.

In Florence during the Renaissance, the Arte del Cambio…made the cheating of clients punishable by torture…

But financial crimes weren’t merely punished; they were stigmatized…

Contrast that with our modern societies where “punishment” for so-called white-collar crime is (at worst) nothing but a slap on the wrist in comparison to punishment handed out for blue-collar crime: the crimes of the Little People. The entire basis of this two-tier justice was the presumption (never supported with evidence) that the rich did not require as much deterrence from crime as the poor – and thus the sentences for their misdeeds did not need to be as severe.

Today, as the bankers now openly confess to a single act of fraud which they themselves estimate is roughly $350 trillion in scope, well over 90% of all crime in the world (by dollar value) is now white-collar crime. Meanwhile, we just had 25% of Wall Street executives confess that crime was a way of life in banking (and presumably the other 75% were lying).

In short, never in all of human history has white-collar crime required such maximum deterrence. I suggest to all these Thieves that they not only study their history books, but (for those based in the U.S.) that they also take a glance toward Death Row, and contemplate what “maximum deterrence” means in the 21st century U.S.A.


Further Reading:

Own Physical Gold, but Audit Paper Gold

August 8, 2012 Leave a comment

Much has been written here and elsewhere about the merits of holding physical gold as opposed to paper representations of gold, otherwise known as gold derivatives or paper gold. However, when it comes to auditing gold stored in vaults, counting the physical gold bars and drilling holes into them are not necessarily the way to go. Ironically, when it comes to auditing, it’s the “paper” that’s more importing than the physical.

In this recent interview at Capital Account, Chris Powell, co-founder and treasurer of Gold Anti Trust Action Committee (GATA) explains why he’s not excited about news that the US Treasury is auditing its gold stored at the NY Federal Reserve.

The dramatic news of drilling into the bars to ascertain their purity is of little relevance to him. He’s more interested in an audit of the paper claims to the gold. He doesn’t doubt that the gold is physically there, nor that they are pure. Rather, he wants to know who actually owns the gold? How many parties are claiming ownership to each bar of gold? Have they been leased or swapped?

Watch this very informative interview, which also covers other topics of interest:


For further reading:



The first Central Bank on Mars

August 6, 2012 1 comment

This is the first image taken by NASA’s Curiosity rover. Image credit: NASA/JPL-Caltech

After 8 years of planning, 8 months of space flight covering 566 million km and performing flawlessly throughout its “7 Minutes of Terror”, Curiosity landed right on time and on the spot inside the  Gale Crater, Mars at 0530 GMT, August 5.

This nuclear powered rover, about the size of an SUV is loaded with the most-sophisticated instruments ever used off Earth. The Mars Science Laboratory will keep hundreds of scientists and engineers busy over the next Martian year (23 earth-months) as they assess whether the landing area has ever had or still has environmental conditions favorable to microbial life.

Now, this is rocket science, and how much does it cost? A mere $2.5 billion! That’s loose change or a rounding error when compared with the thousands of billions created out of thin air to bailout banksters and Wall street gamblers. On the one hand, we have people gambling with financial derivatives to the tune of hundreds of trillions of dollars, creating massive illusionary wealth for themselves when they win while burdening the masses with trillions in bailouts when they lose. On the other hand, we have these heroes of modern civilization building real things, doing real science, creating new technologies - all real, physical stuff working on shoe string budgets with constant threats of further budget cuts:

In the Obama Administration’s budget request for next year, which was unveiled last month, NASA planetary science suffered a 21 percent cut, compelling the agency to scale back its robotic exploration efforts and drop out of two future European-led Mars missions entirely.

Dear Obama, Geithner & Bernanke,

Would you consider passing over some of your money printing loose change to these good folks over at NASA, and maybe, just maybe, you get the right to set up your first Federal Reserve central bank on Mars to propagate your fraudulent fractional reserve banking system on the red planet and beyond. Remember, there will be be a few humans over there in the not too distant future. You want to be the first to suck their blood dry, don’t you?



Bailouts for the banksters in 2008 alone could fund over 680 of these incredible missions!

Updated:  Aug 7

  • Watch Lyndon Larouche’s take on the significance of the Curiosity landing. “This is a vindication for mankind and science versus Obama!”



Get every new post delivered to your Inbox.

Join 210 other followers