So the Fed now wants to regulate the financial services industry.... the fox guarding the henhouse

[seafan]

The Fed unreserved

By Peter Schiff
June 24, 2008

Throughout history, governments have always used crises to justify blatant power grabs. Often the crisis subsides, but the expanded government powers remain. In America this week, the tendency came into sharp focus. Congress signaled that it is preparing to perpetuate the George W Bush administration's domestic wiretapping program, and has even abandoned the pretense that warrantless surveillance be confined to terrorism.
Similarly, even though our financial crisis has yet to reach full flower, Treasury secretary Henry Paulson announced plans to give the Federal Reserve new and explicit powers to oversee and regulate the financial services industry. However, a sober look at his plan reveals that it is tantamount to giving the fox complete autonomy to guard the henhouse.

What few economic leaders have acknowledged is that the Federal Reserve itself is responsible for the real estate and credit bubbles, which are the source of our current troubles. By keeping interest rates too low for too long, the Fed ignited speculative fever and engendered a disregard for risk management that pushed asset prices above rational levels.
Should we blame the private sector for taking advantage of all the cheap credit, or the Federal Reserve for supplying it? If a kindergarten teacher passes out handfuls of Pixie Sticks, and then leaves her classroom unattended for several hours, should we blame the five year olds for the hysteria that ensues?

The reality is that we should be restricting, rather than expanding, the powers given to the Federal Reserve. Since former chairman Alan Greenspan, his successor Ben Bernanke and company have already inflicted so much damage with the weapons already in their arsenal, why provide them with heavier artillery? Only in Washington do those who screw up get rewarded for doing so.
Since the Fed has demonstrated complete incompetence at setting interest rates, why not return that function to the market? Instead of allowing the Fed to inflict unbridled havoc on our economy, why not re-impose some discipline? Instead of looking for new ways to regulate Wall Street, why not find an old way to regulate the Fed? Actually there is a simple answer to all of these questions; it's called the gold standard.

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For a history of how the Federal Reserve was created in secret by a few very wealthy individuals in the early 1900's, see
G. Edward Griffin, author of The Creature From Jekyll Island: A Second Look At The Federal Reserve


From G. Edward Griffin's 1994 Audio Lecture on the Federal Reserve System: (1.5 hours)

Why the Federal Reserve System should be abolished:


1. It is incapable of accomplishing its stated objectives.

2. It is a cartel, operating against the public interest.

3. It is the supreme instrument of usury.

4. It generates our most unfair tax.

5. It encourages war.

6. It destabilizes the economy.

7. It is an instrument of totalitarianism.

More from the Asia Times:

In his speech outlining these proposals, Paulson stated that during the past 50 years the performance of the US economy has been second to none. I do not know what planet Paulson has been living on these past 50 years, but it is certainly not Earth. If Paulson were referring to the prior 50-year period, from 1908-1958, his statement would have been correct. But from 1958 to 2008, the US economy has blown a lead even greater than the one the Lakers enjoyed over the Celtics in game four of the just concluded NBA Finals. In fact, it may well qualify as the biggest economic choke in history.

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Not only did the US surrender a substantial lead, but in many respects our current standard of living is lower than the one our grandparents enjoyed. Sure we have a few more gadgets, larger televisions and more prevalent air conditioning, but the quality of life has actually declined.

In the 1950s, the average man earned enough money to fully support a wife and four kids, all the while saving for retirement and paying off his mortgage. Today the average man can barely support himself. It takes two bread winners in most families to make ends meet, and that is assuming only two children. Even with both parents working, the typical mortgage on the family home will never be paid off and retirement is now a pipe dream. Flush with high pay, low debt, and a strong currency, the Ugly American in the 1950s could vacation in Europe like a king. Now we can now barely afford the gas for a day trip to a Six Flags theme park.

If Paulson can be so completely clueless regarding the Fed's role in the current debacle and in America's economic stumbles over the past two generations, why would anyone place any faith in his proposed remedies?
In fact, an unaccountable and unelected Federal Reserve, which nonetheless has lately proven to be as politically craven as any two-bit politician, does not hold the keys to our economic revival. However, with its increased willingness to rescue the big financial firms from their own excesses, perhaps Paulson sees an expanded Fed as the best way to ensure the continued prosperity of his former pals on Wall Street.

Many people in this country do not understand this history of the Federal Reserve.

It has been a scam to keep the reality from public knowledge that in 1910, financial giants who happened to be competitors, sat down together to create a cartel, thereby eliminating competition among themselves, and enhancing their profits.


And, here we are today.

[seafan]

1. The goal of this game is not wealth. It's power.

From Griffin's lecture: (paraphrased)


Regarding the very wealthy private entities at the pinnacle of power at the Federal Reserve:

This river of money that flows from the working class to the very wealthy and powerful--- what are they doing with it?


They aren't buying any more yachts or mansions.


What are they doing with it? When a human has everything monetarily possible, what does he still yearn to have?


It's power. They are literally buying up the world. And I don't mean real estate.

They are using this money to acquire power over you, me and our children. They are buying up control of the world through acquiring power over organizations and institutions through which we live and work. Our power centers. Most of us act in groups and we follow leaders.

They are buying up control over the leaders of political parties, publishers, newspapers, tv networks, wire services, universities, church organizations, labor unions. Any organization through which people work, live, move or seek information, these people are taking control over them. This is where these people have been concentrating and spending their money.


This process has been going on outside the US at a much faster rate than in the US. The huge amount of money given to countries by the World Bank/IMF.... yet, in spite of this money flowing to the third world nations; after 50 or so years of this, there's not one underdeveloped country who has had its standard of living raised. Many are worse off. That money does not go to the people or their businesses, where it might actually raise the living standards. No, it goes to their governments... the politicians, the tinhorn dictators, who control those countries with an iron hand, and use it to further consolidate their control over their own people. The ones at the top couldn't care less about the standard of living of their people. As long as they have their mansions, their jets, their yachts and their limousines, and then they go to the UN meetings--- they have exactly what they want and their cronies back home are well taken care of. They'd be crazy to give up that flow of money.



Those nations have been purchased. And we, the people, pay most of the bill.

Sending our money away from us to those third world nations to solidify those people under the iron hand of their governments...

While control over the common people in those poor nations is the primary objective, the other objective is to drain our power and resources to lower our standard of living in the US, and to become just like those in the third world. When people are hungry, in chaos on the streets, they will subject themselves to incredible controls.


The goal of this game is not wealth. It's power.


What are we going to do about it??


We will get out of this mess the same way we got in it.

We must convince Congress to abolish the Federal Reserve System, and it can be done any time a majority of Congress wants to do it. If we tackle Congress one district at a time. It takes relatively few people to affect an election. Citizen action.

Citizens can turn out of Congress any member who is caught up in this web.


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For a history of how the Federal Reserve was created in secret by a few very wealthy individuals in the early 1900's, see
G. Edward Griffin, author of The Creature From Jekyll Island: A Second Look At The Federal Reserve