Ben Bernanke Tries To Convince America That The Federal Reserve Is Good

Ben Bernanke Tries To Convince America That The Federal Reserve Is Good And The Gold Standard Is Bad The Economic Collapse Wednesday, March 21, 2012 Ben Bernanke has decided that he needs to teach all of us why the Federal Reserve is good for America and about why the gold standard is bad. On Tuesday, Bernanke delivered the first of four planned lectures to a group of students at George Washington University.

But that lecture was not just for the benefit of those students. Officials at the Fed have long planned for this lecture series to be an opportunity for Bernanke to “educate” the American people about the Federal Reserve. The classroom was absolutely packed with reporters and just about every major news organization is running a story about this first lecture. So the Federal Reserve is definitely getting the publicity that it was hoping for. You can see the slides from the presentation that Bernanke gave to the students 1. right here. It is pretty obvious that one of the primary goals of this first lecture was to attack those that have been critical of the Fed over the past few years. In doing so, Bernanke “stretched” the truth on more than one occasion.

The entire event was staged to make Bernanke and the Federal Reserve look as good as possible.

Prior to his arrival, the students gathered for the lecture were actually instructed to applaud Bernanke….

The 30 undergraduates at George Washington University sent up a round of applause. It was, they’d been told beforehand, “appropriate, even encouraged, to politely applaud” Tuesday’s guest lecturer.

But as noted above, this lecture was not for the benefit of those students. AUSA Today article even admitted that “addressing the public directly” was one of the real goals of this lecture….

For Bernanke, the GW lectures serve a dual function: They give him a chance to reprise the role of professor he played for more than two decades, first at Stanford and then at Princeton, where he eventually chaired the economics department.

And they give him a way to expand his mission of demystifying the Fed. As part of that campaign, Bernanke became the first Fed chief to hold regular news conferences and conduct town-hall meetings.

In addressing the public directly, Bernanke has also sought to neutralize attacks on the Fed, some of them from Republican presidential candidates.

So what did Bernanke actually say during the lecture?

Well, you can read all of the slides right here, but the following are some of the highlights….

On page 6 of the presentation, Bernanke makes the following claim….

“A central bank is not an ordinary commercial bank, but a government agency.”

Well, that is quite interesting considering the fact that the Federal Reserve hasargued in court that the Federal Reserve Bank of New York is not an agency of the federal government and that the various Federal Reserve banks around the country are private corporations with private funding.

So did the Federal Reserve lie to the court or is Ben Bernanke lying to us?

And what other “agency” of the federal government is owned by private banks?

It is even admitted that the individual member banks own shares of stock in the various Federal Reserve banks on the Federal Reserve website….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

The Federal Reserve always talks about how it must be “independent” and “above politics”, but when they start getting criticized they always want to seek shelter under the wing of the federal government.

It really is disgusting.

On page 7 of the presentation, the following statement is made….

“All central banks strive for low and stable inflation; most also try to promote stable growth in output and employment.”

Well, on both counts the Federal Reserve has failed miserably.

Right now, if inflation was measured the same way that it was back in 1980, the annual rate of

inflation would be more than 10 percent.

And when you take a longer view of things, the inflation that the Federal Reserve has manufactured has been absolutely horrific.

Even using the doctored inflation numbers that the Federal Reserve gives us, the U.S. dollar has still lost 83 percent of its value since 1970.

The truth is that inflation is a “hidden tax” that is constantly destroying the value of every single dollar that you and I hold. Those that attempt to save money for the future or for retirement are deeply penalized under such a system.

As far as employment goes, the total number of workers that are “officially” unemployed in the United States is larger than the entire population of Portugal.

The average duration of unemployment is hovering near an all-time record high and almost every measure of government dependence is at an all-time record high.

So the Federal Reserve is failing at the exact things that Bernanke claims that it is supposed to be doing.

But instead of directly addressing many of the specific criticisms that have been leveled at the Fed, Bernanke instead chose to spend much of his lecture talking about the problems with adopting a gold standard. The following are statements that were pulled directly off of the slides he used during his speech….

-”The gold standard sets the money supply and price level generally with limited central bank intervention.”

-”The strength of a gold standard is its greatest weakness too: Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions.”

-”All countries on the gold standard are forced to maintain fixed exchange rates. As a result, the effects of bad policies in one country can be transmitted to other countries if both are on the gold standard.”

-”If not perfectly credible, a gold standard is subject to speculative attack and ultimate collapse as people try to exchange paper money for gold.”

-”The gold standard did not prevent frequent financial panics.”

-”Although the gold standard promoted price stability over the very long run, over the medium run it sometimes caused periods of inflation and deflation.”

-”In the second half of the 19th century, a global shortage of gold reduced the U.S. money supply and caused deflation (falling prices). Farmers were squeezed between declining prices for crops and the fixed dollar payments for their mortgages and other debts.”

Bernanke spent more time on the gold standard during his speech than on anything else. At one

point during the lecture, Bernanke made the following statement….

“To have a gold standard, you have to go to South Africa or someplace and dig up tons of gold and move it to New York and put it in the basement of the Federal Reserve Bank of New York and that’s a lot of effort and work” Bernanke even blamed the gold standard for the Great Depression. On a slide entitled “Monetary Policy in the Great Depression”, Bernanke made the following claims….

•The Fed’s tight monetary policy led to sharply falling prices and steep declines in output and employment.

•The effects of policy errors here and abroad were transmitted globally through the gold standard.

•The Fed kept money tight in part because it wanted to preserve the gold standard. When FDR abandoned the gold standard in 1933, monetary policy became less tight and deflation stopped.

Bernanke seems to want to frame the debate over monetary policy is such a way that the American people are given only two alternative systems to consider: the Federal Reserve and a gold standard.

But the truth is that there are a vast array of both “hard money” and “soft money” systems that would not include a central bank or a gold standard at all.

So the truth is that the American people would have many different systems to choose from if they wanted to shut down the Federal Reserve and set up something new.

In the past the U.S. government has issued debt-free money and it could certainly do so again.

But in his lecture, Bernanke did not even mention how the Federal Reserve creates money or how whenever new money is created more debt is created.

Under the Federal Reserve system, the money supply is designed to continually increase, and whenever more money is created more debt is also created.

In a previous article I discussed how more money is created on the federal level….

For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it. The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government “Federal Reserve Notes” in return. Usually this is just done electronically.

So where does the Federal Reserve get the Federal Reserve Notes?

It just creates them out of thin air.

Wouldn’t you like to be able to create money out of thin air?

Instead of issuing money directly, the U.S. government lets the Federal Reserve create it out of thin air and then the U.S. government borrows it.

Talk about stupid.

The designers of the Federal Reserve system intended to trap the U.S. government in a debt spiral that would expand perpetually.

So has their design worked?

Well, just look at the chart below‌.

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

So I guess you could say that the results have been spectacular.

The Federal Reserve system also greatly favors the big Wall Street banks that it is designed to serve.

When those big banks get into trouble, the Federal Reserve snaps into action.

According to a limited GAO audit of Fed transactions during the last financial crisis, $16.1 trillion in secret loans were made by the Federal Reserve to the big Wall Street banks between December 1, 2007 and July 21, 2010.

The following list is taken directly from page 131 of the GAO audit report and it shows which banks received money from the Fed‌.

Citigroup - $2.513 trillion Morgan Stanley - $2.041 trillion Merrill Lynch - $1.949 trillion Bank of America - $1.344 trillion Barclays PLC - $868 billion

Bear Sterns - $853 billion Goldman Sachs - $814 billion Royal Bank of Scotland - $541 billion JP Morgan Chase - $391 billion Deutsche Bank - $354 billion UBS - $287 billion Credit Suisse - $262 billion Lehman Brothers - $183 billion Bank of Scotland - $181 billion BNP Paribas - $175 billion Wells Fargo - $159 billion Dexia - $159 billion Wachovia - $142 billion Dresdner Bank - $135 billion Societe Generale - $124 billion “All Other Borrowers� - $2.639 trillion What about all the rest of us?

Did we get bailed out?

No, we were told that if Wall Street was rescued that the benefits would trickle down to the rest of us.

Unfortunately, that has not exactly worked out. In article, after article, afterarticle I have detailed the horrible economic suffering that the American people are still going through.

But what Bernanke and the Fed have done is create inflation in commodities such as oil which is affecting the household finances of nearly everyone in America.

The average price of a gallon of gasoline in the United States is now up to $3.87. That is an all-time record high for the month of March.

So far in 2012, the price of gasoline in the United States has risen by 17 percent.

Thanks Bernanke.

Over the past several decades, every time there has been a major spike in gasoline prices in the United States, a recession has always followed. If you doubt this, just check out this amazing chart.

So will we soon see another recession?

If we are lucky. Hopefully the next downturn will not be a full-blown depression.

The truth is that the Federal Reserve does not help us avoid booms and busts. Rather, it creates them. The Fed was at the heart of the housing bubble which helped bring on the last financial crisis when it crashed, and the current ultra-low interest rate policies of the Fed are creating more bubbles which will have devastating long-term consequences.

So Bernanke does not have anything to be proud of, and his track record has been absolutely nightmarish.

Hopefully the American people will not believe the propaganda and will take an honest look at the Federal Reserve.

When you take an honest look at the Federal Reserve, there is only one rational conclusion: Congress should shut it down, lock the doors and throw away the key.

Central Banking Was Responsible for 2008 Meltdown Nothing Else Daily Bell Wednesday, March 21, 2012 The meltdown explanation that melts away … Although our understanding of what instigated the 2008 global financial crisis remains at best incomplete, there are a few widely agreed upon contributing factors.

One of them is a 2004 rule change by the U.S.Securities and Exchange Commission that allowed investment banks to load up on leverage. This disastrous decision has been cited by a host of prominent economists, including Princeton professor and former Federal Reserve ViceChairman Alan Blinder and Nobel laureate Joseph Stiglitz. It has even been immortalized in Hollywood, figuring into the dark financial narrative that propelled the Academy Award-winning film Inside Job. Bethany McLean is a contributing editor at Vanity Fair, and co-author with Joe Nocera of “All the Devils are Here: The Hidden History of the Financial Crisis.” Her first book, “The Smartest Guys in the Room,” co-written with Peter Elkind, became an Academy Award-nominated documentary. – Reuters Dominant Social Theme: The meltdown was a catastrophe. It was caused by regulations … taxes … leverage … big business … big government … mortgage products … derivatives … greed … Satan … but one thing is for certain, it wasn’t caused by fiat-monopoly central

banking. We know that for sure. Central banking had nothing to do with it ….

Free-Market Analysis: Following the 2008 global economic crash on an almost day-to-day basis, as we have, we’ve regularly made the argument that it was caused by central banking monetary inflation and that its result is bound to be the eventual demise of the dollar reserve system.

We believe we’re being proven correct on both points. We’ve also pointed out that the crash itself was predictable and that the top elites that put this global central banking system in place know full well that cyclically it creates crashes, recessions and now depressions.

But, of course, there is plenty of pushback. Seems everybody has an opinion about what caused the 2008 crash. And most of these opinions, played out in the mainstream media, are focused eagerly on causes that have nothing to do with central banking.

In other words, these theories are PROTECTIVE of central banking and the damage that monetary stimulation can do. Inevitably, when we read these theories we tend to notice that those advancing them are apologists for the system as it is. The system of monopoly fiat. The system that crashes regularly and ruins peoples lives as part of its foundering.

This article, a long one (excerpt above), posted at Reuters goes into incredible detail about an obscure rule change that the SEC allowed in 2004. This supposedly allowed big banks to increase leverage that led to the crash. The article sets out to disprove it.

This article is a clever kind of dominant social theme, in our view. Why? Because in debunking a silly argument about why the 2008 crash occurred, it provides readers with the impression that Reuters is a really sophisticated and hard-hitting newswire.

The idea is that Reuters – which is actually a mainstream media mouthpiece for the power elite – would provide us with an article arguing that the removal of regulation was NOT the cause of the meltdown illustrates that top Reuters writers are truth seekers.

The power elite that is trying to set up world government is having a bad go of it. The Internet – what we call theInternet Reformation – is slicing away at its fear-based promotions. Many lucid thinkers that use the Internet for reading and writing don’t believe mainstream media articles anymore.

The mainstream media is badly in need of a credibility “pick-me-up.” Thus, we argue, articles like this begin to appear. They are very well written, economically literate and academically argumentative. They are meant to impress you and leave you thinking that Reuters itself is a

credible and clever place.

Those who publish these kinds of articles are using them as a kind of glorified PR. They are good articles and those at the top of Reuters are hoping their goodness adds a larger luster to mainstream media brands tarnished by the Internet Reformation.

But because it is Reuters doing the writing and editing, these articles – no matter how good they are – inevitably leave stuff out. For instance, we would have less trouble believing that if the article mentioned central banking as the cause. But the article, in thousands of words, never gets to central banking. Coincidence?

The article does do us the favor of debunking a certain argument about leverage. But it doesn’t take the next step and explain what really DID happen. Too bad.

The article, as we mentioned, does do us the favor of debunking one widely accepted reason for the meltdown, having to do with regulatory induced leverage.

We never believed it to begin with, of course. One reason we knew right off the bat that it wasn’t true was because the financial media maven Simon Johnson was a proponent of this theory.

Anything that Mr. Johnson proposes, in our humble opinion, is likely to be incorrect or at least

implausible. He is always trying to hide the culpability of central banking. He is an incredibly brilliant person and great writer, but in our view, he is an apologist for power. You can see some of our articles about his theories here: EU Continues to Stagger The Quiet Coup The author writes thousands of words to refute the hypothesis of Simon and others.

In fact, she could do it in a few sentences, as follows: “Monopoly monetary inflation is the proximate cause of economic ruin and has ruined economies large and small for thousands of years. There is no need to blame anything else. When power over-prints money, as it inevitably does, the result will be the eventual demise of the civilization in question.”

See? That’s not so complex. And it’s the truth. Monopoly central banking systems are entirely unstable. Even non-monopoly systems offering pure fiat are likely unstable because they will generate price inflation. But within a competitive monetary environment, people should have the ability to choose – even clearinghouses that print money.

The REAL problem is when bankers use mercantilism to create and sustain monopoly money printing. Mercantilism is the bane of free-market economies. When bankers pass laws to provide themselves with legal support for their own interests, that economy is on its way to ruin.

This is why central banks are NEVER entirely private entities, from what we can tell. Some apologists claim central banks are entirely private but a quick look at almost any central bank shows that certain government laws are necessary to their existence and continued operation.

The Fed, for instance, has been called a private bank but it took an Act of Congress to establish the Fed and even today, Congress holds hearings and makes appointments to the Federal Reserve Board.

The Fed, like other central banks, is not private. It is mercantilist. It derives its power from the de facto endorsement of the government it helps to fund.

A purely PRIVATE central bank would be a great improvement, in fact, because such a bank would LOSE (or never have) the right to print monopoly fiat. It is this MONOPOLY that is so detrimental to the larger

system. And by definition, legal monopolies are generated via government approbation.

How murderous mercantilism is! In a mercantilist monopoly environment, fiat money is like poison. It builds up in the system until it ruins it. This is an ineluctable occurrence. Nothing else is needed. As top bankers print too much money – and they always do within a monopoly fiat regime – the money causes first a great boom and then a great bust.

People lament, for instance, the demise of Glass-Steagall that allowed commercial banks and merchant banks to re-merge. But those same commentators never address the issue of WHY Glass-Steagall was re-addressed.

It was re-addressed because the MANIA surrounding the marketplace mandated that the “business cycle has finally been abolished.” In other words, central bank money manias ALWAYS affect regulatory prescriptions. It is almost impossible to stand in the way of a bull market.

Thus, it is only after the fact that the finger-pointing starts. If only this or that regulation hadn’t been abolished or changed, we wouldn’t have had this terrible disaster.

But in fact, it is the mania generated by central banking money printing that sweeps away regulatory barriers the way a raging tidal wave sweeps away all obstacles in its path.

Of course, we are not making an argument for regulation in any case. Regulation can make business worse and more impractical. It can NEVER make things better. Why? Because all regulations – all law – is a price fix, transferring wealth from people who have generated it to people who have not.

This is the dirty secret behind Western regulatory economies, the secret that is never discussed.

And thus, once a crash has taken place, the paid sophists come up with all sorts of reasons why “capitalism” failed.

But they will never explain the truth – capitalism there may be, but freemarkets don’t exist, nor can they so long as money is retained as a government monopoly.

Money is the most important stuff. It is the lifeblood of an economy. If the blood is poisoned is poisoned by monopoly

fiat, then the corpus will be poisoned too.

It is impossible to have a free market within the context of monopoly fiat.

Inevitably, you end up with economies that waste wealth on false schemes that are initially seen as viable only because of the wild, false optimism created by crashing waves of monetary fiat. Paper ticker money is like crack. Here’s some more from the article excerpted above: As Blinder explained in a Jan. 24, 2009 New York Times op-ed piece, one of what he listed as six fundamental errors that led to the crisis came “when the SEC let securities firms increase their leverage sharply.”

He continued: “Before then, leverage of 12 to 1 was typical; afterward, it shot up to more like 33 to 1. What were the SEC and the heads of the firms thinking?” More recently, Simon Johnson, a former chief economist at the IMF, said last November that the decision “by the Bush administration, by the SEC to allow investment banks to massively increase their leverage … in terms of the big mistakes in financial history, that’s got to be in the top 10.”

It is certainly true that leverage at the investment banks zoomed between 2004 and 2007, before the near collapse. And this narrative of the rule change has plenty of appeal — it serves up villains. Stupid SEC people! Greedy bankers! It also suggests regulators were in the pockets of the big banks, and it offers support for the narrative of financial deregulation that many put at the center of the crisis.

There’s just one problem with this story line: It’s not true. Nor is it hard to prove that. Look at the historical leverage of the big five investment banks — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley.

The Government Accountability Office did just this in a July 2009 report and noted that three of the five firms had leverage ratios of 28 to 1 or greater at fiscal yearend 1998, which not only is a lot higher than 12 to 1 but also was higher than their leverage ratios at the end of 2006. So if leverage was higher before the rule change than it ever was afterward, how could the 2004 rule change have resulted in previously impermissible leverage?

Of course, it wasn’t leverage per se that

destabilized Wall Street and caused the entire financial economy to collapse. What occurred was that an overabundance of money printed over the past 30 years or so eventually created an entirely phony economy.

At some point a tipping point is reached. The financial economy of the West remains the biggest bubble ever blown in the history of humankind.

The world is not merely overbanked, it is drowning in financial services and products.

The “market” realized this in 2008 and the system locked up. It took something like US$50 TRILLION in liquidity to unlock it. This will never be admitted by the power elite’s mainstream economic historians and theorists. But it is true.

The world is now not only drowning in dysfunctional and worthless financial facilities, it is drowning in as-yet-uncirculated money that – once it DOES circulate – will tend to destabilize what is left of the system further. The price inflation that will result from all this monetary inflation is fairly inconceivable. This is why we write the dollar reserve system is likely finished … kaput.

One can come up with all sorts of theories as to why there was a crash in 2008 that continues today. But the real reason is because central banks have a monopoly over money and the elites that work for the dynastic families that apparently control these central banks can – and will – always overprint money.

What happened is very simple. The system froze up because so much money printing diverted real

energy and resources into wasteful banking enterprises, houses that didn’t need to be built, factories that didn’t need to produce unnecessary and redundant junk, etc.

When the market itself recognized this, the system stopped working and needed tens of trillions of artificial liquidity to galvanize it again. It is still is not producing jobs properly however, because the system itself is distorted and the jobs that it tends to produce are unnecessary ones.

We don’t expect much from the mainstream media anymore. In fact, over time we expect less and less. But it is worth repeating (to your friends and neighbors) that the economy worldwide is not complex. Get rid of monopoly fiat money printing, allow money to compete in the free market and many if not most of the modern economic tragedies will be avoided.

Conclusion: It’s not complicated. But people don’t understand because there is an entire industry of sophists and wily ones dedicated to generating confusion at the expense of truth.

ZEITGEIST ADDENDUM http://www.youtube.com/watch?v=1gKX9TWRyfs FIAT EMPIRE: Why The Federal Reserve Violates The U.S. Constitution http://www.youtube.com/watch?v=8Xt5US8FUpw Creature From Jekyll Island Second Look at the Federal Reserve http://www.youtube.com/watch?v=Dba9OY0QatU Money, Banking and the Federal Reserve (HQ) http://www.youtube.com/watch?v=YLYL_NVU1bg The Capitalist Conspiracy - G Edward Griffin http://www.youtube.com/watch?v=-H99C4JEq80 The Money Masters a History of Money http://www.youtube.com/watch?v=JXt1cayx0hs The Secret of Oz a History of Money http://www.youtube.com/watch?v=swkq2E8mswI