World Domination by the Fed through deflation

By Glen Wallace

With regard to the future US fiscal picture I foresee a deflationary spiral as more likely than an inflationary or hyperinflationary scenario.  My hypothesis is that the private central banks are leaving little to chance and while the reckless over-spending  may appear as fiscal bumbling and incompetence by congress and various offices of the president, it is in fact carefully planned by the central banks.  Then one must ask oneself what benefits the Fed more, a deflationary or inflationary scenario.  Currently after all the quantitative easing, the Fed is now holding a tremendous amount of US public debt that for the most part is earning very low interest rates.  Under inflationary conditions, the Fed would be facing a situation where they are holding all of this debt that would now be worth much less but without the benefit of receiving a higher rate of return that new treasuries would have to offer in order to entice buyers.  Additionally, under a hyperinflationary condition, by its very nature there is a lack of control of the financial conditions, thereby rendering central banks impotent.  And looking at the Fed and other central banks, their member banks already are completely free from material want and therefore their primary area for potential growth is that in terms of power.  While the central banks already yield tremendous power, it is not absolute.  And a deflationary picture could yield them the opportunity for what could be the closest thing possible to having absolute power over the entire planet.  They could achieve such power through taking receivership of the entire publicly owned system both materially and organizationally in exchange for forgiveness of debt owned.  In an hyperinflationary scenario, however, the public debt could be just inflated away and the Fed would no longer have anything over the people to control them with.

The beginning of a deflationary crisis may ironically begin with inflation.  Were the economy to grow enough to lead to inflation, the Fed, given their mandate to control inflation, may be forced to significantly raise the federal funds rate.  Any rise in interest would have to be born by the the US deficit as it issues new treasuries.  That, coupled with the Fed no longer having reason to engage in quantitative easing, would mean that now all the bond sales would have to go to private purchasers having no assurance that the Fed would turn around and buy those treasuries.  If there where a failure to find sufficient purchasers of those treasuries then the US government would lose the funds it would need to pay for the programs that the congress agreed to pay for.  Given how dependent the economy has become on government spending, were that spending unexpectedly to come to a halt due to a treasury auction failure then the economy could suddenly dip into a recession.  This could all come at a time when the baby boomers would be beginning to tap into the  entitlements that the government had been committed to providing but even before any auction failure, had been not funded anywhere near sufficiently by revenue.   A chain reaction could ensue whereby the retirees would no longer be receiving the checks that they need to pay businesses that have now become dependent on the senior population having a dependable and reliable source of income from the government to pay their bills.  Those businesses that had depended on the seniors could now become insolvent which in turn could jeopardize their vendors that were not catering directly to the seniors but still provided goods and services to businesses that did.  Negative growth could ensue that would quickly become apparent to any observer that the US government would have great difficulty in generating sufficient tax revenue in the future to pay its future obligations.  All the past warnings about future unfunded liabilities would no longer seem like some far away fiction, but would now be very apparent and real.  US Treasuries would have to be issued with very high interest rates in the hope of enticing potential buyers.  But of course the problem there is that unless the fed did try to print our way out of the problem,  the higher rates would make paying off the debt all the more difficult.  This is the point where the Fed would have the economy at its mercy.

Also, under deflation, the group that traditionally has been some of the biggest critics of private central banks, the gold bugs, would be stunned into silence as the value of their gold would suddenly plummet in value along with all the other commodities that would also deflate in value.  Do you really think the all powerful central bankers would allow a hyperinflationary situation to occur that would give their harshest critics more power, confidence and wealth?  What has been going on instead, I
believe is leading the gold bugs and other central bank critics down the primrose path by doing everything to make them believe that the central banks will do everything to prevent deflation and in their bumbling incompetence will instead allow hyperinflation to take hold.  To keep the ruse alive the Fed has installed Bernanke, someone who has studied the great depression and has committed himself to do everything he can to prevent the deflationary spiral that lead to that economic crisis.  But it will turn out that Bernanke is merely an actor cleverly placed to throw everyone off track in an effort to keep prying eyes off the Feds deflationary plot.

There will come a time I believe during a market crash when it will become apparent that servicing the public debt will no longer be possible by the traditional means.  When it also becomes apparent that Bernanke and company will not simply fire up the printing presses to make it all go away, then we will see a really big crisis that will hit every household in the country as the whole economic infrastructure and the system of commerce that goes along with it that we have all become dependent on for our daily needs will grind to a near complete halt.  At that point the public will be clamoring for a rescuer, anyone, to save them from their plight.  And along comes the Fed to save the people from their plight.  The masses will be completely ignorant of the fact that the private central banks planned for this all along, but the mass media, being party to the crime, will do nothing to dispel that ignorance.  Instead newscasters will do just the opposite and urge everyone to put themselves at the mercy of the Fed, and give everything they ask for, including all of our public infrastructure, public lands and governments.  Wanting to do anything to alleviate the suffering the masses will gladly comply and the plan for world domination by the banksters will be complete.

End the Fed but Keep the Fiat

By Glen Wallace

We need to end the Fed, but not go back to a gold or silver standard.  Sometimes I think there is a conspiracy within a conspiracy whereby the powers that be deliberately put forth a gold standard as the only alternative currency if the Fed was abolished.

The general conspiracy is the creation and existence of the private central bank 'The Fed' and all the other private central banks around the world and their issuance of debt based currency.

The conspiracy within that general conspiracy is where the private central bank conspiracy is exposed, but only in a manner where the only alternative given is one that allows the private bankers, that own a majority of the worlds gold, even more power with a gold backed currency. The banksters would then be gaining increased power through the ability they would then have to manipulate the money supply to their advantage through the manipulation of their own huge stockpiles of gold. The plebs are then effectively being led down a primrose path to a destination not of freedom from the banksters, but just the opposite, further enslavement to the private banking system.

Bill Still, in his documentary 'The Secret of Oz' (that I've embedded at the end of this post) shows in historical instances of where gold-backed money was issued, how the masses were oppressed by bankers who withheld their gold, leading to an unnecessary scarcity of money, which in turn lead to a deflationary depression among the masses, but was advantageous to the wealthy bankers insofar as they could then buy up properties of the downtrodden masses for pennies on the dollar.

But Mr Still also showed how when president Lincoln issued, via the US Treasury, the Lincoln Greenbacks as debt free fiat money, there was widespread prosperity as a result.  Backing money with gold limits the growth of the economy because the supply of gold itself is limited.  The Lincoln Greenback on the other hand effectively amounted to a barter equivalency which grew in supply as the growth in goods and services also grew.

And as occurred with the Lincoln Greenback, when a money supply is not limited by the supply and suppliers of gold nor is arbitrarily limited according to the vested interests of the private central bankers, a bountiful burst in organic economic growth seems to occur once the unnecessary limits to the money supply are removed. It is as though, within all of us, is a natural eagerness and curiosity to create and explore in ways that, if harnessed, will result in a verdant economy flourishing in an environment of widespread entrepreneurship.  But we are tied down and shackled by the bankers, prevented from exploring our human potential, while at the same time we are chastised for the very indebtedness that is the shackles the bankers put on us that keeps us from actualizing our potential.        

So there still would be a backing of sorts to a fiat currency that was issued by the US Treasury insofar as the dollars could be exchanged for a given market-determined amount, of any given goods or services.  Just so long as the fiat dollars are issued in a controlled manner that varies directly with the supply of goods and services in existence, that the dollars are exchanged for, hyperinflation will not occur.  Hyperinflation would not occur because the money printers would be limited in the amount of money they could print to the amount of real goods and services in the economy and not the amount of paper and ink available to print that money.

While some may argue that we could not count on our government to issue fiat currency in a controlled manner, I would counter that the risk would be just as great for a gold backed currency to be issued in an uncontrolled manner by an irresponsible government.  It is just as easy to print a dollar that says it's backed by gold as one that does not.  After all, isn't that why I so often read the goldbugs urging people to take physical delivery of their gold and not trust paper gold certificates?  If the issuers of gold backed certificates cannot be trusted, why would they necessarily expect an improvement from an institution that the goldbugs seem to generally mistrust -- the government.

I think that if there is sufficient transparency along with adequate democratic measurement, we can at least sufficiently count on the government to issue our currency in a controlled manner. I certainly think that a transparent democratically controlled government is many times more trustworthy than the private banking system that is currently controlling our central bank, the Federal Reserve.  And for the reasons I've explained, if the government is going to be issuing money, it should be in the form of debt free fiat currency.

If you go to the Federal Reserves website you can see where they tell the story of the Continental.  The Continental is the name of one of Americas earliest currencies.  In what seems like an ironic case of the pot calling the kettle black, the Feds article argues that the continental became worthless because it is a fiat currency, not backed by anything, and as a result became worthless due to rampant printing.  What the article ignores is that Federal Reserve Notes, the dollar, is also a form of fiat currency insofar as it is not backed by anything material either. Additionally the only reason that the Continental fiat currency became worthless, due to hyperinflation, was because the British, in a military act against the American Colonies, printed mass quantities of counterfeit Continental notes in a successful attempt to undermine the value of the money used by the Colonies.  But there is no reason to believe that the British would have been any less successful had the Continental been printed with a statement that said it was backed by gold or silver.

All things being equal, history and reason shows that the best chance for economic success as a nation is with a government treasury being the sole issuer of a debt free fiat currency, issued in a controlled manner.