An inside look at the Fed – continued.
Charles Hugh-Smith of OfTwoMinds blog,
Courtesy of ZeroHedge 7-11-13 / Excerpts:
The Fed has infinite fiat, though they try to disguise that fact. It takes no more effort for them to loan a trillion dollars than a million dollars. They will never run out of zeros in their computer system. The zero keys on their keyboards will always function. No matter how much they can print, they always have available an infinitely greater amount of fiat that they can still print. Printing money requires nearly zero effort and zero cost on their part. They don’t get worn out from printing money.
This whole concept of infinite fiat is hard for people to grasp; it is something outside of their experience. People’s lifelong experience with money is that it is a limited resource. It is hard to conceive of a group of people who have unlimited, infinite money. Yet the Federal Reserve has just that. The Fed is not like a doctor who prescribes a short-term stimulus for a patient who is feeling run down. The Fed is not like a parent who temporarily puts training wheels on a bike until the kid learns how to ride it. These metaphors make people think that the Fed’s fiat printing is temporary and limited. It is not.
Its money printing abilities are permanent and unlimited. The Fed also puts on a show about agonizing over the decision of whether to print money. That make it seem like they are agonizing over whether to pull a sum of carefully saved cash out of their vault. But when they lend to Uncle Sam, they do not pull cash out of a vault that has a finite amount of cash in it. They instead get it from a computer that has the capability of printing unlimited zeros.
Summary: The Fed has infinite fiat. It is not limited by any conceivable shortage, or because of Keynesian stimulus theory, or because the Fed has the role of a doctor, or because the Fed’s role is to put training wheels on the economy from time to time, or because it is hard for it to print fiat and there are only so many hours in a day. They have infinite fiat. Their printing is limited only by how much they think they can get away with and their calculations of how they will benefit from it.
So that brings up the final question I shall deal with today. That is, “How does printing money benefit the Fed? Is it better from their point of view to print or not to print?”
The first point in response to this is that they want the government hooked on their printing. They want to be indispensable to the government. A government that balances it budget or reduces the national debt to zero (as the Jackson administration did) is the opposite of what they want.
The Fed’s power over government is similar to the power a drug pusher has over a junkie. As long as the junkie is doing what the pusher wants, the supply of drugs is uninterrupted. If the junkie does not pay, the supply is cut off. If the pusher wants to jack up the price at any time, he can do so. If the junkie objects, his supply is cut off. So here we see it is in the Fed’s interest usually to maintain the supply, but the supply may also be cut off from time to time in order to ratchet up its power over its victim.”
The big banks always benefit from more printing. They profit from it. To the extent that they are cut off from it, they lose money. So from the standpoint of the big banks, the bias is always to print. Note that the Fed can maintain its supply to the banks while cutting off the government. The Fed’s owners must always be served; the government is instead to be manipulated, enslaved and controlled under the guise of serving.
Any active defiance of the Fed is a danger signal for investors. The Fed can cut off the government at any time, thus precipitating economic chaos so as to quash rebellion. At present I do not see any serious defiance of the Fed anywhere.
The Fed’s main goal is to increase the profits of the big banks. That goal is consistent with increased profits for all firms and prosperity in general, so long as the banks and the elites grab the largest share of the profits.
But that goal is also served in the long run by boom-and-bust cycles that have a ratcheting effect of concentrating wealth in the hands of the wealthy. The clued-in super-wealthy can profit both as bulls and as bears, and can purchase prized assets cheaply at the bottom of the cycle (on easy credit from their friends at the Fed).
It is a Clausewitzian principle that individuals, organizations and nations will expand their power until some superior or equal power effectively opposes them and stops them. Because the Fed’s power has no equal, we can expect the Fed’s power to continue to increase indefinitely.
That “superior power,” to halt the grinding advance of debt enslavement in America, is American people. And the plan for change is currently available – with direct credit extensions for American citizens.
The Leviticus 25 Plan.