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Our Enemy, the Fed
Ron Paul
Before the US House of Representatives Committee on Financial Services Monetary Policy and Rising Prices, March 17, 2011
There is perhaps no topic as important to the average American today as rising prices. Whether we consider food, gasoline, or clothing, the cost of living is increasing significantly. At a time of high unemployment, rising prices trap American families between a rock and a hard place. While rising prices colloquially are referred to as "inflation," true inflation is defined as an increase in the money supply, and all other things being equal, an increase in the money supply leads to a rise in prices. Inflation is and always has been throughout history a monetary phenomenon, and its destructive effects have ruined societies from the Roman Empire to Weimar Germany to modern-day Zimbabwe.
Blame for the most recent round of price increases has been laid at the feet of the Federal Reserve's program of quantitative easing, and rightly so in my opinion. This program, known as QE2, sought to purchase a total of $900 billion in US Treasury debt over a period of 8 months. Roughly $110 billion of newly created money is flooding into markets each month, markets which still have not fully recovered from the financial crisis of the last few years. Banks still hold billions of dollars in underperforming mortgage-backed securities on their books, securities which would render numerous major banks insolvent if they were "marked to market." These nervous banks are hesitant to loan out further money, instead holding well over a trillion dollars on reserve with the Fed. Is it any wonder, then, that the Fed's new hot money is flowing into commodity markets?
The price of cotton is up more than 170% over the past year, oil is up over 40%, and many categories of food staples are seeing double-digit price growth. This means that food, clothing, and gasoline will become increasingly expensive over the coming year. American families, many of whom already live paycheck to paycheck, increasingly will be forced by these rising prices into unwilling tradeoffs. Rising prices lead to consumers purchasing ground beef rather than steak, drinking water rather than milk, and choosing canned vegetables over fresh. Clothes are worn until they are threadbare, in order to conserve money that keeps food on the table and pays the heating bill. While some might argue that this new frugality is a good thing, frugality is virtuous only when it results from free choice, not when it is forced upon the citizenry by the Fed's ruinous monetary policy.
While the Fed takes credit for the increase in the stock markets, it claims no responsibility for the increases in food and commodity prices. Even most economists fail to understand that inflation is at root a monetary phenomenon. As the supply of money increases, more money chases the same amount of goods, and prices rise. There may be other factors that contribute to price rises, such as famine, flooding, or global unrest, but these effects on prices are always short-term, not long-term. Consistently citing rising demand, bad weather, or energy supply uncertainty while never acknowledging the effects of monetary policy is a cop-out. Governments throughout history have sought to blame price increases on bad weather, speculators, and a whole host of other factors, rather than acknowledging the effects of their inflationary monetary policies. Indeed, tyrants of many stripes have debased their nations' currencies while denying responsibility for the suffering that results.
The unelected policymakers at the Fed are also the last to feel the effects of inflation, in fact, they benefit from it, as does the government as a whole. Inflation results in a rise in prices, but those who receive this new money first, such as government employees, contractors, and bankers are able to use it before prices begin to increase, while those further down the totem pole suffer price increases before they see any of this new money. By reducing the purchasing power of the dollar, the Fed's monetary policy also harms savers, encouraging reckless indebtedness and a more present-oriented pattern of consumption. Hard work and thrift are punished, so economic actors naturally respond by spending more, borrowing more, and saving less. After all, why save rapidly depreciating dollars?
We must also remember that those policymakers who exercise the most power over the economy are also the least likely to understand the effects of their policies. Chairman Bernanke and other members of the Federal Open Market Committee were convinced in mid-2008 that the economy would rebound and continue to grow through 2009, even though it was clear to many observers that we were in the midst of a severe economic crisis. Chairman Greenspan before him was known for downplaying the importance of the growing housing bubble, even while it was reaching its zenith. It remains impossible for even the brilliant minds at the Fed to achieve both the depth and breadth of knowledge necessary to enable centralized economic planning. As Friedrich von Hayek stated in his Nobel Prize address:
"The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society - a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals."
March 18, 2011
Dr. Ron Paul is a Republican member of Congress from Texas.
www.dailypaul.com
I Think Today Is The Day The Dollar Breaks Down
http://gonzalolira.blogspot.com/2011/03/i-think-today-is-day-dollar-breaks-down.html
The dollar has broke below 76. Things could start getting ugly!!
It does seem like this is the grand finale doesn't it!! However, I would be willing to bet people have been saying that for quite some time now...
From what see was saying, when does that alignment happen again? Does all this happen in the next two years? It almost seems to simple to just look up in space and know what is going to happen on this planet!! Is it really just that???
Hey IxCimi, have you seen this video of a women telling us there was going to be an earthquake between the 11th and the 15th? I would like to hear your analysis...
Very good point P.C.!! It is truly sad.
They seem to be following the dollar once again!! A mirror image...
If you have non-hybid garden seeds they should be non GMO. Most farmers have the hybrid,GMO seeds. Most of the seeds you buy at a Home Depot type of store are hybrid seeds. The seeds that come from those fruits are mostly sterile.
Have you seen how much non GMO seeds are going for on eBay? If the SHTF in this country you will see a handful of seeds/ ounce of gold parity!! One cannot eat gold and silver but they will get you what you need in that scenario. However, I did eat a gram of gold on time and I urinated 87 proof Goldschläger!! LOL
Good call P.C.! I have a big garden in my back yard and I will take out more grass and add to it in a few weeks. Every year people laugh at me because my yard gets small and my garden gets bigger. Who do you think will have the last laugh??? I also have an excellent green thumb that I may as well put to good use. Next week I will fire up the lights in my basement grow room to get a head start on the growing season.
The only trading in the markets I do anymore is trading silver ETF's and some quick option trades if I see an easy dollar to be made. Yes, almost all hard assets!!!
Looks like a nice long bottoming candlestick on the chart today. Next stop $50!!!!
I spent some time in Japan a few years back. It's a shame to see them suffer like this but they are a strong people and will pick each other up!!
Does he live in Japan??
I see you guys are talking about the dollar and safe havens this weekend. The outlook for the dollar in my opinion is that it's living on borrowed time. It has jumped off the 50th floor of a skyscraper and we are enjoying the first 49 floors now, but the ground is coming up fast!! Seeing what happened in Japan today and all the other natural disasters occurring around the Earth is scary as hell if you ask me. The more these things keep happening the more I see people getting out of stocks and more into real hard assets. Things that will save their families during an emergency such as, food, water, generators, silver and alternative energy. The average Joe who has been contributing to their 401k for the last 30 years is going to get wiped out when the dollar looses it's value and that will be the trigger point for when people start buying things they can hold in their hand, or at least store in their house. Self preservation will rule the day!!
Today he put his money where his mouth is.
Oh come on!! Doom and Gloom is much more fun... LOL
I love this guy's videos:
I have two little girls and I would rather give them a life of "pure" freedom, than a collective, mediocre education!!
The Gun in the Room and Public Schools
Szandor Blestman
"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." - George Washington
The gun in the room allegory refers to the nature of government. While many people do not want to think about it and likely do not want to admit it, government is force. Every law made, every tax passed, every regulation imposed, is backed up by the threat of force being used against you. Many famous people knew this and have commented on it. The quote above attributed to George Washington is perhaps the best known. Even Barack Obama recently confessed that he feels the nation state is a monopoly on violence. I'm not sure who was the first to present "the gun in the room" allegory, but I've heard it attributed to both Harry Browne and Murray Rothbard. Anyway, I thought I'd try to present my own short explanation of the gun in the room.
Let's say there's two people in a room. They are sitting with a table between them. On the table is a gun. They are arguing about something they consider important, say the education of children, and how it should be funded. One person is arguing that the parents of the child should have to pay for its education and the other one is arguing that the cost should be divided between all people who live in the community regardless of whether they have children or not and whether they will use the school services or not, because the education of children is so important and they are our future.
The argument becomes heated. After all, it's a very emotional issue. Both parties have good intentions and wish the best for mankind and its progeny. After a while, neither party has given an inch. Suddenly, one party picks up the gun and points it at the other party. He threatens to use it if the other doesn't agree with him. The other party, the one with the gun pointed at him, is taken aback. He takes a couple of breaths, looks deep into the eyes of the one pointing the gun, decides he's serious and will, in fact, use the gun, throws up his hands and tells the other guy that he now agrees with him. The guy who picked up the gun now puts it in his waistband and leaves the house with a smug smile, content that he has won the argument.
In realty, it was the man arguing for community funded schooling that won the argument and the gun he picked up was government. He picked up the gun and took it with him. Those who would argue with him realize in the backs of their mind that he still has the gun. They know he'll use it. They also know that his friends, AKA the corporate mass media, will not widely broadcast these issues and will pat him on the back and tell him to keep any dissenters in line. Those who disagree have been cowed into keeping their mouths shut so they just go along to get along and try as best they can to minimize the intrusions he might make on their lives.
Recently, I wrote an article in which I tried to explain why I couldn't enthusiastically support the peaceful protestors in Wisconsin and other states. I couldn't support either side of the argument because of the inherent violence of the state. Apparently, I failed miserably. I've received feedback that's indicated to me that the ideas I was trying to convey were missed by some readers. It is my hope that I will be able to clarify my thoughts on this issue.
An emailer wrote and felt I what I had said was untrue. He felt that much could be done to improve the level of service people get from the state, specifically the state run school systems. He pointed out that they could send their children to private schools and made a comparison between the cost of private schools versus the cost of public schools. He also asked the question to the effect of what greater gift can we give our children than education?
I wrote a long letter to this gentleman to try to explain a bit better what I meant to say. Perhaps I should have said that many people feel that there is nothing that can be done rather than stating there is nothing they can do. That is what I meant to say anyway and it is not so much an untrue statement. I also went on to explain that I am writing opinion pieces and not necessarily doing factual reporting. Although I try to be as accurate, truthful and factual as possible in my writing, I am only human and sometimes I don't catch errors in my wording that can be interpreted differently than the concept I was trying to get across.
I explained that people have to pay for public schooling whether they use it or not. This is because of the gun in the room. If one refuses to pay his property taxes, or that part of the tax which pays for public schools, then one will quickly find himself imprisoned, losing his property, or worse. Actually, in the email, I used the example of the master/slave relationship, that we are all slaves to government. It amounts to about the same thing since an unarmed man becomes a slave to someone with a gun if he wants to stay alive. It becomes a question not only of private property ownership, but of who owns whom.
If one refuses to pay his taxes, more specifically property taxes, one will quickly find out that he does not own his "private property." Even if one owns the property outright, or even has had the property in the family for generations, they will quickly find out who really owns their property if they refuse to pay their taxes regardless of whether or not any of their services were ever used. So, if a family decides it wants to send its children to a private school, will they be able to stop paying the portion of its property tax used to fund schools? I think not. If they were, how about those households that have no children using the schools, will they be afforded the same courtesy? I think not.
This more or less indicates to me that the "community" owns your property. Never mind that it was your labor that led you to be able to afford that property, or that you came to "own" it in some other legal way. Let's make the assumption that most people are able to afford their homes because they work hard and earn money to pay for it. Even if they have paid off their mortgage and own title to the property, it can be taken if they refuse to pay their taxes. Supposedly they own that property due to the product of their labor, but they really don't unless they continue to give a portion of the product of their labor to the "community." What kind of relationship is this between the property owner and the community? Well, when someone else owns the product of another's labor, that sounds like a master/slave relationship to me. That certainly is not freedom. If a master owns a slave, can the slave own himself? Even if it is just a percentage of the product of one's labor, then that person is that percentage a slave.
As for the cost of education if it wasn't subsidized by the state, well it's difficult to say whether it would be more or less expensive. I think at that point the market would determine the value of the education and individual families would have to determine for themselves if their money would be best spent on that education or on something else. I can say this, however, without property taxes families would have thousands of extra dollars to work with in terms of sending their children to school. Also, competition tends to drive prices down, so there is every reason to believe that there would be many affordable choices to choose from and even the poorest in our society would have the means to send their children to school if they wished to.
I would like to point out that life is education and that one does not stop learning just because one has left school. Taking your child fishing, or on a nature walk, or even to a carnival can be educational. Teaching them to hunt, fish or plant a garden is probably more valuable than sending them to school. Why should the bureaucrats at the department of education or the school board decide what's the most important thing for my child to learn? Shouldn't that decision be up to me? You might say I'll make a bad decision, but so might they. When I make a bad decision, it affects my children, when they make a bad decision, it affects all the children at that school. Since the state is in charge of the school and the purse strings, isn't it more likely that the state will teach children propaganda that helps maintain the state's power? There is lots of evidence that home schooled children get an education quite a bit better than children who graduate from the public school system. There is even quite a bit of evidence that they do better in college. I know two of the smartest people I ever knew at the University of Illinois were home schooled.
As for the question, "What greater gift can we give our children than education?" I give a simple answer. Freedom is a greater gift. I think we should work toward an open, voluntary society where interactions between people happen on a voluntary basis. There should be no taxation. Government should have to fund itself the same way charities and private businesses do. Private property and individual rights should be honored and remain unalienable especially by institutions of governance. What greater gift can we give them than a society where they have as much opportunity as possible to reach their full potential? What greater gift is there than to break the chains that bind the body and mind to the state? What greater gift is there than self reliance and independence?
The emailer also made a profound statement. "It is time to consider what we value in this society." I agree with that statement. I think it is time for each individual to consider what he truly values in this society. I believe everyone will have a different answer to that question. That is the very reason I value freedom so much. Freedom gives everyone the most opportunity to work toward what they value most.
Yes, it is time to consider what we value most. Do we, as a nation, truly value freedom above all else? If so, shouldn't we better define exactly what it means to be free? Shouldn't we be honoring our neighbors' choices as we would want them to honor ours and not trying to force them to conform to ways they may not want to conform to? Shouldn't we be honoring individual rights rather than promoting group privileges? Isn't it time we figure out a better way and start practicing it rather than looking to socialist countries and trying to emulate them? Isn't that really what America was supposed to be about, a place where the downtrodden could come to get away from government force and government programs, a place where we can say leave us alone, we can take care of ourselves?
Apparently, we have forgotten what it means to be free and have tacitly allowed ourselves to be enticed by the sirens' song of collectivism. We have forgotten the lessons of history and have become doomed to repeat it. Perhaps if schools had taught lessons on what freedom truly was and what it meant to be independent we would have better maintained the individualist philosophy the founders so ascribed to. Of course, once the schools became controlled by the public sector, they wouldn't want to teach that which would weaken their power. Perhaps that's why communism counts public schools as one of the planks of its doctrine. Once you can entrap the minds of children through indoctrination, you will soon have a generation of obedient serfs who will not question the leadership of those who wish to keep the power for themselves and enslave the rest of humanity so that they can steal the vast majority of the wealth created from those who create it.
Regardless of how far down the road we've gone, it is never too late to turn back. It is never too late to reclaim our heritage. It is never too late to reclaim liberty and freedom, especially for our children. The secret is to just say no. It is disobedience. The more who disobey, the more who dissent, the more those at the top won't know what to do. For the first few, it is rough. There are already many tax protestors who have died at the hands of the violent government, and many more who have ended up in prison. Once enough of them are refusing to pay, however, once enough of them have taken to the streets, once enough people are standing up and saying no, the bureaucrats will not know how to handle it. At that point, they will be confronted by their inherent immorality and they will have to give in. At that point, we will be able to begin a genuine paring down of government and the first steps along the road to genuine freedom and prosperity.
IxCimi, have you seen the documentary Blind Spot?
The dollar is about to die this morning!!
Well I already grow my own food, make my own beer and am extremely good with guns, so I guess I have a head start on most of the sheeple out there!
WOW!!! I feel like I was just told by a fortune teller the day I am going to die. I need more ammo and stored food!!
Egon von Greyerz: "A Hyperinflationary Deluge Is Imminent", And Why, Therefore, Bernanke's Motto Is "Après Nous Le Déluge"
http://www.zerohedge.com/article/egon-von-greyerz-hyperinflationary-deluge-imminent-or-why-bernankes-motto-apr%C3%A8s-nous-le-d%C3%A9lu
I know this is a dollar demise message board but what type of things do you see happening? Solar flares,meteors, floods all of the above, what is it and when? You have obviously done your homework?
They always use terrorism to disguise what their real motive is. It's sad that we are force to pay our government to lie to us!! Are you personally doing anything to prepare for these crazy times??
...Terror threats appear to be on the rise as FEMA has rushed a $1 Billion order of dehydrated food in the event of attacks on domestic targets in the US. This is also coming on the heels of one of the largest terror drills performed by the US Navy on American soil, as Operation Solid Curtain is taking place this week.
In an article Tuesday from the Beaufort Observer, many of the largest suppliers of dehydrated foods in the country are dropping their distributors and customers to dedicate their resources to supplying a billion dollar FEMA request and purchase.
One of the nation's largest suppliers of dehydrated food has cut loose 99% of their dealers and distributors. And it's not because of the poor economy. It's because this particular industry leader can no longer supply their regular distribution channels. Why not? Because they're using every bit of manufacturing capacity they have to fulfill massive new government contracts. Look, the government has always been a customer of the industry to some extent. But according to our sources, this latest development doesn't represent simply a change of vendor on the government's part. It's a whole new magnitude of business.
And that's not all.
Apparently, even though they've cut off their regular consumer markets, the industry leader I've just mentioned still can't produce enough survival food to meet the government's vast requirements. How do we know? Earlier this month, FEMA (the Federal Emergency Management Agency) put out a Request for Proposal, or RFP, for even more dehydrated food. The RFP called for a 10-day supply of meals - for 14 million people. That's 420 million meals. Typically, FEMA maintains a stockpile of about 6 million meals. Why the sudden need to increase the stockpile by 420 million more? (And that's in addition to whatever our aforementioned industry leader is supplying.) It almost seems like they're trying to stock a modern day "Noah's Ark," doesn't it?
Single functions or events such as FEMA requesting a purchase of survival food might not stand out as peculiar when it is their responsibility to ensure they are mission ready for unforseen events in the US, but couple this with other pieces of the puzzle, such as the Navy drill of Solid Curtain, which is intended for: nationwide "drill" involving all military, and it's a drill based on a severe terrorist attack.
And the public had best be aware of something major potentially occurring on our soil in the near future. Global events across the world such as the revolutions and protests, the rising spike in oil, the falling dollar, food shortages, and unrest in Wisconsin and Ohio, are bringing us to the point where crisis may take place, whether from domestic or foreign sources.
Terror alerts have been raised by FEMA in the past month, and this new special order of dehydrated food, at the magnitude of $1 Billion dollars in taxpayer money, should be a call for everyone to prepare on your own for any potential crisis.
theinternationalforecaster.com
"I prefer dangerous freedom over peaceful slavery"
Because they are drunk with easy money. Buffet has studied the Fed and not monetary history/science. He is blinded by today and not by the lessons of yesterday. All the farmland in the USA is a great thing to be in control of, but he who has the gold wins!! Is a currency more likely to be backed by gold or farmland? Yes the German Dueschmark after the Wiemar hyperinflation was backed mostly by land, however, after any great world reserve currency has collapsed, then the new system has to be backed by gold. On an individual basis I would rather have a million worth of land than gold, but when it comes to setting the worlds monetary policy, gold is king!! What say you???
A mega-day for gold and silver:
http://broadcast.ino.com/education/gold31/
A mega-day for gold and silver:
http://broadcast.ino.com/education/gold31/