The Financial Mess: Getting to the Heart of the Beast

Discussion of the root problem. It’s just my opinion, I could be wrong; but… By Alan Walsh

There’s lots of talk about what caused the current economic mess. I think most citizens have some grasp of the problem, but are missing a key central point. As far as I’m concerned, it all comes down to one simple causal; the existence of the Federal Reserve System (Fed). The Fed is not, as is popularly-believed, a federal agency. It is a bank, owned by other banks, and operated by executives from those banks for their benefit. Our country, in its “vast wisdom”, granted the Fed power to control U.S. monetary policy. They did this because the banks already owned their souls. They’ve been using their increasing wealth ever since to preserve and perpetuate that influence. The Fed, and the banks & financial institutions it serves (referred to hereafter as “banks”), have been whiplashing the economy with bubble/bust cycles ever since the Fed’s inception by receiving mountains of cheap money from the Fed, then using their special powers of moneycreation to whiplash markets into speculative frenzies. This last go-round was on an unparalleled scale because their greed finally took them over the edge. And what happened? Presto, the Fed bailed them out with the government’s blessing! Our futures and our childrens’ were mortgaged to save the banks from themselves. How would you like to have that level of protection? The banks have played the various markets in different combinations over the years. Their influence is huge. Make no mistake about it, the markets are manipulated; stocks, bonds, gold, the lot. There’s no such thing as free & open markets. That’s why JP Morgan can keep making fortunes through thick & thin. “It’s good to be the king”, and it’s good to be holding the trump cards. I remember that a year or so ago Morgan was publicly recommending that investors dump gold, while at the same time buying it up themselves. This time around, the banks used derivatives as a means of leveraging their real estate speculations. Derivatives provide leverage, but they also provide privacy; because they are largely unregulated and the government has resisted all pressures to do so. This meant that the banks could whip up billions in speculative transactions outside the public eye. The government feverishly protected their privacy. Even now, it’s hard to get a handle on the extent of the problem. The banks aren’t talking, nor the Fed or the government. The government even gave them an “out” for the huge underwater positions they’re still holding by waiving the normal rules of accounting so that they aren’t obligated to report these garbage investments at true value on their balance sheets. Who knows what they’re really worth? A fraction of what the “bogus” accounting rules are allowing them to report, I’m guessing. But hey, the Fed stands ready to bail

them out again. Given the state of real estate foreclosures, and the declining value & quality of the municipal bonds they’re sitting on, the banks may be needing that bailout sooner than later. “FOX IN THE CHICKEN COOP” So let’s recap: ▪ The government creates the Fed and gives them control over monetary policy ▪ The government takes us off the gold standard; removing the last concrete backing for the dollar (Note: If gold is so bad, why did the government force citizens to turn it in?) ▪ The Fed pumps mountains of cheap unbacked money into the banks ▪ The banks use their special powers to create even more unbacked money and speculate with it; creating bubble/collapse cycles for decades ▪ Billions are lost when the latest house of cards collapses ▪ The banks are bailed out; creating mountains of public debt ▪ The rules of accounting are rewritten to cover-up the mess, and all the bankers & authorities go mum (Derivatives, what derivatives?) ▪ America gets handed the bill … and has to live with the consequences ▪ The government enacts a financial reform bill that has no teeth ▪ The game goes on. Banks go on using their special powers, with Fed help, to continue their speculations ▪ The bankers have a good laugh, and dole out fat bonuses My solution: Get rid of the Fed – NOW - and replace it with a federal agency that can be held accountable. Let U.S. monetary policy be decided by an institution that actually has some modicum of interest in the nation. It’s not a new idea. Do you know the difference between a Federal Reserve Note and a U.S. Bank Note?

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