Tuesday, April 15, 2008

Who Insures the Insurers?

The Federal Deposit Insurance Corporation (FDIC) insures bank accounts up to $100,000. The FDIC holds about a penny in reserve (in T-bills) for every dollar worth of insured deposits.

Who insures the T-bills? The Federal Reserve System. Who insures the Federal Reserve System? No one. It doesn't need insurance. It can create money.

Then who insures the purchasing power of the dollar? The central banks of the world, which hold dollars as legal reserves for their own currencies.

What happens if they decide not to add to their holdings of dollars?

[What we can look forward to includes:] rising prices for imported goods, rising domestic interest rates because foreign central banks are not buying Treasury debt any longer, unemployment, bankruptcies, defaults.

And when the checks from Washington no longer buy much of anything, the great political transformation will begin.

[Excerpt of an article by Gary North]

Tuesday, April 08, 2008

Soros: “Worst financial crisis since the 1930s”

George Soros, the legendary financier and philanthropist, has written a new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

Mr. Soros’ opening sentence summarizes his sense of urgency about the turmoil in the financial world, where he is one of the most successful and enduring of investors:

“We are in the midst of the worst financial crisis since the 1930s.”

Saturday, April 05, 2008

Wall Street Investment Banks Now Borrowing $38.1 billion Daily

As an update on my March 29th posting, Wall Street investment companies are stepping up their borrowing a bit from the Federal Reserve’s unprecedented emergency lending program.

The Federal Reserve reports Thursday that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program!

That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.

Wednesday, April 02, 2008

On Abolishing the Federal Reserve

As discussion is underway to give further, sweeping financial oversight to the Federal Reserve, reflect for a moment on this excerpt of a speech by Congressman Ron Paul to the U.S. House of Representatives (September 10, 2002)

Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy.

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state.

Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy.

I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.