Why We Don't Need The Federal Reserve - Gold Price

NEW YORK - March 29, 2013 - PRLog -- The American Fed as it operates these days is definitely an insult to anyone who believes in financial and political freedom. In an era of globally linked finance, the very idea of a Fed is definitely an abomination. The Fed was established in 1913. It is only one hundred years old. And it is anything but an original part of America's financial machine. Its original objective was easy: To stop banking failures. What do the experts have to say about gold and silver prices? Learn more >> http://gold-and-silver-market.com/KITCO-SILVER/

In the time, the United States of America had just gone through the vicious bank panic of 1907. That crisis was substantial because it saw the failure of Knickerbocker Trust, which sought -- but failed -- to obtain monetary support from its peers. Unable to acquire liquidity from any supply, Knickerbocker Trust collapsed. This impacted public psychology deeply because Knickerbocker's peers not just chose to not rescue Knickerbocker, but additionally suspended payments to each other.

This boomeranged through the system and came to roost in the retail level when the public figured out that they did not have access to their cash, particularly in "specie," which means in gold. Bank runs and closures became the norm. The New York Stock Exchange fell 50% prior to financier J.P. Morgan famously locked banking executives in his personal library and formulated a liquidity injection that in the end calmed every thing down.

Loath to waste a great crisis, legislators stepped up to the plate by agitating for centralized banking as a means of restoring public confidence while supplying the banking system having a supply of liquidity that would stop their wholesale collapse. And they got it a few years later...in spades.

What is truly fascinating to me searching back utilizing today's lens is how sophisticated the machinery of the time was. Potent public and private figures worked with each other, frequently in fantastic secrecy like they did at Jekyll Island, Georgia, to develop the framework for the Fed. The Wall Street Journal published a 14-part series highlighting the need to get a central bank. Citizen groups and trade organizations piled on.

And viola...the Fed was born under the guise of a politically independent institution that would stabilize the monetary system, shield the monetary supply against inflation, and maintain credit as required by injecting stimulus when the economy flagged and withdrawing it when issues had been overheated. In the terminology of the day, this was viewed as providing elasticity to the dollar that would, in turn, establish more efficient control over the banking system.

None other than the Comptroller of the Currency observed that the Fed would supply a circulating medium that's "absolutely safe." What irony. How high will Silver go? Learn more >>  http://www.gold-and-silver-market.com

Fast forward to these days. Each 1913-dollar is now worth $0.04 cents. Goods and solutions that cost a buck back then now will set you back $21. Where's the stability in that?

If that is not sensible enough, think about wages. According to the U.S. Census Bureau, the median earnings of male workers in 2010 were $32,137 while the median earnings of male workers in 1968 was $5,980. On the surface this is not too shabby. It is a 437.4% increase over 42 years - or an average earnings gain of 10.41% a year, over exactly the same time period.

Nevertheless, if you run the numbers the other way, utilizing 2010 dollars, a very different image emerges. You rapidly see that median earning male workers really have less buying power these days than they did 42 years ago ($32,844 vs. $32,137).

That is your Federal Reserve at work. It is robbing America by steadily sucking the life out of the monetary system. Over time, it'll trigger the system to collapse -- just ask anyone in the former Soviet Union. They had a "Fed," and no Soviet bank ever failed per se. Nevertheless, the state ultimately took so much wealth from the individuals that the whole system broke.

Taxation Courtesy of the Printing Press

Legions of spend-it-while-you-can politicians and economists do not see it this way. And neither, maybe more importantly, does sitting Federal Reserve Chairman Dr. Ben Bernanke.

He stated explicitly on November 21st, 2002, in remarks to the National Economists Club that, "by growing the number of dollars in circulation, or perhaps by credibly threatening to do so, the U.S. government may also decrease the worth of the dollar in terms of goods and services, that is equivalent to raising the prices in dollars of these goods and services."

In other words, he believes he can produce financial worth merely by printing cash. It is no wonder that he continues to print cash these days (euphemistically calling it "quantitative easing") understanding complete well that he's eviscerating the dollar. He believes that doing so will be the exact same thing as raising prices by managing inflation.

In reality, inflation is really defined as the artificial increase in the supply of cash and credit. It is a tax by any other name. So what Bernanke is truly performing is artificially taxing the American public by debasing its currency. It is no wonder that more individuals have less. But here's exactly where it truly hits home for me.

When the Fed was created, it was envisioned as a supply of liquidity for the banking system. The presumption was that the accessible money in the government could offset any particular failure in the banking system subject to the Fed's oversight because it had centralized the credit risks related with their lending portfolios.

In today's atmosphere, credit is diffused globally far beyond the Fed's reach. What is more, there is too a lot of it and also the banking system is now so large that the risks it holds dwarf the Fed's liquidity capacity. For instance, you will find an estimated $600 trillion to $1.5 quadrillion in derivatives goods worldwide at the moment. International gross world product is roughly $79 trillion by comparison.

Contrary to what Bernanke and others who're so tightly involved in the system think, this crisis was not brought on by a lack of liquidity. Rather, it was brought on by too a lot cash sloshing about in some kind of unregulated mosh pit with inadequate supervision and inadequate regulatory oversight.

The sad reality is the fact that Bernanke and his central banking buddies in "Feds" all over the world could print cash till the end of time and they still would not have the ability to print enough to assure liquidity. However they'll continue to try because that is the only way they maintain the illusion going. What do the experts have to say about gold and silver prices? Learn more >> http://www.gold-and-silver-market.com/KITCO-SILVER/