Tuesday, January 12, 2010

More Record Profits for the Banks. More Pain and Suffering For Us.

This time it's the Federal Reserve...windfall profits totaling $52.1 billion, of which $46.1 billion is turned over to the Treasury Department. I guess that's supposed to make us all feel good.

Well, it might if we knew the Fed is/was truly operating in the public interest and not of Wall Street (considering Wall Street is able to borrow money at zero percent interest from the Fed, thus reducing their funding costs and increasing the profit on every transaction).

The reality is we do not know much of anything because the Fed monitors and oversees itself. That's right. There has never ever been a comprehensive independent audit of the Fed, and we know what absolute power does .

Yes, we are told that the Fed is a non-profit organization that turns over its profits to the U.S. Treasury, after all expenses, but that's not quite the whole truth. The truth is the Fed has the privilege of creating money out of thin air. That means they get to put that freshly created money to use right away, at no cost. That means that those profits earned from interest, paid by we, the taxpayers, are not turned over to our government, but kept by the private member banks, "seigniorage privilege".

Not to mention, the Fed's policy of keeping interest rates artificially low leads to monetary inflation, which leads to less purchasing power for you and me. So, the Fed ensures that we, the people pay higher interest rates, and at the same time, guarantees our dollars won't be worth as much.

Oh, and if you're wondering why inflation has not run completely amok, it's because when the unemployment rate is over 10%, it acts as a deflationary tool.

Yep, when the Fed screws things up through its irrational greed for greater and greater inputs of unearned income, we the people - the producing class - always pays. There is no such thing as a crisis suffered only by the investor class (who produce nothing), even when it's 100% their doing. Always, the people pay the highest price.

“I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money....I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with the Congress for sitting idly by and permitting such an idiotic system to continue.”Wright Patman (1893-1976), chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.

1 comments:

Anonymous,  19:39  

What's that about 10% unemployment rate deflationary tool?

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