Ben Bernanke: "What me worry?" But what does Alan Greenspan say?

The U.S. central bank, the so-called "Federal Reserve" or "FED" has loaned a completely unprecedented ~$2.5 trillion (with a "T") into existence, lately by buying-up U.S. Treasuries ($40 billion a month) and Mortgage-Backed Securities (MBS) ($45 billion a month) from Fannie Mae and Freddy Mac, currently the backers of nearly all U.S. mortgages. 

By the Law of Supply and Demand, putting this $85 billion a month of buying power into circulation eventually dilutes the value of the dollar, which we experience as "inflation." But Mr. Bernanke, the current FED Chairman, says not to worry, the FED has things under control.

But what does his predecessor, former FED Chair Alan Greenspan say about the FED and control? 

What Alan Greenspan says:

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Where all the inflation has gone - - -

The U.S. Federal Reserve (the FED), in addition to setting interest rates to the lowest in history, is creating $85 billion in money-equivalent every month by buying various bonds. This is all inherently inflationary, but so far, not much inflation is showing up in the U.S. economy. Why not?

Because for the time being, it's going elsewhere - - -

Brazilian President Dilma Rousseff criticized U.S. monetary policy saying it has harmed Brazil and other developing countries. Rousseff said the U.S. decision to leave benchmark lending rates near zero has created an overload of speculative money that floods into economies like Brazil.
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Brazilian President Dilma Rousseff: "Such expansionist monetary policies in and of themselves, is isolation, regarding the fiscal policies, ultimately lead to a depreciation in the value of the currencies of developed countries thus impairing growth outlooks in emerging countries." --Democracy NOW! Headlines, Tuesday, April 10, 2012

And here - - -   

Annual [Argentine] inflation, clocked by private analysts at over 20 percent... --Argentine leader's image falls as inflation soars | Reuters

Now we have this logical evolution:

Brazilian authorities are likely to tighten monetary policy faster than expected to combat resurgent inflation ...the central bank's monetary policy committee will hike rates by at least 25 basis points to 7.5% when it meets on Wednesday.

"We have passed the point of no return," said Marcelo Carvalho head of Latin America economic research at BNP Paribas, who predicted a 50 basis point hike. "Inflation has been too high too long and it's time to wake up." Brazil poised to hike rates: analysts | LatinFinance

But hey, what's a little more Krugmanite collateral damage among friends?

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How to control inflation

Annual [Argentine] inflation, clocked by private analysts at over 20 percent, was another worry voiced in the survey. The government fines economists who publish their inflation estimates, which tend to double or triple the official figures... --Argentine leader's image falls as inflation soars | Reuters

Argentina's government apparently forced McDonald's to sell the Big Mac at an artificially low price to manipulate the country's performance on the "Big Mac index"

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What's with gold? The Bigger Picture - - -

The titular price of gold dropped about $84 dollars on Friday, April 12, 2013 in an obviously unprecedented manner. Yet, at the same time, ABN AMRO, one of the largest banks in Europe, failed to deliver the PHYSICAL gold it had contracted to deliver and defaulted, Venezuela, Germany, and apparently the Netherlands are repatriating their gold from the U.S. Fed -- and the U.S. Mint has periodically suspended sales of precious coins because of a lack of metal to cast them with.

SOMETHING is going on. Maybe it's just a normal trashing of the gold price by the government-banking axis, but to an extreme degree.

The question is, "Why NOW?"

Hopefully the answer is, "Because we've been trying to do this to protect our Keynesian zero-real-interest-rates against gold ever since it hit $1900/oz and threatened them -- and just NOW all the factors were finally right." Former U.S. Assistant Secretary of the Treasury Paul Craig Roberts thinks this is the case.

That's most likely.

BUT if the answer is, "We see a serious ripple in the fiat force, and we're trying to head the disaster off at the pass," they may be right. Worse, their blatantly obvious action against gold may precipitate the very disaster they fear and perhaps are even semi-aware of from history.

In that case, here's what that would likely look like - - - My Blog Former U.S. Under Secretary of Treasury Paul Craig Roberts explains what the bankster-government axis may be worried about.

According to veteran metals trader Andrew McGuire, the western banking-government amalgam, spearheaded as usual by Bankster Goldman Sachs, dumped more than an unheard of 500 tons of PAPER gold on the market late last week. And pimped, cajoled, and forced other weak hands to play along.

What's paper have to do with it? "Paper gold" merely means it was promises to deliver gold, not gold itself. Which is what makes the failure of ABN AMRO to deliver promised gold very interesting indeed.

It's directly analagous to the beginning of an old fashioned run on a bank where the bank was unable to redeem its "Redeemable in Gold on Demand" dollars -- the only Constitutional kind -- because they'd printed those redeemable I.O.U.s for more gold than they actually had. If anyone else had done that, it would be called "counterfeiting."

And because the banks are so interconnected, this isn't just a run on ABN AMRO.

AND maybe the repatriation movement, besides being interesting, is the straw that lit the fuse as Venezuela, Gremany, probably Holland, and perhaps some other countries are repatriating their gold which has been theoretically stored in the valuts beneath the Federal Resreve Bank of New York -- made famous in Die Hard With a Vengeance, the third in the series.

History? That was when France, a few other countries, and most importantly, the markets, called Uncle Scam's Bretton-Woods "London Gold Pool" paper-gold bluff by taking delivery of actual physical gold from the U.S. and its other eight dragooned central banks. In stupidly trying to again raise the market bet and cap the price of gold, Uncle airlifted a bunch of gold to London, ultimately collapsing the floor of one storage vault. But that was all to no avail. Being caught with its counterfeit shorts down, finally, on August 15, 1971, with Executive Order 11615, Nixon "closed the gold window," thus abrogating the international convertibility of the U.S. dollar to gold and finalizing the biggest default in history. So far.

P.S. As of April 14, 2013, 22:57, it looks like Goldman et.al. are still working the plan. Be interesting to see just how far they can go before the markets once again slap them upside the head.

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The REAL Fear Factor

Can YOU find the common denominator?

Folks including H.L. Mencken, U.S. founder James Madison, U.S. President Dwight D. Eisenhower, Henry Kissinger, Soviet dictator Josef Stalin, U.S. General Douglas MacArthur, and Prof. Chalmers Johnson all explain the main factor we should fear.

"The whole aim of practical politics is to keep the populace alarmed -- and thus clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary." -- H.L. Mencken

"It is a universal truth that the loss of liberty at home is to be charged to the provisions against danger, real or pretended, from abroad." --James Madison

"Our (U.S.) government has kept us in a perpetual state of fear - kept us in a continuous stampede of patriotic fervor - with the cry of grave national emergency ... Always there has been some terrible evil at home or some monstrous foreign power that was going to gobble us up if we did not blindly rally behind the exorbitant funds demanded. Yet, in retrospect, these disasters seem never to have happened, seem never to have been quite real." --US General Douglas MacArthur, Address to the Annual Stockholders Sperry Rand Corporation (30 July 1957)

"Today Americans would be outraged if UN troops entered Los Angeles to restore order; tomorrow, they will be grateful. This is especially true if they were told there is an outside threat from beyond, whether real or promulgated, that threatened our very existence. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being by their world government." --Henry Kissinger, June 8, 1992, Evian, France, Media Protects Bilderberg, Spotlight.org

"It is part of the general pattern of misguided policy that our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear. While such an economy may produce a sense of seeming prosperity for the moment, it rests on an illusionary foundation of complete unreliability and renders among our political leaders almost a greater fear of peace than is their fear of war." --U.S. General Douglas MacArthur, Speech to the Michigan legislature, in Lansing, Michigan (15 May 1952).

"The easiest way to gain control of a population is to carry out acts of terror. [The public] will clamor for such laws if their personal security is threatened." --??Josef Stalin

Given this background, it is not surprising that some have seen the US failure to avert the 9/11 attacks as creating an invaluable pretext for attacking Afghanistan in a war that had clearly already been well planned in advance. There is a possible precedent for this. The US national archives reveal that President Roosevelt used exactly this approach in relation to Pearl Harbor on December 7 1941. ... Similarly the PNAC [Project for a New American Century] blueprint of September 2000 states that the process of transforming the US into "tomorrow's dominant force" is likely to be a long one in the absence of "some catastrophic and catalyzing event -like a new Pearl Harbor". This war on terrorism is bogus, Michael Meacher, MP & U.K. environment minister, The Guardian, Saturday September 6, 2003

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

"We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together." --Dwight D. Eisenhower, Military-Industrial Complex Speech, 1961, Public Papers of the Presidents, Dwight D. Eisenhower, 1960, p. 1035- 1040

"Barbarian invasions would be superfluous: we are our own Huns." --Bertrand de Jouvenal

"This time his [Prof. Chalmers Johnson] tone was more alarmist, while his focus was on the way an American version of military Keynesianism was failing the country. He feared that the U.S. would be simultaneously overwhelmed by related tides of militarism and bankruptcy. ...and predicted that, in the reasonably near future, the U.S. would have to choose between remaining a democratic society or becoming a military dictatorship." --Chalmers Johnson vs. the Empire by Tom Engelhardt -- Antiwar.com

[Police Chief] Stovall told the group of almost 40 residents that beginning in 2013, the department would deploy a new street crimes unit to high crime areas on foot to take back the streets. "[Police are] going to be in SWAT gear and have AR-15s around their neck," Stovall said. "If you're out walking, we're going to stop you, ask why you're out walking, check for your ID." Arkansas Police chief says citizens could be subject to ID checks

Government officials are quietly installing sophisticated audio surveillance systems on public buses across the country to eavesdrop on passengers, according to documents obtained by The Daily. Plans to implement the technology are under way in cities from San Francisco to Hartford, Conn., and Eugene, Ore., to Columbus, Ohio. ...With the new systems, experts say, transit officials can effectively send an invisible police officer to transcribe the individual conversations of every passenger riding on a public bus. BIG BROTHER'S LISTENING - The Daily

The Pentagon has confirmed plans to deploy hundreds of additional spies overseas as part of an effort to expand its intelligence operations worldwide. The Washington Post reports the Defense Intelligence Agency hopes to use the covert operatives as part of an overall force of some 1,600 officials around the world. The proposed expansion would ultimately result in what the Pentagon aims to be an espionage network rivaling the CIA in size. It would also likely result in an increased number of deadly air strikes and other covert actions that would otherwise be subjected to congressional oversight. --Pentagon to Deploy Hundreds of Spies Worldwide, Democracy Now! December 03, 2012

William Binney, the former chief of research, the National Security Agency's signals intelligence division, describes this situation that we are in now as "turnkey totalitarianism," that the whole system of totalitarianism has been built -- the car, the engine has been built -- and it's just a matter of turning the key. And actually, when we look to see some of the crackdowns on WikiLeaks and the grand jury process and targeted assassinations and so on, actually it's arguable that key has already been partly turned. --Wikileaks' Julian Assange

Talk of imminent threat to our national security through the application of external force is pure nonsense. Our threat is from the insidious forces working from within which have already so drastically altered the character of our free institutions - those institutions we proudly called the American way of life." --General Douglas MacArthur, Speech to the Michigan legislature, in Lansing, Michigan (15 May 1952)

So tell me, what did all these informed folks think the main factor we have to fear is?

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ALSO RELEVANT:

Freedom and the Indians

What the Elders Say

The nature of "reality" via Bohr, Feynman, & Quantum Mechanics

The Essence of Government by Ostensive Definition

Governments don't aid progress, they retard it

UNCOMMON SENSE: The REAL Fear Factor

Franz Oppenheimer, The State [1919], Translator: John Milton Gitterman

The Criminality of the State - Albert Jay Nock - Mises Daily

Silicon Valley Roused by Secession Call - NYTimes.com

The End of the Nation-State? - NYTimes.com

It's not who or what you think - - -

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Ron Paul: Putting your money where your mouth is - - -

Putting your money where your mouth is - - -

--Greg Mankiw's Blog: The Ron Paul Portfolio

- - - AND loving it - - -

--Ron Paul's Long-Term Holdings Outperform The Market And Most Pros - Seeking Alpha

L. Reichard White, Monday, December 26, 2011 11:49 AM

ECONOMICS IN ONE EASY LESSON

Economics is simpler than you think -- if you're an Austrian Economist (Hayek, Mises, etc.) rather than a Keynesian Economist (J.M. Keynes), monetarist (Milton Friedman), neo-Keynesian economist (Bernanke, Krugman, etc.).

1. The "law of supply and demand" applies to "money."

2. An increase in the "money" supply greater than the increase in production -- because of the law of supply and demand -- causes a general price inflation across the boards.

3. Credit (I.O.U.s of various types, including stock certificates, bonds, etc. -- that note on the back of granddad's cigarette pack), as Daniel Webster put it, is equivalent to "money" and has all the effects of "money."

3A. Most I.O.U.s start out as limited circulation I.O.U.s -- and stay that way unless a market is established which allows them to be traded, that is, makes them "liquid."

4. A sudden change in the amount of either "money" or credit -- in either direction -- disrupts trade and thus the advantages of specialization and division of labor -- which ultimately determine the physical level of well-being of the human race -- and make the "modern" large populations possible.

5. Without the advantages of trade (and thus division of labor), extremely large numbers of men, women and children would die.

6. Barring the crash of a solid gold or silver asteroid, a sudden change in the supply of gold and silver (transactional hard money) are highly unlikely.

7. Because their value depends on psychology rather on a directly perceived value of a strictly limited physical commodity, the effective supply of both credit and paper/megabyte money can change suddenly.

8. The supply of both credit and paper/megabyte money CAN change with extreme rapidity, paper/megabyte because it's easy to create, credit because it completely depends on confidence that the debtor can and will pay, and without that confidence, a credit vehicle becomes devalued or even worthless. That is, because people can lose confidence in an I.O.U. and so don't want it, it becomes less, or even completely, "illiquid." That is, "people don't want it" = "illiquid" = "devalued" or even "worthless."

9. Since most people hold money for later use, at least partially, it's important that people have confidence it will hold its trade value and NOT devalue. Thus, the main "psychology" that determines whether or not people will hold a particular I.O.U. is their expectation as to its future value. If they expect its value to drop -- or equivalently, expect prices to rise -- they will spend it quickly. That is, if they expect a general price inflation, they will lose confidence in their money and spend it quickly.

10. Once people in general start to spend quickly, this puts more money into circulation quickly, thus increasing its effective supply, which causes more inflation, more inflationary expectations, destroys more confidence, and so forth. The Austrian School of economics calls the rapid spiral that results a "crack-up boom" or "catastrophenhause." Others call it "hyperinflation." Which is why U.S. Federal Reserve Chair Bernanke and the FED are so concerned by peoples' "inflationary expectations." This is, of course, not a problem with transactional hard money -- which, barring that solid-gold asteroid, can't suddenly inflate -- or suddenly deflate.

Just another I.O.U.

There's always a discount on an I.O.U. The amount depends on its perceived likely-hood of being paid. The dollar is, in essence, such an I.O.U. The perception of repayment is dropping and you can follow it by watching the value of dollars on the market. --L. Reichard White, Thursday, November 11, 2010 3:22 AM

More symptoms - - -

- - - of unsound money:

Our parents were "The Greatest Generation," and they earned that title by making enormous sacrifices and investments to build us a world of abundance. My generation, "The Baby Boomers," turned out to be what the writer Kurt Andersen called "The Grasshopper Generation." We've eaten through all that abundance like hungry locusts. --Op-Ed Columnist Thomas L. Friedman, Root Canal Politics - NYTimes.com

These are just two more symptoms of unsound money. The boomers - - - and everyone in line behind us - - - are just following the incentives implicit in fiat (paper/electronic) money: Because of chronic yearly inflation caused by central bankers and politicians, this kind of "cash is trash" and thus saving is stupid. Our parents on the other hand, behaved in accordance with the incentives implicit in real Constitutional "hard" money (gold and silver) -- which can't be inflated.

Out of Greece: The dynamics of contagion

"As I testified before this committee in the midst of the Mexican financial crisis in early 1995, major advances in technology have engendered a highly efficient and increasingly sophisticated international financial system. ...But that same efficient financial system, as I also pointed out in that earlier testimony, has the capability to rapidly transmit the consequences of errors of judgement in private investments and public policies to all corners of the world at historically unprecedented speeds." -Alan Greenspan to House Banking Committee, 16 September, 1998.  --BIG-FLOAT: The American Damocles

How inflation led to totalitarianism in Rome

The episodes of extreme inflation took a standard form. ... The government ...resorted to debasing the coins of the realm. This took the form of replacing the gold and silver in coins with copper and other cheaper metals. Over the period 218 to 268 A.D. the silver content of Roman coins dropped to one five thousandth of its original level. Sometimes the size and weight of coins were reduced. It also meant vastly increasing the amount of coins in circulation. There was a corresponding increase in prices. The emperors usually blamed the price increases on the greed of merchants. ... In 301 AD Diocletian issued an edict declaring fixed prices; i.e., price controls. His edict provided for the death penalty for anyone selling above the control prices. There was also penalties (less severe) for anyone paying more than the control price. Irate consumers sometimes destroyed the businesses of those who sold higher than the control prices. In the short-run these draconian measures may have curbed inflation but in the long-run the results were disaster. Merchants stopped selling goods but this led to penalties against hoarding. People went out of business but Diocletian countered with laws saying that every man had to pursue the occupation of their father. The penalty for not doing so was death. This was justified on the basis that leaving the occupation of ones father was like a soldier deserting in time of war. The effect of this was to turn free men into serfs.   EPISODES OF HYPERINFLATION, Thayer Watkins, ECONOMICS DEPARTMENT, SAN JOSE STATE UNIVERSITY