The dollar is back by the United States government, while gold isn’t backed by anything, and therefore it is a more comfortable investment, according to this very pretty Canadian reporter:
Actually, the US dollar is backed by the balance sheet of the Federal Reserve bank. See this post for another explanation of international monetary policy.
One of my kitties decided to stay out all night, and consequently I had trouble sleeping and found myself wide awake in the wee hours of the AM. So I turned to Market Watch and Bloomberg News to see the latest. First I turn to John Markman of Market Watch who claims that Timothy (I-forgot-that-I-had-to-pay-taxes) Geitner has cooked up a scheme that will save Europe (Geithner’s plus-sized euro bailout is stealth QE3). :
The plan, cooked up by U.S. Treasury Secretary Tim Geithner, is to persuade European leaders to vastly expand the size of the emergency bailout fund known as the EFSF, or European Financial Stability Facility. His proposal, and I’m not making this up, would use leverage — i.e., borrowing — to increase the size of the already borrowed money in the fund by up to 10x. … snip
This is a little hard to believe, but it’s the truth. The funds from euro-zone countries in the EFSF have already been borrowed. And now the plan espoused by Geithner is to use that money as collateral to borrow as much as ten times more. The guy does not get enough credit for his evil genius.
Where is Geitner going to get this money? Apparently, if I understand correctly, from the Federal Reserve Bank. So Bloomberg says (Euro Crisis Makes Fed Lender of Only Resort),
The ECB said Sept. 15 it will coordinate with the Fed and other central banks to provide three-month dollar loans to banks to ensure they have enough of the currency through the end of the year. The Fed bears no foreign-exchange or credit risk on the swap lines because the Frankfurt-based ECB is its counterparty.
So let’s get this straight: The Federal Reserve will lend money to the Europeans. This money will come from where? It will become a new line on Fed balance sheet and will thus increase the adjusted money base. This has become known as quantitative easing. The money won’t be printed, and so nobody will see wheel barrows cash in the market places of Europe as they did in the Weimar Republic. No, it will just be line in a balance book, electronically created from nothing at all (see Niall Ferguson, The Ascent of Money, 30-31, quoted in this post).
Now the best explanation of global monetary policy is in Corner Gas, season 3, episode 1, which is actually an allegory of banking in our times: Oscar has made some bad bets in his stock picking game with Hank, who is beating him hands down. They each started with $10,000 of fictional money, but Oscar’s picks have gone South. But he’s seen the news about Ark Research’s insider trading, and he believes that knowledge will help him defeat Hank. He decides to bet big on Ark Research, but he is in desperate need of liquidity. So Oscar (a.k.a., the European banks) goes to his son Brent (i.e., the Federal Reserve Bank) and asks for $10,000 from his fictional money tree. Brent says, Why can’t you do it yourself? Did a fictional hooligan steal your make-believe ladder? No, Oscar says, that would be against the rules. Without rules nothing makes sense, he claims. With rules, this makes no sense, Brent responds. The monetary policy part of the clip begins at 0:39. (@7:08 Oscar explains that he lost all the money and he can’t pay Brent back, and that is exactly how the loan to Europe is gonna go down).
Craig Carter has written an interesting post entitled, “Secular Politics Infiltrating the Church: Hell’s Scheme to Bring Down Evangelicalism.” There I’ve entered into a rather lengthy discussion with a self-proclaimed progressive who apparently believes himself to be Christian. I reproduce here my comments and his responses. I think it demonstrates that while progressives claim to care about people, they really despise people and are more concerned about re-engineering society to make it more equal–who cares who dies or suffers along the way, just so long as the rich can no longer parasitically leech off of others. I responded first to his manner in which he responds to Craig Carter and Gordon (another correspondent), while mercilessly libelling the Tea Party. Later, I explained how progressive, with their need to enlarge the state, had forced me to renounce my US citizenship, resulting in my suffering the loss of my birth right. The reason that I insist on telling my story about how I’ve suffered is that I still can. Those whom the progressives around the world have murdered can no longer tell their story.
Peter W. Dunn said…
That’s amazing Steve. You praise Craig and Gordon for civil tone of their responses to you, and then insult the Tea Party, libelling them as liars. Wow. An entire movement of people who want smaller government libelled as liars. You called Ron Paul demonic.
I think you should read my blog Steve: The Righteous Investor. You could start with this: Worship the invisible God or our modern Idols: which?
You wrote:
“Progressives are not trying to replace a deity through gov’t, as you suggest, but progressives do not believe in a theocracy. We believe that ended with Jesus. The gov’t should meet the needs of all people, not just those who are wealthy or favoured by majority status.”
Well with these lines you have proved Craig Carter’s main point in the post. Because a god or an idol is what we have faith in to meet all our needs. You suggest that it is government. I suggest that Jesus is still alive and that it didn’t end with Jesus but he still lives in our hearts by the Holy Spirit. I’m not advocating theocracy–like the progressives who believe in big government that meets all our needs–I believe in small government that doesn’t suck up all the oxygen in the room and thus allows other institutions, like the family and the church, to breath a little too. But you advocate government as panacea and that ultimately is evil.
The socialists, of course, reject God as Jehoveh Jireh, because they believe in government-jireh, which provides everything we need. Who needs faith in a God who strictly prohibits in his Ten Continue reading
In a book entitled, The Better Angels of our Nature, Harvard Professor Pangloss (Steven Pinker) says we are living in a more humane world today (see his article “Violence Vanquished“).
Well, I beg to differ. He argues that violent death is less frequent than in previous periods in human history, and that the number of people who die peaceably in their sleep all over the world is at a higher percentage than ever before. True, because he’s only counting those who manage to make it out of their mothers’ wombs without first suffering a violent genocidal demise. That’s only 4 out of 5 people. So stay out of your mother’s womb. It is a game of Russian Roulette (I prefer my chances with six shooter). But also, we are now on the verge of war breaking out all over the globe (starting with Egypt, Libya, Yemen, etc.) caused by economic instability. Apparently, the Christian Century published similar drivel, just before the outbreak of World War I. Today, with global instability caused by monetary policy, the doctrine of Total Depravity is gaining traction.
Pangloss pictured right: click on picture to watch video at Market Watch
Wesley Snipes is in a Federal prison. The reason is that the IRS needs to make victims out of some in order to make compliant sheep out of the rest. This website, Freesnipesnow.com says that he is innocent.
I think it is a perverse form of justice when the law chooses to make an example of you so that others will be compliant. Funny thing is that liberals* who don’t believe that the death penalty is a deterrent, think it is perfectly fine to punish a man more severely than he merits so that others will fear and will comply with the tax law. (*Liberals: The majority of Federal bureaucrats are democrats. Their jobs depend on it.)
In my book, any man that goes to a US federal prison unjustly is a hero. Conrad Black is a hero who is suffering his punishment for conducting and selling a business in a manner that conformed to Canadian law (non-compete payments are normal up here) and because he committed an act in Canada (clearing out his office) that a jury decided was an obstruction of US justice. The arm of US justice is long indeed. Black is a hero. Snipes is a hero. Juries found both Black and Snipes guilty on the basis of the testimony of a scoundrel. But the Feds don’t care about justice; they just care about convictions and breaking legs. Just ask Scooter Libby or the late Senator Ted Stevens.
The IRS and the Federal justice system are the villains. If you break the legs of one man, the others will be sure to pay their gambling debts:
Time has come to kill the behemoth. States need to outlaw officers of the Federal government in their jurisdictions. I’m just glad that I live in a country away from their reach.
The Righteous Investor 