You therefore might have expected Mr Fisher to toe the FOMC ‘party’ line on all things to do with the $14 trillion dollar debt of the US government and the pronouncements of Federal Reserve Chairman of the Board, Ben Bernanke. However, the bubbled pressures within the federal reserve system are finally beginning to generate some deep visible cracks upon the marbled public edifice of the Marriner S. Eccles Federal Reserve Board building.
Take a look at these fascinating quotes from Mr Fisher, in a speech he gave on January the 12th. The first sentence alone is remarkable enough:
Today, I will speak to the truth as I see it. I speak only for myself and my colleagues at the Dallas Fed and not for anybody else on the FOMC or elsewhere in the System. I suspect this will immediately become clear.
It does…
The Federal Reserve has held rates to nil. We have expanded our balance sheet to unprecedented levels. After much debate―which included strong concern expressed by one member with a formal vote and others, like me, who did not have voting rights in 2010―the FOMC collectively decided in November to temporarily undertake a program to purchase U.S. Treasuries that, when added to previous policy initiatives, roughly means we are purchasing the equivalent of all newly issued Treasury debt through June.
By this action, we have run the risk of being viewed as an accomplice to Congress’ fiscal nonfeasance. To avoid that perception, we must vigilantly protect the integrity of our delicate franchise. There are limits to what we can do on the monetary front to provide the bridge financing to fiscal sanity.
There’s little Kreminology required to translate this uncoded 32 pound ball across the bows of USS Bernanke.
And there’s more…
The entire FOMC knows the history and the ruinous fate that is meted out to countries whose central banks take to regularly monetizing government debt. Barring some unexpected shock to the economy or financial system, I think we have reached our limit.
Perhaps we should invite Mr Fisher to become our central banking analyst here at the Cobden Centre?
The [recent US] election tapped into a foreboding sense that the cost of that comfort now exceeds its benefits, as manifest in looming megadeficits, deep if not unfathomable unfunded liabilities, egregious abuse of fiscal powers symbolized by earmarks and other methods used by politicians to grease the skids of their reelection.
Tapping into that foreboding in the recent election was the easy part. Talk of reform is cheap. Enacting reform will be painful.
Without dwelling too long upon earmarks, the paragraphs above could almost have been written by Congressman Ron Paul.
To make things even more interesting, the next section could almost have been written by President Andrew Jackson, the heroic destroyer of the Second Bank of the United States (a central banking predecessor to the Federal Reserve).
We shall see if the new Congress will prove worthy of the power the American people have “loaned” them, and, together with the president, actually draw the spirits of fiscal reform and sanity from the “vasty deep” to at long last implement meaningful fiscal and regulatory policy that incentivizes private-sector job creation here at home while arresting the hemorrhaging of our Treasury. If they do, then more Americans will find work and be better off, better paid and freer to make their own decisions about the economy.
If they don’t, then woe to our children, their children and the American Dream.
This potentially watershed speech is worth reading in its entirety.
Lew Rockwell has announced an exciting opportunity in the US:
Ron Paul has been named chairman of the Domestic Monetary Policy subcommittee, and will have one committee staffer. Ron and his chief of staff Jeff Deist are looking for a smart, young economist, “thoroughly Austrian, and preferably with an advanced degree. The candidate needs strong knowledge of the Fed and monetary policy generally, and must be an effective writer. He or she will be responsible for organizing hearings; summarizing data and Fed actions for Dr. Paul; writing statements; dealing with Financial Services committee staff; and various other tasks.”
..
This can be a life-changing experience for the right young person. Imagine an 18th century classified: “Wanted, Economist-Assistant to Thomas Jefferson.” This is the equivalent, although Jefferson was not as principled in office as Ron Paul.
Let us hope that British monetary policy one day finds itself in the hands of a “thoroughly Austrian” economist.
Before Alan Greenspan stood down from his chairmanship of the Federal Reserve, Ron Paul got him to sign a copy of Greenspan’s 1966 essay, “Gold and Economic Freedom” — originally written for the Objectivist newsletter — an essay which you can still find lurking within the Ayn Rand book, “Capitalism: The Unknown Ideal“.
Here’s a quote to tempt you to read the whole thing, which is almost prescient, given that today gold, silver, and copper all hit record highs:
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
The most amazing thing about this astounding essay, is that when Dr Paul got Rand’s “Undertaker” to autograph it, Greenspan said he still stood by every word. You can watch Dr Paul talk about this particular strange encounter in the very watchable Mises Media video below, at 32:00 minutes on the clock:
The lesson is thus clear. If you want to prevent Ben Bernanke and other central bank governors from stealing your life’s wealth, to benefit their masters in government, then do what central banks do and what Alan Greenspan implied you do; protect yourself with physical gold. And keep it out of the banking system, to prevent either outright Roosevelt-style confiscation or other dubious shenanigans.
Not many people are aware that on the 5th of April 1933, the US citizens were instructed to deliver up all their gold (money at the time) to the Federal Reserve and get less in purchasing power back. This confiscation of wealth would make even Emperor Nero or Henry VIII blush with its boldness.
Congressman Ron Paul has always campaigned for the Fed to open its books and have this gold counted as there are rumours that all of it is not there. An open audit would settle the matter. The Fed refuses. You can draw your own conclusions from this.
Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold.
Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it’s “a possibility” that there might not actually be any gold in the vaults of Fort Knox or the New York Federal Reserve bank.
The libertarian lawmaker told Kitco News, a website tracking news about precious metals, that an audit was necessary to determine how much the U.S. maintains in gold reserves in case the government were to use gold to back the dollar.
“If there was no question about the gold being there, you think they would be anxious to prove gold is there,” he said.
“Our Federal Reserve admits to nothing, and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?
“I think it is a possibility,” Paul said when asked if there was truth to rumors that there was actually no gold at Ft. Knox or the New York Fed.
Paul had been one of the Republicans to spearhead a broader audit of the Fed as part of the Wall Street reform bill passed through Congress this year. The provision, which was weakened somewhat in the final version, found Paul joining with a number of Democrats to require the Fed to open its books and outline its assets and liabilities.
The gold reserves, which Paul’s new bill would audit, are generally seen as a guarantee on a nation’s currency, but the U.S. moved the dollar away from being tied to the price of gold in 1972.
Paul stopped short of calling for the reinstitution of the gold standard and instead called for the government to allow the use of hard currency — gold and silver tender — alongside the use of the dollar.
“If people get tired of using the paper standard they can deal in gold or silver,” he said.
Desperate times lead to desperate measures and on a side note, I wonder what is being planned now. I remember being told at the start of my business career by a wise old multi millionaire, “remember, when the banks or the government need money, they can only come after you if you have money,” i.e. they can’t confiscate what you do not have.
The main meat of the latest Peter Schiff video blog discusses the testimony this week of Ben Bernanke in his semi-annual visit to the US Congress. Mr Bernanke was challenged quite strongly by Congressman Ron Paul, who in effect asked the Federal Reserve chief to state how bad things would have to get before he realised his Keynesian stimulus policies of monetary expansion were wrong. Alas, Mr Bernanke managed to escape answering the question because Mr Paul ran out of time (you can see a YouTube of this questioning here).
Before discussing the Bernanke testimony, Mr Schiff also debates the continuing decline of the Dollar against other major world currencies, including the Euro and the Pound. He notes that there was better financial news this week coming out of Europe and the UK, and he thinks this is not entirely unrelated to the government spending cutback austerity programmes recently announced by European governments, as opposed to the continuing belief by the US government that Keynesian stimulus spending is the only way to revive the American economy.
[Whether the UK government is actually bold enough to implement its proposed austerity programme and face down all of the emotive calls from government agencies to lessen their pain, is something we will need to wait and see.]
Commenting that the earlier US stress tests on banks were like letting gerbils run around on a suspension bridge and then declaring that the bridge was safe, Mr Schiff wants to reserve judgement on the efficacy of the European bank stress tests, but thinks that the Dollar index will need to drop to 70 before concerns will be raised about the continuing weakness of the Dollar.
Schiff follows these discussions by talking about the wisdom of letting General Motors use taxpayers’ money to buy up car loans companies and the possible ulterior motives of the US government in investigating the admittedly poor practices of some US gold dealers.
In reference to Sean Corrigan’s latest piece on the problems that Ben Bernanke is facing, Cobden Centre readers may want to refresh their background to this story by watching a nicely produced YouTube video first broadcast seven months ago, featuring Ron Paul, Peter Schiff, and Marc Faber:
As previously mentioned on this blog, TCC’s Chairman Toby Baxendale and I traveled to Jeykell Island in the US the weekend before last to attend a major conference hosted by the good people of the Ludwig von Mises Institute. Headed ‘The Birth and Death of the Fed’ not only was the event very impressive in its own right – very well organised with several hundred people in attendance – but there were lots of excellent speakers exploring money and banking from an Austrian school perspective. You can listen to the main highlights here through these links:
Robert P. Murphy – Only the Austrians can Can Explain Depressions
For me, it was not only a delight to listen to and meet Lew Rockwell but it was also a particular pleasure to meet and talk with Congressman Ron Paul. A most intelligent and moral person, I found him to be every bit the gentleman I had expected.
Tomorrow, Toby and I are off to the US for a conference. While I am not looking forward to the early start and the particularly long flight, I am looking forward to meeting Lew Rockwell of the Ludwig Von Mises Institute and Congressman Ron Paul.
I am also looking forward to meeting lots of other enthusiasts for the Austrian School of Economics and exchanging views and opinions with them.
Indeed, it is concerning these aspects of the trip, that I am reminded of what Churchill once said: “If you love your job, you will never work again!”
