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interesting article about inflation in Egypt. Iraq needs to take notice before RVing.
This is What Happens to Inflation when a Currency Gets Unpegged from the Dollar
by Wolf Richter • Feb 13, 2017 • 49 Comments
The “supply shock” in Egypt
On November 3, the Egyptian Central Bank removed all exchange-rate restrictions and raised its benchmark rate by three percentage points. This was done to obtain that all-important $12-billion bailout loan the IMF had provisionally agreed to provide in August, though by November 3, the IMF’s executive committee still hadn’t ratified it.
In the unofficial market, the pound had already collapsed against the dollar. With the peg gone, the official exchange rate instantly plunged from 9 pounds to the dollar to over 15 pounds to the dollar, and four days later it was at 18 pounds.
On November 11, the IMF stopped dragging its feet and ratified the $12-billion loan.
At today’s rate of 17 pounds to the dollar, the currency has lost 48% of its value since November 3. This chart, showing the value of each pound in US cents, depicts that plunge in its horrific brutality:
But Egypt imports about $60 billion per year in fuel, raw materials, and finished goods. And for Egyptians who have to pay for them in pounds, there are some bitter consequences.
The latest announcement of those bitter consequences was the inflation rate for January: Overall consumer price inflation soared by 28% year-over-year and core inflation soared by 31%. This chart (via Trading Economics) of core inflation shows that everything from rents to computers was a big driver in a horrendous increase in the cost of living:
This soaring inflation was due to “supply shocks,” Egyptian Finance Minister Amr El-Garhy told Bloomberg TV. It was not demand driven. It was “expected,” he said, given the devaluation. And it’s going to get worse: “We knew that this is still peaking when it comes to inflation, we expect this to happen.”
Eventually, the impact of that supply shock may fade from the year-over-year statistics, and inflation might settle down, under ideal conditions, but the currency got crushed, and will remain crushed.
But El-Garhy said the rise in Egyptian stocks was an “encouraging sign, and a strong vote of confidence in the economic reform program.” He also credited the $12-billion bailout loan from the IMF that Egyptians have to service with their devalued currency.
With inflation changing so rapidly, no one knows what inflation amounts to on a daily basis. Everything denominated in pounds is losing value at a rapid rate that no one knows exactly. Inflation reporting happens after the fact, and may be unreliable. But the value that the pound loses today is what matters in order the gauge stock and bond prices today. And everyone is in the dark. The stock market denominated in Egyptian pounds has gained about 50% since the devaluation. That looks good on paper. And El-Garhy touted that. In reality, it just reflects the destruction of the currency.
And foreign investors that are chasing yield wherever they can find it jumped on Egyptian debt. Last Thursday, they bought 98.5% of the 6.6 billion pounds ($372 million) in six-month Egyptian Treasury bills that the government issued and 97.5% of 6.6 billion in one-year bills, according to the Finance Ministry, cited by Bloomberg. And these foreign yield chasers are doing what they’re doing everywhere: driving down the yield.
But these bonds are denominated in Egyptian pounds, and no one knows what inflation will do to the currency over the next 12 months.
Being long oil is a very “crowded trade,” but who’s on the other side of that trade, and what do they know that speculators don’t? Read… Why a NYMEX Veteran is Getting Nervous about Oil
hello again my friends. its your bud here with another worth of a take on what i see happening within the borders called iraq. and it is really good news from my vantage point! the topic of this opinion piece is the '6 major factors that influence an exchange rate'. i will cover each factor briefly in reference to iraq and hope to derive whether or not those invested are either in a good or bad position.
as many know, the importance of an exchange rate revolves around one country's trading relationships with other nations. trade relationships is the sole purpose of an exchange rate. where there is no international trade, an exchange rate tied to a currency has no domestic significance. with this in mind lets peer into the 6 factors of exchange rate influence between iraq and its trading partners.
1) Inflation - iraq has done a fantastic job steering its inflation rate. the latest report (aug 2015) has inflation at 2.2%. some economists would mark this as the ideal inflation rate. this places iraq is a great position with trading partners for determining a strong exchange rate to the iqd.
2) Interest Rates - iraq has maintained a steady interest rate of 6% over the last 5 years. compared to other nations, it is a phenomenal rate. the importance here is the attractiveness it has to foreign investors. should iraq sure up the security situation with daesh and clean up political corruption, foreign investors might feel confident enough to pour funds into iraq at these rates.
3) Current-Account - iraq has done quite well between trading partners and has held a positive current account balance (exports vs imports) over the previous 9 years except for 2010. oil is its primary export and it has been strong enough a commodity to keep iraq experiencing gains in its current accounts. as iraq build its non-oil sector through the plan for increased industry and agriculture, exports should increase and it will be reflected in the current account.
4) Public Debt - this is where the hidden gem is revealed and the reason for the title of my opinion piece. everything in the papers speak to iraq's "deficit financing". however for some reason it appears to be seen in a negative light. my opinion is much different. not all debt is good but in this instant i definitely believe it is. when most developing nations look to expand its economic markets as iraq is doing, there will be an inevitable deficit to fiscal policy (the budget). in the short term, this is a very very good thing! where most under developed nations utilize deficit financing for payment of domestic and foreign loans, this does not hold true for iraq. iraq is using this tool as developed nations would, for capital formation for economic growth and boosting the private sector. this type of debt is the best stimulate for the economy in the short term. (here is a good slide-show presentation explaining deficit financing.)
5) Terms of Trade - balance of trade for iraq is simply outstanding and last reported at approximately $40B usd ($44B previous year). compared to turkey (-$6B usd), japan (-$268B yen), germany $24B eur. i would say that iraq comparatively has a case for a strong dinar. its current accounts and balance of trades are unbeatable (maybe a little exaggeration there).
6) Political Stability & Economic Performance - well, you can't shine everywhere . unfortunately this important piece is dragging iraq down.....and i mean wayyyyyyyy down. nobody in their right mind want to stick hundreds of millions in an environment like this. this area alone is holding iraq back the most. all things considered, if this one area is corrected there is no reason why foreign investment wont flood the country and the domestic currency surge in demand.
there you have it gang. hopefully this piece wasn't too long. this should give us all a solid overview of the factors that influence the dinars TRUE exchange rate the most. from it we should be able to make a sound judgement on where the currency is headed and whether or not we want to remain involved.
THIS IS A GREAT ARTICLE THAT SHINES A LIGHT ON PROBABLY THE NUMBER 1 REASON OUR COUNTRY IS BROKE AND GOING DOWN THE TUBES, IT'S BASICALLY THIEVERY BY CENTRAL BANKS:
TO VIEW THE GRAPHS AND CHART, CLICK ON THE LINK, IT WOULDN'T LET ME BRING THEM OVER:
America: Bankrupt And On Borrowed Time
04/07/2015 17:00 -0400
Capital Expenditures Fail fixed Market Conditions Money Supply Reality
inShare Submitted by Thad Beversdorf via First Rebuttal blog,
Thomas Jefferson is credited with the following sage advice, “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.” And so it seems sometimes the answer is right in front of us all along and we just fail to see it.
We hear a lot of talk these days about inflation. For decades the western world has been misled about a necessity for inflation to grow an economy. This is entirely false. Inflation has no relevance to economic growth; inflation is a depressive force on an economy and it can only come by way of increased money supply.
The apex of the discussion is that price increase does not equate to inflation. Inflation is but one of two paths for rising prices. More specifically, prices can rise by way of supply/demand fundamentals of an asset itself and by way of supply/demand fundamentals of the currency form being used to transact the underlying asset. The prior will raise prices in all currency forms while the latter, being inflation, will raise prices only in that relevant currency.
For inflation to occur demand for a given currency must decline relative to its supply. This can happen if consumers lose faith in a currency and thus demand less of it, or by governments increasing supply without proportional increases in demand. The latter is exactly what we’ve seen over the past 100 years but to such a grotesque degree over the past 8 years that it may have actually shattered the foundation of the economy of which it was driving. This is precisely the chain reaction that Thomas Jefferson had warned us would result from a private central banking system.
Once the economy is broken an epidemic of resource misallocation leads to an immense narrowing of income distribution, ultimately paralyzing the velocity of money; the result being an income-less society save for an elite slice. This leads to mass public and consumer debt creation in an effort to stave off the collapsing natural demand that ultimately ends in deflation when the debt efforts, after a short reprise, actually hasten the collapsing demand by hammering the final nail in the budgetary coffin. At such a point deflation is essentially infinite as people are willing to trade anything for a dollar to purchase food, or inflation is infinite as people will simply circumvent dollars and barter; an interesting paradox that in practice will be a moot point given the vast majority will have nothing to trade for food or dollars because ownership is no longer a reality.
It seems then, that Jefferson’s prediction is theoretically sound, but let’s see if we can find any empirical evidence to either support or refute his cautionary message. We know that dollar inflation has been approximately 2400% since 1913, 2000% of that devaluation coming subsequent to 1971 when Nixon moved to a pure fiat currency. The reason we moved to a fiat currency is to remove the restriction on money supply that is inherent to a convertible currency. We can see in the next chart that inflation is directly linked to money supply, which has seen around 1700% increase since 1971.
This ‘easy’ money accelerated significantly around the mid 1990′s and this has led to a misallocation of resources. To see this, let’s look at the relationship between corporate fixed capital expenditures and dividends. The idea being that fixed capital expenditures are economically productive meaning they lead to economic expansion, whereas dividends divert cash off corporate balance sheets and thus detract from capital expenditures, having a contractionary force on the economy.
The above chart clearly depicts a significant change in the economy’s allocation of corporate resources at the same time money printing accelerated. Fixed capital investment was a much larger share of GDP than dividends up until the mid 1990′s when that began to reverse. Again moving to a market environment that promotes a contracting rather than expansionary economic process. We should be able to see this effect actually taking place via declining capacity utilization. As a result of that we should then see declining labour participation rate and declining incomes from slack in the labour market. Looking at the data this is exactly what we find.
Notice that all three indicators begin to trend downward around 1998, shortly after (and one could suggest as a direct result of) the resource misallocation that began a few years earlier in the mid 1990′s. The next link in this chain should be an expansion of consumer loans in an attempt to offset the resulting demand deterioration from the weakening job market conditions.
We find abundant empirical evidence in the above charts showing an acceleration of consumer debt during the mid 1990′s and again around 2009. And this is perfectly in line with our theory and so we seem to be on the right track. Now the obvious result of massive increases in consumer debt is that ownership is being replaced by indebtedness. That is, to a great extent now we rent or borrower our assets as opposed to owning them.
In the above chart we see that home ownership is now back to the level it was before we ended Bretton Woods in 1971. And it’s not just housing, today about 75% of new car sales are being financed and with longer maturities than ever before. In short, ownership of the 2 major assets typical to the traditional American family has been on a sharp decline for the past 10 years with no signs of slowing.
The American dream is built on ownership because it represents substantive progress by way of building a family’s net worth. A net worth that has declined by 40% since 2007 for all but the very top of the economic food chain. But it’s not only the American dream that is in retreat. The reality is that over the past 8 years increases in public debt have outgrown increases in GDP. The nation is borrowing more than it’s producing and spending more than it’s collecting every quarter. A trend that is to continue and to worsen each and every new year according to the CBO’s own projections.
Where does this leave America and really the rest of the western world whose data will mirror the US?
Bankrupt and on borrowed time.
11 Reasons Why The Federal Reserve Should Be Abolished
Submitted by Michael Snyder of The Economic Collapse blog,
If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately. It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people.
The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years.
The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy. But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place? Wouldn't our economy function much more efficiently if we allowed the free market to set interest rates?
And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures". So why is the Federal Reserve doing it? Sadly, this is the way it works all over the globe today. In fact, all 187 nations that belong to the IMF have a central bank. But the truth is that there are much better alternatives. We just need to get people educated.
The following are 11 reasons why the Federal Reserve should be abolished...
#1 The Greatest Period Of Economic Growth In The History Of The United States Happened When There Was No Central Bank
Did you know that the greatest period of economic growth in U.S. history was between the Civil War and 1913? And guess what? That was a period when there was no central bank in the United States at all. The following is from Wikipedia...
The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.
So if our greatest period of economic prosperity was during a time when there was no Federal Reserve, then why shouldn't we try such a system again?
#2 The Federal Reserve Is Systematically Destroying The Value Of The U.S. Dollar
The United States never had a persistent, ongoing problem with inflation until the Federal Reserve was created in 1913.
If you do not believe this, just check out the inflation chart in this article.
The Federal Reserve systematically penalizes those that try to save their money. Inflation is a tax, and the value of each one of our dollars goes down a little bit more every single day.
But over time, it really adds up. In fact, the value of the U.S. dollar has fallen by 83 percent since 1970.
Anyone that goes to the grocery store on a regular basis knows how painful inflation can be. The following is a list that shows how prices for many of the things that we buy on a regular basis absolutely skyrocketed between 2002 and 2012...
Peanut Butter: 40%
A Loaf Of White Bread: 39%
Spaghetti And Macaroni: 44%
Orange Juice: 46%
Red Delicious Apples: 43%
Ground Beef: 61%
Chocolate Chip Cookies: 39%
Even the price of water has absolutely soared in recent years. According to USA Today, water bills have actually tripled over the past 12 years in some areas of the country.
So how can the Federal Reserve get away with claiming that we are in a "low inflation" environment?
Well, what Ben Bernanke never tells you is that the way that the government calculates inflation has changed more than 20 times since 1978.
The truth is that the real rate of inflation is somewhere between five and ten percent right now, but you will never hear about this on the mainstream news.
#3 The Federal Reserve Is A Perpetual Debt Mach
The Federal Reserve system was designed to be a trap. The intent of the bankers was to trap the U.S. government in an endless debt spiral from which it could never possibly escape.
But most Americans don't understand this. In fact, most Americans don't even understand where money comes from.
If you don't believe this, just go out on the street and ask regular people where money comes from. The responses will be something like this...
"Duh - I don't know. I've got to get home to watch American Idol."
This is why it is so important to get people educated. I think that most Americans would be horrified to learn that the creation of more money in our system also involves the creation of more debt.
The following is a summary of money creation that comes from one of my previous articles...
When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.
Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.
The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.
So what does the Federal Reserve do with those Treasury bonds? I went on to explain what happens...
The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.
There is a problem.
Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.
So where will the U.S. government get the money to pay that debt?
Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.
But that never actually happens, does it?
And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.
Men like Thomas Edison and Henry Ford could not understand why we would adopt such a foolish system. For example, Thomas Edison was once quoted in the New York Times as saying the following...
That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.
Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.
But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.
Unfortunately, today most Americans don't even understand how the system works. They just assume that we have the best system in the entire world.
Sadly, the reality is that the system is working just as the international bankers that designed it had hoped. The United States has the largest national debt in the history of the world, and we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day in a desperate attempt to keep the debt spiral going.
#4 The Federal Reserve Is A Centrally-Planned Financial System That Is The Antithesis Of What A Free Market System Should Be
Why do we need someone to centrally-plan our financial system?
Isn't that the kind of thing they do in communist China?
Why do we need someone to tell us what interest rates are going to be?
Why do we need someone to determine what "the target rate of inflation" should be?
If we actually had a free market system, the free market would be the one "managing" our economy.
But instead, we have become so accustomed to central planning that any alternatives seem to be absolutely unthinkable.
For example, CNBC cannot possibly imagine a world where the Fed (or some similar institution) was not running things...
But suppose the law were taken off the books? The Fed's job—in simple terms—is to manage the nation's money supply and achieve the sometimes-conflicting tasks of full employment, stable prices while fighting inflation or deflation.
How would the U.S. economy then function? Something has to take its place, right?
Global markets would also need some sort of economic direction from the U.S. The Fed manages the dollar — and as the world's leading currency, a void left by a Fed-less America could throw those markets into chaos with uncertainty about who's managing U.S. interest rates and the American economy.
I've got an idea - let's let the free market "manage" U.S. interest rates and the American economy.
I know, it's a crazy idea, but I have a sneaking suspicion that it just might work beautifully.
#5 The Federal Reserve Creates Bubbles And Busts
Do you remember the Dotcom bubble?
Or what about the housing bubble?
By dramatically distorting interest rates and financial behavior, the Federal Reserve creates economic bubbles and the corresponding economic busts.
And guess what?
Now it is happening again.
When will the American people decide that they have had enough?
If you can believe it, there have been 10 different economic recessions since 1950. And of course the Federal Reserve even admits that it helped create the Great Depression of the 1930s.
Perhaps it is time to try something different.
#6 The Federal Reserve Is Privately Owned
It has been said that the Federal Reserve is about as "federal" as Federal Express is.
Most Americans still believe that the Federal Reserve is a "federal agency", but that is simply not true. The following comes from factcheck.org...
The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks (chartered by the federal government) and those state-chartered banks that wish to join and meet certain requirements. About 38 percent of the nation’s more than 8,000 banks are members of the system, and thus own the Fed banks.
And even the Federal Reserve itself has argued that it is "not an agency" of the federal government in court.
So why is there still so much confusion about this?
We should not be allowing a private entity that is owned and dominated by the banks to make decisions that dramatically affect the daily lives of all the rest of us.
#7 The Federal Reserve Greatly Favors The "Too Big To Fail" Banks
Since the Federal Reserve is owned by the banks, should we be surprised that it serves the interests of the banks?
In particular, the Fed has been extremely good to the "too big to fail" banks.
Over the past several decades, those banks have grown tremendously in both size and power.
Back in 1970, the five largest U.S. banks held 17 percent of all U.S. banking industry assets.
Today, the five largest U.S. banks hold 52 percent of all U.S. banking industry assets.
#8 The Federal Reserve Gives Secret Bailouts To Their Friends
The Federal Reserve is the only institution in America that can print money out of thin air and loan it to their friends any time they want to.
For example, did you know that the Federal Reserve made 16 trillion dollars in secret loans to their friends during the last financial crisis?
The following list is taken directly from page 131 of a GAO audit report, and it shows which banks received secret loans 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
If you will notice, a number of the banks listed above are foreign banks.
Why is the Fed allowed to print money out of thin air and lend it to foreign banks?
#9 The Federal Reserve Is Paying Banks Not To Lend Money
Did you know that the Federal Reserve is actually paying U.S. banks not to lend money?
That doesn't make sense. Our economy is based on credit, and small businesses desperately need loans in order to operate.
But the Fed has decided to pay banks not to risk their money. Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on "excess reserves" that U.S. banks park at the Fed.
So the big banks can just send their cash to the Fed and watch the money come rolling in risk-free.
As the chart below demonstrates, the banks have taken great advantage of this tremendous deal...
#10 The Federal Reserve Has An Astounding Track Record Of Failure
Over the past ten years, the Federal Reserve has been an abysmal failure when it comes to running the economy.
But despite a track record of failure that would make the Chicago Cubs look like a roaring success, Barack Obama actually decided to nominate Ben Bernanke for a second term as the Chairman of the Federal Reserve.
What a mistake.
Just check out some of the things that Bernanke said prior to the last financial crisis. The following is an extended excerpt from an article that I published previously...
In 2005, Bernanke said that we shouldn't worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to "full employment"....
"We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."
In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets....
"With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."
In 2006, Bernanke said that housing prices would probably keep rising....
"Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise."
In 2007, Bernanke insisted that there was not a problem with subprime mortgages....
"At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency."
In 2008, Bernanke said that a recession was not coming....
"The Federal Reserve is not currently forecasting a recession."
A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure....
"The GSEs are adequately capitalized. They are in no danger of failing."
There are many, many more examples that could be listed, but hopefully you get the point.
And now it is happening again. Bernanke is telling the American people that everything is going to be just fine and that no major problems are ahead.
Do you believe him this time?
#11 The Federal Reserve Is Unaccountable To The American People
What is the most important political issue to most Americans?
Survey after survey has shown that the American people care about the economy more than anything else.
So why do we allow an unelected, unaccountable entity that is privately-owned to make our economic decisions for us?
The Federal Reserve has become so powerful that it has been called "the fourth branch of government". Every four years, presidential candidates argue about who will be best at managing the economy, but the truth is that it is the Fed that manages our economy.
We are told that the "independence" of the Federal Reserve is absolutely critical, but don't the American people deserve to have a say in the running of the economy?
Our system is broken. It is a system that will continue to create more bubbles and more debt until the entire thing finally collapses for good.
Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing....
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
But instead of banning government borrowing, we have allowed ourselves to become enslaved to a system where government borrowing actually creates our money.
We do not need to have a central bank. There are much better alternatives. We just need to get people educated.