April 12, 2010
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The two stupidest characters ever to grace the big screen – Lloyd Christmas and Harry Dunne – were first introduced to the world in Jim Carrey’s 1994 movie, Dumb and Dumber. If that movie were made today, its leading characters could easily be our government and the supposedly independent Federal Reserve Bank. Both of these institutions have foisted their misguided policies on the American public, who, in their passive acceptance, have proven themselves to be the dumbest of all.
While our government has the general citizenry pretty well hoodwinked, there are times when those of us who know better must speak out. I am referring to the plunder of public treasuries and enrichment of banking cartels that has been the inevitable consequence of every calamity in modern times. The big banks get rich and the rest of us pay for it.
We willingly allow such pilfering as long as the stock market goes up, the singular goal of everything central banks do. An earthquake and tsunami struck Japan on March 11, 2011. The yen appreciated and their stock market fell. The central banks of the G-7 intervened to sell trillions in yen to stem the market plunge.
The insanity is this: Why can’t the market decide where the yen or the stock market should be priced? The people of Japan needed help. A nuclear power facility threatened to melt down. Yet the Bank of Japan could only support the stock market. The US central bank has been no different. Every disaster is a license to manipulate.
Allow me to shed some light on the absurdity of intervention so we can decide if it is helpful.
Dumb and dumber’s latest overture to the dumbest occurred on Tuesday, March 22, 2011. The Federal Reserve announced to the public on that day that 2010 brought forth record profits. Not for us, though – for the Fed. The Fed made a record $81.7 billion in 2010 ‘largely on investments made to help the economy and banks weather the 2007 - 2009 financial crisis.’ As per their mandate, they turned over the bulk of the loot to the US Treasury – some $79.3 billion. This added to the $47.4 billion the Fed transferred to the Treasury in 2009.
The Fed would like us to believe that this transfer of $126.7 billion to the Treasury over the past two years is a wonderful development. But how again did the Fed earn $87.7 billion in a year? The Fed is, of course, a market-manipulation machine, and it is indeed a bank that makes money by lending money. Trading securities and derivatives is also profitable if you have all the inside information. The Fed has an advantage in that it can simply conjure money out of thin air if it wishes to lend.
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