Fed Up With the Fed


Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Guest Blogger

In the past few weeks, I have written about how the FDIC along with the Bank of England had developed a plan to allow the Big banks to grab depositors funds  in order to bail out those very same big banks.  Since that article was written, I have reviewed just what role the Federal Reserve Bank plays and how can it be improved.  You may remember the role the Federal Reserve played in bailing out the Big Banks during the beginning of the Great Recession.

“As a result of the Government Accountability Office (GAO) audit of the Fed, Senate sponsor Bernie Sanders of Vermont said, “We now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world.” Among the investigation’s key findings was that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland. These decisions were all made without the public, media or elected officials’ knowledge, and they would have remained secret without an audit.” Bernie Sanders   

For the math impaired, like myself, that is 16 Trillion dollars in basically secret financial “assistance” that the Fed provided the so-called Big Banks.  As the GAO Audit of the Fed showed, the “assistance” was given to not only domestic banks and corporations, but to many foreign firms as well.  Should the American people allow the Federal Reserve to continue to secretly fund the very same banks and institutions that played a large part in sending this country into a recession?  In an Op-Ed for Truthout-org, the case is made that our country needs to consider remaking the Federal Reserve into an institution that actually works to better the economy and not just improve the big financial institutions bottom lines.  Truth-Out

Before we continue, it is necessary to briefly review just what the Federal Reserve does and how does it operate.  “The Federal Reserve is a privately owned US central bank that acts behind closed doors to create money and set interest rates, and it presently puts the interests of the big banks first. The Federal Reserve was originally created by Congress in 1913 and can be altered, nationalized or even dismantled by Congress.

The Fed is a private entity that is controlled by the banks. The 12 Regional Reserve Banks issue shares of stock to its member banks. The Fed is not operated for profit, and the stock may not be sold, traded or pledged as security for a loan. It does pay dividends that are, by law, 6 percent per year. But more importantly, the stock provides banks with votes to elect six of the nine members of the board of governors of the regional banks.” Truth-Out

The Truthout Op Ed suggests that while a central bank is necessary “to regulate the money supply by setting interest rates and to be a lender of last resort in a financial crisis, ” some experts suggest that regulating process can be done in a more transparent and mechanical way without the Federal Reserve Board of Governors weighing in on the issue. ” The GAO Audit referred to earlier also uncovered conflicts of interest  within the Fed’s lending practices.

‘ “For example, the CEO of JPMorgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Sanders urged that “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed.” ‘  Truth-Out

Does it concern you that until the GAO audit was forced on the Federal Reserve by Congress, a member bank of the Fed and indeed, an institution run by a member of the Federal Reserves Board of Directors can obtain secret loans totaling $390 Billion?  Anyone who has borrowed money from any bank knows how your economic life is examined and investigated before your loan to buy your home or your car is approved.  Maybe we should all get our mortgage loans from the Federal Reserve!

What can be done to make the Federal Reserve better or make our country’s monetary policy actually work for everyday Americans and the American economy?  There are many suggested improvements or overhauls that have been recommended.  Public banks, modeled after the public Bank of North Dakota is one possible answer.  The Bank of North Dakota takes in all of the state’s revenues and turns it into credit that ordinary citizens can use.

“Ellen Brown, the president of the Public Banking Institute, argues that we need a public bank in every state and major city. The United States has one model for public banking: the bank of North Dakota. When North Dakota farmers were losing farms to Wall Street, they organized a populist movement, and in 1919, set up the bank of North Dakota. The publicly owned bank recycles state revenues into credit for the state. Thus, North Dakotans keep their money in their community.

The result has been an ongoing success. Even during the current economic collapse, North Dakota escaped the credit crisis and has maintained a budget surplus since 2008, low unemployment and no public debt. ” Truth-Out

Can you imagine the money saved in the State of North Dakota by utilizing the Bank of North Dakota instead of private banking institutions?  Ms. Brown who was quoted above provides us with an example of how much money the State of California could save by setting up its own State bank.  ” Brown summarizes: “At the end of 2010, it had general obligation and revenue bond debt of $158 billion. Of this, $70 billion, or 44 percent, was owed for interest. If the state had incurred that debt to its own bank – which then returned the profits to the state – California could be $70 billion richer today. Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure.” Truth-Out

The changes suggested to the Federal Reserve along with States setting up their own State banks are just two of the ways that the economy and everyday Americans can be helped.  Americans can move their money into credit unions and smaller community banks and they can take advantage of or establish Time banks and Time dollars to allow for a barter like system to provide an option for Americans to purchase services in exchange for their own services or labor.

I cannot cover all the possible methods and means that can be utilized to improve the economy for ordinary Americans in this one article.  I recommend that you read the Truth-Out article in its entirety and check out the links and additional references noted herein.  The bottom line, in my opinion, is that the Federal Reserve, in its current set-up,  has outlived its usefulness.  Americans are still hurting from the recession that the Federal Reserve did not see coming.  The recovery is being delayed, in part because of the policies of the Federal Reserve and its penchant to work for the Big Banks instead of all Americans.

We need to take back our economy and work to convince Congress to revamp the Federal Reserve.  The individual States can save Billions for their citizens by setting up their own public banks.  Wall Street and the Big Banks will claw and scratch to keep the Federal Reserve in their pockets, but this country cannot survive without a sea change in how the Fed works and how Americans have access to credit.

Can the Federal Reserve be reined in and revamped to help ordinary Americans?    Do you think that your home State would be able to establish a State bank?  Have you moved your money into credit unions or small community banks?  What else can be done to improve the economy without utilizing large private financial institutions?

Additional references: Clearing the Fog Radio;

Local Currency;


Federal Reserve;

84 thoughts on “Fed Up With the Fed

  1. raff,

    Excellent follow up. Economically speaking, a central bank has utility, but only under public control. A privately held central bank with guaranteed dividends is simply a bad idea from the start.

  2. Larry,

    Thank you for this piece. In order to understand how our country and the world is being taken over by this Corporate Elite, we must understand the mechanisms. The “Fed” has for too long controlled American financial policy as a benefit for this Elite and it has done so in secret. While I knew this empirically, I needed the background you provided to be able to discuss and think about it intelligently. It’s high time to nationalize the “Fed” to make it serve the publics’, not the elites interests.

  3. Confession: I used to think that people who talked about the shady deals the FED made with corporations both foreign and domestic were simply right wing conspiracy buffs who saw double dealing behind every door. Boy was I WRONG!

    The FED does nothing for the people, that is, the human people. They funded the bubble and they rewarded the banksters who created it, fed off it and crashed it.

    I have had it. Thanks, Raff. And thanks to Bernie Sanders.

  4. I have long been a fan of North Dakota’s state bank (BND) but whenever I’ve brought it up for the State of Ohio, I’ve been called a socialist. Idiots

    Thank you, raff, for this informative series.

  5. Thanks Gene and Mike. The more you learn about the Fed, the more disgusted you can get.
    It is amazing that a Socialist state like North Dakota can run a state bank, but not Ohio, or Illinois, Wisconsin, etc.
    Justice Holmes,
    You are right about Bernie Sanders. But kudos should also go out to Rep. Alan Grayson and others for making the audit the fed bill a possibility.

  6. rafflaw,

    You beg the question, masterfully.

    If “the fed” is not controlled by the people we elect, then who does control them?

    Is it the same folks who control the people we do elect?

    Either way, your post introduces text that gives new meaning to “control freak.”

  7. Dredd,
    many of the suggestions for “improving” the Fed revolve around a more democratically controlled system. Right now the banks control the votes on the body that lends money to..the banks.!

  8. Gene H. 1, April 21, 2013 at 2:57 pm


    Excellent follow up. Economically speaking, a central bank has utility, but only under public control. A privately held central bank with guaranteed dividends is simply a bad idea from the start.

    But this is the central blank which has futility.

  9. rafflaw 1, April 21, 2013 at 3:50 pm

    many of the suggestions for “improving” the Fed revolve around a more democratically controlled system. Right now the banks control the votes on the body that lends money to..the banks.!
    That would mean that the chickens are in the Fox matrix I suppose.

    Anyway, I am in appreciative awe of the guest bloggers at Jonathan Turley’s blog.

    While commenting here I got a strange call from a “local source” in a mysto area code that is nowhere near anywhere, especially here.

    It suggested that I put batteries into my fire alarms so my family … blah blah blah … which I interruped with “solly no heary” …

    Know what I’m sayin’ …

    Keep up the good work.

    When it happens to you, it means you are doing some shitkickin’ blogging or you are cheating with a firefighters woman or man.

    Nick can ‘splain it.

  10. http://www.nakedcapitalism.com/2013/04/robert-johnson-on-the-oligarchs-theyre-all-standing-on-the-deck-of-the-titanic-looking-in-each-others-eyes.html

    Robert Johnson: I think the, call it the oligarchy now is audacious. They don’t really care if they’re legitimate. There was a time – you know, I always hear Jurgen Habermas was paraphrased by saying, “Legitimate if you can, coerce if you have to, and accommodate if you must.” And I think we’ve gone past –…”

    “…But there is a sort of, “Okay guys, you’re mad, how are you going to stop me?” mentality at the top.”

  11. JFK started the US printing some of its own paper money again. LBJ dropped the idea.

    There are some communities creating their own currencies. Ithaca dollars is one. Local merchants accepted a percent of the purchase in the Ithaca dollars. Since they could only be used in local stores, it kept a certain part of every purchase circulating within the community. I think there was another in Park Slope Brooklyn area.

    I like the idea of state-owned banks.

    I left banks in the dust decades ago when one took advantage of naive me in collecting far more interest on a student loan than they were entitled to. When I found out, I switched banks briefly, then joined a credit union.

    I’ve belonged to 4 different ones, depending on my location. I recommend them but watch out for them offering banking type services and fees. When they do, it’s time to switch. For example, one of them advertised H&R Block Rapid Refund, basically a bridge loan for a $25 fee. Unless your refund was really large, the “interest” on that loan was exorbitant. Imo, the credit union should have been providing assistance for its members to better estimate their tax liability so they wouldn’t have such a huge refund, or they should have offered their own bridge loans at their usual rates. This particular credit union had other problems as well, such as putting deposits in the wrong person’s account, rude customer service reps, etc.

  12. The readers of this blog are generally a very informed group.

    The comments suggest that most of us (I certainly am) are surprised by the extent of the Fed’s actions.

    $16 trillion is a sum equal to our entire GDP- it is incredible that so much money was deployed without our knowledge. More amazing that these facts did not come out until 2011.

    Democracy suffers when unelected officials can deploy the equivalent of a year’s GDP without oversight or public awareness.

    Have we lost our republic?

  13. http://www.nakedcapitalism.com/2013/03/what-is-modern-monetary-theory-or-mmt.html
    Tuesday, March 12, 2013
    What is Modern Monetary Theory, or “MMT”?
    By Dale Pierce. Cross posted from New Economic Perspectives
    [excerpted quote]
    “MMT was independently co-discovered by a single person. A person who had no specific training or academic background in economics at all – the American businessman and auto-racing enthusiast Warren Mosler. How he came to initially suspect and, ultimately, clearly understand that the spending of sovereign governments had become operationally independent of their taxing and borrowing is recounted in his 2010 book, “The Seven Deadly Innocent Frauds of Economic Policy.” The 1996 publication of an earlier book of his, “Soft-Currency Economics,” launched MMT as a social, intellectual and online movement. And while the academic side of MMT was completely unknown to him at first, it was not long before the two camps discovered each other, and this has led to a very extensive collaboration in the years since.

    Today, MMT is being discovered by a rapidly-growing worldwide Internet audience. And the public’s growing interest in MMT is evident in other ways as well.”

    The 7 Deadly Innocent Frauds of Economic Policy [Hardcover]
    Warren Mosler (Author)

  14. Raff,

    Excellent article! I have stated this before, and I will say it again: “Wall Streets’ Richness is fueled by Main Streets’ Indebtness.” I have already stated my solution (Main Street needs to become debt free) to this mess on an article that Elaine wrote. I have also stated how we have loaned out trillions of dollars to other countries, and not even expecting these countries to pay us back (also on Elaine’s article).

    Nevertheless, it begs the question(s): Does the National Deficit of $17 trillion truly exist, since it is money that we owe ourselves? Can our economy exist without a growing global economy? Or are we the ones growing or ‘creating’ the global economy to make it seem like there is a global economy? Can our economy exist or ‘thrive’ without the feds’ financial ‘assistance’?

    If was sad that conservative commentary Bill O’Reilly made a statement to hush a famous conservative economist (forgot his name) about the bailouts by stating: we needed the bailout funds, if not, then the unemployment would have been 20%-25%.

  15. Remember Lincoln’s Gettysburg address?

    “…government of the people, by the people, for the people, shall not perish from the earth.”

    The fed certainly has drifted from that ideal.

  16. I already knew about this and I can’t imagine anything more despicable! To reward the very institutions that just about brought our economy down not to mention the world economy boggles the mind. And of course no criminal charges were ever filed; and now, they are patting themselves on the back giving themselves big bonuses. Please excuse me while I vomit.

  17. The FED was chartered to accomplish two main tasks: ensure full employment, and manage inflation. It also charges the Treasury to manage our currency. And, since the most recent round of “quantitative easing” the FED is now the single largest holder of US Treasury Bills — they hold more US debt than China.

    While a lot of people think that a major problem with the FED is its use of “paper money,” this really isn’t the problem that most people think it is. The Dollar isn’t “backed by nothing” but rather, it is backed by the world’s reliance on the Dollar as a global reserve currency. What keeps other countries buying dollars is the fact that oil is priced exclusively in Dollars.

    Moreover, if we leave paper currency behind and switch to a “more tangible” commodity like gold (as if oil weren’t tangible — the problem here is that our stake in oil is contingent), we’d be in for a world of hurt.

    If we return to the gold standard, for example: 1) China could ask us to repay our debt to them in gold, in which case all our wealth would flow right out of the country, and couldn’t be replaced; 2) it would be easier for interested parties to manipulate the value of the currency simply by cornering the market for gold (whereas now, things get complicated LIBOR-style when somebody wants to manipulate the currency); 3) if we returned to the gold standard, our economy would tank because right now the whole thing is built around the dollar’s status as a reserve currency, and the creation of wealth through the mechanism of bank lending (which also creates inflation by expanding the monetary supply); 4) returning to the gold standard would make the valuation of our currency less intuitive: all the gold ever mined in the history of the world would fit inside three Olympic size swimming pools, and we would, in essence, be pricing things in terms of gold ATOMS (which are not all that “tangible” in and of themselves).

    Lastly, there is some historical precedent for viewing paper money favorably: under the Articles of Confederation, paper money was viewed as an important means by which to regulate wealth. The system was seen as more equalitarian by the majority of Americans.

  18. IndigoJones is right about the importance of the use of the US dollar for oil trades but that could be changing.

    From 2006:

    The U.S. media tells us that Iran may be the next target of U.S. aggression. The anticipated excuse is Iran’s alleged nuclear weapons program. William Clark tells us that economic reasons may have more to do with U.S. concerns over Iran than any weapons of mass destruction.

    In mid-2003 Iran broke from tradition and began accepting eurodollars as payment for its oil exports from its E.U. and Asian customers. Saddam Hussein attempted a similar bold step back in 2000 and was met with a devastating reaction from the U.S. Iraq now has no choice about using U.S. dollars for oil sales (Censored 2004 #19). However, Iraq’s plan to open an international oil exchange market for trading oil in the euro currency is a much larger threat to U.S. dollar supremacy than Iraq’s switch to euros.

    While the dollar is still the standard currency for trading international oil sales, in 2006 Iran intends to set up an oil exchange (or bourse) that would facilitate global trading of oil between industrialized and developing countries by pricing sales in the euro, or “petroeuro.” To this end, they are creating a euro-denominated Internet-based oil exchange system for global oil sales. This is a direct challenge to U.S. dollar supremacy in the global oil market. It is widely speculated that the U.S. dollar has been inflated for some time now because of the monopoly position of “petrodollars” in oil trades. With the level of national debt, the value of the dollar has been held artificially high compared to other currencies.

    From 2012

    On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970’s, when Henry Kissenger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency.

    I believe Hugo Chavez had similar plans for Venzuelan oil sales.

  19. Now maybe some of you will now understand why the 2nd amendment is essential to protect. Our government is becoming increasingly fascist and stripping rights.

  20. Very good article. It is too bad that there is no one in Congress to take this issue by the horns and begin the move to replace the Fed with a regulated Central Banking entity. A regulator not a facilitator for theft and deception.

  21. Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.

  22. “The second amendment will be of no use against the government if the banks crash the economy.”

    There is a breakdown of both correlation and causation in that statement, raff. Tyranny and economic collapse may come hand in hand, but their relation to the 2nd is independent, not conjoined.

  23. The development of the global economy has eliminated the significance of borders and national fidelity. The only important distinction now is between have and have-nots, or have-less’. I believe the bubble crisis was deliberately drawn up as a transfer of wealth, and that now all that remains is to loot the social security trust fund.

  24. RAFFLAW:

    Baby, you are late to this party!

    End it honey, dont mend it. Let the market set the interest rate. All this central planning is enough to give a capitalist the vaors. Pass the smelling salts and tell Bernie he’s passe.

    Capitalism is where its at man, can you dig? Socialism is for aging hippies and people with refined taste, like the Vanderbilts, Harrimans and other members of the New York social register. Get it, social register, socialism?

    You boys on the left have been supporting those lame brains for years. Well I guess better late than never in figuring it out.

    As I always say, “Rags to riches to rags in 3 generations.” Thats in a capitalist free market. You boys on the left have been doing the bidding of the “man”. for nigh on 100 years now. Keeping that social register safe for their posterity and posteriors.

    We have been trying to tell you guys on the left, the decent ones anyway, that you are just supporting rich people with all your talk about the proletariat.
    You think ole Engles really wanted to share his wealth? Nah, he wanted the middle class to pay. Marxism was created to protect the wealthy not the poor.

    Its about time you start to figure it out.

  25. AY:

    no it isnt. Every man, I dont care how moral you are, brings natural bias to any situation. You may not even understand the bias.

    Interest rates should be tied to the market rate, that is what controls the economy. The Fed has been responsible for 100 years of boom and bust and has trashed the economy along with all the other controls enacted to protect us from the Fed.

    It is a self-perpetuating economic nightmare, the Fed fuks up and congress legislates to offset the fuk up and then has to legislate some more to offset congressional fukupery and then the Fed raises or lowers its rates to offset the fuk up that offset the fuk up that led to the fuk up.

  26. Bron,

    A central bank does have utility in controlling inflation. However, the other stated rationales for creating the Fed – maximizing employment and moderating interest rates – come into direct conflict with it being privately held and guaranteeing a dividend. A central bank can be a useful tool for government to shape the economy. The Fed, however, does not work for the government ergo it does not work for the public interests. It is a prime example of an institution that begs for nationalization.

  27. Justice Holmes sed:
    “Confession: I used to think that people who talked about the shady deals the FED made with corporations both foreign and domestic were simply right wing conspiracy buffs who saw double dealing behind every door. Boy was I WRONG!
    I have had it. Thanks, Raff. And thanks to Bernie Sanders.”

    Rafflaw sed:
    “You are right about Bernie Sanders. But kudos should also go out to Rep. Alan Grayson and others for making the audit the fed bill a possibility.”

    OMFG, really?
    Thanks to Bernie Sanders and Alan Grayson?

    For sure they have some thanks coming, but who has been railing against the Fed for the last 30 years? Who has been ringing the alarm bell about this corrupt cronyed institution, when no one was listening and everyone was laughing about how ridiculous such “chicken littel” criticisms were?
    And who, almost single handedly against an uphill battle actually managed to get a partial Audit-the-Fed bill passed???

    And Sanders, Grayson get the Kudos, without one mention in this thread so far about the venerable Ron Paul, who was the only with the prescience to see this problem and never let it go until some other representatives finally dimly saw something might be wrong. And when got the glimpse that the Fed hoped we never got, it only pointed to even worse unrevealed machinations.

    Basically the Fed Board has managed to bail out almost exclusively their personal pals and colleagues that they worked with, on the backs of taxpayer money and the credit of the US Govt, just so that their friends wouldn’t have to sacrifice any of their own uber-rich lifestyles.
    They took their public trust, made up a false catastrophe that they caused, and that would have been a problem only for them, and nationalized it as a public crises.

    David Stockman has illuminated this most clearly with his new book, and showed that the only ones who would have suffered without a govt bailout, would have been the bankers and financial corporate board members and stockholders of their failed gambles.

    This is all true, and wouldn’t have seen the light of day, had it not been for the “right wing conspirasist” Ron Paul, who was for the longest time, the ONLY one calling for inquiry and public control over the Fed.

  28. Gene H:

    do you think it is going to work any differently if nationalized? Britian tried nationalization of industry and banking in the late 40’s after the war and destroyed its economy.

  29. “Capitalism is where its at man, can you dig?”


    I don’t know if you vote or not, but if you do, I believe that every vote you’ve cast in a regular election was for someone who if elected would support the Fed and Corporatism. Possibly you’ve voted for some Libertarians, but in the main you wouldn’t have the opportunity to do so. Also too in this issue you miss the point. It is the anti-Capitalist Corporatists who use the Fed, not the other way around.

  30. “Interest rates should be tied to the market rate, that is what controls the economy.”


    Belief in the “Free Market” is akin to belief in the “Tooth Fairy”. Even Adam Smith understood that markets had to be regulated or they become corrupt.

  31. “Britian tried nationalization of industry and banking in the late 40′s after the war and destroyed its economy.”


    Again you view history through a distorted lens. The privatization and austerity introduced by Thatcher remade the British economy into a the bank controlled economy they have today.

  32. Gary T:

    well said, socialist dont know sh*t about economics and have been protecting the Fed for years. The corporate fascists told them it was necessary and they believed them rather than Paul and other free market economists who have been shouting this from the roof-tops for many decades.

    It is a joke as you say. Gene H gives the tell above. Sanders and Grayson just want to nationalize it, not end it.

    What a choice we have; corporate fascism or state socialism. Oh my god we are doomed. Either way we are fuked.

    Maybe it is time to go to Texas, arent they talking about creating a seperate country?

  33. In the industry that I know of, BP bought my old company ARCO. This happened after Thacher had privatized BP. Before that BP was a very good company. In fact, they and ARCO jointly owned and ran the Prudhoe bay oil field. I was thinking that BP was a great company to work for since the BP employees on the North Slope had an indoor swimming pool for its employees and ARCO did not. After privatization, I imagine that they probably got rid of that perk.

    If you read the headlines, you will see that BP actually got worse after privatization, and after acquiring ARCO, the pipeline went from getting environmental awards to destroying it. They refused to run pigs through the line and cut all maintenance. In Texas City when they took over the Amaco refinery, they failed to fix the engineering design flaws that were pointed out by OSHA, which resulted in the deaths of 15 people when an outrageously designed blow down drum was allowed to vent to the air. It blew up and burned those 15 contrators to death. Then of course we all saw how they lied, cheated, and dodged responsibility for the Deepwater Horizon disaster. If anything, this proves that privatization of such things is a threat to the company, and the public. Instead of fines,the US simply should have nationalized BP with NO compensation for its crimes.

  34. Mike S:

    she was there for only a few years. The changes she instroduced are gone as are the changes Reagan introduced.

    Too bad too. But even Reagan and Thatcher didnt go nearly far enough and had to compromise quite a bit with the Democrats and the Labour party.

    My history is fine.

  35. Mike Spindell:

    do we have a court system? If my mother is taken advantage of by a business then I take them to court or have them arrested.

    Look at the recent thread about halal meat and McDonalds, that is proper government regulation. Having congress or the Dept of Ag write legislation to protect people from non-halal meat is not.

  36. Bron,

    Yeah. Because your laissez-faire fairy tale version of economics has worked so well. I’d say “Surely you’re not so blind as to not see that a privately held central bank is a creature laissez-faire economics and is directly contributory to the corporatist fascism you bemoan” but I know you are exactly that blind. That’s what happens when you worship greed and follow the philosophical and economic dictates of sociopaths.

  37. Bron,

    Do you have problem with people of integrity running the Federal Reserve? I reread your post and am not clear what you are trying to convey….. People that are running it now are running it with their special interests in mind…..

  38. ARE:

    Oil well fires happen in the Gulf, I used to see them burning when I surveyed offshore setting oil rig jackets, oil rigs and pipe lines. I also heard about people being killed in rig accidents and helicopter crashes. Drilling for oil is a dangerous business and people die.

    The fact that we dont have more catastrophes is a testament to the skill and knowledge of the many people who work in that industry.

    I might also point out they were drilling in 5000′ of water, in the early 80’s when I worked for a drilling company in Alaska we were drilling in 500′ of water and that was considered deep.

    So I am not sure what nationalizing BP would do, maybe if Obama’s administration had allowed more drilling closer to shore those people would still be alive and the environment would not have been damaged.

  39. This link goes to the third lecture in a series of lectures by Richard Bulliet.
    I specifically refer to his topic of wheat, labor, and centralization discussed
    from 34:minutes to 50 minutes. The title of these lectures is,
    Richard Bulliet – History of the World to 1500 CE.

    Big stones and the centralization of civilization. Big mounds of dirt and the needs of a laboring society. Small stones and the preservation protection of wealth. Tons of wealth converted to easily transported wealth.
    … The stock market of 2000 BC. LOL How and why it began.
    The below is me ruminating tangentally about the thought bubbles bouncing around between my ears, activated by the concepts and theories presented in this lecture. ……. Normally my thought bubbles leak out and evaporate into the ether. This morning they leaked out onto my computer.

    Wheat was an original commodity of ancient times. Being rich meant you had a lot of wheat. Today wheat costs 300 dollars a ton. 1000tons x 300 $ = 300,000 dollars.
    To be in the top 10% earners today, based on ancient income, you would need a silo in your backyard with 1000 tons of wheat in it, minus what you consume in a year. Of course you would then (if the silo was not completely emptied that year), have to build a new silo for the next years income. Carried over income becomes wealth. I’m quite sure even Hercules could not consume 1000 tons of wheat in a year.

    The few today that have 3 billion dollars of wealth would have 10,000,000. tons of wheat in their backyard. ….. These are gluttons of Greed.
    We do not see the obscene imbalance, perverted egos, and the Mountain of hoarded wealth these “neighbors” withhold from the commons. The Waltons, Buffets, Soros, Kochs, have little pieces of paper that represent 10 million tons of wheat. We don’t see these silos, and mountains of insane accumulation. Society praises and raises them as superb and successful members of society.
    4000 years ago among an agrarian society, these folks would not exist. (except in the guise of kings and authority of the state).
    Why does an individual, and or a nuclear family need 10 million tons of wheat, withdrawn from the commons.
    Money, letters of credit, investment in stocks, trust and faithful backing of currency, sure saves the effort of lugging around tons of wheat. Our monetary system is a brilliant creation of tested and proved growth of rational society. Our monetary system allows and enhances the good of the commons. ……. Till it doesn’t.
    Individuals and rule of government that is pro greater and greater accumulation of wealth, to fewer and fewer individuals (or corps) has lost the 5000 year path of advancing civilization. Society that exists to serve the wealthy is a society that has fallen from the rising path of our human struggle. Money is still wheat, Money is food, Money is shelter. I supply my labor in exchange for money.
    Money compensates labor. …..Till it doesn’t.
    Profit for the sake of profit, Extreme profit for the sake of Extreme profit is a perversion and corruption of economic evolution. Accumulation of extreme wealth through profit can only exist by denying a balanced income and earning of the labor of the commons. Extreme capitalism cuts jobs, lowers wages, lessens opportunity….. not for the greater good of all, but for the greater accumulation of individual profit. Having 10 million tons of wheat and rigging the government and laws to acquire another 10 million tons is obscene.
    This philosophy denies the good of the commons, and denies the forwarding of an enlighten society. It contributes and leads to ill health and repressive degradation of the society. This is my personal and valid (to me) perception of where we are at today.

  40. The FACTS are that when BP was privatized it went from being a responsible corporation to one that killed scores of people for no good reason, trampled on the environement, and cut costs to give the execs billions of pounds. THAT is the problem. When you have large corporations running things ONLY for their owners and looking out ONLY for the interests of the execs. what happens should be a surprise only to a fool. When the owners were the British public, it was run as it should be run.

    Bron tries to divert attention from the fact that BP was and is a danger to the public. It was found guilty of criminal charges of manslaughter and should have had its corporate charter revoked. Its assets sold off, or preferably nationlized. To leave such a dangerour business in the hands of private interests is only an invitation to more disasters since NO government can have enough regulators to keep tabs on them. Oif field drilling and the oil business has inherent hazards to be sure. Even nationalize oil companies will have accident, but to leave them in private interests with little or no oversight only invites more disasters.

    Such companies have PROVEN that they are irresponsible through the oil price rigging, intense lobbying that has resulted in global warming and stymied the political solutions that are needed. They deny science, pollute the political, and physical environment, and kill people. That alone should be more than enough reason to get rid of them as private companies.

    As for BPs offshore drilling, I have to note that Brazils nationalized oil company is doing beter than BP and in deeper waters, yet they have mandated measures to prevent what BP got away with in the Gulf. I suggest you read Greg Palast on BP and it misdeeds in the Caspian Sea, and the Gulf.

  41. A great equalizer for the commons would be if wealth went stale.
    Scrooge McDuck if I remember correctly from my comic reading years, would go in his vault and “bathe” in his accumulated wealth.
    BTW he can not possibly be alive today ..can he? I wonder if he willed all his wealth to his nephews?

    Anyways, once wealthy always deserving? Mr. Romney “earned” 20 million dollars last year. Mr Buffet a gazzillion? What is the meaning of earned.

    4000 years ago in our economic infancy, wealth was perishable. Something had to be done with it,…or the wheat would sour and be of no benefit to anyone. Today we have magic alchemic wheat. It can be stored, hoarded, lusted over, and removed permanently from cycling down to the level of honest labor. It is, was, and will be, the honest labor of the commons that create the goods and growth of economic health. It is the greedsters and hoarders that rob the honest efforts of honest labor.

    Necessary income for today, comes from resources and focused labor.
    Wealth is an accumulation of things, not necessary today.
    Great wealth accumulates things, not necessary at all.
    But for even greater accumulation, to no purpose at all
    That drains the pool of Wealth, Necessary for the incomes of Today.

  42. Gene H:

    what is the FED? It is a central bank. What is a central bank?

    “Central banking is a system in which a legally privileged bank, a “central bank,” has a government-granted monopoly on the creation of base money (i.e., currency and bank reserves) and the power to dictate the ratio of reserves that other banks must hold to back deposits. Under a central banking regime, this base money is accorded an exclusive legal tender status. No institution or person other than the central bank is legally permitted to create such money (to do so would be to engage in counterfeiting), and no one is permitted to use anything other than the central bank-authorized money to pay for goods or services or to settle debts.”

    Henry Mark Holzer, Government’s Money Monopoly: Its Origin and Scope and How to Fight It (New York: Books in Focus, 1981).

    The fed issues fiat currency which is not based in gold and so has no real value. It has been used to finance our deficit spending for all of these many years with no accountability to reality [markets].

    The fifth plank of Marx and Engels’s Communist Manifesto of 1848, calls for “Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.” And to here you tell it, a central bank is a capitalist idea. Am I missing something?

    [central banks] “were not at the cutting edge of a market economy,” that “central banking is almost entirely a phenomenon of the 20th century,” and “to some extent, central banks were looked upon and created as a means of financing the government.”

    Paul A. Volcker, “The Role of Central Banks,” in Central Banking Issues in Emerging Market-Oriented Economies, A Symposium Sponsored by the Federal Reserve Bank of Kansas City (August 23–24, 1994).

    “Final freedom from the domestic money market exists for every sovereign national state when there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.”

    Beardsley Ruml, “Taxation for Revenue is Obsolete,” American Affairs, January 1946.

    “That the rise of central banking has led necessarily to the demise of the gold standard is clear from monetary history (and is codified in Gresham’s Law: bad money drives out good money). Three broad phases are discernible, with slight differences depending on the nation studied. The first phase is a system of relatively free banking on a pure (classical) gold standard (most of the 18th and 19th centuries); the second phase is central banking based on increasingly diluted and manipulated forms of the gold standard (World War I to 1971); the third phase is a system of full-fledged central banking with pure fiat money issuance having no tie to gold (since 1971). The earlier centuries are characterized by the rule of law, constitutionally limited governments, relatively conservative spending, and rational banking practices. In contrast, the past century, especially the period since 1971, is dominated by the rule of men, unrestrained government, reckless spending, and harebrained banking practices.”

    Lawrence H. White, “The Rule of Law or the Rule of Central Bankers?” Cato Journal (Fall 2010).

    I think it pretty safe to say that a central bank is not a capitalist idea, that it makes financing wars easy, it takes away the wealth of individuals through deficit spending and it will eventually take away our liberties.

  43. david blauw:

    Romney and other wealthy people dont keep their earnings in a vault. they invest it in other ventures so they can make more money and put more people to work.

  44. AY:

    if you operate in a corrupt system and have integrity what does that matter? Eichman had “integrity” and operated in the Nazi system which was morally corrupt.

    If you have true [moral] integrity you do not work for a corrupt system you work to end it.

  45. Bron,

    Nice attempt to sidestep the issue of control vis a vis public vs. private.

    And by nice I mean transparent. The reason the Fed sucks so bad is it is private and guarantees a dividend. That’s naturally going to skew their policy toward private interests and away from public interests.

    Also, the gold standard? Really? A return to the gold standard would do nothing but increase market instability and totally negate the use of central banks in controlling inflation.

  46. Gene H:

    I sidestepped no issue. And presented some facts about central banks.

    What controls inflation is having a money that is actually unable to be printed and has to be manufactured and have some store of value. Gold, silver, copper and other precious metals like palladium and platinum fill that bill. There is a limited supply, it cost money to mine and produce, it has industrial use.

    “Also, the gold standard? Really? A return to the gold standard would do nothing but increase market instability and totally negate the use of central banks in controlling inflation.”

    We had a rise in living standard while we were on the gold standard in the 19th century. Real wages doubled in that century and there was relative stability among nations after the Napoleonic wars. The 20th century was a bloody one and we had central banks which financed them. They may not be the only cause but they sure did fund them.

    We also have had inflation that the fed has not kept under control, your money is worth much less now than it was in 1913. In 1913 your money was worth twice what it was in 1813.

    The FED is a monopoly granted by government. Not much private about that. I thought you didnt like monopolies?

  47. “There is a limited supply, it cost money to mine and produce, it has industrial use.” – Bron

    The precise reasons why using it as a basis for currency is too volatile and an invitation for runaway inflation as the supply either dwindles or remains static while demand is ever increasing. Also, a certain amount of inflation is simply normal and a reflection of scarcity. That the Fed as a central bank isn’t a 100% efficient brake on inflation is simply the reality that 100% is usually impossible. Again, the problems with the Fed are private ownership and a guaranteed dividend skewing their priorities to private interests over the public trust, not that they don’t work as a brake at all.

    As for monopolies? I’m against them in most but not all instances. I am almost universally against privately held monopolies though. They can have utility – such as in realizing operational efficiencies in the provision of health care insurance universally – but when you attach a profit motive, monopolies usually go wrong. Ultimately it was the profit motive – and uncontrolled greed when it came to LD rates – that did MaBell in. Monopolies, like corporations, are a useful tool, but they have expanded in scope beyond utility and into the realm of social harm in the name of profits.

    Believe it or not, society exists and some endeavors should be done with the best interests of society placed well in front of any personal interest in private profits. Or do you think the Roman aqueduct system was built for personal profit? They were capitalists don’t you know.

  48. “The FACTS are that when BP was privatized it went from being a responsible corporation to one that killed scores of people for no good reason, trampled on the environment, and cut costs to give the execs billions of pounds. THAT is the problem. When you have large corporations running things ONLY for their owners and looking out ONLY for the interests of the execs. what happens should be a surprise only to a fool. When the owners were the British public, it was run as it should be run.”


    Excellent reply and a telling rejoinder to our distinguished Randian.:)

  49. Bron, it’s all wheat

    Gold, silver, copper and other precious metals like palladium and platinum fill that bill. There is a limited supply, it cost money to mine and produce, it has industrial use

    These metals are just cleaner and more convenient to own. When your neighbors are dying of starvation, it easier to say “sorry I have no wheat for you”.

    Money is never more precious than food. ……. Unless the individual and society is eager to believe it.
    And those without money are 3/5 human, or chattel..

  50. Bron,

    1, April 22, 2013 at 1:07 pm
    david blauw:
    Romney and other wealthy people dont keep their earnings in a vault. they invest it in other ventures so they can make more money and put more people to work..

    HAHAHAHAHAHA, That I disagree with. You are far from 100% correct on this one. …. However I ain’t 100% correct either.

  51. Bron,
    Is the State of North Dakota a socialist state? They have a state owned bank which has worked very well for its citizens.

  52. “And those without money are 3/5 human, or chattel..”

    David Blauw, that simplistic statement could undermine every law and every civil notion that is currently hanging by a tenuous thread in this Country. Plus, it aint true.

  53. david:

    what do they invest in? probably some stuff that doesnt do much and is tax free but they also invest in companies. Although municipal bonds go for building things and that puts people to work.

  54. Gene H:

    “The precise reasons why using it as a basis for currency is too volatile and an invitation for runaway inflation as the supply either dwindles or remains static while demand is ever increasing.”


    If the supply remains static, then that means an ounce of gold increases in value, if the supply dwindles that means an ounce of gold increases in value. Which means that a pair of pants costs less in relation to the amount of gold needed to buy them not more.

    That is why when we were on the gold standard our buying power increased by at least a factor of 2. Because the government was not able to rob us blind using fiat currency.

  55. raflaw:

    as far as mortgages go I know they have some minor influence but they dont set the rate as does the fed.

    by the way a good article and timely.

  56. david blauw:

    how about we are all equal before the law and have the right to pursue our happiness as we judge it based on liberty and the right to our life.

  57. rafflaw,

    I postponed reading your post because I get so upset when I read stories about the Fed and big banks and Wall Street, and corporations and billionaires who avoid paying taxes–or paying as little as possible.

    Here’s a story that got me going this morning:

    Restyled as Real Estate Trusts, Varied Businesses Avoid Taxes
    Published: April 21, 2013

    A small but growing number of American corporations, operating in businesses as diverse as private prisons, billboards and casinos, are making an aggressive move to reduce — or even eliminate — their federal tax bills.

    They are declaring that they are not ordinary corporations at all. Instead, they say, they are something else: special trusts that are typically exempt from paying federal taxes.

    The trust structure has been around for years but, until recently, it was generally used only by funds holding real estate. Now, the likes of the Corrections Corporation of America, which owns and operates 44 prisons and detention centers across the nation, have quietly received permission from the Internal Revenue Service to put on new corporate clothes and, as a result, save many millions on taxes.

    The Corrections Corporation, which is making the switch, expects to save $70 million in 2013. Penn National Gaming, which operates 22 casinos, including the M Resort Spa Casino in Las Vegas, recently won approval to change its tax designation, too.

    Changing from a standard corporation to a real estate investment trust, or REIT — a designation signed into law by President Dwight D. Eisenhower — has suddenly become a hot corporate trend. One Wall Street analyst has characterized the label as a “golden ticket” for corporations.

    “I’ve been in this business for 30 years, and I’ve never seen the interest in REIT conversions as high as it is today,” said Robert O’Brien, the head of the real estate practice at Deloitte & Touche, the big accounting firm.

    At a time when deficits and taxes loom large in Washington, some question whether the new real estate investment trusts deserve their privileged position.

    At a time when deficits and taxes loom large in Washington, some question whether the new real estate investment trusts deserve their privileged position.

    When they were created in 1960, they were meant to be passive investment vehicles, like mutual funds, that buy up a broad portfolio of real estate — whether shopping malls, warehouses, hospitals or even timberland — and derive almost all of their income from those holdings.

    One of the bedrock principles — and the reason for the tax exemption — was that the trusts do not do any business other than owning real estate.

    But bit by bit, especially in recent years, that has changed as the I.R.S., in a number of low-profile decisions, has broadened the definition of real estate, and allowed companies to split off parts of their business that are unrelated to real estate.

    For example, prison companies like the Corrections Corporation and the Geo Group successfully argued that the money they collect from governments for holding prisoners is essentially rent. Companies that operate cellphone towers have said that the towers themselves are real estate.

    The conversions generally do not require the companies to change their underlying business. The chief executive of the Corrections Corporation, Damon T. Hininger, told investors in February that the new structure should help in the company’s aim of “housing more and more population for federal, state and local levels as they grow or deal with overcrowding.”

  58. Elaine:

    We ought to have a flat tax of 15% of a person’s income to cover everything we do on the local, state and federal levels. We would have no exemptions and everyone making over $20,000 per year would pay. All income whether derived through actual work or investment would be taxed at that rate. People and corporations would save billions of dollars a year and accountants could work on making people profitable in a positive way rather than using the tax code. And lobbying would just about disappear once congress quit monkeying around with the tax code.

    If government would stop deficit spending, we would have a thriving economy and more money than we knew what to do with. We ought to operate our country as a business and every citizen ought to own shares. If we lease federal land to an oil company for drilling we ought to all get a small royalty check, if we lease pasture land to farmers ditto, timber from federal lands ditto, coal ditto.

  59. Wall St. Redux: Arcane Names Hiding Big Risk
    Published: April 18, 2013

    The alchemists of Wall Street are at it again.

    The banks that created risky amalgams of mortgages and loans during the boom — the kind that went so wrong during the bust — are busily reviving the same types of investments that many thought were gone for good. Once more, arcane-sounding financial products like collateralized debt obligations are being minted on Wall Street.

    The revival partly reflects the same investor optimism that has lifted the stock market to new heights. With the real estate market and the economy improving, another financial crisis seems a distant prospect. What’s more, at a time when the Federal Reserve has pushed interest rates close to zero, the safest of these new investments offer interest rates almost double that paid by ultrasafe United States Treasury securities, according to RBS Securities, which was involved in such instruments in the past.

    But the revival also underscores how these investments, known as structured financial products, have largely escaped new regulations that were supposed to prevent a repeat of the last financial crisis.

    “All of this seems like a fairly quick round trip,” said Manus Clancy, a managing director at Trepp, a research firm that focuses on commercial real estate. “You are seeing a fair number of sins being forgiven.”

    Banks are turning out some types of structured products as fast or faster than they did before the bottom fell out. So far this year, for instance, banks have issued $33.5 billion in bonds backed by commercial mortgages, slightly more than they did in early 2005, when the real estate market was flying high, according to data from Thomson Reuters.

    Banks have won over investors by taking steps to make this generation of structured products safer than the last one. But with demand for these products on the rise, credit ratings agencies and regulators are warning that the additional protections are already dwindling, allowing some of the old excesses to creep back into the market.

    “The players in the business are generally the same as they were before,” said Tad Philipp, a commercial real estate analyst at Moody’s rating agency. “Because it’s the old players, they know how to push the boundaries.”

  60. Black men are fed up with the way Connecticut Justice is treating us. Can you do a story on that?


  61. Excellent article – informative and it included a couple solutions. Anyone who desires a better understanding of what happened in 2008, should watch this documentary, produced by the Canadian Broadcast Company and Al Jazeera. It shows what happened and why in the US, UK, Iceland, France, Germany, Spain, Dubai, China, etc.

    Title: “Meltdown – Secret History of the Global Financial Collapse”
    Duration: Four 45-minute episodes

  62. The fed rreserve is the reason jfk was killed.. he had the utter gall to return to his christian roots and shut down the fed reserve and reopen our central bank to print the money which had no debt on it… also go read money the 12th and final religion. And american caliphate by R.duane willing

  63. “When I critically scrutinize the economic, political, financial, and social landscape at this point in history, I come to the inescapable conclusion that our country and world are headed into the abyss. This is most certainly a minority viewpoint. The majority of people in this country are oblivious to the disaster that will arrive over the next decade. Some would attribute this willful ignorance to the normalcy bias that infects the psyches of millions of ostrich like iGadget distracted, Facebook addicted, government educated, financially illiterate, mass media manipulated zombies. Normalcy bias refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to inform the populace about the impending disaster. The assumption that is made in the case of the normalcy bias is that since a disaster hasn’t occurred yet, then it will never occur. It also results in the inability of people to cope with the disaster once it occurs. People tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.”


  64. The Federal Reserve is a Central Bank which represents the member banks by a Board comprised of Bank members. It is a bank cartel. It is there to control and manipulate the money supply and the interest rate. It is neither Federal nor a Reserve. It is the crux of the Government/Banking relationship. It manipulates the interest rate to enable the government to borrow cheaply and beyond its means, punishing savers, rewarding debtors. Big banks receive new money printed by the Fed first, before it is released into the public realm when it has most its value, inflation coming to later recipients. The system rewards crimes by both the government and the bank members. Read “The Creature from Jekyll Island.” You will get quite an education on this conspiracy of epic proportion perpetrated upon the American people.

Comments are closed.