The reason this is so powerful still is that it was not a conspiracy or a planned coup, so much as it was the development of an ethos that led to the coup. This took real time and took root because it met what people wanted to believe and still do…
http://video.google.com/videoplay?docid=-1087742888040457650#
Now that Ayn Rand has a new movie coming out, brace yourself this is only round one.
I need help folks. Will someone please explain the first part of the interview to me in plain english?
This interview opened with a question I was keen to hear the responder’s answer to. Basically, it was: “As someone who clearly has a deep understanding of this stuff, what’s your outlook on the economy?”
The first sentence hooked me because it created cognitive dissonance…
Stagflation has been my forecast for quite some time as the most likely outcome, with a real protracted deflation or hyperinflation as lesser probabilities.Stagflation? What the deuce is that?... I had to look it up. Apparently it means:
“a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)”
Oh, ok, that sounds reasonable. But wait, I’ve been preparing for hyperinflation, not stagflation. Do I need to go back and review the sources that led me to conclude hyperinflation was the most likely outcome? Do I need to alter my plans? How do I deal with and prepare for an extended period of Stagflation? What if I need to prepare for multiple contingencies? How can I prepare for all these possible outcomes at the same time? Is that possible? Am I supposed to just place my bets and hold my breath?
As you can see, I’m on the hook now, please tell me why you came to the above conclusion.
The reasoning behind this is fairly straightforward.Thank heavens! A complicated, jargon filled explanation of your reasoning would only confuse me.
In a fiat monetary regime, the central banking authorities license the shadow banking system to create money through their credit expansion mechanisms. There is a money multiplier, or a natural credit expansion, in a normal growth economy. In the event of a recession due to a business cycle, the Fed can relax reserve requirements and interest rates through their open monetary operations, essentially lowering the standard for credit creation, also known as the interest-rate hurdle, for a profitable return.What? (scratching head)
In the event of a financial crisis or a credit collapse such as the one in which we are now, the Fed has the ability to monetize existing and new government debt by purchasing it at extraordinary (non-market) prices, adding it to its balance sheet. Additionally, the ability to pay interest on bank reserves gives them a little more fine control on the effects, and even keeping some liquidity out of the system by paying banks to retain a greater amount than they ordinarily would, and raising the bar a little on interest rates. People also forget that the Fed has always had the power to set reserve and margin requirements. This extraordinary monetization effort by the Fed requires a significant amount of cooperation from bondholders and those external entities who hold dollar assets in their currency reserves.
The problem, of course, is that the Fed is only a part of the bigger picture. It is the responsibility of the Congress and the Executive to set fiscal and regulatory policies for the country and the real economy, including import export, jobs, taxation, and so forth. Today, the government, both the Executive and the Congress of both parties, is presiding over a broken system, made so by a relatively tight coterie of monetary interests who have been promoting an outsized, over-dominant financial sector, and the undermining financial regulation since the early 1990's.
I’m sorry, but none of that made any sense to me whatsoever, but it sounds terribly important. I sincerely want to know what it means. Will someone please explain it to me in plain english? Which is to say, at the level of say, a high school dropout?
Sincerely,
Glen
Glen,There’s a tendency in today’s main stream economic news to paint whatever’flation’ (inflation/deflation/stagflation/hyperinflation) as some kind of a black and white picture. This or that. In reality it is not at all that way. You could have assets that were previously in a bubble (say housing for example) deflating/contracting for many years to come, while food prices continue to rise simultaneously due to supply shortages, disruptions due to energy shocks etc. etc. Essentially, planning towards any specific outcome alone is not a wise thing, because in the mean time, we could be taking several other paths. So we hedge against all possible outcomes, at the same time keeping in mind what is the most likely and knowing when to fine tune our investments towards the likely future as it unfolds. Short-term horizon and long-term horizon planning also helps, See Chris’s article on ‘Taking control of your finances’ for a detailed explanation.
You don’t just place these bets and hold your breath, we have to constantly be aware of the current events and the likely future events that may manifest. Plan accordingly. CM website’s ‘what should I do’ series is very helpful towards reducing anxiety and having concrete plans for a sustainable and resilient future.
Now to the jargon:
The Federal Reserve has nothing ‘Federal’ about it. It is a private entity, whose shareholders are participating member banks. The premise is that they are a central monetary authority, who help retain economic stability in the country. They have a dual mandate, which is that they have to ensure stable prices and low unemployment. They fail miserably at both and in fact, they are the cause of economic instability in the country. You can read the book – ‘End the Fed’ by Ron Paul for a very detailed yet approachable description of what the Fed does and why it should be abolished.
What Jesse is saying is that the Federal Reserve has extraordinary powers to intervene the market and when they do intervene – they have serious effects not just the US economy, but the global economy. US Dollar is still the world reserve currency, so everyone in the world who holds dollars get affected by the US monetary policy. The Fed can do what they are doing now, only if all these global participants (China, Japan among others) can oblige. They clearly do not like what the Fed is doing now (quantiative easing), because it causes them to inflate their own domestic currencies. Remember, these foreign nations can only strive for one of the two – exchange rate stability or domestic price stability. They all choose exchange rate stability, because they don’t want to lose the value of their US dollar reserves. This system as you can see, is highly fragile and prone to serious disruptions, when participants do not oblige.
But the Federal Reserve itself is in control of private banking cartels. Combine these cartels with a government that is engaging in reckless spending, you have a thoroughly broken, morally corrupt monetary system. Financial sector is the strongest/wealthiest lobby in the US Congress, so they always get their way. A broken, unethical monetary system has led to staggeringly increasing imbalance of wealth. Concentration of wealth and power within a few people leads to economic policies that suit just them while the rest of the populace suffer at their expense.
Massive private gains and equally massive public losses is the end result.
Hope this helps.
Whew! Ok thanks SunDarb.
I thought that there was new information… which is to say, knowledge that was not part of my current understanding… embedded in that cryptic message from Jesse.
Glad to see that there’s really not.
Thanks for decoding it for me. After re-reading it, I see how your explanation connects up the pieces that I couldn’t put together.
There’s a lot in Jesse’s phraseology that I still don’t understand, but at least I know I’m not missing anything important.
One thing you helped refine in my understanding was the mechanism by which world currencies are tied to US monetary policy, and how they have to choose between exchange rate stability and domestic price stability.
What I’m trying to figure out now, is how the banking system in the country where I live, Thailand, is affected by US monetary policy.
“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
- Louis Dembitz Brandeis, A.J. United States Supreme Court (1916-1939).
All you need to know about the NWO here:
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