First of all, the ‘Fed’ as it is called, is not federal, and has no reserves. It was formed under rather obtuse and shady circumstances in 1914, and the first ‘fed’ or national bank, was dissolved by President Andrew Jackson. The United States did without a national bank for a hundred years. JFK was going to bring the troops home from Vietnam, abolish the CIA, as well as the Federal Reserve, with the Treasury issuing its own money. He was assassinated, not by a shot fired from a book depository, with a cheap Italian rifle, but from the ‘grassy knoll,’ across the street, where JFK was riding in an open car. Who killed him? Not Lee Harvey Oswald, but that’s another column.
I’ve spent hours trying to find out the workings of the Fed, which is not in our Constitution, but it’s very complex and full of bureaucratese, with 12 regional banks, a board of governors, about 50,000 employees and a budget of over $500 million. The Fed did one thing which needed to be done, and that was to make the dollar a sole U.S. currency, disposing of many banks of different names, designs and even colors, printing dollars, which was extremely confusing, and needed to be fixed.
The Fed’s interest rates, have nothing to do with inflation, other than minutely discouraging home sales because of high interest rates, but the Fed’s published interest rates, are from interbank borrowing, and have nothing to do with interest rates on mortgages or the rest of our economy. As the dictionary says, inflation is caused by, “An increase the money supply,” and it’s just that simple.
Article One, Section 9 of our Constitution says that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law, and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” It says nothing about a Federal Reserve or national bank of any name.
I am going to try to make the whole affair simple, and avoiding all the complexity of ‘increasing the money supply.’ It’s the House of Representatives and Senate, plus the President, who signs laws regarding money distribution. Distribution laws, which influence voters to vote for who promised handouts. In other words, the House and Senate members are selling their votes, and we have inflation. Those legislative bodies and then presidents, have voted fo giveaways, partaken of by virtually everyone. Over the years, politicians have voted in, over 2,000 federal offices, and currently, there are over 190,000 pages of regulations governing virtually everything. All government spending in excess of taxes and dollars coming in, are paid with inflation, to make it simple.
The federal government is America’s largest employer, even beating Walmart. Imagine their salaries, benefits, retirements, and health care, obviously paid with dollars supplied by the Fed, and which dollar disbursements, are added to the national debt, which has just topped $40 trillion. The 190,000 pages of regulations are paid by you the taxpayer, trying to obey them, and on top of that, your cost of living is going up because of them.
The bills pile up and need to be paid, just like your and my bills pile up and need to be paid. You and I have enough dollars to pay our bills, and we do, giving us a good credit rating. The Treasury calls the Fed, tells them how much their bills are, and the Fed prints, sells bonds or otherwise provides (borrows) the dollars need to pay, and this increases the national debt. The Fed technically asks for bids on the bonds, but that’s a mere formality, because they’re always sold and for some reason, the U.S. credit rating is sound. The $40 trillion debt will continue to increase, because it is impossible to un-ring a bell, and once a handout is in place it is never repealed.
Had JFK lived, the Treasury would have issued its own dollars and added them to the debt, but there would not be any expensive, complicated nonsense, known as the Federal Reserve, in existence.
As a general rule, if you wish to see how much inflation we really have, go to Fox Business News and look for the ten year interest paid for a Fed bond. Anyone buying a Federal ten year bond will be a fee for such purchase, and the interest will have to be paid with your taxes. The rate will stand immovable for ten years, whereas your gold and silver will go up automatically as the dollar declines. If we have runaway inflation, as always happens when an economy is in trouble, gold and silver prices will increase, following the currency’s decline and inflation, whereas your ‘investment’ in a Fed bond, will not change a bit.
The current inflation, is caused by the usual reckless thoughtless spending, by federal agencies, welfare in a hundred names, all initiated by Congress, and Trump’s war in Iran. Protect yourself, because I have no idea when a sudden economic disaster can occur, like the crash of 1929. None of the ‘experts’ or wealth managers thought it was coming, till it did, and people were jumping out of windows.
Protect yourself now, because happenings tomorrow, no one knows, and neither do the wealth managers.
Don Stott don@coloradogold.com