An interesting case study on socialism and the effects it has had in Brazil. A lot of the problems that the speaker mentions with Brazil have to do with corruption, and defenders of socialism might say that it was the corruption of the people implementing the system that was the problem rather than inherent problems of socialism itself. However, central to the concept of socialism is centralized government control, and this in itself provides opportunities for corruption to occur.
Author: SGOVAdmin
How the Fed went from lender of last resort to destroyer of American wealth
A new book by an insider exposes the damage the Fed has done to America in so many areas–politically, economically and socially. This excerpt outlines a devastating indictment of the Fed and its policies.
Source: How the Fed went from lender of last resort to destroyer of American wealth
How socialism and crony capitalism merged
An insightful article about the parallels between socialism and monopoly capitalism.
Source: Greetings Slaves | PJ Media
Gold Repatriation in Europe
European nations are moving their gold back home at an increasing rate. This article from Peter Schiff’s website makes some interesting observations about this trend.
Two interesting implications:
- There has been much speculation that the New York Fed doesn’t actually have the gold in their vault—that it has been lent out, sold, or otherwise dispose of. If it is true, as this article claims, that the Fed denied Germany’s request for a physical audit, then this does raise questions.
- From a spiritual perspective, physical gold is a focus of spiritual light and power. The movement of these quantities of gold around the world does represent a shift of global energy. In addition to the gold moving across the Atlantic, gold is also accumulating in the East.
See below for the link to the article.
Germany ramped up its gold repatriation project last year, joining other European nations bringing gold home. The trend underscores the importance of holding physical gold within easy access. Germany’s Bundesbank transferred more than 210 tons of gold back into the […]
Source: Europe Continued Gold Repatriation at Faster Rate in 2015 – Peter Schiff’s Gold News
Do we need the Fed?
This article was written by Ron Paul and originally published on his website. Find the original article here.
Stocks rose Wednesday following the Federal Reserve’s announcement of the first interest rate increase since 2006. However, stocks fell just two days later. One reason the positive reaction to the Fed’s announcement did not last long is that the Fed seems to lack confidence in the economy and is unsure what policies it should adopt in the future.
At her Wednesday press conference, Federal Reserve Chair Janet Yellen acknowledged continuing “cyclical weakness” in the job market. She also suggested that future rate increases are likely to be as small, or even smaller, then Wednesday’s. However, she also expressed concerns over increasing inflation, which suggests the Fed may be open to bigger rate increases.
Many investors and those who rely on interest from savings for a substantial part of their income cheered the increase. However, others expressed concern that even this small rate increase will weaken the already fragile job market.
These critics echo the claims of many economists and economic historians who blame past economic crises, including the Great Depression, on ill-timed money tightening by the Fed. While the Federal Reserve is responsible for our boom-bust economy, recessions and depressions are not caused by tight monetary policy. Instead, the real cause of economic crisis is the loose money policies that precede the Fed’s tightening.
When the Fed floods the market with artificially created money, it lowers the interest rates, which are the price of money. As the price of money, interest rates send signals to businesses and investors regarding the wisdom of making certain types of investments. When the rates are artificially lowered by the Fed instead of naturally lowered by the market, businesses and investors receive distorted signals. The result is over-investment in certain sectors of the economy, such as housing.
This creates the temporary illusion of prosperity. However, since the boom is rooted in the Fed’s manipulation of the interest rates, eventually the bubble will burst and the economy will slide into recession. While the Federal Reserve may tighten the money supply before an economic downturn, the tightening is simply a futile attempt to control the inflation resulting from the Fed’s earlier increases in the money supply.
After the bubble inevitably bursts, the Federal Reserve will inevitability try to revive the economy via new money creation, which starts the whole boom-bust cycle all over again. The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.
Some economists and policy makers claim that the way to stop the Federal Reserve from causing economic chaos is not to end the Fed but to force the Fed to adopt a “rules-based” monetary policy. Adopting rules-based monetary policy may seem like an improvement, but, because it still allows a secretive central bank to manipulate the money supply, it will still result in Fed-created booms and busts.
The only way to restore economic stability and avoid a major economic crisis is to end the Fed, or at least allow Americans to use alterative currencies. Fortunately, more Americans than ever are studying Austrian economics and working to change our monetary system.
Thanks to the efforts of this growing anti-Fed movement, Audit the Fed had twice passed the House of Representatives, and the Senate is scheduled to vote on it on January 12. Auditing the Fed, so the American people can finally learn the full truth about the Fed’s operations, is an important first step in restoring a sound monetary policy. Hopefully, the Senate will take that step and pass Audit the Fed in January.
Von Mises on the gold standard
Ludwig von Mises wrote about the gold standard in 1949 in chapter 17 of his landmark book Human Action: A Treatise on Economics.
The struggle against gold, which is one of the main concerns of all contemporary governments, must not be looked upon as an isolated phenomenon. It is but one item in the gigantic process of destruction that is the mark of our time. People fight the gold standard because they want to substitute national autarky for free trade, war for peace, totalitarian government omnipotence for liberty.
More by von Mises on the gold standard: The Gold Standard | Mises Daily
Austria is repatriating its gold
Austria has repatriated 15 tonnesof its gold reserves as part of a plan to hold half its stock ofthe precious metal within the country’s borders, the AustrianNational Bank (OeNB) said on Friday.
Source: Austria says it has repatriated 15 tonnes of gold from London | Reuters
China and SDRs
This article from Europacific Capital summarizes the significance of the IMF’s recent decision to recognize China’s Renminbi as a reserve currency.
China Takes a Big Step Forward
By: John Browne
Thursday, December 10, 2015
On November 30th the International Monetary Fund (IMF) announced that it would admit China’s Renminbi currency, commonly known as the Yuan, to the select basket of reserve currencies that make up its Special Drawing Rights (SDR’s). Having been stalled by U.S. influence for many years, the long-awaited IMF decision acknowledges the massive transfer of financial power from the old West to the new East. The move heralds an era of potentially great change with global implications for politics, economics and investments.
At the end of WWII, the U.S. and British governments persuaded the participants of the Breton Woods Agreement to accept the U.S. dollar as the world’s international reserve currency and to simultaneously create the World Bank and the IMF. The aim was to establish a stable, global financial system and to encourage the recovery of international trade. In particular, the role of the IMF was to ensure a smooth flow of foreign exchange and to lend money, when needed, to sovereign nations experiencing temporary balance of payments problems.
For much of the postwar years, the structure succeeded. In the first decades following the War, the value of world trade grew so fast that the demand for currency threatened to outstrip the available amounts of gold and U.S. dollars. The IMF responded in 1969 by creating the Strategic Drawing Rights (SDR) as a supplementary international reserve asset for central banks. Each SDR was valued at 0.888671 grams of fine gold equivalent to one U.S. dollar. (Fact Sheet, SDR, IMF 11/30/15)
When the fixed exchange rate system established by Bretton Woods collapsed in the early 1970s and currencies were exchanged at floating rates, gold was dropped from the SDR’s backing and replaced by a combination of the most widely-traded currencies, which became known as the ‘SDR basket’.
Most recently, the basket was comprised of five international reserve currencies, including 41.90 percent U.S. dollars, 37.4 percent euros, 11.3 percent pound sterling and 9.4 percent yen. (Fact Sheet, SDR, IMF 11/30/15)
For much of the past ten years, China has sought to gain international recognition commensurate with her growing economic and political power. China lobbied hard for the inclusion of its Renminbi currency in the prestigious SDR basket. However, the U.S. used its 17 percent vote, along with its political influence among allies, to block China on the grounds that its reserves remained undisclosed and its currency was not freely convertible.
In response, China began to liberalize trading in its currency to allow foreign central banks to trade in its government bonds and to begin disclosing its hidden reserves. This was a major political step for the secretive Communist government and a crucial test of President Xi Jinping’s efforts to transform the Chinese economy.
These moves were sufficient to gain allies for China in the IMF and admittance to the SDR basket. Referring to China’s inclusion, Christine Lagarde, Managing Director of the IMF, has stated, “…It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems…The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which, in turn will support the growth and stability of China and the global economy.”(IMFSurvey Magazine, 12/1/15)
The new SDR basket will comprise 41.73 percent U.S. dollars, 30.93 percent euros, 10.92 percent Renminbi, 8.33 percent yen and 8.09 percent sterling (Fact Sheet, SDR, IMF 11/30/15). The percentages reflect just an initial recognition of the financial power accumulated in the new East.
Furthermore, China’s Renminbi is the first currency of a non-U.S. ally to be admitted to the SDR basket. That alone heralds a new era for monetary affairs. On a parallel track, China has recently succeeded in launching the Asian Infrastructure Investment Bank, a Chinese led multi-billion dollar investment bank that would finance roads, bridges, and other infrastructure projects in the poorer regions of Asia. The bank was widely viewed as a means to counter America’s influence in Asia. And while Washington opposed the project, Beijing managed to line up the support of 57 countries, including such key U.S. allies as Britain, Germany, Australia, and South Korea.
It is no secret that China wishes to become first among equals as a superpower. As part of this strategy, it is not unrealistic to assume that China’s endgame will be to knock the U.S. dollar off its perch as the International Reserve Currency.
If successful, this could prove a devastating blow to the U.S. As the International Reserve Currency, almost all global commodities are traded in dollars. This confers upon the Federal Reserve the unique privileges of setting the stage for major international interest rates to suit U.S. economic cycles and of creating seemingly unlimited amounts of fiat money from thin air. Rather than yielding meekly to U.S. wishes, China can be expected gradually, but inexorably, to challenge the dollar’s Reserve status and today’s omnipotent influence of the Federal Reserve. It could herald also a revival of the role of precious metals in the global monetary system.
Even now, with its potential inclusion in the SDR basket, central banks and corporate treasurers will be considering further currency diversification into the Chinese Renminbi. Most likely, this rebalancing will involve selling of U.S. dollars and euros to buy Renminbi. This will be done both to balance risk and because, as China’s economic might grows and the dollar’s Reserve status is challenged, it is increasingly likely that more commodities will be priced in Renminbi.
It is unlikely that China will wish to upset international trade, and its own export machine, at a time of looming recession. However, over the long term, China may be expected to use its new found financial influence to erode the power of the U.S. dollar. As the world’s largest producer, and rumored already to be the world’s largest holder of gold, China may push progressively for the reintroduction of a gold link for the SDR, and eventually for its Renminbi, to boost international support for its acceptance as an increasingly credible substitute for the dollar as the world’s International Reserve.
Should this happen, perhaps the most important floor supporting the dollar would evaporate, rendering the Federal Reserve unable to continue creating money at will and catapulting U.S. interest rates to levels that potentially could threaten a massive debt and even a currency crisis. Given the unprecedented $18.8 trillion level of U.S. Treasury debt and estimated $100 trillion-plus level of unfunded U.S. Government obligations, according to usdebtclock.org, this would be extremely damaging for the dollar and potentially to the U.S. economy.
The risks of devastation to world trade make it likely that this strategy will take considerable time to become manifest. In the meantime, China may be expected to use the implied threat judiciously to twist the arms of powerful nations.
Despite potentially serious domestic political problems and massive internal debt levels of some $28 trillion, according to McKinsey & Co., China has gained its place in the SDR basket. Only time will tell precisely how China will use this new-found influence. But it could spell the beginning of the end for America’s monetary and even military dominance. Such developments could result in a revival of precious metals in monetary affairs. As debt then would become revalued rather than devalued by inflation, such a move could have considerable economic and political implications for national and private debtors in the U.S., Europe and the entire world.
http://www.europac.com/commentaries/china_takes_big_step_forward
Priceless: How The Federal Reserve Bought The Economics Profession
Interesting article about how the Federal Reserve dominates the academic field of economics.
The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
Source: Priceless: How The Federal Reserve Bought The Economics Profession
Alan Greenspan on “Gold and Economic Freedom”
In 1966, long before he became chairman of the U.S. Federal Reserve, Alan Greenspan wrote an article titled “Gold and Economic Freedom.” Here are a couple of excerpts:
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other….
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.
Greenspan also includes an analysis of the causes of the Great Depression. Mainstream economists blame the gold standard, but Greenspan demonstrates that it was actually by attempts of the Federal Reserve to manipulate the economy (as Ben Bernanke admitted in 2002).
Here is the whole article: Gold and Economic Freedom – Alan Greenspan