Euro Crisis Destabilizing the Dollar
In response to pressure from Wall Street, the White House and central banks in Europe, the Federal Reserve last week drastically cut interest rates for currency swaps to benefit troubled European banks. This will flood world markets with more dollars and will soon mean rising prices for every American at the grocery store. This extra liquidity will temporarily ease the cash crunch for irresponsible bankers, but in the long run it will make the situation much worse for consumers all over the world. Equities markets registered big gains at the news, but only for a day. Make no mistake - this is not capitalism, and this is not how a free market operates. In a free market, bankruptcies happen, even to large banks. We must remember, free markets are the true and best regulators of financial mismanagement.
By contrast, under our current form of special interest corporatism certain businesses are granted too-big-to-fail status and are never allowed to go bankrupt. They keep profits generated during the good times generated by the Fed's monetary inflation, yet their losses are socialized through inflationary bailouts. This means you and your family eventually pay for the Fed's decisions because every dollar you earn is worth less. Few people make the connection that they have enriched bankers in Europe through doubling and tripling prices on milk, eggs, gasoline, and clothing, but that is exactly what is happening. The increased pace and size of these types of desperate financial maneuvers means price inflation will hit sooner and far too fast for wages to keep up. This is how the middle class gets wiped out, as has happened so many times in the past when fiat money fails.
The Fed's latest actions in cooperating with foreign central banks to undertake liquidity swaps of dollars for foreign currencies is just one more reason why Congress needs enhanced power to oversee and audit the Fed. Under current law Congress cannot examine these types of arrangements. Those who would argue that auditing the Fed or these agreements with central banks harms the Fed's independence should reevaluate the Fed's supposed independence when the Fed bails out Europe so soon after President Obama promised US assistance in resolving the Euro crisis.
Rather than calming markets, these arrangements should indicate just how frightened governments around the world are about the European financial crisis. Central banks are grasping at straws, hoping that flooding the world with money created out of thin air will somehow resolve a crisis caused by uncontrolled government spending and irresponsible debt issuance. But those governments and central banks never grasp that it is their own monetary policies that allowed European banks to become so wantonly overleveraged in the first place. If those banks need liquidity, they should generate it the old fashioned way: by attracting depositors. If they cannot do so, they should be allowed to fail. Congress should not permit this type of open-ended commitment on the part of the Fed, a commitment which could easily cost American taxpayers trillions of dollars. These dollar swaps are purely inflationary and will harm Americans as much as any form of quantitative easing.
Americans deserve sound money that cannot be manipulated and created out of thin air by central planners who deceitfully promise prosperity. Fiat money caused this European crisis and the financial crisis before it. More fiat money is not the cure. The global fiat currency system has proven itself a failure. We need real monetary reform. We need sound money.
Posted by Abu Aardvark on 12/07/11 05:54 AM
"We need Ron Paul in the White House, that's what we need ! ! ! "
I agree. Others may not:
"Have the Rothschilds Placed Their Presidential Bet?"
Click to view link
Posted by cosmos on 12/07/11 05:29 AM
We need Ron Paul in the White House, that's what we need ! ! !
Of course it wouldn't hurt if the American people would wake up and look at the money.
Posted by Bobby7 on 12/06/11 03:52 PM
LISTEN TO HOWARD BEALE, AMERICA:
I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there's nobody anywhere who seems to know what to do, and there's no end to it.
We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TVs while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be!
We all know things are bad -- worse than bad -- they're crazy.
It's like everything everywhere is going crazy, so we don't go out any more. We sit in the house, and slowly the world we're living in is getting smaller, and all we say is, "Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won't say anything. Just leave us alone."
Well, I'm not going to leave you alone.
I want you to get mad!
I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street.
All I know is that first, you've got to get mad.
You've gotta say, "I'm a human being, goddammit! My life has value!"
So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell,
"I'm as mad as hell,
and I'm not going to take this anymore!!"
Posted by Bobby7 on 12/06/11 03:47 PM
I have read them all, Ron Paul & CO, but I have yet to hear them tell JOE PUBLIC, "This is what you should"! From December on-wards... ... ... ... ... ... .."
If I see a hole in the ground, its no use ranting on about the hole!
Tell me how I can fill it & the best material I should use to do the job!
The BULL-DUNG must stop! The PUBLIC need answers!
Posted by laceja on 12/06/11 03:45 PM
The answer is quite simple. Politicians are so bad at keeping their mouths shut, the will surely blab everything to the American people, which will cause such outrage, it will make Mr. Paul's job much easier.
Posted by gunter on 12/06/11 03:37 PM
It's been a while since I contributed, but I haven't stopped reading. I've been busy too ;-)
I must take issue here with Dr. Paul. Although 99% of the time I am in complete agreement with Dr. Paul, I find his assessment of the European monetary crisis a bit "narrow" (for lack of a better word).
One cannot say that the overleveraging of European banks will lead to problems for the dollar (or FRN's to be precise), when it was the creation of unlimited amounts of FRN's that enabled the same banks to overleverage in the first place. So I must conclude that Dr. Paul is a politician after all (maybe only a handfull of truly "good" politicians exist), and that this column is a bit of political rhetoric.
I know very well that Dr. Paul knows that at the hart of the issue lie the central banks of the world. So it is not needed to pit Europe and America against each other (Or have I misread the very esteemed Dr. Paul here?)
A junkie cannot blame his dealer for his addiction, just as a dealer cannot blame the junkie for his career-choice.
Posted by amanfromMars on 12/06/11 01:35 PM
Gee, thanks, flying_pig. What would I do without you?
Posted by gmallast on 12/06/11 01:17 PM
Of course the political leaders are frightened. This means the end of their ability to buy support from the ignorant and the naive with tax money, debt money, and fiat money expropriating other people's wealth. As Maggie--er--Lady Margaret Thatcher pointed out,the trouble with socialism is what do you do when you run out of other peoples' wealth to expropriate?
This is funny. Looking for a particular quote, I started reading the last chapter of Wealth of Nations, "Public Debts." Adam Smith describes perfectly how the current crisis came about by government increasingly relying on debt to finance spending so that tax revenues only cover the interest on the debt and then not even that--over 200 years ago!!! As Yogi Berra would say, reading that was like deja vu all over again. I don't know if our current political and financial leaders are stupid, crazy, or evil.
Anyway, the esteemed Dr. Paul demonstrates once again why he is a godzillion time better than his immediate opponents for the Republican nomination. He actually knows something!
Posted by flying_pig on 12/06/11 01:10 PM
My, what verbal diarrhea. The word you seem to lack in your vocabulary is "Counterfeiting"
Posted by kenn on 12/06/11 09:17 AM
Dollar swaps? Can you say money printing then laundering... LOL. They're making a joke out of their own funny money... .
Besides,,, Ole great leaders were too busy ensuring we americans could be incarcerated forever by the boys and girls protecting our freedoms.
More disgusting! None of it seemed to bother others I talked to. I guess the old adage "You get the government you deserve" is applicable.
Posted by onebornfree on 12/06/11 07:31 AM
RP :"Congress needs enhanced power to oversee and audit the Fed."
Dear Mr Paul, please explain to me how giving a bunch of crooks more power "to oversee and audit the Fed" helps anyone [outside of the crooks themselves]. I am at: Click to view link
Reply from The Daily Bell
Is a good point, but he probably won't get back to you. He is busy.
Posted by AlephNull on 12/06/11 06:11 AM
Another interesting link :
Japan's Gold-for-Bonds Offer Could Boost Return By 5.9 Times
Click to view link
Posted by AlephNull on 12/06/11 05:58 AM
Maybe we should listen to these 7 minutes :
Using the opposition to get your way
Click to view link
Not too sure of the Date & Source .. would be interesting if anyone here knows.
Posted by amanfromMars on 12/06/11 02:58 AM
The problem is not fiat currency per se, for such an artificial exchange medium is a most convenient vehicle for transfer of wealth and services, but the abuse of the facility with its vast accumulation by fools who do not allow it to do its magic with its population spend/flow.
To think that vast individual paper wealth delivers power is a nonsense whenever it does not also provide superior intelligence for control, and you may like to consider that that is what a presidential hopeful should be considering harnessing and providing to change the Great Game dynamic.
And those who will/can present Cyber Command and Control are the creative drivers of that New World Order Paradigm which does not suffer from the arrogance of fools. And is why of course it has such a high priority in all of those systems which would be seeking to maintain the exercise of their global powers.
The Virtual Realm though, that which Cyber Commands would attempt to Control, are completely different from anything that has gone before, and will prove to be far too much of an intellectual challenge for any who would be seeking to maintain the Status Quo arrangements based upon past successes and old dynasties, for they are based upon perverse and corrupt practices which are being exposed by new knowledge and intelligence which shares information to be freely challenged for veracity.
Does your White House campaign have anyone competent in that irregular and unconventional field/those peculiar and particular fields, or do you do battle without the necessary future weaponry to vanquish all comers? ... ... and thus guarantee yourself defeat? Who fronts, from deep within the Virtual Machine, Cyber Command and Control for Ron Paul?