Wednesday, December 29, 2010

Federal Reserve shipped $12 billion in cash to Iraq

The Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills, to Iraq from 2003 to 2004. According to Representative Henry Waxman (D-CA), Oversight and Government Reform Committee Chairman, the Federal Reserve Bank in New York had to pack 181 million individual bills including more than 107 $100 bills on to wooden pallets to be shipped to Iraq. The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad.

A few months earlier, Ron Paul had questioned Ben Bernanke on this and other items; Bernanke called all the allegations "bizarre."

Andrew Jackson on the Bank of the United States (central bank)

I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out.

How little has changed. Bankers are still threatening that if the government does not do as they request, we will all suffer economic ruin. Too bad we no longer have politicians like Andrew Jackson who was unwilling to help the bankers destroy the country. And, even then, the bankers were in a heads-we-win, tails-you-lose situation.

Tuesday, December 28, 2010

How Congress voted on extending the Bush tax cuts

This month, in their lame duck session, Congress voted to extend all the Bush-era tax cuts, as well as extending unemployment insurance benefits and reducing the estate tax. Many progressives considered the extension of the Bush-era tax cuts a line in the sand. This tax policy has coincided with rising poverty levels, skyrocketing unemployment, rising rates of foreclosures, soaring public and private debt, an increase in the gap between the very rich and the poor, and a shrinking middle class. It is hard to argue that the tax cuts, which were originally sold as a way to stimulate the economy and benefit everyone, have worked. Yet, because they benefit a very small minority of households who have seen their wealth and incomes increase dramatically during the past terrible ten years for the economy, they were pushed through by President Obama and a majority of Democrats.

In the Senate, Bernie Sanders (D-VT) filibustered against the deal for nearly nine hours (Filibernie's Greatest Hits, Mother Jones, Dec 10, 2010). But, in the end, the measure passed the Senate 83-15, with 45 Democrats and 37 Republicans voting in favor. Nine Democrats and five Republicans voted no; two Senators did not vote. New Jersey's Democratic Senators split on this issue, with Menendez voting yes and Lautenberg voting no. Senator Sanders had introduced an amendment that would have let the tax cuts expire for income over $250,000 and would have used half the revenue for deficit reduction and half for infrastructure projects. Every Republican representative voted against the amendment, along with 15 Democrats. Senator Frank Lautenberg (D-NJ) was a co-sponsor of the Sanders amendment.

In the House, the measure passed 277-148; 112 Democrats and 38 Republicans voted no. Donald Payne (D-NJ) voted no while Dennis Kucinich (D-OH) voted yes.

Monday, December 27, 2010

Who owns the Federal Reserve?

"Who Owns the Federal Reserve?" Interesting charts with information from the August 1976 House Committee report on Banking, Currency and Housing.

Dennis Kucinich (D-OH) introduces monetary reform bill

On December 17, 2010, Dennis Kucinich introduced a radical bill in the House, "The National Emergency Employment Defense Act of 2010" (the NEED Act). The bill would allow Congress to create and regulate money, taking this power away from the private central bank. It calls for the creation of money by private financial institutions as interest-bearing debt to cease once and for all. The government would issue debt-free money to pay for infrastructure projects and to pay down the debt.

This is a fascinating bill just from the standpoint that monetary policy should be the primary concern of government at this moment. The fact that private banks are in control of our money supply is a tremendous robbery perpetrated on a daily basis against the American people. However, the question I have regarding this bill is whether Congress can be trusted with something as important as our money supply. I don't think they can do worse than the Federal Reserve which only serves the interests of the bankers. However, Congress is indebted to a variety of interests and we have to wonder if they can handle the responsibility of money creation that is solely in the interests of the American people.

Ben Franklin's views on monetary policy still resonate today

I just finished reading an essay entitled "Benjamin Franklin and the Birth of a Paper Money Economy," written by Professor Farley Grubb, based upon a lecture he gave at the Federal Reserve Bank of Philadelphia on March 30, 2006.
"In 1765, in response to Lord Grenville's challenge to come up with some palatable way for the British to increase taxes on the colonists to help pay for the Seven Years War, Franklin writes up a proposal for a North-America-wide universal paper currency modeled on Pennsylvania's land bank system. The British would run the colonial land bank and collect the interest on the paper money loaned out to colonists in place of any new direct taxes placed on the colonists."
Isn't this interesting that the colonists would consider allowing the British to issue paper money and collect interest on it in place of direct taxation? It is my understanding that today we allow the banks to issue paper money and collect interest on it, but this does not go to fund our government, but to only to deliver super-sized profits to the banks. The government must collect taxes in addition to the citizens subsidizing the banks through their charter to issue money.

Franklin also write in "Of the Paper Money of America" that the depreciation of the Continental dollar operated as an inflation tax or a tax on money itself. Again, today we all pay a steep inflation tax, presumably paid to the issuing banks, as well at being taxed directly at almost every turn.

Sunday, December 26, 2010

In 2003 Paul Krugman predicted money printing and soaring interest rates

"[M]y prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt. And as that temptation becomes obvious, interest rates will soar."
This was written in 2003. We know now, in 2010, that the Federal Reserve is printing money and is monetizing the debt, but they have been able, thus far, to keep interest rates down. Disaster has been delayed for a long time. How bad will it be when interest rates begin to rise out of the control of the central bank's ability to print more money? When they lose control, how high will interest rates soar and will the US government be able to borrow any money at all, for any price? What will happen to US small business, homeowners, and local governments when their interest payments skyrocket? Will we see international bankers repossessing nearly every tangible asset in the US? And is that the goal?

"A Fiscal Train Wreak," Paul Krugman, New York Times, March 11, 2003