Our fiat money system was flawed from the beginning. Glass-Steagall
was the only impediment to achieving what we now see--a corrupt
government run by Wall Street crooks. There is no audit of the Fed,
and secrecy is the watchword. The crooks justify this by citing
examples in which theoretical actions by the Fed would give some
speculators an unfair advantage if secrecy was not enforced. They
apparently don't think that effects on the hoi polloi are worth
considering. They also see no reason why there should be any public
accountability of their operations. The original powers granted to
the Fed were intended to be used to maintain price stability by
manipulating the size of the fraction of the money supply that fuels
commerce (M1), and not to control or avoid controlling speculation.
We have seen questionable activities of the Fed in recent years--the
weekly plane load of $100 bills that was sent from the NY Fed
Reserve Bank into Russia during the transition when the USSR
collapsed, the huge stashes of Benjies found in Iraq,
the statements by senior CIA officials that cash was indispensable
in getting things done. There is no available explanation as to how
these phenomenal amounts of cash were accounted for, because of the
secrecy. The most logical explanation is that this cash was created
out of thin air and not debited from any existing account at the
Fed. This all seems out of control, but the kicker is...we can't
story about the cash.
Glass-Steagall (in the Banking Act of 1933) prevented banks from
engaging in any other form of business than banking. When it was
repealed through the Gramm-Leach-Bliley Act, a series of crises
began, and finally the devastating crash of 2007-2008 and the
"Quantitative Easing" solution (on the backs of the taxpayers)
resulted in a widespread conviction that the system was rigged to
exploit the public for the benefit of the rich. Even now, in 2016 no
one outside of Wall Street, the US Treasury, and the Fed knows
enough to explain the details of the transactions that took place,
and those who know are not talking.
The "toxic assets" the Fed bought from the Wall Street crooks...where did that pile of worthless paper go? What us outsiders do know about
this exchange certainly is stunning however. For the Fed to purchase
$3.5 trillion worth of Treasury bonds on the open market and $1.75 trillion in "toxic
assets" and see no expected result in the economy implies that the
money didn't go into the high velocity fraction of the total money
supply (M1). It only benefited those who got us into this mess. Some authorities said these purchases were made with loans from the Fed, and that now they have been paid off. So...where is that pile of toxic assets? And what is the Fed going to do with it? It's all smoke and mirrors.
The Federal Reserve System was designed to ignore
the fact that
predators will always concentrate in any system where there is money
and/or power to be had. And that has been its fatal flaw.
I am a retired physicist and hold a B.S. in Ch. E. as well. I have been an environmental activist since the early 1970s. I have been a writer of opinion pieces and other essays since about 1995 and am a published author of history. I have (more...)
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