It is ironic that Occupy Wall Street is reportedly very low on cash. This is something that Wall Street itself never has to worry about. They have ready access at all times to as much cash as they need. The Occupiers mistakenly blame capitalism, but it is not capitalism that is behind this inequity. It is the completely anti-capitalist Federal Reserve System.
The Fed purports to stimulate economic growth by expanding the volume of money and credit. This forces down interest rates and makes more money available to start new businesses or expand existing ones. However, while the currency units are created out of thin air, the purchasing power is not. The purchasing power has to come from somewhere.
As I've explained before, the expansion of money and credit really redistributes wealth from the holders of existing currency units to whoever receives the new money. When an individual "redistributes wealth" without the consent of its current owner, most people call it "stealing." Now, the Occupy movement may not have a problem with that if it results in less disparity between rich and poor. However, that's not what the Federal Reserve System is all about. The Fed steals for the 1%.
Everyone knows that the new money and credit created by the Fed flows to Wall Street. That's where big loans are made and new ventures are launched. While the borrowers do have to pay the loans back, they do so out of profits made from new capital they have acquired. The Fed silently steals this capital from everyone and transfers it to Wall Street.
This transfer is accomplished through the phenomenon of steadily increasing prices. That is the cost of creating new money. The cost is born by the 99% while the 1% keeps all of the profits.
If the amount of currency is increased and the amount of available goods and services remain the same, prices are going to rise. You don't have to take my word for it. Sometimes a spreadsheet is worth a thousand words.
This spreadsheet from the Fed's own website tracks the "inflation rate" from 1800-2008. The last column (added) tracks the price movements of a basket of goods and services that cost $100.00 in 1800. As you can see, prices dropped dramatically over time throughout the 19th century. That same basket of goods that cost $100.00 in 1800 cost only $56.74 in 1912.
It is important to understand the implications of this phenomenon for 19th century workers. It made them richer. Someone making $200.00 per year in 1912 was twice as wealthy as someone making $200.00 per year in 1800. While wages increased less in the 19th century than in the 20th, purchasing power for the average worker rose dramatically. This is the natural result of society becoming more productive. As the supply of goods goes up, all things being equal, the price of goods goes down.
Contrary to Ben Bernanke's warnings of the horrors of "deflation," falling prices were the norm throughout the period in American history when the economy and the middle class expanded most dramatically. Yes, great fortunes were made by a few, but they had to be made honestly when money was honest. Most importantly, the common worker became wealthier during this period. He didn't have to risk his savings in the stock market just to keep up with inflation. He could simply save cash and watch his purchasing power increase over time, instead of vanish.
Now, look at the same basket of goods from 1913 (the year the Fed was created) through 2008. You see exactly the opposite trend. The same basket of goods that cost $56.74 in 1912 now costs $1,265.14. Obviously, even the more dramatic increase in wages during this period has not kept up with the increase in prices. This makes the average worker poorer.
The Fed is the reason that average Americans have worked harder and become more productive over the past century yet have not experienced a corresponding increase in wealth. It is why two people in the average family have to hold jobs just to provide the lifestyle formerly provided by one. The Fed is behind the widening gap between rich and poor.
People from different ends of the political spectrum will never agree on everything. However, they can work together on those things that they do agree on, such as stopping a war or abolishing bad laws. If the Occupiers turn their attention to the Federal Reserve System, they will be surprised at the people they will find standing by their side. Libertarians, independents, and even a Republican presidential candidate will join them on this. Let's get rid of 99% of the problem now and argue about the other 1% later. Occupy the Fed.
Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.
Just to start to explain the differences between perception and reality, here are two absolute fundamentally undeniable facts about our current system. This is not opinion but is law and operational reality.
1. A bank is not reserve constrained in its lending. A bank could have zero deposits and zero reserves and yet could loan a billion or more dollars depending on the amount of capital the banks owned. It borrows reserves after the fact as is needed. The flip side is that a bank could have a trillion dollars in deposits and reserves and yet could not loan a single penny if it doesn't have any capital. What this means is that a bank never checks or cares what its reserve position is before making a loan .This is why even if a banks reserve position is expanded 10 fold this will have no effect on if a bank can or can not make any additional loans.
2. The fed can only trade reserves for treasuries or treasuries for reserves and thus has zero ability to directly increase or decrease the money supply. The net financial assets of the private sector do not change. This is why it is called an asset swap. The only way NFA of the private sector changes is when government spends money into the economy.
I just wanted to say thank you to everyone who took the time to read this and for all of the thoughtful comments, whether in agreement or disagreement. This was my first piece here at Huffington Post and I hope to get the opportunity to write here again. Thanks very much to the editors for the space and the opportunity. Remember, liberty is inevitable if reason is allowed to prevail.
To many people let their emotions get the best of them these days, The facts are simple, if you use common sense and study the statistics it tells you that the FED is killing our economy and it must be regulated or ended.
A credible case can be made that at least part of the reason they can afford to provide the social services they do is that less of their national wealth has been transferred to their banking system.
END THE FED
The Great Depression clearly was caused by conscious Fed policy. They staged a massive monetary expansion, then an equally massive and longer contraction, which collapsed a very high percentage of the banks who were not members of the Federal Reserve System.
The inflation of the 1970's, equally, was in my view inexplicable absent a conscious monetary expansion.
Then add to this overarching idea that for the same amount of work, the amount of wealth people could accumulate grew steadily from roughly 1850 to 1910, then that it reversed. Consider if we had continued that pattern. We would have no unemployment, no national debt, no issues with healthcare, no poverty. Rather than being concentrated, wealth would have been distributed.
Virtually all the problems that liberals concern themselves with would have been solved had we maintained the momentum initiated by Jackson's destruction of Biddle's empire.
The Fed is not part of the problem. In real ways, it is the only problem that matters.
Nominal wages are not as nearly is important as the purchasing power of the currency in which they, and the resultant savings, are denominated.
Ron Paul knew this would happen because of founding fathers warned us about the crooked bankers.End the Fed..Ron Paul 2012
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children wake up homeless on the continent they conquered.”
Thomas Jefferson
This they do for the real owners of the banks, the Family Offices who own controlling votes in banks but also in many other corporations, and juicy placements in Private Equity, Hedge Funds, Real Estate Trusts. They need sudden drops in prices of everything and then high rises in order for their capital gains game to work. The Fed provides the scaffolding and the bank balance sheets provide the rope toss! Until...oooops!
Meanwhile, the 99% lose everything and the next 1% or 2% or 3% get fleeced on the way down!
That is how it works. It is a machine. It is clockwork. Hopefully, this story can get out there too very very soon. There is a reason Gingrich was told by "some very powerful people" to stop talking about Bain Capital.Too many people were asking questions and writing articles.
NO MORE BS * VOTE For RON PAUL 2012
At least that's what the media would have you believe.