Guest Post by Simon Black
Yesterday the Federal Reserve released the minutes from its July meeting a few weeks ago in which they decided to NOT raise interest rates.
These minutes are the official archive of the meeting, providing details about the presentations, debates, and discussions that took place.
They contain very formal sounding language, referring to their near-zero interest rates as “accommodation” in the same way that my high school health teacher preferred to use the more clinical term “copulation” instead of “sex”.
As an example, the most recent Fed minutes state:
“members agreed to indicate that they would continue to closely monitor global economic and financial developments.”
What in the world does that even mean?
I really get so tired of their forked-tongue garbage.
Interest rates are at 5,000 year lows. There are now 500 MILLION people around the world, in fact, living under NEGATIVE interest rates.
Remember that money is essentially nothing more than a measurement of economic value, in the same way that a meter or a mile is a measure of distance.
Just imagine the chaos if there were some unelected committee of bureaucrats who got together from time to time to change the value of the mile.
Or imagine if, tomorrow morning, they decided that the mile would be shortened by 20%.
Some people would benefit from that arrangement (taxi drivers). Others would be worse off (taxi passengers). There are always winners and losers.
Similarly, there are always winners and losers with monetary policy.
And these unelected central bankers have made a series of very deliberate decisions to forsake one segment of the population (anyone trying to save money) for the benefit of another (those who are heavily in debt, like, ummmm, governments).
They try to wrap their decisions up with fancy sounding language about “accommodation” and 14 pages of fluff like
“. . . the Committee should wait to take another step in removing accommodation until the data on economic activity provided a greater level of confidence that economic growth was strong enough to withstand a possible downward shock to demand.”
But if there were some secret minutes detailing the Fed’s inner conscience, here’s what they would really be saying:
“Nothing terribly catastrophic has happened yet, so we have decided to continue screwing responsible savers with interest rates that are at 5,000 year lows so that this dangerous asset bubble can persist, the federal government can continue indebting future generations, and the commercial banks can keep making tons of money, because we are shit scared that even the tiniest 0.25% increase in interest rates will completely derail this totally fragile economy, and that would be really bad for Barack Obama and Hillary Clinton.”
They know that the gig is up. Just keeping ballast in the boat before it tips over. Why would anyone wish to lead a nation in demise? Could it be a sinister globalist plot?
Decent interest rates over several decades allowed poor people that worked hard and long and SAVED to merge into the middle class. This was accomplished by saving and then switching between Savings Accounts or Money Market Accounts or Certificates of Deposit depending which bank provided the best interest rates.
Yes, it meant going without the new gadgets or vacations, or etc.
Life is about choices. Thank you Obama and Democrats for fucking the poor – they will stay poor.
Added 08:20 a.m.
ZIRP and QE only exist to help government reduce their debt costs AND to enrich the already wealthy, especially the International Corporations (includes Banksters) that have borrowed Trillions at 0.25% interest. Which is also why the U.S. is a Fascist state (gov’t and Big Corps are incestuous).
The train really started moving with the repeal of Glass-Steagall, by a Rep. controlled CONgress and a Dem. Pres. (Clinton).
The next time a ‘friend’ tells you that the Dem’s care about the ‘little guy’, give them an education.
Face it the federal reserve , treasurey dept and any appointed fed only knows Washington DC insider geek speak where the bla bla bla and NEVER answer a direct question to a point where you want to have Al Capone ask the question while holding a Louisville Slugger over their fucking heads ! After a few of them have their skulls beat to a fine mush we may start getting straight answers . I cannot listen to Hillary be interviewed because even when the interviewer corners her she wiggles out slicker than a shithouse rat ! Now for Trump everything is going to be great again believe me . OK , How ? Bla Bla Bla how about our vets Bla Bla Bla it’s going to be great . First Donald you better look at all the financials “ALL”. We’re fucked ! Bankruptcy and default is the only way to wipe this slate clean and now for the plan . I would send you a Louisville Slugger but I think they are made in China now !
Anonymous, you forgot WAR! WAR has worked before! Hey, I’m a poet and didn’t know it!
You better pray that those who created this mess don’t take you to WAR. The pain of WAR can certainly focus your attention to survival and away from the economic morass we are currently in.
Pray hard!
“When faced with an impossible situation, do the impossible!”–Homer
“Remember that money is essentially nothing more than a measurement of economic value, in the same way that a meter or a mile is a measure of distance.” Au Contraire, Mon Capitaine!
No! Not really. First, economic value is subjective and resides in the minds of those making the exchange not intrinsic to the currency facilitating that exchange. The currency is a piece of paper with the ugly portrait of politician on it. It has no value except to light your cigar. The value of the currency to the participants of that exchange is that some greater fool will give them some ‘good’ for it. Currency is no longer a ‘good’ in its own right, which is what true money is. This is why currency can and do go to hyper-inflation where people refuse to see value in it. It is impossible for real money to hyper-inflate be cause it is a ‘good’ in its own right. It is difficult to manipulate real money which is why governments prefer their fiat funny pieces of paper. Fiat currency facilitates theft, is theft.
Secondly, An odometer on your car measures miles traveled and a yardstick measures distance. These devices do their work outside of what is being measured and are not a part of that being measured. Currency, on the other hand, is not outside of the exchange but an integral part of that exchange. The exchange could not happen without that currency. Of course there is barter, but we are talking about currency and its part in an exchange of ‘goods’. Fiat Currency has the color of its former glory–a ‘good’– and it is this remembrance that give a sense of value to the persons involved.
Money is the most misunderstood subject of any item that people use on a daily basis. And…the government and FED want to keep it that way.
The two things that I lament most about society is their lack of teaching about the two most important aspects of life–SEX and MONEY! They are mystified and glorified, but never explained. Go figure!
True freedom come from understanding how the real Universe works and allowing others to share in that knowledge.
END the FED.
Revoke their charter. Dismantle it.
Have Treasury handle the nations money, the way it was supposed to be in the first place!
ONE RULE FOR ALL – The “Rule of Law”. Equally enforced on all. For all.
That’s why we had a gold standard way back in 1972….
It was a way for country’s to guarantee their respective currencies…. they were always backed by gold, and governments could not inflate their currencies without affecting the price of gold. That in essence preserved the wealth of it’s citizens (time = money / money = time)
Now the governments get to do what they want at the expense of it’s citizens. They merely inflate their respective currencies and we get to pay more for goods and services!
Pretty good deal if your the government or the FED…….
It’s another part of moral relativism – no values are absolute, so no morality can be absolute, so money doesn’t need to have absolute value (gold standard).
It’s brought us Marxism, acceptance of Islam as a religion, and now inflation soon to be hyperinflation. The survivors will know better.
As I have said more than once on this site, MONEY is the grease that makes civilization possible. There has never been a civilization that existed without money. Why is this, you ask? Because money facilitates TRADE and the whole purpose of civilization is trade. MONEY, also, allows specialization of LABOR which is an economy of time. Everyone benefits with MONEY. It was mankind’s greatest invention.
The Roman Empire failed because it’s money failed. All civilizations fail when their money fails. Failed money precedes the fall.
The Eastern Roman Empire (Byzantine Empire) lasted a thousand years because their coinage was the Bezant, a gold coin that if debased was punishable by death.
You want to destroy a civilization? First destroy its money. Take HEED America!
Anon…you can get a straight answer from the Fed…once a member leaves office .
Richard Fisher the former Dallas Fed Chief said :
“The Fed front-loaded an enormous market rally in order to create a wealth effect.” Today he is back, taking a victory lap onthe 7th anniversary of the crisis lows by explaining, rather stunningly, to CNBC that “we injected cocaine and heroin into the system” to enable a wealth effect (that he admits did not work, despite its success in raising asset prices), and “now we are maintaining it with ritalin.” Fisher also confirmed his previous warning that “The Fed is a giant weapon that has no ammunition left.
We need a new way to measure wealth. Most think wealth is their 401k, bank account and property owned. Lot’s of unhappiness infests those consumed by their bottom line. Wealth to me is cultivating friends and maintaining my health. I don’t believe in collectivism or socialism. I believe in self reliance, free will and God. I don’t plan on taking much to the grave and I hope my demise will be remembered by my friends fondly, that is wealth to me. Screw the FED!
Ouirphuqd–Wealth isn’t measured, wealth is. Wealth is valued in terms of a greater need. Governments choose to measure wealth in dollars so to extract a pound of flesh. This seem ‘just’ to governments as their survival is primal to your interests. What we need is a new way to tax that is fairer to all. If you said, “think about” instead of measure, I would wholeheartedly agree.
As Alfred E. Neuman said, “Money isn’t everything, but they won’t go out with you if you don’t have any.”
Homer, hope you can take it with you?!
As Jack Benny said, “If I can’t take it with me, I’m not going.”
As Jesus said, “Lay up treasures that rust dost not eat.”
Inflation as a Process of Wealth Transfer
It is better to think of inflation as a process rather than a particular rate. The process starts with a particular type of monetary system, emerges in an expansion of the money supply by central bank printing and bank loans flowing into various areas of the economy, manifests itself in prices rising generally — though unevenly — higher than they otherwise would have been, finally leaving a wake of winners and losers.
This approach allows us to see inflation as not some inevitable force, but a deliberate process of wealth transfer enshrined in state policy.
How is wealth transferred by inflation? Money represents purchasing power. Creating money out of thin air, which is what central banks and commercial banks are licensed to do, confers purchasing power on those who are able to use the money first. For this new money to obtain purchasing power, it must rob little bits of purchasing power from all the other money in the economy. Purchasing power is transferred from those who hold money to those who create new money at close to zero marginal cost. https://mises.org/blog/inflation-it%E2%80%99s-wealth-redistribution-scheme