By Albert Maslar –The Federal government has a distinct advantage over State governments in that it can and does print money, lots of it, to cover its unsustainable spending habits. The trouble is that eventually the dollar is reduced in value so the new dollars are worth considerably less than the old dollars.
The Federal Reserve operates behind a veil of secrecy impenetrable even by Congress. Congressman Ron Paul is the Fed chief antagonist who demands a full audit and disclosure of Fed operations and their balance sheet.
While public information shows the Fed’s balance sheet at about $2.9 trillion, that does not include emergency lending programs to financial institutions and sovereigns the world over. A partial audit in 2010 revealed some, but not all, of these programs totaling trillions above and beyond the Fed’s weekly H.4.1. statement.
It also does not include discount, zero-interest “lending” programs to the central bank’s 21 primary dealers that then turn around and purchase U.S. treasuries and other assets, totaling trillions more. It took a Freedom of Information Act (FOIA) court case by Bloomberg News and Fox News to reveal more than $15 trillion of emergency loans made by the Fed between March 14, 2008 and March 16, 2009.
Only a full audit could possibly reveal the true scope of these operations that total perhaps more than the $16 trillion national debt, raising the question of how it was the Fed was ever permitted to “legally” steal the U.S. Treasury blind?
The Bible in reference to Jesus Christ stated a not well recognized or appreciated truism that “It is better for you that one man die for the people than that the whole nation perish.” Applied to the current situation it might translate into, “It is better for the Fed to die than bankrupt the entire economy of the country.”
President Obama wants the Buffet tax rule for “fairness”, so why not the Fed rule? Confiscate and nationalize the Fed and use its $16 trillion apparent capacity to offset the entire $16 Trillion national debt. That might be equivalent to office supplier Staples and their red “Easy Button”.
One push of that button fixes it all and only the Fed is seemingly hurt. Of course, if only it were that easy. Sadly, the Fed only holds $76 billion of actual capital behind the trillions of loans it has made, which are lent into existence.
Therefore, printing $16 trillion to pay off the debt in reality would be highly inflationary, even worse than what we’ve already seen to date. We’d perhaps be better off defaulting.
In fact, the Fed has already been printing trillions excessively since previous Fed Chairman Alan Greenspan has kept the dollar printing presses humming — and really, longer than that — and continued big time by current Chairman Ben Bernanke.
“Printing money” has bad connotations so a new word is invented, “Quantitative Easing,” that is further obfuscated, reducing it to “QE.”
QE1 dates back to November 2008, and meant to rescue $1.25 trillion of mortgage backed securities. QE2 was meant to bail out troubled banks with another $600 billion of U.S. treasuries purchases in 2010, but banks sat on the money, profiting from the differential between the interest banks had to pay for the money, and the greater interest they could charge back to the government for government securities held.
The much heralded QE3 has been officially put off the table but in fact may have already secretly been accomplished.
Printing money excessively has gradually increased over the years. But at some point the Fed will be forced to print enormous amounts of additional money simply to purchase growing unfunded debt created by deficit spending, and to repay the unpayable national debt, which is growing as far into the future as the eye can see at the rate of $1.25 trillion each year.
(Note: A “million” is a one followed by six zeros while a “trillion” is a one followed by twelve zeros, double the number of zeros in a Million, resulting a trillion being a million million.)
The near $16 trillion national debt divided by 330 million legal and non-legal residents equals $48,485 owed by every man, woman, and child living in the USA; or $53,333 for every one of the 300 Million U.S. legal residents. The actual national debt when unfunded, off-balance sheet liabilities in Fannie, Freddie, Social Security and Medicare are taken into account is four to five times larger or up to a $250,000 owed by every legal resident of the U.S.
Unfortunately, the only 2012 presidential candidate of either political persuasion who would have stopped all of the foreign wars and rein in the Fed is a candidate who does not have the ghost of a chance at the presidency, Ron Paul. Castor oil is not to the liking of career politicians. When there is no more money in the pot, they print more and borrow it back.
Constitutionally, spending authority resides with the House of Representatives; spending powers both political parties have abused over the years while blaming each other for waste, duplication, and fraud, but taking excessive pay and obscene retirement benefits for fiscally destroying the formerly “Good Old U.S.A.”
Specific recent blame can be laid directly at the feet of Republican House Speaker John Boehner who wasted multiple opportunities to limit current spending to 60 percent of current levels funded solely from monthly tax collections, balancing the budget.
Meanwhile President Obama’s budget received zero votes in the House of Representatives, voted down by a final vote 409 to zero in favor. Not a single Democrat voted in favor of Obama’s budget, but that did not stop Obama from demonizing Paul Ryan’s budget that actually passed in the House by a vote of 228-191. Ryan’s budget would not balance the budget for perhaps forty years, but providing for the proverbial unforeseen unanticipated occurrences, it could be later.
Senate Majority Leader Democrat Harry Reid did not even bother to schedule votes on either budget proposal but Obama blames the House for not acting, causing him to spout that “I can’t wait for Congress to act,” that he uses to justify arbitrary actions by the EPA and through Executive Orders.
As the value of the dollar erodes and magnified by a real jobless rate in the 15 percent range, along with EPA’s constant barrage of impossible regulations buffeting employer confidence, the Titanic ship of state heads for a colossal and now perhaps unavoidable collision that might reduce the U.S. to third world status.
It is imperative for survival that Americans learn to financially survive ala Greece and other European countries that are attempting to survive by working around government cutbacks, learning how to live by their wits, re-learn the barter culture, and skirt excessive taxes as government largesse is reined in. It is a grim picture and a not so pretty outlook with there being no knight in shining armor in sight for America.
What is clear is that there is no proposal on the table in Congress to do anything about these problems. Our “representative” institutions are proving themselves to be an incapable mess of career politicians. There are no plans pay down the debt, lower taxes or fix our broken entitlement programs. Too bad for the American people. As Proverbs 29:18 advises, “Where there is no vision, the people perish.”
Albert Maslar is a contributing writer to the Liberty Features Syndicate. Americans for Limited Government Senior Editor Robert Romano provided additional reporting and research.
