Federal Reserve Board chairman, Ben Bernanke, announced in mid-March yet another cut in the key federal funds rate – the sixth in as many months – reducing the cost for major borrowers to only three-fourths of what it was just the day before.
This, fast on the heels of providing $270 million in funding, plus $30 billion (with a ”B”) in additional guarantees, for JP Morgan Chase to buy Bear Stearns Cos. “Helicopter Ben” is certainly living up to the nickname he earned after he remarked in a 2002 speech that he would stave off a recession even if he had to drop money from helicopters to do it.
The results of these policies have been as destructive as they have inevitable.
The dollar is collapsing. Not only against foreign currencies – we’re now at par with the Canadian dollar and rocketing towards a 2-1 deficit against the Euro – but also against commodities, as genuine wealth seeks safe harbor against data-entry money.
While the Fed was busy with its latest currency manipulations gold was already passing the $1,000 an ounce landmark, silver $20. Even industrial metals like copper and zinc are fetching record prices.
Now, a spike in a particular commodity — say, for instance, $100 per barrel oil — can be attributed to a shortage.
But when they all move dramatically and simultaneously, it’s not the commodities that have gone up. It’s the purchasing power of our money that has gone down.
In fact the increasing cost of even the base metals recently prompted Edmund Moy, director of the United States Mint, to propose further debasing the copper and nickel-plated, zinc slugs we call coins by substituting color-coated steel.
“Never before in our nation’s history has the government spent more money to mint and issue a coin than the coin’s legal tender value,” he claimed in testimony at a recent hearing before the House Financial Services Committee’s panel on monetary policy.
It is more than a little unsettling to have our nation’s monetary policy is in such hands.
Can the director really be unaware of the fact that the U.S. Mint issues 1-ounce, Gold Eagle coins – currently worth about eighteen times their $50 legal tender value?
It was in fact the creation of the Federal Reserve less than a century ago that marked the beginning of the end for money “as sound as a dollar.” The final blow came during the Nixon administration when our money’s last tie to anything of intrinsic worth was severed with the decree that even Silver Certificate currency would no long be redeemable in specie as promised.
So why would Bernanke, Moy, et al., want to degrade our money? “Cui bono?” as the lawyers say. Who benefits?
The answer is: those who are at the head of the line.
Creating an additional $270 million in US currency to give JP Morgan Chase provided that company the means to acquire Bears Stearn Cos. Then the owners of Bears Stearn get the money to spend on something else, albeit at slightly reduced purchasing-power value.
And so the effects will continue to ripple outward, gradually diminishing. The amount of goods and services that can be bought with that $270 million must inevitably decline over time until the nominal value of the currency reaches equilibrium with the actual wealth available in the economy to purchase.
And who will pay?
You will – some years in the future when you go to draw out the money you put into your 401(k) in today’s dollars.
Interestingly, one Nevada businessman may have found a way to bring the whole system crashing down.
Robert Kahre has been paying his employees in those $50 Gold Eagle coins — making their annual salaries well below the threshold for even having to file tax returns. And so far, the IRS has been helpless to do anything about it.
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More on government fraud:
And then there’s:
- Inspector Clouseau. Rep. Alan Grayson (D-FL) turning Federal Reserve Inspector General into a deer in the headlights. (5 min. C-SPAN video)
- The Great Con Job. Tip off on the Fed/Bankster $trillion rip off. (12 min. MSNBC video)
Tags: Bernanke
Very insightful op-ed! Certainly close to a bulls-eye from two years ago! Hard to believe back when this was written we were outraged by the use of Billions. Mr. Obama and our out of control congress have continued an unnerving trend, cheapening our dollar and our nation. The Obama administration’s policy of handing out newly printed money will eventually end in hyperinflation similar to what happened with Jimmy Carter. I personally remember making 15% interest in the money market. This time could be worse!!