By Dennis Siluk Ed.D.
To be honest, I don't think many people know what the Federal Reserve is. I worked for a bank many years ago for eleven years total, had to go to the Federal Reserve now and then, and even the folks working in the so called System, didn't know the workings of it, they just worked for it (I'm talking about the years between 1982 to 1993). I'm not all that smart about it either but I do know a few things, that I really do not like knowing about it. And to get off of my poetry for an evening, for I am a better poet than a economist, or article writer, I think so anyways, I thought I'd write a paragraph or two about it. Two may do.
Who owns the Federal Reserve? Can you buy stock in it? How did it come into existence? Is it really a reserve? Is it really a system? These are simple questions, nobody asks, perhaps the reason being, nobody really has the right answers, and where do you get them, not in Economics 101, or 701. I will answer them for you in my own way, and you can believe it or not. The Federal Reserve is owned basically by five families in America. In essence, the FRS is the central bank of or for, America, and since 1914, no one out side of the five families could buy stock in it. They have the monopoly on it. It doesn't sound fair, but that's the way it is.
A reserve bank they say it is? I don't think so. They print money, not reserve it, and they print what they want, and somehow try to keep inflation down, buy printing without discrimination.
China and Japan own so much of our money, should they dump it on the world, it would take a million dollars to buy a new car that now cost $26,000-inflation would sink America back into the dark ages. If you are asking why they buy it in the first place, it is because they want to do business with us. I doubt you will find this information in your economic books, so don't waste your time; it is behind the doors stuff. Again I say, we had a taste of the Federal Reserve System, in the 1920s with hyperinflation, guess who was the creators of that, you got it, the FRS.
This so called group I'm talking about has total control of the money, it almost sounds criminal, but the government has passed laws protecting these investors, whom nobody can subdue. It is clear to see, in future time, our paper currency, with our national debt, breaking the ankles of the American society as it is today. I'm surprised it has lasted this long.
Last but not least, the Federal Reserve System is not a system in the terms of what a system is considered being, that is, an organization by the government, although it is blessed by the government. It is a scheme that was put together in 1913, and activated in 1914, and became an organism of these five families, and has remained so ever since, and in their hands.
Actually, this would make for a good book, but I'm a poet, and this just would not fit into a poem, except perhaps "Black Sunday."
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See Dennis' web site: http://dennissiluk.tripod.com
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Dennis Siluk Ed.D. - EzineArticles Expert Author
Alexis D'Tocqueville
Observer of America
Thursday, May 8, 2008
Tuesday, May 6, 2008
Federalist, No. 7
Monday, May 5, 2008
Say What! Hillary and Economics---Free Gas or Gasbag?
By now, I am sure that Hillary Clinton's "scheme" to save us poor consumers at the pump from the avarice of the big, bad oil companies has been thoroughly sliced and diced on the political blogs. I won't go into a detailed debunking of Hillary's plan, other than to state the obvious: Hillary is full of it!
The basics of her "scheme" are that she proposes to suspend the federal tax on gasoline so that we consumers won't have to pay it at the pump and then have the big oil companies pay the tax themselves. That should fatten our wallets, give us a chance to fill up the tank, and to pay off the entire national debt at the same time, right? Wrong!
What Hillary fails to understand about economics (her judgment being clouded by the fog of politics), and the way businesses do business, is that a cost incurred by a business is usually passed along to consumers in the price they pay for the good or service that the business is providing! The federal gasoline tax is not a cost that Big Oil is incurring and therefore adding on to each gallon of gas because Big Oil is not currently paying the tax as a cost to its business! It is big, bad federal government which is adding that cost to the price of a gallon of gasoline, not big, bad oil companies!
So, what exactly will happen to the price of a gallon of gasoline at the pump if the payment of the tax is shifted off the consumer and onto Big Oil? The price will stay the same! That is because Big Oil will add the cost of the tax it is paying into the price it charges for the delivery of a gallon of gasoline to the wholesalers, who will in turn factor that cost into their retail price at the pump. And who will end up paying the cost of the tax reflected in the price? The consumer!
Tom Firey, the author of the article linked below, sums up the effect of Hillary's illogic nicely when he writes:
"Because she intends for the windfall profits tax to generate the same revenue as the gas tax, the windfall profits tax will have the same effect on gasoline supply, demand, and price as the current gas tax. The only difference is that the gas tax is transparent to consumers while the windfall profits tax is not. Voilà — the gas tax seems to disappear, but gas prices stay the same and the government still gets its money."
But, Alas! I mistake! For, not only will the price of a gallon of gas remain the same thanks be to the federal government for adding to its increase by imposing the federal gasoline tax; but through its inflationary policies, the federal government will assure us that the price of gasoline will continue to rise as the purchasing power of our devaluing currency continues to fall!
What Hillary is proposing is a shell game, smoke and mirrors! And in the end, as with all shell games, it is the sucker (consumer) and not the con-artist (politician) who gets taken!
Anyway, here is Mr. Firey's complete article on the subject, with a nice analysis of the factors influencing the price of gasoline. Please read it here at Cato Institute.
The basics of her "scheme" are that she proposes to suspend the federal tax on gasoline so that we consumers won't have to pay it at the pump and then have the big oil companies pay the tax themselves. That should fatten our wallets, give us a chance to fill up the tank, and to pay off the entire national debt at the same time, right? Wrong!
What Hillary fails to understand about economics (her judgment being clouded by the fog of politics), and the way businesses do business, is that a cost incurred by a business is usually passed along to consumers in the price they pay for the good or service that the business is providing! The federal gasoline tax is not a cost that Big Oil is incurring and therefore adding on to each gallon of gas because Big Oil is not currently paying the tax as a cost to its business! It is big, bad federal government which is adding that cost to the price of a gallon of gasoline, not big, bad oil companies!
So, what exactly will happen to the price of a gallon of gasoline at the pump if the payment of the tax is shifted off the consumer and onto Big Oil? The price will stay the same! That is because Big Oil will add the cost of the tax it is paying into the price it charges for the delivery of a gallon of gasoline to the wholesalers, who will in turn factor that cost into their retail price at the pump. And who will end up paying the cost of the tax reflected in the price? The consumer!
Tom Firey, the author of the article linked below, sums up the effect of Hillary's illogic nicely when he writes:
"Because she intends for the windfall profits tax to generate the same revenue as the gas tax, the windfall profits tax will have the same effect on gasoline supply, demand, and price as the current gas tax. The only difference is that the gas tax is transparent to consumers while the windfall profits tax is not. Voilà — the gas tax seems to disappear, but gas prices stay the same and the government still gets its money."
But, Alas! I mistake! For, not only will the price of a gallon of gas remain the same thanks be to the federal government for adding to its increase by imposing the federal gasoline tax; but through its inflationary policies, the federal government will assure us that the price of gasoline will continue to rise as the purchasing power of our devaluing currency continues to fall!
What Hillary is proposing is a shell game, smoke and mirrors! And in the end, as with all shell games, it is the sucker (consumer) and not the con-artist (politician) who gets taken!
Anyway, here is Mr. Firey's complete article on the subject, with a nice analysis of the factors influencing the price of gasoline. Please read it here at Cato Institute.
Sunday, May 4, 2008
Pulling a Tiger Out of the Hat
In a recent article, Gary North compares Federal Reserve Chairman, Ben Bernanke to a master illusionist, practicing sleight of hand. Mr. North writes :
"The illusionist relies on his ability to get the audience to look at one thing while he manipulates something else.
The stage illusionist doesn't harm anyone. Any illusionist who harmed people would be written out of the guild. That's why the Federal Reserve has never been able to gain membership, despite its consummate mastery at getting the audience to look somewhere else than where the FED is doing the manipulating."
The illusionist draws away his audience's attention by means of clever distraction. According to Mr. North, this is just what Chairman Bernanke and the Fed have been doing! They have been framing the current economic crisis in terms of liquidity, when the real issue is insolvency! Mr. North continues:
"The FED is not supplying the banking system with liquidity. It is instead providing public band-aids for banks facing insolvency or at least a contraction of their lending ability due to reduced balance sheets. The FED is trying to persuade decision-makers in an illiquid commercial banking system that the FED stands ready to bail out any toppling firm whose bankruptcy threatens the entire payments system with gridlock. This is what Greenspan a decade ago called cascading cross defaults."
This is the very point that Chris Klein was making with his article I posted here, and which can be found in more detail on his blog Wreckonomics.
Mr. North's article can be found in its entirety here.
This current crisis goes beyond the shores of the good 'ol U.S.A., as well. For an international flavor, I encourage you to check out this article. The level of state secrecy shows just how dangerous and fragile the current situation is. There are murmurings being sent out from the halls of power here, amplified by the lackey press, that all is well. The storm has been weathered and safe harbor is in sight. But, don't be fooled! It is just another illusionary sleight of hand!
P.S. As a point of reference when you read the figures in the article from England, where the number given is in pounds double that number to arrive at roughly the dollar equivalent (e.g., 50bn pounds is roughly equal to 100bn dollars, where bn=billion).
"The illusionist relies on his ability to get the audience to look at one thing while he manipulates something else.
The stage illusionist doesn't harm anyone. Any illusionist who harmed people would be written out of the guild. That's why the Federal Reserve has never been able to gain membership, despite its consummate mastery at getting the audience to look somewhere else than where the FED is doing the manipulating."
The illusionist draws away his audience's attention by means of clever distraction. According to Mr. North, this is just what Chairman Bernanke and the Fed have been doing! They have been framing the current economic crisis in terms of liquidity, when the real issue is insolvency! Mr. North continues:
"The FED is not supplying the banking system with liquidity. It is instead providing public band-aids for banks facing insolvency or at least a contraction of their lending ability due to reduced balance sheets. The FED is trying to persuade decision-makers in an illiquid commercial banking system that the FED stands ready to bail out any toppling firm whose bankruptcy threatens the entire payments system with gridlock. This is what Greenspan a decade ago called cascading cross defaults."
This is the very point that Chris Klein was making with his article I posted here, and which can be found in more detail on his blog Wreckonomics.
Mr. North's article can be found in its entirety here.
This current crisis goes beyond the shores of the good 'ol U.S.A., as well. For an international flavor, I encourage you to check out this article. The level of state secrecy shows just how dangerous and fragile the current situation is. There are murmurings being sent out from the halls of power here, amplified by the lackey press, that all is well. The storm has been weathered and safe harbor is in sight. But, don't be fooled! It is just another illusionary sleight of hand!
P.S. As a point of reference when you read the figures in the article from England, where the number given is in pounds double that number to arrive at roughly the dollar equivalent (e.g., 50bn pounds is roughly equal to 100bn dollars, where bn=billion).
Friday, May 2, 2008
Federalist, No.6
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