A couple months back (December 16) there was some hysteria about the Federal Reserve bailing out the Eurozone to the tune of some 54 Billion Dollars. While it was a travesty, the hysteria over it was too little too late.
Where was the hysteria when the Fed gave Europe another $1 Trillion just weeks later? There was none because it was disguised as a ‘currency swap’.
Where was the hysteria when the Fed ‘loaned’ $2+ Trillion from 2007 to 2010 to European Central Banks, is another several Billion Dollars something to rend one’s clothes over? Because the $2 Trillion+ was given away before the Eurocrisis came into its own, and because the American public is so well trained to feign temporary indignation over minute distractions, the real bailouts, one of which occurred prior to the realization of the Eurocrisis, and the other of which was labeled an ‘exchange’, were largely ignored and continue to be so. Even the much-touted $54 Billion is forgotten these days.
People tend to focus on the Congress when bemoaning bailouts because they have been fooled into thinking that America’s chief money-wasters are our duly elected representatives. While I do not condone the spendthrift ways of the Congress, I would sooner trust my own representative in Congress to needlessly blow this money than the unelected elitist board of some pseudo-public banking cartel. It is Congress’ job to make appropriations! So even if they slip up, there is still some accountability. Not so for the Fed.
So, whether the Congress bails out Europe with additional billions or not, we still on the hook for trillions. The Federal Reserve already GAVE European Central banks $3 Trillion, which will never be returned. That is 3 Trillion Dollars worth of purchasing power stolen from the US money supply! That is 3 Trillion Dollars that adds to the future inflationary trends we already face.
If the Euro collapses, is the US Dollar far behind? Or will the aversion of the Eurocrisis only make our coming crisis that much worse? Which candidates are prepared for such a scenario?
The crisis we face is just as bad. No, worse! We happen to be more powerful because the Dollar is the world’s reserve currency, and our manufacturing base and real GDP still beats that of Europe. But when the Euro collapses (it may have been averted this time, but the can may only be kicked down the road so far for so long), will it not take a huge part of our customer base with it? This could be the trigger that signals the loss of confidence in the Dollar (which is propped up by GDP and military might, neither of which are sustainable). When that happens, the 15 Trillion Dollars in National Debt and the $70 to 120 Trillion Dollars in unfunded liabilities will come home to roost, because the dollar’s purchasing power will decrease faster than we can pay those things off.
Cut artificial ties of the Dollar to GDP, the Fed to Foreign Central Banks, and debt owed to the Fed, and the Dollar could survive, or at least be restored after a time of hardship. But leave these Keynesian distortions in place, and they will be entrenched until the next crisis, and credit themselves with a sham recovery. Just as FDR was credited with ending the Great Depression, though he prolonged it. Just as Obama would like to take credit for the supposed recovery that has yet to arrive and might never arrive. They took advantage of those crises by passing (FDR) the New Deal and associated entitlements still here today, that are now bankrupt, and by pushing through (Obama) phony stimulus and socialized medicine.
So long as the Fed is with us, or is permitted to act on its own, it will take advantage of the Euro Crisis just as FDR and Obama took advantage of the recessions.
Do you want a President that will keep the Fed, maybe slap it on the wrist a few times for political reasons, but allow monetary policy to continue to get worse, just as every president since FDR has done, or do want a President that will reign in the Fed, not just by auditing it, but by repealing executive orders and legislations, by appointing like minded individuals to phase out the Fed, and ultimately by ending it?
Islamo-Fascism and Obama-Socialism are puny threats compared to the Fed’s immoral and unsustainable behavior, and the coming entitlement and/or Dollar collapse.