The Fed’s Inflation Scam
- How Americans Get Screwed By "Their" Central Bank –
"The U.S. money supply is still expanding at a 14% annual rate - six times faster than GDP. All that moolah has to go somewhere. For the moment, it’s going into deals. And the deal makers - such as über-dealer Goldman Sachs - are making big, big money."
The Daily Reckoning
Inflation is commonly defined as money media expanding faster than production of goods and services. The question is who creates "our" money, and who really generates inflation?
In fact, the "Fed" and its member banks have the exclusive, private, privilege to create our debt-based money. Since interest is their profit, in the last decade or so the Fed has been creating money at 3-6 times the growth in productivity – an act both highly inflationary and irresponsible. Not only that, their money machine has been so busy lately they even stopped publishing a vital measure of their money-creation crimes.
In short, the Fed does, and always has been, creating inflation. It is not consumers or average wage-earners who were, until recently, simply getting back to where they where a decade ago in terms of real wages and purchasing power. After this meager recovery, we are faced with a fascist and idiotic "free trade" regime undermining the value of our currency and producing inflation, dependency, oligarchy, and oligopoly big time.
Rather than rightly blaming a private monopoly Fed, however, capital’s historical "taking away the punch bowl" trick is to blame average wage-earners for inflation – due they say to miniscule raises in labor’s wages compared to truly outrageous and criminal executive compensation increases and insider thievery.
As usual, however, not only has the Fed been creating money at rates greater than productivity but it has also been feeding a stock market frenzy with easy margin money, bailing out the richest of investors and hedge funds for their parasitic and predatory derivative and currency plays, guaranteeing the speculative losses of bond dealers, and funneling endless funds to big, money center, banks.
These are the same people and interests who own the "Fed" and control the money game without imput from duly elected representatives – no democracy here. We, the people, have no say in who gets "our" money, its uses, and we have no seats on the boards of the bond dealers who own the Fed. There is virtually no public in "our" system, they tell us what to do, how much to pay, and what the interest cost will be... meanwhile "our" legislators sit on their hands.
In any case, as past panics proved, it is the ability to change rates, to produce loose and then tight money that not only controls our economy but also produces immense insider trading possibilities for the Fed’s banker owners – who are, let’s get real, privvy to the interest rate moves contemplated, and can easily deal offshore. It also appears the head of the Fed always checks with Goldman Sachs, et. al., before any pronouncements – after all, this is who Greenspan and now Bernanke work for – i.e., the real owners of "our" central bank.
Yet, amidst all this potential for profiteering and economic sabotage we never audit the Fed or its real owners. And we call this a democracy?
After an easy-money and "free trade" boom, in which the rich have gotten fabulously richer and successfully transferred more of the wealth of the middle classes into the hands of the few, the "Fed" not only continues to create money in excess of productivity but also had the gall to raise interest rates on every hapless American and small business in order to "stop inflation." – rather than rifle-shot lowerings of rates for those businesses who meet consumer demands in sectors actually experiencing demand increase. No, too logical.
Instead, we are all punished, including the many who have not changed their buying habits one bit, have not contributed to increasing demand, are on fixed incomes and are struggling to get along. Onerous bankruptcy laws, thirty percent credit card rates, and massive home foreclosures, (wreaking devastating social chaos on struggling families) then teach the poor and middle classes a lesson in who is boss in "our" economy.
Every struggling wage-earner, who has nothing to do with creating inflation, is thus penalized. In addition to middle America having lost trillions of dollars in mutual funds, they now see their recently recovering home and stock values falling once again due to rising loan rates – many in mortgages virtually designed for failure. We also suffer higher interest costs built into every item we purchase, and higher oil prices due to free trade’s guaranteed currency decline and bankrupting imperial war policies.
All this despite the fact the vast majority have nothing whatever to do with either excess money creation or allowing "excess demand" to arise – as if the latter were evil.