Where Your Money Is Going
Nation by nation, the public is dependent on the wisdom of a group of highly-paid experts called central bankers. These people work for private organizations that have been granted sovereign power by their national governments. No other group of profit-seeking private entrepreneurs in the world enjoys an equal measure of autonomy (self-law) - autonomy from both the government that granted them their monopoly over the money supply and also from consumers in the free market. They impose sanctions, both positive and negative, however, no sanctions are ever imposed on them by the likes of us.
The public has been taught by the media that this profit-seeking monopoly is run for the benefit of the people. That public-spirited monopolists over the money supply really have the nation's best interests at heart. Because these men, unlike all other monopolists, are simultaneously self-sacrificing yet self-serving, thus the politicians have granted them independence from the government. They also possess independence from the free market's negative sanction - bankruptcy. In fact, the central bank is charged with the task of forestalling widespread bankruptcies, beginning with those institutions that legally own the central bank - private commercial banks.
A central bank, unlike any other organization, is praised because no one in civil government controls it. Textbook writers in economics, as well as financial columnists for major newspapers, praise the central bank for its anti-democratic legal status. The nation's professional opinion-makers assure the literate public that the great benefit of a central bank is that it is independent from politics. Congress cannot tell it what to do. Neither can the President. This is presented as an enormous advantage to the public.
There is no monopoly more profitable or with more power to ignore the government than a central bank. It has power over the only common link among all participants in the economy - the money supply. The world's national governments have self-consciously transferred power over the central economic institution - money - to a group of unelected, profit-seeking, self-screened representatives of the commercial banking system, a system based on fraud.
Commercial banks promise to pay depositors interest on the money that can be withdrawn by the depositors at any time, yet the banks lend this same money long-term to borrowers, who do not have to repay it until a specific date. The system therefore is "borrowed short" and "lent long." Bankers earn a good living, and a few get rich, from contracts that are based on a lie. This promise is believable most of the time because only a handful of depositors can actually withdraw their money at the same time. Whenever a lot of them try to withdraw money at the same time, we call these events panics or bank runs.
These events used to produce bankruptcy. But then central banks came along, beginning in 1694 in England. They are invested by the State with what has traditionally been explained as the State's sovereign authority - the authority to create money. This ability to create money reduces the threat of bank runs, but it also guarantees the creation of depreciating money.
Every national currency is depreciating. Compared to the price of goods that the currency would buy 30 years ago - especially real estate - consumers around the world are suffering from currencies of declining value. This makes them seekers of long-term debt, especially for real estate. This quest for money to borrow increases demand for the asset leased by banks, namely money. In other words, the central banks' slow destruction of money creates public demand for the services of commercial banks. This is a classic vicious circle. It is the product of a government-granted monopoly. Banking is not a free-market phenomenon.
Today, an American commercial bank can borrow money in the federal funds overnight money market at 2.75%, and then this same commercial bank can turn right around and lend that same money to credit card users for up to 24%. Which means for every $275 dollars paid out, a bank pulls in $2,400 - not too shabby a deal!
The public has trusted politicians and central bankers. Voters assume that the promises and the assurances of these experts are reliable. And thus we have allowed them to indebt our children and our grandchildren. Then, when our children and grandchildren begin to vote, they are assured by these same experts that everything is just fine, and besides, these debts will be paid by their children and grandchildren.
Promises that rest on lies eventually are broken. Everyone can't get his money out of the bank at the same time. Everyone who has been promised a comfortable retirement by the government won't enjoy one. Every old person who gets sick won't get well at government expense. A few will perhaps, but most will not.
So, whom should you trust? Politicians that make promises that statistically cannot be fulfilled? Commercial bankers who make promises - "withdraw your money at any time" - that cannot be fulfilled without a digital printing press to make the promises technically valid? Or should you trust gold, which rises in price whenever political promises are fulfilled with fiat money instead of tax revenues?
The public regards Alan Greenspan as part magician and part guru. This faithful assembly of millions includes some very sophisticated investors. But there is a major problem with investing anyone with guru status as well as a monopoly over our money supply. He is an old man. And Alan Greenspan, like Warren Buffett, will not live forever.
The public always seeks out representatives to trust in. They really do not put much trust in bureaucracies. They put their trust in specific individuals. Voters invest these representatives with the aura of infallibility whenever they do not understand what these representatives actually do. This is rational. Voters need to hold someone responsible. It is far easier to hold an individual responsible than a committee. In good times, the recipients of the public's trust rejoice. In bad times, they point the finger of blame elsewhere. Or they retire.
Alan Greenspan is due to step-down as Fed chairman early in 2006. And when the fateful day of Greenspan's retirement finally arrives, something tells me that you just might not want to be in the stock market!
* * * * *
The public has been taught by the media that this profit-seeking monopoly is run for the benefit of the people. That public-spirited monopolists over the money supply really have the nation's best interests at heart. Because these men, unlike all other monopolists, are simultaneously self-sacrificing yet self-serving, thus the politicians have granted them independence from the government. They also possess independence from the free market's negative sanction - bankruptcy. In fact, the central bank is charged with the task of forestalling widespread bankruptcies, beginning with those institutions that legally own the central bank - private commercial banks.
A central bank, unlike any other organization, is praised because no one in civil government controls it. Textbook writers in economics, as well as financial columnists for major newspapers, praise the central bank for its anti-democratic legal status. The nation's professional opinion-makers assure the literate public that the great benefit of a central bank is that it is independent from politics. Congress cannot tell it what to do. Neither can the President. This is presented as an enormous advantage to the public.
There is no monopoly more profitable or with more power to ignore the government than a central bank. It has power over the only common link among all participants in the economy - the money supply. The world's national governments have self-consciously transferred power over the central economic institution - money - to a group of unelected, profit-seeking, self-screened representatives of the commercial banking system, a system based on fraud.
Commercial banks promise to pay depositors interest on the money that can be withdrawn by the depositors at any time, yet the banks lend this same money long-term to borrowers, who do not have to repay it until a specific date. The system therefore is "borrowed short" and "lent long." Bankers earn a good living, and a few get rich, from contracts that are based on a lie. This promise is believable most of the time because only a handful of depositors can actually withdraw their money at the same time. Whenever a lot of them try to withdraw money at the same time, we call these events panics or bank runs.
These events used to produce bankruptcy. But then central banks came along, beginning in 1694 in England. They are invested by the State with what has traditionally been explained as the State's sovereign authority - the authority to create money. This ability to create money reduces the threat of bank runs, but it also guarantees the creation of depreciating money.
Every national currency is depreciating. Compared to the price of goods that the currency would buy 30 years ago - especially real estate - consumers around the world are suffering from currencies of declining value. This makes them seekers of long-term debt, especially for real estate. This quest for money to borrow increases demand for the asset leased by banks, namely money. In other words, the central banks' slow destruction of money creates public demand for the services of commercial banks. This is a classic vicious circle. It is the product of a government-granted monopoly. Banking is not a free-market phenomenon.
Today, an American commercial bank can borrow money in the federal funds overnight money market at 2.75%, and then this same commercial bank can turn right around and lend that same money to credit card users for up to 24%. Which means for every $275 dollars paid out, a bank pulls in $2,400 - not too shabby a deal!
The public has trusted politicians and central bankers. Voters assume that the promises and the assurances of these experts are reliable. And thus we have allowed them to indebt our children and our grandchildren. Then, when our children and grandchildren begin to vote, they are assured by these same experts that everything is just fine, and besides, these debts will be paid by their children and grandchildren.
Promises that rest on lies eventually are broken. Everyone can't get his money out of the bank at the same time. Everyone who has been promised a comfortable retirement by the government won't enjoy one. Every old person who gets sick won't get well at government expense. A few will perhaps, but most will not.
So, whom should you trust? Politicians that make promises that statistically cannot be fulfilled? Commercial bankers who make promises - "withdraw your money at any time" - that cannot be fulfilled without a digital printing press to make the promises technically valid? Or should you trust gold, which rises in price whenever political promises are fulfilled with fiat money instead of tax revenues?
The public regards Alan Greenspan as part magician and part guru. This faithful assembly of millions includes some very sophisticated investors. But there is a major problem with investing anyone with guru status as well as a monopoly over our money supply. He is an old man. And Alan Greenspan, like Warren Buffett, will not live forever.
The public always seeks out representatives to trust in. They really do not put much trust in bureaucracies. They put their trust in specific individuals. Voters invest these representatives with the aura of infallibility whenever they do not understand what these representatives actually do. This is rational. Voters need to hold someone responsible. It is far easier to hold an individual responsible than a committee. In good times, the recipients of the public's trust rejoice. In bad times, they point the finger of blame elsewhere. Or they retire.
Alan Greenspan is due to step-down as Fed chairman early in 2006. And when the fateful day of Greenspan's retirement finally arrives, something tells me that you just might not want to be in the stock market!
* * * * *
posted by Bob Moser at
6:01 PM
0 Comments:
Post a Comment
<< Home