Unknown to us also is how much government debt the Fed is directly
monetizing. The treaurie international commutment report has indicated
hugh treasury buying by Carribeabn banks. This can't all be drug
money, and some Such as richard russel think it is the Fed doing
Bernankes helicopter money as promised through the Carribeabn Banks.
Vonstant inflation also dilutes the 7 trillion dollar existing
ddebt.The liquidity that flows out from New york dilutes every pre
existing dollar. It is Fraud weit large. In it's insideous effects it
is worde than a direct tax because it is hidden, and therfore hides
it's face. The public suffers and knows not why. The whole world pays,
not just Americans. The poor Chinese pay as thier banks prit yuan to
buy treasuries importing US infaltion onto the backs of the worlds
poorest. If you figure 6 percent inflation this year, the depreciation
of the debt alone is worth 400 billion dollars. tremendous structural
moral andequity problems are also created. Inflation is a very
regressive tac. The rich, with access to bank credit and mortgages
often root for inflation. The elderly savers eat cat food so as not to
dive into principle. The fractional reserve system was perfected by
the english in the chatering of the bank of england for the ecplicit
purpose of disguising the cost of war with France. Viet Nam was paid
for with the misery of the inflation of the seventies.. Atlleast taces
are there to dee if you care to look.
I got very personal about this issue because my mon had her life
savings tied up in a Marland bank that went bust in the early
eighties. The State renigged on it's insurance, and paid her back
after a eight year wait with no interest. The principles, includig a
close relative if favored Marland Denate cindidate Ben Cardin, went to
jail. The lesson is every single Bank in the US is bankrupt. If called
on it's obligations could not be met, and the reserve requirements
have dwindled to near zero, with 40 some billion dollars of resrves on
deposit for the whole stinking system.How much debt does the Fed hold
on it's books. How much does it get other cbs to hold. and what about
the repo pool. It's way too late , but if you don't think this is a
hugh problemjust cruise around the St Luis ded 's dite for a while and
look at monetary growth.j Then think about the hollowed out cities and
town's all accross america where manufacturing used to happen. Think
about all the desperate elderly. think of all the blue collar
sonsrunning meth cuz ther havn't been any manufacturing jobs in
ageneration due to the dollars manipulated cb sterength. Think of all
the people you know gambling in vegas, in stocks in fx. Who saves. No
one.
Richard:
All very good points.
-Derek
>
> >>
> Actually, seigniorage income from the Federal Reserve remitted to
the US
> Treasury in 2004 was only $18 billion. Total tax receipts of the
federeal
> government were $1,880 billion. This includes personal and
corporate income
> tax, as well as social security receipts and excise tax. The
confiscation of
> our wealth by taxation dwarfs that due to the government printing
money.
> The taxation burden is by far the more important dragon to slay.
> <<
> Derek,
> I think that your numbers, while true, are misleading in that they
> understate the total effect the Fed has.
> Seigniorage, the literal "printing of money" (and related
windfalls) is
> not the only way the Fed participates in raising money for the
government
> machine. In 2004 alone, the Federal debt was up by roughly $596
billion.
> Though not as large as the $1880 billion raised in Federal taxes
that you
> mention, it is significant, nonetheless.
> Without sound money, decreasing taxes without simultaneously
decreasing
> spending will just cause the sources of money to shift, as is
happening now.
> Tax revenues have fallen under Bush, yet the government is larger
than ever.
> Somehow, we are paying for an expensive war. All those resources
are coming
> out of today's economy. The People are made to pay for all the
resources
> consumed by the government, one way or another, sooner or later
(usually
> sooner, as resources on a macroeconomic scale, like labor, are
hard to
> "borrow" from the future).
> Sound money would shackle the government more effectively and more
> permanently than lower taxes.
> Don't misunderstand me, I am also for lower taxes.
> Plus, don't forget, the real estate bubble caused by easy money
directly
> creates a huge tax windfall for the local governments, and to a
lesser
> degree also the Feds. So while we trade our same old houses back
and forth
> at higher and higher prices, our property taxes are raised and we
are hit
> with capital gains taxes. But, is anything really produced? Are
our houses
> better than before? More likely, the financial services industry
(e.g.,
> realtors, bankers) is just getting a windfall at the home-trader's
expense -
> i.e., friction losses, not real gains.
> And that is before the real pain becomes felt. The bubble
bursting. The
> retirees on fixed incomes getting abnormally low interest to live
on while
> prices skyrocket. The halving and halving again of your retirement
nest-egg.
>
> Or, worse.
> Rich
> ------------------------------
> Some food for thought...
> Federal spending has increased 267 percent since 1960, eight
times faster
> than median income, which has risen 34 percent.
> Mandatory spending (excluding net interest) has increased by $1.086
> trillion since 1962, or 650 percent.
> In every year since 1993 Federal spending has increased faster than
> inflation; with dramatic increases in the last three years
(2002-2004:
> +6.2%, +5.2%, +5.7% *above inflation*). [Wow! That's over *18%
real growth
> * in government spending in three measly years. Good thing we
voted those
> small-government Republicans into office, or think what might have
> happened!]
> Coincidentally, the M3 chart Phil brought to our attention shows
> compounded annual growth of about 6.5% per year, enough to cover the
> government growth in the last paragraph. You can bet that the
$2400 Billion
> dollars that showed up since the start of 2001 didn't all get
spread around
> to everyone's uniform advantage. "Bigger government,"
> "dislocation/misallocation of resources" and "real-estate bubble"
are the
> words that come to my mind right away.
> Total Credit Market Debt (non-financial and financial) expanded
at a 6.9%pace to $37.31 Trillion (306% of GDP). [A record. In 1929 the
peak was 260%.
> Don't make the mistake of thinking the Fed wasn't involved... both
times.]
>
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