The Robber Barons
June 27, 2011 by Bob Livingston
Ben Bernanke is stumped.
That’s what the Federal Reserve chairman told The Associated Press last week. The AP report said:
“Fed Chairman Ben Bernanke told reporters Wednesday that the central bank had been caught off guard by recent signs of deterioration in the economy. And he said the troubles could continue into next year.
‘We don’t have a precise read on why this slower pace of growth is persisting,’ Bernanke said. He said the weak housing market and problems in the banking system might be ‘more persistent than we thought.’”
I thought he was the smartest guy in the room. But eight weeks ago, he was singing a different tune. He said then that the job market was gradually improving.
Since then, unemployment has gone up. It was at 9.1 percent in May. New jobless claims hit a seasonally adjusted 429,000 for the week of June 13. (It’s topped 400,000 for 11 straight weeks.) And the Fed has revised its forecast for economic growth this year down to a range of 2.7 percent to 2.9 percent from its April estimate of 3.1 percent to 3.3 percent.
The economy grew only 1.8 percent in the first three months of 2011. That, of course, is not what the Fed expected. Back in January, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, told The Hill newspaper that the economy “could expand by 4 percent and interest rates may need to go up.”
Does anyone see a pattern here? Isn’t it time for Bernanke and company to admit they haven’t a clue?
Trillions of dollars of spending money created out of thin air in the form of the Troubled Asset Relief Program (TARP), bailouts, loans to banksters — both foreign and domestic — and stimulus haven’t changed the economic situation. Throwing more fiat money at the problem has made it worse.
Who knew? Lots of people, but none of them subscribe to the same Keynesian philosophy that Bernanke, Treasury Secretary Timothy Geithner and the economic advisers to the Presidents — Barack Obama and those before him — subscribe to.
Some of us saw this coming long ago. In February 2008, I wrote in my monthly newsletter, The Bob Livingston Letter™:
“The focus of the Federal Reserve is on preventing the collapse of the financial balloon.
“There is no free market solution to the credit collapse. More likely we are witnessing a de facto nationalization of the banking system in which massive profits flow to the private sector while big losses accrue to the public, as always.
“The banking system is insolvent or on the verge of insolvency. The Fed will be voicing repeated concerns about inflation while sacrificing the savers of the world to salvage the banking system.
“We will float on paper money. Buy gold and silver!
“Up to now, gold has served mainly as a bet against the dollar and U.S. policy failures, but just ahead, gold will be a strong bet against all fiat globalism. Gold is a tremendous alternative to political foolishness. We sit in the middle of a spectacular finale in the next two to three years.
“In 2008, I expect silver to glitter maybe at an all time nominal high.
“The planners are managing a silent and invisible reduction in the American living standard.
In the March 2008 Letter I wrote:
“When central banks expand the money supply, it gives rise to the consumption of goods of every description, which is not preceded by production (and savings). It leads silently to less means of sustenance. As long as the pool of funding continues to expand, loose monetary policies give the impression that economic activity is being boosted. It is a great illusion to all but the sober.
“In reality, economic activity is not boosted and to some it becomes apparent. Once this happens, the economy begins its downward plunge. Then the most aggressive expansion of the money supply will not reverse the plunge.
“This foretells that the end of the financial system is near. At that point you will need your precious metals to survive.
“Some things will rise big in price, like food, fuel and commodities. While homes will go down for some time, bailouts and foreclosures will last for years. Precious metals will keep going up!
“Under cover of this financial crisis, I expect a vast nationwide expenditure for infrastructure like highways and bridges. This is badly needed in the U.S. now.”
In the January 2009 Letter I wrote:
“Paper money expands consumption way beyond income. This eventually guarantees debt collapse and social breakdown. The foundation of the household collapses and the middle class is destroyed. Paper money is an illusion and illusory because it is non-substance and can be created by the government to infinity. When the people accept numbers on green strips of paper or computer symbols for money, they accept illusion for reality.”
In the May 2009 Letter I wrote:
“Bubbles and bailouts are not paid for with gold and silver. They are paid for with printing press money, which dilutes your savings and retirement funds. So who are the heroes of bubbles and bailouts? The short answer is, the money creators. They are presiding over and benefiting from the greatest transfer of wealth in history, with the almost certain guarantee that they will never be found out because they are operating above the threshold of perceived reality.
“We should, of course, know that every new dollar that the money creators create dilutes every dollar already created. They are using non-substance, fiat, that costs them nothing and exchanging it for substance in the form of capital assets. This is a transfer of wealth by definition. This depreciating fiat is impoverishing all who hold dollar assets.”
This article was reprinted in January 2010 here, if you’d like to read it in its entirety.
I point these out not to toot my horn or present myself as a sage, but to show that some of us understand what is going on. I’m not alone.
In his 2007 book, Crash Proof: How to Profit from the Coming Economic Collapse, Peter D. Schiff wrote, “The real estate bubble, easily the worst speculative episode in American history, has been artificially propping up the entire national economy. The unwinding will cause havoc reaching well beyond the stakeholders directly involved.”
In an article for the Ludwig von Mises Institute titled The Rescue Package Will Delay Recovery, adjunct scholar Frank Shostak wrote:
“(T)he rescue package cannot prevent so-called economic disruptions. If anything, government intervention would make these disruptions much worse. Again, a better alternative is to let the market do the job. The market’s ability to make swift adjustments without much drama was vividly illustrated only a few weeks ago when the very large investment bank, Lehman Brothers, was allowed to go belly up. The world did not come to an end. Instead, this was a healthy development. A money loser was eliminated from the market. This freed up resources to promote growth.”
The only statesman left in Washington, D.C., Representative Ron Paul (R-Texas), has been preaching a similar message to deaf ears for many years. For that, the mainstream media and elite “economists” have labeled him a crackpot and worked overtime to marginalize him, even as his warnings have proven true.
To the Obama haters, the blame is not his alone. The problems began long before Obama entered the scene. Former Fed Chairman Alan Greenspan had a lot to do with it. Bernanke has perpetuated it. President George W. Bush set much in motion. Obama doubled down. But the roots are much deeper, reaching to 1913 and perpetuated through the years.
What they’ve done is set in motion the collapse.
Bernanke and his advisers, Obama and his advisers, Representatives Paul Ryan (R-Wis.) and Eric Cantor (R-Va.) and their advisers are all cut from the same cloth. Is it any wonder that those who advocated the policies that brought us where we are say they don’t know what to do to fix it? To change course would be to admit their past lies.
Reality is far different. They know what to do but they’re saying what they need to say for public consumption. Meanwhile, the robber barons continue their work.