I haven't made any postings in a while. I've been busy trying to understand what has gone wrong with the United States. I don't mean just in recent times but for many years. In the last few weeks, I've read again the Constitution, the Bill of Rights and all the other Amendments and I'm about 25% through reading of the Federalist Papers. My intention was to reacquaint myself with the original intent of our founding fathers. Besides all these documents that have to do with the Constitution, I've also read the history of the Federal Reserve System.
Politicians have reaped havoc with the original intent of the founding fathers, for a federal government of defined and limited powers, from day one. Politicians, in general, have mostly put the interest of their own personal power above the interest of the nation. This is not news to anybody. But 1913 seems to have been the year that the original intent of the Constitution was completely abandoned. This is the year that the16th Amendment was ratified establishing the right of the Federal government to tax all forms of income , the 17th Amendment was also ratified this year which provided for the election of Senators by popular vote rather than being appointed by the various state legislatures, and this is the year that Congress passed the law establishing the Federal Reserve System. I've no doubt that the Founding Fathers would have found these changes appalling. These three changes set the stage for the ever increasing power of the central government and the subsequent decline of the power of the states.
Income Taxes
Laws giving the federal government the power to tax income ( individual and corporate ) were passed more than once prior to 1913 but were struck down by the Supreme Court as being unconstitutional. The progressives, i.e., socialist of the time, didn't give up until they were finally able to get their way when 36 states ratified the 16th Amendment. This is what the conservatives of the day had to say: " ...a first step toward complete confiscation of private property....to oppress the middle classes and increase the lower class who would have to depend on government for their survival.". Those in favor of bigger government now had the tool to forever fund their programs. Programs ostensibly to benefit those who can't take care of themselves; but what they really want is to make their constituents dependent on them for their well being and thereby guaranteeing their continued reelection and thereby increasing their personal power. When the conservatives come out against these programs that waste money and resources and in the long run make for a weaker country, they are pilloried as cold and heartless and greedy. Those on the left loved to tell the public that under conservative administrations, the rich get richer and the poor get poorer and they love to point out that the majority of the wealth in the country is in the hands of a small percentage of the population. These people better hope they never achieve their goal of becoming a socialist country because then they will see very clearly how few will be the people that control all of the wealth. They will also see how little incentive there is for people to work and be productive. Conservatives, on the other hand, have just as much empathy for the poor or more than do the socialist. The difference is that conservatives know that progress comes from jobs and jobs come from investment and investment comes from wealth. Taxes and the threat of more taxes are disincentive to investment and more and more social programs are a disincentive for people to give their maximum effort to care for themselves. Remember, government can't give anything to their citizens without first taking it from their citizens. Someone by the name of Harriet Rubin is credited for saying: " Power is about what you control....Freedom is about what you unleash.".
Election of Senators
The 17th Amendment provides for the election Senators by popular vote of each states residents rather than being appointed by the legislatures of each state. That's not a bad thing, right? We are after all a democracy, right? No, we are not a democracy we are a republic and I'll leave it to you to investigate the difference between the two, if you don't already know. What is important here is that the founding fathers had very good reasons for preferring that Senators would be appointed by their respective states rather than being elected.
Bare in mind that these men were representatives of the original thirteen states and were united in the goal to create a federal government that would unite them into one nation; but in doing so they wanted only to give such powers to this federal government to do, for the good of all states, what they could not reasonably do for themselves and nothing more. One of the ways that they intended to keep the federal government from trying to grab more and more power was to be sure that the states themselves were represented in this central government. The purpose for having two houses in the legislature was for the Representatives would represent the people and the Senators would represent the states, i.e., state's rights. Effectively the Senators were to be employees of their respective states and subject to recall if their state was not in agreement with their actions. Not a perfect system but what system is. I dare say that if were not for the 17th Amendment, we probably would not have any of these unfunded mandates from the Federal government that are helping so many states to go bankrupt.
Federal Reserve SystemNow we come to the Federal Reserve System. Creating the Federal Reserve System was probably the most crippling blow of all. I wonder how many Americans realize that the Federal Reserve is not an agency of the Federal government but is instead a private corporation who's shareholders are the principle investment banks of the world, such as, Rothschild's, Lazard Brothers, Warburg Bank, Chase Manhattan,and Goldman Sachs and many some what lesser banks. That's right. The worlds biggest banks own the U.S. monetary system and as best as I can determine, they control the monetary systems of Europe too. It seems insane but is true. The government does get to appoint a Board of governors and the chairman of the board. But guess where they come from . Yup. They invariably come from the investment banking sector. The Feds operation are secret and they are not responsible to anyone; not to the Congress nor to the President. The government is not even allowed to audit them. They control fiscal policy and they have the power to create money out of thin air, and more; they need only ask and the Treasury will print what ever number of dollars they ask for, free. They in turn can use these dollars to purchase government bonds from the Treasury, which must be booked as a debt. The government now owes this money with interest to the Fed even though the Fed did nothing to earn that money in the first place. Beautiful! The Fed determines the interest rate that banks banks must pay for over night loans and, there by, the interest rate that governments, industry and individuals must pay for borrowed funds. In general, if the the Fed perceives the economy to be sluggish, they lower interest rates and vice verse if they perceive the economy to be growing to fast. The idea behind the Fed or any other central bank is to try to maintain a stable currency. I guess that's why the dollar has lost 95% of its value since the Fed came into existence.
Jeff Fisher is an ex-hedge fund manager that sometimes writes articles for LewRockwell.Com. A while back he wrote an article titled " The Dollars Third and Final Act". Fisher asserts that the U.S. is currently submerged in its third credit crisis since the creation of the Federal Reserve System. The first crisis resulted in the Great Depression. The second resulted in the stagflation of the 1970s. The third crisis is what we are currently living through. According to Fisher " All three episodes were the inevitable result of the prior credit inflation orchestrated by the Federal Reserve System." I highly recommend that you read the entire article. I t is very well written. Fisher, however, is not very optimistic for the future. I include here his summary.
" In summary, for the U.S. economy to improve, many unlikely things must occur.
Saving must rise, productive capital must be accumulated, government must shrink to a fraction of its present size in real terms, and the Fed must stabilize the dollar.
Centuries ago, men realized that for there to be peace, Church and State had to be separated.
In order for civilization to survive going forward, the Market and State must be separated.
The role of government in the economy must be eliminated.
The age of central banks and central planning must end.
I think you can see why Mr. Fisher is not optimistic.
The Feds discount rate is effective zero at the present time. The only arrow left in their quiver to continue this credit inflation is to start the printing presses and create more greenbacks that will be necessary to fund the governments apatite for deficit spending. Things are out of control. David Stockton, former Reagan Budget Director points out: " It takes $25 in Federal deficit to produce $1 of GDP.". Not exactly a formula for success. One of the popular phrases of the moment is " the Fed is pushing on a string". Well, Obama and Company are also pushing an a string.
This brings me to a dilemma that I've been wrestling with. I can understand why politicians behave like idiots. What I can't understand is how the Fed can behave like an idiot. The people who run the Fed and their owners are extremely astute money people. Yet it seems the the Fed is and always has acted in a manner that would appear to be against the interest of their owners let alone the Nation. I don't see the logic. I mean these investment bankers, one would believe, are the capitalist of all capitalist. So why do they appear to be acting against their own interest? It doesn't make sense unless they have some ulterior motive. There are many who say that these investment bankers want to collapse the major economies of the world so that they can institute a system of one currency for the world and eventually one government for the world. Sounds like the basis for a Hollywood film, but who knows. Like I said, their actions seem to defy logic.
Enough said.
Sense or nonsense?