Will the Federal Reserve Cause a Civil War?

[k98nights]

Will the Federal Reserve Cause a Civil War?

Posted by Stephen Gandel Tuesday, October 19, 2010 at 5:35 pm 40 Comments • Related Topics: federal reserve, economy

Bernanke critics are on the attack (Joe Raedle/Getty Images)

What is the most likely cause today of civil unrest? Immigration. *** Marriage. Abortion. The Results of Election Day. The Mosque at Ground Zero. Nope.

Try the Federal Reserve. November 3rd is when the Federal Reserve's next policy committee meeting ends, and if you thought this was just another boring money meeting you would be wrong. It could be the most important meeting in Fed history, maybe. The US central bank is expected to announce its next move to boost the faltering economic recovery. To say there has been considerable debate and anxiety among Fed watchers about what the central bank should do would be an understatement. Chairman Ben Bernanke has indicated in recent speeches that the central bank plans to try to drive down already low-interest rates by buying up long-term bonds. A number of people both inside the Fed and out believe this is the wrong move. But one website seems to believe that Ben's plan might actually lead to armed conflict. Last week, the blog, Zerohedge wrote, paraphrasing a top economic forecaster David Rosenberg, that it believed the Fed's plan is not only moronic, but "positions US society one step closer to civil war if not worse." (See photos inside the world of Ben Bernanke)

I'm not sure what "if not worse," is supposed to mean. But, with the Tea Party gaining followers, the idea of civil war over economic issues doesn't seem that far-fetched these days. And Ron Paul definitely thinks the Fed should be ended. In TIME's recently cover story on the militia movement many said these groups are powder kegs looking for a catalyst. So why not a Fed policy committee meeting. Still, I'm not convinced we are headed for Fedamageddon. That being said, the Fed's early November meeting is an important one. Here's why:

Usually, there is generally a consensus about what the Federal Reserve should do. When the economy is weak, the Fed cuts short-term interest rates to spur borrowing and economic activity. When the economy is strong and inflation is rising, it does the opposite. But nearly two years after the Fed cut short-term interest rates to basically zero, more and more economists are questioning whether the US central bank is making the right moves. The economy is still very weak and unemployment seems stubbornly stuck near 10%.

The problem is the Fed only directly sets short-term interest rates. And they are already about as close to zero as you can go. That's why Ben Bernanke has been recently talking about something called "quantitative easing." That's when the Fed basically creates money to buy the long-term bonds that it doesn't directly control, and drive down those interest rates as well. That should further reduce the cost of borrowing for large companies and homeowners. Some people are calling this "QE2" because the Fed made a similar move during the height of the financial crisis when it bought mortgage bonds. (See photos of the Tea Party movement)

Not everyone agrees this is a good move. In fact, a number of presidents of regional Fed banks, not all of which get to vote at Fed policy meetings, have recently come out against Bernanke's plans. Some say it sets bad policy. Others think it will stoke inflation, which might be the point. Few, though, have warned of armed conflict. Here's how Zerohedge justifies its prediction of why the Fed's Nov. 3rd meeting will lead to violence:

In a very real sense, Bernanke is throwing Granny and Grandpa down the stairs - on purpose. He is literally threatening those at the lower end of the economic strata, along with all who are retired, with starvation and death, and in a just nation where the rule of law controlled instead of being abused by the kleptocrats he would be facing charges of Seditious Conspiracy, as his policies will inevitably lead to the destruction of our republic.

OK. The idea that Bernanke might kill large swaths of low-income neighborhoods or Florida by his plan to further lower interest rates is a little ridiculous. But there is a point in Zerohedge's crazy. Lower rates do tend to favor borrowers over savers. And the largest borrowers in the country are banks, speculators and large corporations. The largest spenders in our country though tend to be individuals. Consumer spending makes up 70% of the economy. And the vast majority of consumers are on the low-end of the income scale. So I think it is a valid question to ask whether the Fed's desire to drive down interest rates at all costs policy is working. Companies are already borrowing at low rates. They are just not spending. (Read a special report on the financial crisis blame game)

That being said, civil war, probably not. "It is a gross exaggeration," says Allan Meltzer, who is a top Fed historian at Carnegie Mellon. "I cannot recall ever learning about riots or civil war even when the Fed made other mistakes." When I called, David Rosenberg was traveling and couldn't talk, but he did send me a quick e-mail to stress that he has never, ever suggested that any moves the Fed makes will lead to a militia uprising.

Some smart people, though, including Meltzer, it appears, and Rosenberg do think the path of quantitative easing that the Fed looks likely to embark on is the wrong move. John Taylor, a top Fed scholar at Stanford, says eventually you will have to pull the support out, and when you do a year from now when the economy is recovering he thinks it could be quite disruptive. So even if you don't double dip now, you might double dip then. And even if you don't it would make for a slow recovery. Others, such as Raghuram Rajan, who has became famous for warning about the possibility of a financial crisis back in 2005, believe low-interest rates could be creating new bubbles in say gold or commodities.

So it seems clear what the Fed is likely to do. How the economy, the militias and the rest of us react is up in the air. The count down is on. T minus 15 days to Fedamageddon. See you there, hopefully.

Read more: http://curiouscapitalist.blogs.time.com/2010/10/19/will-the-federal-reserves-next-meeting-lead-to-civil-war/#ixzz12w89Coe6

[inheritance]

Thanks for the post!

[cris]

Ermmm....domestic conflict is almost always caused by liberal democrats, eco-terrorists, anti-corporate radicals, and unions....militias keep to themselves, and are merely concerned with being prepared to protect their interests from creeping liberal facism....im tired of hearing how conservatives are the problem, when the facts are, liberals are going to be this nations downfall.....they need to be defeated in Nov....its very close folks....i can feel freedom and prosperity right around the corner

[behaviorkat]

I have been a liberal and a conservative, women do this, I was much happier as a conservative---- something about reaping rewards for good/hard work and being smart------ it is much more fun.

[general53]

CIVIL WAR, YOU MEAN WORLD WARS.

[dinarded]

The citizens of the United States do not, collectively, have it in them to revolt. Not anymore. We are not the same country NOR the same type of people that founded this nation. Very few actually understand patriotism, freedom, or oppression. To MOST, these are all things of the past. The vast MAJORITY of the people in the US believe that patriotism is flying a flag, freedom is being allowed to go to McDonalds for lunch, and oppression was defeated when the slaves were freed.

But hey, if the government and international bankers run things, WHY WOULD they allow the truth of these things to be taught in our schools?

[Shylmysten]

Will the Federal Reserve Cause a Civil War?

Posted by Stephen Gandel Tuesday, October 19, 2010 at 5:35 pm 40 Comments • Related Topics: federal reserve, economy

Bernanke critics are on the attack (Joe Raedle/Getty Images)

What is the most likely cause today of civil unrest? Immigration. *** Marriage. Abortion. The Results of Election Day. The Mosque at Ground Zero. Nope.

Try the Federal Reserve. November 3rd is when the Federal Reserve's next policy committee meeting ends, and if you thought this was just another boring money meeting you would be wrong. It could be the most important meeting in Fed history, maybe. The US central bank is expected to announce its next move to boost the faltering economic recovery. To say there has been considerable debate and anxiety among Fed watchers about what the central bank should do would be an understatement. Chairman Ben Bernanke has indicated in recent speeches that the central bank plans to try to drive down already low-interest rates by buying up long-term bonds. A number of people both inside the Fed and out believe this is the wrong move. But one website seems to believe that Ben's plan might actually lead to armed conflict. Last week, the blog, Zerohedge wrote, paraphrasing a top economic forecaster David Rosenberg, that it believed the Fed's plan is not only moronic, but "positions US society one step closer to civil war if not worse." (See photos inside the world of Ben Bernanke)

I'm not sure what "if not worse," is supposed to mean. But, with the Tea Party gaining followers, the idea of civil war over economic issues doesn't seem that far-fetched these days. And Ron Paul definitely thinks the Fed should be ended. In TIME's recently cover story on the militia movement many said these groups are powder kegs looking for a catalyst. So why not a Fed policy committee meeting. Still, I'm not convinced we are headed for Fedamageddon. That being said, the Fed's early November meeting is an important one. Here's why:

Usually, there is generally a consensus about what the Federal Reserve should do. When the economy is weak, the Fed cuts short-term interest rates to spur borrowing and economic activity. When the economy is strong and inflation is rising, it does the opposite. But nearly two years after the Fed cut short-term interest rates to basically zero, more and more economists are questioning whether the US central bank is making the right moves. The economy is still very weak and unemployment seems stubbornly stuck near 10%.

The problem is the Fed only directly sets short-term interest rates. And they are already about as close to zero as you can go. That's why Ben Bernanke has been recently talking about something called "quantitative easing." That's when the Fed basically creates money to buy the long-term bonds that it doesn't directly control, and drive down those interest rates as well. That should further reduce the cost of borrowing for large companies and homeowners. Some people are calling this "QE2" because the Fed made a similar move during the height of the financial crisis when it bought mortgage bonds. (See photos of the Tea Party movement)

Not everyone agrees this is a good move. In fact, a number of presidents of regional Fed banks, not all of which get to vote at Fed policy meetings, have recently come out against Bernanke's plans. Some say it sets bad policy. Others think it will stoke inflation, which might be the point. Few, though, have warned of armed conflict. Here's how Zerohedge justifies its prediction of why the Fed's Nov. 3rd meeting will lead to violence:

In a very real sense, Bernanke is throwing Granny and Grandpa down the stairs - on purpose. He is literally threatening those at the lower end of the economic strata, along with all who are retired, with starvation and death, and in a just nation where the rule of law controlled instead of being abused by the kleptocrats he would be facing charges of Seditious Conspiracy, as his policies will inevitably lead to the destruction of our republic.

OK. The idea that Bernanke might kill large swaths of low-income neighborhoods or Florida by his plan to further lower interest rates is a little ridiculous. But there is a point in Zerohedge's crazy. Lower rates do tend to favor borrowers over savers. And the largest borrowers in the country are banks, speculators and large corporations. The largest spenders in our country though tend to be individuals. Consumer spending makes up 70% of the economy. And the vast majority of consumers are on the low-end of the income scale. So I think it is a valid question to ask whether the Fed's desire to drive down interest rates at all costs policy is working. Companies are already borrowing at low rates. They are just not spending. (Read a special report on the financial crisis blame game)

That being said, civil war, probably not. "It is a gross exaggeration," says Allan Meltzer, who is a top Fed historian at Carnegie Mellon. "I cannot recall ever learning about riots or civil war even when the Fed made other mistakes." When I called, David Rosenberg was traveling and couldn't talk, but he did send me a quick e-mail to stress that he has never, ever suggested that any moves the Fed makes will lead to a militia uprising.

Some smart people, though, including Meltzer, it appears, and Rosenberg do think the path of quantitative easing that the Fed looks likely to embark on is the wrong move. John Taylor, a top Fed scholar at Stanford, says eventually you will have to pull the support out, and when you do a year from now when the economy is recovering he thinks it could be quite disruptive. So even if you don't double dip now, you might double dip then. And even if you don't it would make for a slow recovery. Others, such as Raghuram Rajan, who has became famous for warning about the possibility of a financial crisis back in 2005, believe low-interest rates could be creating new bubbles in say gold or commodities.

So it seems clear what the Fed is likely to do. How the economy, the militias and the rest of us react is up in the air. The count down is on. T minus 15 days to Fedamageddon. See you there, hopefully.

Read more: http://curiouscapitalist.blogs.time.com/2010/10/19/will-the-federal-reserves-next-meeting-lead-to-civil-war/#ixzz12w89Coe6

This ain't even the half of it. What this story does not tell, and what the media is not reporting, is what the big banks have been doing under close supervision of Bernake. See, since the interest rates have been reduced to nearly 0, the big banks have been taking out loans from the FED (that's out tax dollars btw) and then buying US treasury bonds that have a 3.5% return. Basically they are borrowing money from the Fed for 0% interest (remember these are our tax dollars) and then selling them back to the Fed at a 3.5% interest. But don't just take my word for it....look this up....the crap that is going on just blows my dang mind. It's freaking criminal.

[bamf1414]

The citizens of the United States do not, collectively, have it in them to revolt. Not anymore. We are not the same country NOR the same type of people that founded this nation. Very few actually understand patriotism, freedom, or oppression. To MOST, these are all things of the past. The vast MAJORITY of the people in the US believe that patriotism is flying a flag, freedom is being allowed to go to McDonalds for lunch, and oppression was defeated when the slaves were freed.

But hey, if the government and international bankers run things, WHY WOULD they allow the truth of these things to be taught in our schools?

Dinarded, I agree, but we as people can only take so much as well. All we get is push push push for working our butts off, and told we don't do enough when the tax rate is already crazy. If it keeps going this way, which I don't particularily think it will, we will begin to push back!!!!!!!!!!!!!!!!!!!!!!!!!!!

[GIDad]

The citizens of the United States do not, collectively, have it in them to revolt. Not anymore. We are not the same country NOR the same type of people that founded this nation. Very few actually understand patriotism, freedom, or oppression. To MOST, these are all things of the past. The vast MAJORITY of the people in the US believe that patriotism is flying a flag, freedom is being allowed to go to McDonalds for lunch, and oppression was defeated when the slaves were freed....

The Republic is forming up to restore the Constitution. Activists are born when they eat a bowl of dirt for dinner. The straw that will break the Camels back will fall soon. The Republic is ready.

http://republicoftheunitedstates.org/

It does not take a majority to prevail... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.

Samuel Adams

Edited December 29, 2010 by GIDad

[Hawaii K]

How is it the Federal reserve is not even owned by our government?

[GIDad]

The Federal Reserve isn't Federal and there isn't any Reserve.

The plan was brilliant and carefully crafted by men who had an infinite amount of patience. They knew it would take decades to accomplish but the game was on. By 1913, under Woodrow Wilson, they were able to corrupt congress enough to get the 16th and 17th amendments passed. Even though the 16th was never ratified what the people didn’t know was just fine with them. The 16th paved the way for the bankers to gain complete control over the nation’s monetary system with the creation of the Federal Reserve Debt System, (nothing federal about it, owned lock stock and barrel by a foreign corporation) designed at a weekend retreat in Georgia called Jekyll Island. Following that, the IRS, also owned by them, was created.

To further control the monetary system and place the people under permanent debt, the bankers manipulated the economy and plunged the nation into the great depression. Then their handpicked CEO, (remember the government is now a corporation not a government therefore there are no restrictions of birthright etc. to hold that office), Franklin D. Roosevelt called in all the nation’s gold leaving the population with absolutely worthless paper notes backed by nothing, created out of thin air and based on debt.

Edited December 29, 2010 by GIDad

[Hawaii K]

G.I Dad- thanks so much for the info. Wow unbelievable, makes

you see things in a total different light.

Thanks so much & Aloha!

[general53]

The Federal Reserve isn't Federal and there isn't any Reserve.

(The plan was brilliant and carefully crafted by men who had an infinite amount of patience. They knew it would take decades to accomplish but the game was on. By 1913, under Woodrow Wilson, they were able to corrupt congress enough to get the 16th and 17th amendments passed. Even though the 16th was never ratified what the people didn’t know was just fine with them. The 16th paved the way for the bankers to gain complete control over the nation’s monetary system with the creation of the Federal Reserve Debt System, (nothing federal about it, owned lock stock and barrel by a foreign corporation) designed at a weekend retreat in Georgia called Jekyll Island. Following that, the IRS, also owned by them, was created.

To further control the monetary system and place the people under permanent debt, the bankers manipulated the economy and plunged the nation into the great depression. Then their handpicked CEO, (remember the government is now a corporation not a government therefore there are no restrictions of birthright etc. to hold that office), Franklin D. Roosevelt called in all the nation’s gold leaving the population with absolutely worthless paper notes backed by nothing, created out of thin air and based on debt.)

The Federal Reserver, Is an Off Shore Corporation,or is that the IRS ?

Never under estimate the American Sprite, go to a gun show .

m j lee

[dinarded]

The Birth of Federal Reserve...........Please watch if are curious as to how it came into being and what it really is

The Birth of the U.S. Federal Reserve Bank - How usury destroyed America

http://video.google.com/videoplay?docid=-8484911570371055528#

This next video is VERY long but VERY in depth....It's one of the best I have ever seen

The Money Masters - How International Bankers Gained Control of America

http://video.google.com/videoplay?docid=-8484911570371055528#docid=-515319560256183936

Edited December 31, 2010 by dinarded

[hollywood]

The Fed. Reserve should be abolished along with their stooges, the I.R.S. And the constitution should be reinstated.

[BanG]

Excellent Post! I too have been reading the same information in my studies for investing. I was particularly interested in an article called the "Collapse of the dollar". I have been able to determine that as I invest more and more I'm moving money out of US Bonds and other markets to protect my money. Anyway good article.

[tkeaton]

I remember a hippie slogan of the 60's, "Suppose they gave a war and nobody came." What if millions of us stopped participating in their little game?

[tommyboy]

I guess this means that, for our entire lives, we are merely pawns of such as the Rothschilds and what they have bought (ie: other countries, etc.). What is interesting is that I have also read that JFK had signed an Executive Order to get rid of the Fed and go back to a system where we were our own banks and held something (can't remember what; too long ago; senior moment) to back our money so we would NOT be a fiat currency country. He was murdered about 10 weeks later, and ON THE PLANE from Dallas, with his body aboard, LBJ rescinded that E.O. !!!

The Rothschilds have said that they don't care who sits on the throne, as long as they control the money of a country, they control that country.

Look at what is happening now w/the nation's debt and what it costs us DAILY to satisfy just the interest. Are we, as a country, the USA, headed in that direction?

Edited January 5, 2011 by tommyboy

[PA10]

Regarding 'M J Lee', references to Amendments "16 and 17":

I suppose its inevitable that an Off Shore - Tax Haven venue would digress to discussions of the inequities of the IRS and Federal Taxation. History has a way of repeating itself and over time, many important lessons can be lost and learned. Since 1776, the Federal Government has devised various 'ways and means' to provide for the 'general welfare' of 'We the People' such as the 16th Amendment: The United States Revenue Act of 1913 aka: 'Tariff Act', 'Underwood Tariff' etc... enacted to limit Federally imposed Tariffs on important consumer commodities like wool/woolens (our primary fiber for clothing at that time). Back then wool had an astounding Tariff of 40% and apparently nothing will piss off a voter more than an overpriced pair of scratchy-ass wool pants.

While the Act did make make clothing and other important consumer commodities more affordable (lowered Tariffs by as much as 15%) - the bad news was, the lost Federal Tariff revenue had to be 'off-set' by a compensating revenue vehicle. In that regard, the Act removed the constitutional obstruction that previously prohibited 'Direct Taxation' by the Federal Government. The rest is history as the Federal Government promptly re-instituted a previously outlawed Federal Income Tax System established by the Lincoln administration (for funding the Civil War) which was found 'unconstitutional' by the US Supreme Court and subsequently abolished 10-years after enactment. So, at the end of the day, one hand giveth while the other taketh away! Add to that, it also invited the creation of the supporting Federal Reserve Banking System and it's bureaucratic Bag Men - the IRS!

I don't know about the rest of you, but I'd prefer the expensive wool pants any day VS the trade-off!

The old adage - "be careful what you wish for" comes to mind.

Regarding the 17th amendment - I don't see where that Act implies corruption (requires Senators to be directly elected). Actually, that Act made it possible for ordinary citizens to elect CORRUPT - MORALLY BANKRUPT SENATORS!

On that note, I'm putting the history book back on the shelf. Go RV....