A Conspiracy of Counterfeiters

[peejay 327]

A Conspiracy of Counterfeiters

by Patrick J. Buchanan

Posted 08/30/2011 ET

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

"Lenin was certainly right," John Maynard Keynes continued in his 1919 classic, "The Economic Consequences of the Peace."

"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Keynes warned that terrible hatreds would be unleashed against "profiteers" who enriched themselves through inflation as the middle class was wiped out. And he pointed with alarm to Germany, where the mark had lost most of its international value.

By November 1923, the German currency was worthless, hauled about in wheelbarrows to buy groceries. The middle class had been destroyed. German housewives were prostituting themselves to feed their families. That same month, Adolf Hitler attempted his Munich Beer Hall Putsch.

Today a coterie of economists is prodding Federal Reserve Chairman Ben Bernanke to induce inflation into the American economy.

Fearing falling prices, professor Kenneth Rogoff, former chief economist for the International Monetary Fund, is pushing for an inflation rate of 5 to 6 percent while conceding that his proposal is rife with peril and "we could end up with 200 percent inflation."

Paul Krugman, Nobel Prize winner and columnist for The New York Times, is pushing Bernanke in the same direction.

Bernanke, writes Krugman, should take the advice he gave Japan in 2000, when he urged the Bank of Japan to stimulate the economy with "an announcement that the bank was seeking moderate inflation, 'setting a target in the 3-4 percent range for inflation, to be maintained for a number of years.'"

And who inspired Bernanke to urge Tokyo to inflate? Krugman modestly credits himself.

"Was Mr. Bernanke on the right track? I think so -- as well I should, since his paper was partly based on my own earlier work."

But Krugman is not optimistic about Bernanke's injecting the U.S. economy with a sufficient dose of inflation.

Why is Ben hesitant? Two words, says Krugman: "Rick Perry."

Krugman believes Bernanke has been intimidated by Perry's populist threat in Iowa after his first day of campaigning:

"If this guy (Bernanke) prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous."

Perry was indulging in Texas hyperbole, and the press came down hard on him for language unbefitting a presidential candidate.

Yet Perry has raised a legitimate series of questions.

What should be done to high officials of the U.S. government who consciously set out to dilute and destroy the savings and income of working Americans? What should be done to those who have sworn an oath to defend the Constitution and then steal the wealth of citizens by secretly manipulating the value of the currency, the store of wealth upon which those people depend?

Is inducing inflation -- debauching the currency, the systematic and secret theft of the savings of citizens -- a legitimate policy option for the Federal Reserve? Has Congress authorized official thievery?

Who do these economists think they are?

Inflation rewards debt -- and erodes savings. It is legalized counterfeiting, the deliberate creation of money with nothing to back it up.

If a citizen printed dollars bills, he would be tracked by the Secret Service, prosecuted and imprisoned. Why, then, is the Fed's clandestine printing of money with nothing to back it up a legitimate exercise and, according to Krugman & Co., a desirable policy for Bernanke and the Fed?

Schooled economists such as Rogoff, Krugman and Bernanke know how to shelter their wealth from the ravages of inflation -- and even to get rich. But what about widows whose husbands leave a nest egg of savings in cash and bonds? What are they supposed to do as the value of their savings is wiped out at 4, 5 or 6 percent a year -- or whatever annual rate of ruin the Rogoffs and the Krugmans decide upon?

This is not only an economic issue but a moral issue.

To inflate a currency is to steal the money citizens have earned and saved and entrusted their government to protect. Any government that betrays that trust and steals that wealth is not only unworthy of support. It is worthy of being overthrown.

On this one, as Keynes said, Lenin was right.

Perry and Ron Paul deserve the nation's gratitude for putting this issue of the unfettered power and the amorality of our unelected Federal Reserve on the political docket.

http://www.humanevents.com/article.php?print=yes&id=45847

[mawilson 2,133]

Why is Ben hesitant? Two words, says Krugman: "Rick Perry."

Krugman believes Bernanke has been intimidated by Perry's populist threat in Iowa after his first day of campaigning:

Now that's funny!

Is it possible that the Fed didn't announce another round of QE last Friday because Bernanke was scared of Rick Perry?

Edited August 30, 2011 by mawilson

[peejay 327]

Now that's funny!

Is it possible that the Fed didn't announce another round of QE last Friday because Bernanke was scared of Rick Perry?

Apparently Krugman thinks so.

[mawilson 2,133]

Apparently Krugman thinks so.

Well then, thank you, Rick Perry!

[Obama 2012 1,714]

I've said it before, and I'll say it again, America SHOULD NOT be afraid of deflation.

Inflation is not an 'increase' in prices. It's a decrease in the value of currency. People don't seem to understand this and cannot grasp the concept at all. Deflation is an increase in the value of currency.

In other words, with deflation, your dollar has more buying power. During inflation it has less buying power.

I never get why no one truly understands the concept and how it works. The argument always revolves around the debt. I'll tell you what, if the FED were to reign in cash, make the dollar worth something again, then maybe we'd actually stand a chance to pay off the debt with the right spending cuts/possible tax increases in certain areas.

The only reason why we are still standing at all as a nation today, is because we are the world's reserve currency. If the dollar was not the reserve currency with the current way our dollar is being treated, the dollar would have fallen long ago and America would be in a heap of trouble.

[Mr. Big Dog 10,747]

Schooled economists such as Rogoff, Krugman and Bernanke know how to shelter their wealth from the ravages of inflation -- and even to get rich. But what about widows whose husbands leave a nest egg of savings in cash and bonds? What are they supposed to do as the value of their savings is wiped out at 4, 5 or 6 percent a year -- or whatever annual rate of ruin the Rogoffs and the Krugmans decide upon?

This is not only an economic issue but a moral issue.

That's interesting. Here we argue that John and Jane Average lack the knowledge and skills to navigate their nest eggs through various economic conditions. At the same time, we argue that John and Jane Average should be solely in charge of their retirement nest egg rather than rely on inflation adjusted benefits due from Social Security. Which is it? Can John and Jane Average properly navigate their nest egg or can't they?

[Usui Takumi 1,562]

Its generally accepted that the massive war reparations including 26% of exports were the cause of hyperinflation in Germany.

[Dan J 277]

I've said it before, and I'll say it again, America SHOULD NOT be afraid of deflation.

Inflation is not an 'increase' in prices. It's a decrease in the value of currency. People don't seem to understand this and cannot grasp the concept at all. Deflation is an increase in the value of currency.

In other words, with deflation, your dollar has more buying power. During inflation it has less buying power.

I never get why no one truly understands the concept and how it works. The argument always revolves around the debt. I'll tell you what, if the FED were to reign in cash, make the dollar worth something again, then maybe we'd actually stand a chance to pay off the debt with the right spending cuts/possible tax increases in certain areas.

The only reason why we are still standing at all as a nation today, is because we are the world's reserve currency. If the dollar was not the reserve currency with the current way our dollar is being treated, the dollar would have fallen long ago and America would be in a heap of trouble.

Inflation encourages investment, if the value of your money is decreasing, you need to invest it keep or increase your the relative value of your money.

Deflation discourages investment. Why risk your money if you will gain value by holding it.

[Dakine10 5,452]

I've said it before, and I'll say it again, America SHOULD NOT be afraid of deflation.

Inflation is not an 'increase' in prices. It's a decrease in the value of currency. People don't seem to understand this and cannot grasp the concept at all. Deflation is an increase in the value of currency.

In other words, with deflation, your dollar has more buying power. During inflation it has less buying power.

I never get why no one truly understands the concept and how it works. The argument always revolves around the debt. I'll tell you what, if the FED were to reign in cash, make the dollar worth something again, then maybe we'd actually stand a chance to pay off the debt with the right spending cuts/possible tax increases in certain areas.

The only reason why we are still standing at all as a nation today, is because we are the world's reserve currency. If the dollar was not the reserve currency with the current way our dollar is being treated, the dollar would have fallen long ago and America would be in a heap of trouble.

I imagine the reason most Americans are afraid of deflation is because 75% of them took on way more debt than their incomes dictated they should have.

[Mr. Big Dog 10,747]

I imagine the reason most Americans are afraid of deflation is because 75% of them took on way more debt than their incomes dictated they should have.

I think they are afraid because the last major deflationary period this country experienced was the Great Depression.

[SMR 368]

That's interesting. Here we argue that John and Jane Average lack the knowledge and skills to navigate their nest eggs through various economic conditions. At the same time, we argue that John and Jane Average should be solely in charge of their retirement nest egg rather than rely on inflation adjusted benefits due from Social Security. Which is it? Can John and Jane Average properly navigate their nest egg or can't they?

That's kind of the point. With a responsible, transparent fiscal policy an average person can manage his or her savings and retirement provided he or she plans for it. If the government is allowed to manipulate the currency, the requisite skill to turn a profit or even just protect your earnings becomes much more specialized.

[Usui Takumi 1,562]

That's kind of the point. With a responsible, transparent fiscal policy an average person can manage his or her savings and retirement provided he or she plans for it. If the government is allowed to manipulate the currency, the requisite skill to turn a profit or even just protect your earnings becomes much more specialized.

As long as the money supply changes are transparent things should remain ok. Its when the central bank does the unexpected that a shock can occur.

[Captain Oates 911]

Inflate

That takes money from those who have it in cash/bonds (the trillions held by 'job-creators') and hands it to those who are under water financially (borrowers)

As the government is a major borrower, its borrowing (the national debt) will decrease

Equities do alright in inflationary times so my investments will ride it just fine

Deflation - my parents were so hungry in the slump of the 30's, they stayed in bed so they would not be hungry and had no heat in the house. He had a job too !

The right wing say they dont mind if that happens so long as the spending is reduced and given to the rich as tax breaks - Americans will vote for that because they dont want those black people walking in and out of the white house and being so smart and educated and clever and all those things that set them apart from the voters.

[Mr. Big Dog 10,747]

That's kind of the point. With a responsible, transparent fiscal policy an average person can manage his or her savings and retirement provided he or she plans for it. If the government is allowed to manipulate the currency, the requisite skill to turn a profit or even just protect your earnings becomes much more specialized.

As long as the money supply changes are transparent things should remain ok. Its when the central bank does the unexpected that a shock can occur.

There are inflation targets that the Fed bases monetary policy on. There isn't a lack of transparency or predictability.

Edited August 30, 2011 by Mr. Big Dog

[Obama 2012 1,714]

Inflate

That takes money from those who have it in cash/bonds (the trillions held by 'job-creators') and hands it to those who are under water financially (borrowers)

As the government is a major borrower, its borrowing (the national debt) will decrease

Equities do alright in inflationary times so my investments will ride it just fine

Deflation - my parents were so hungry in the slump of the 30's, they stayed in bed so they would not be hungry and had no heat in the house. He had a job too !

The right wing say they dont mind if that happens so long as the spending is reduced and given to the rich as tax breaks - Americans will vote for that because they dont want those black people walking in and out of the white house and being so smart and educated and clever and all those things that set them apart from the voters.

The national debt won't decrease That's part of the problem. Our government has a spending problem. a BIG spending problem. While the idea is nice of possibly having more money to pay off the debt, the fact remains that we aren't doing anything to decrease spending to have a chance of paying off that debt.

You're also asking for the poor to suffer. Part of our problem today is inflation is out of control. We're printing money left and right and keeping interest rates low at the same time? This is economic suicide. The FED knows this and it's why it's doing what it's doing. At the end of the day it wins no matter what and makes money as well as they cronies who invest into it.

Part of the mess we are in today is that the economy shrank, yet we didn't let prices deflate with it. We infused so much damn money into the economy that prices actually went up during these harder times. That's insanity on its face. You have more people who need government assistance because of it. You have people who can barely afford to make ends meet because the price of bread, milk, and meat is going up along with other every day needs.

One of the worst things we could possibly do right now is print more money. I can't stand slick Rick one bit, but he is 200% right when he says it's treasonous for big Ben to print more money at a time like this.