Monopoly Money
In case you haven’t heard, the hundreds of billions of dollars we have printed and borrowed to bail out our own banks and businesses that are “too big to fail” has now reached a whole new level of insanity. Our freshly printed dollars are now leaving our own shores to bail out the banks of Europe and their investments in the failed welfare states of Europe. Yes, “Helicopter Ben” Bernanke is now working with European central banks to infuse liquidity and prop up European banks that are heavily invested in bonds from Portugal, Ireland, Italy, Greece and Spain, affectionately known in the investment community as the “PIIGS.” No doubt pig slop is worth more than bonds from these bankrupt countries.
So without any input from you or I or our elected representatives, the gods at the Fed are going to send hundred of billions or trillions of our dollars to Europe in an attempt to forestall the inevitable collapse of their failed socialism, an experiment made possible by our military welfare. Our dollars are going to ensure the generous pension checks, free health care and the salaries of all those bureaucrats necessary to keep their nanny states running and the eternal adolescents from rioting. And we can’t forget the generous welfare benefits given to a those Muslim immigrants so that instead of working they can sit around and plan jihad against the self-loathing and deteriorating European states and culture. With all our own economic problems and mountains of debt, is this really where our money should be going?
Of course, the Obama administration doesn’t engage in any activity for altruistic reasons. It does so either for ideological reasons or to help or pay back supporters. In this case, one of the companies which will experience devastating losses if European banks and countries start defaulting is Obama’s favorite American company, General Electric. GE’s balance sheet looks much like America’s, way too much debt and not enough cash. It has a lot of exposure to credit cards and mortgages in Europe and losses of tens of billions in those markets will put it on the verge of bankruptcy. Of course it won’t fail, we the people have generously guaranteed its debt through 2012 and another bailout would not be hard to get. The only reason Jeff and Co. can run GE like this is because they know they have friends in high places and they are only interested in getting the highest compensation they can while they can as their business model dooms an American icon. Its the Solyndra model writ large.
It is important to understand that there is no real wealth available to bail these banks out. Europe is broke. Now that we have joined the European economic club of anemic growth, we don’t have trillions of dollars in wealth lying around either. That means only one thing. The money for these bailouts is brand new off the printing presses. To understand why this is not only horrible economically but just plain immoral, I have reprinted the following excerpt from the Fed section of “Leave Me Alone; A Patriot’s Plan for Restoring Pride and Prosperity in America” available at www.leavemealonenow.webs.com
"There is a very simple reason why we intuitively know we are being screwed by this system, a system that benefits those at the top, or the insiders, and leaves the rest of us holding a bag of excrement. To understand why this wholesale printing of money benefits the government and their friends in the banking industry and hurts the rest of us, we need to look at it honestly for what it is-legalized counterfeiting. Counterfeiting is illegal for you and I and for good reason. It erodes confidence in, and the value of, the currency. Remember one of the primary premises of this work, what is wrong/bad/immoral for the individual is wrong/bad/immoral for the government. When the government, through the Fed, prints money, the effects are the same. The currency loses value and eventually, people lose confidence in it.
The question is, who benefits from counterfeiting? Obviously, the counterfeiter does because he goes out and exchanges his fake money for goods and services at their current value, based on the amount of money in circulation. Think of it in a closed neighborhood. In that neighborhood there was one million dollars in circulation and all goods and services were based on that amount of money. The counterfeiter prints another million. He goes out and spends it all, buying a new house, a car and whatever else he wants. He buys everything at current prices based on the one million dollars in circulation. However, he has now doubled the money supply which means money becomes cheaper and goods become twice as expensive. Each time that fake money changes hands, it loses buying power and the average people in the neighborhood suffer from inflation. The crook got his stuff when the currency had twice as much value but everyone else had their purchasing power cut in half.
Now elevate it to the national level. The Fed prints two trillion dollars and trades it for treasuries so the Federal Government now has an extra two trillion dollars to spend. Who gets that money first? Obviously, anyone who works in government receives that money before anyone else. After that, it goes out to all those who have lobbied for and received government contracts and benefits. It goes to bailouts to those whose friendship with Washington has “merited” them such treatment. The banks receive that money as deposits that they use to lend to their friends and clients. They all get to spend that “new” money at current values. However, as that money makes its way through the system, as those union workers and contractors spend it and banks loan it, money becomes cheaper because there is more of it. The rest of us who receive it last find our dollars buy less than they did last year, last month or even last week. It is redistribution of income from the middle class and the poor to the rich and connected.
Of course, the way all that happens in practice is not so simple. Tim Geithner doesn’t walk over to the Fed and hand Ben Bernanke a suitcase full of treasuries and leave with a suitcase fill of freshly printed hundred dollar bills. The Federal Reserve buys and sells treasures on the open market through a broker, or a series of brokers like Goldman Sachs, not from the treasury directly. These brokers compete with one another under the New York Fed through an auction process, keeping the whole process neatly confined among the Wall Street elite.
The fact is this, wherever power is concentrated, corruption is rampant. The bigger the government, the more corruption. With the amount of money flying around and out of Washington, a process only made possible by the Fed, corruption is precipitated on an unheard of scale where billions of dollars are paid out to those with the best paid lobbyists and more intimate connections. It is a system that is based on an immoral premise, counterfeiting, and therefore it breeds immorality. The only way we are going to even begin to change Washington is to eliminate the very foundation for this perverse and wicked edifice."
“Lenin is said to have declared that the best way to destroy the capitalist system to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis for society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes
So without any input from you or I or our elected representatives, the gods at the Fed are going to send hundred of billions or trillions of our dollars to Europe in an attempt to forestall the inevitable collapse of their failed socialism, an experiment made possible by our military welfare. Our dollars are going to ensure the generous pension checks, free health care and the salaries of all those bureaucrats necessary to keep their nanny states running and the eternal adolescents from rioting. And we can’t forget the generous welfare benefits given to a those Muslim immigrants so that instead of working they can sit around and plan jihad against the self-loathing and deteriorating European states and culture. With all our own economic problems and mountains of debt, is this really where our money should be going?
Of course, the Obama administration doesn’t engage in any activity for altruistic reasons. It does so either for ideological reasons or to help or pay back supporters. In this case, one of the companies which will experience devastating losses if European banks and countries start defaulting is Obama’s favorite American company, General Electric. GE’s balance sheet looks much like America’s, way too much debt and not enough cash. It has a lot of exposure to credit cards and mortgages in Europe and losses of tens of billions in those markets will put it on the verge of bankruptcy. Of course it won’t fail, we the people have generously guaranteed its debt through 2012 and another bailout would not be hard to get. The only reason Jeff and Co. can run GE like this is because they know they have friends in high places and they are only interested in getting the highest compensation they can while they can as their business model dooms an American icon. Its the Solyndra model writ large.
It is important to understand that there is no real wealth available to bail these banks out. Europe is broke. Now that we have joined the European economic club of anemic growth, we don’t have trillions of dollars in wealth lying around either. That means only one thing. The money for these bailouts is brand new off the printing presses. To understand why this is not only horrible economically but just plain immoral, I have reprinted the following excerpt from the Fed section of “Leave Me Alone; A Patriot’s Plan for Restoring Pride and Prosperity in America” available at www.leavemealonenow.webs.com
"There is a very simple reason why we intuitively know we are being screwed by this system, a system that benefits those at the top, or the insiders, and leaves the rest of us holding a bag of excrement. To understand why this wholesale printing of money benefits the government and their friends in the banking industry and hurts the rest of us, we need to look at it honestly for what it is-legalized counterfeiting. Counterfeiting is illegal for you and I and for good reason. It erodes confidence in, and the value of, the currency. Remember one of the primary premises of this work, what is wrong/bad/immoral for the individual is wrong/bad/immoral for the government. When the government, through the Fed, prints money, the effects are the same. The currency loses value and eventually, people lose confidence in it.
The question is, who benefits from counterfeiting? Obviously, the counterfeiter does because he goes out and exchanges his fake money for goods and services at their current value, based on the amount of money in circulation. Think of it in a closed neighborhood. In that neighborhood there was one million dollars in circulation and all goods and services were based on that amount of money. The counterfeiter prints another million. He goes out and spends it all, buying a new house, a car and whatever else he wants. He buys everything at current prices based on the one million dollars in circulation. However, he has now doubled the money supply which means money becomes cheaper and goods become twice as expensive. Each time that fake money changes hands, it loses buying power and the average people in the neighborhood suffer from inflation. The crook got his stuff when the currency had twice as much value but everyone else had their purchasing power cut in half.
Now elevate it to the national level. The Fed prints two trillion dollars and trades it for treasuries so the Federal Government now has an extra two trillion dollars to spend. Who gets that money first? Obviously, anyone who works in government receives that money before anyone else. After that, it goes out to all those who have lobbied for and received government contracts and benefits. It goes to bailouts to those whose friendship with Washington has “merited” them such treatment. The banks receive that money as deposits that they use to lend to their friends and clients. They all get to spend that “new” money at current values. However, as that money makes its way through the system, as those union workers and contractors spend it and banks loan it, money becomes cheaper because there is more of it. The rest of us who receive it last find our dollars buy less than they did last year, last month or even last week. It is redistribution of income from the middle class and the poor to the rich and connected.
Of course, the way all that happens in practice is not so simple. Tim Geithner doesn’t walk over to the Fed and hand Ben Bernanke a suitcase full of treasuries and leave with a suitcase fill of freshly printed hundred dollar bills. The Federal Reserve buys and sells treasures on the open market through a broker, or a series of brokers like Goldman Sachs, not from the treasury directly. These brokers compete with one another under the New York Fed through an auction process, keeping the whole process neatly confined among the Wall Street elite.
The fact is this, wherever power is concentrated, corruption is rampant. The bigger the government, the more corruption. With the amount of money flying around and out of Washington, a process only made possible by the Fed, corruption is precipitated on an unheard of scale where billions of dollars are paid out to those with the best paid lobbyists and more intimate connections. It is a system that is based on an immoral premise, counterfeiting, and therefore it breeds immorality. The only way we are going to even begin to change Washington is to eliminate the very foundation for this perverse and wicked edifice."
“Lenin is said to have declared that the best way to destroy the capitalist system to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis for society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes
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