*****Chairmen of the Federal Reserve And Washington Influence*****

Wikipidea reports on the Chairmen of the Federal Reserve.

(emphasis mine) [my comment]

Chairman of the Federal Reserve
From Wikipedia, the free encyclopedia

The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States. Known colloquially as "Chairman of the Fed," or in market circles "Fed Chair" or "Fed Chief". The Chairman is the "active executive officer" (see 12 U.S.C. § 242) of the Board of Governors of the Federal Reserve, which is an independent agency of the federal government created by statute (see 12 U.S.C. § 241), as part of the Federal Reserve System.

Overview

As stipulated in the Banking Act of 1935, the chairman is one of seven members of the Board of Governors of the Federal Reserve System who are appointed by the President from among the sitting Governors. The chairman is subject to Senate confirmation to a four-year term. In practice the chairman is often re-appointed, but cannot serve longer than one 14-year term as governor (or, if appointed to fill a position whose previous occupant had not served out their term, then 14 years plus the time remaining in the previous unexpired term). By law, the chairman reports twice a year to Congress on the Federal Reserve's monetary policy objectives. He or she also testifies before Congress on numerous other issues and meets periodically with the Secretary of the Treasury.

Currently, the chairman is Ben Bernanke, a South Carolina macroeconomist nominated by George W. Bush and sworn into office on February 1, 2006, for a term lasting until 2010. Bernanke succeeded Alan Greenspan, who served for more than 18 years under four U.S. Presidents.

...
[Here is a graph showing the Dollar's devaluation VS the Chairmen of the Federal Reserve


Notice how, after the banking act of 1935, the dollar was set on an uninterrupted downhill track.
]


Chairmen of the Federal Reserve

Chairman of the Board of Directors of the Federal Reserve System

1) Charles S. Hamlin (August 10, 1914August 10, 1916)
2) William P. G. Harding (August 10, 1916August 9, 1922)
3) Daniel R. Crissinger (May 1, 1923September 15, 1927)
4) Roy A. Young (October 4, 1927August 31, 1930)
5) Eugene I. Meyer (September 16, 1930May 10, 1933)
6) Eugene R. Black (May 19, 1933August 15, 1934)

First Chairman of the Board of Governors of the Federal Reserve System

7) Marriner S. Eccles (November 15, 1934February 3, 1948)
8) Thomas B. McCabe (April 15, 1948April 2, 1951)
9) William McChesney Martin, Jr. (April 2, 1951February 1, 1970)
10) Arthur F. Burns (February 1, 1970January 31, 1978)
11) G. William Miller (March 8, 1978August 6, 1979)
12) Paul A. Volcker (August 6, 1979August 11, 1987)
13) Alan Greenspan (August 11, 1987January 31, 2006)
14) Ben S. Bernanke (February 1, 2006 — )

[
Funds Rate History from 1955 to 2008

]


Historical Note

The Board of Governors of the Federal Reserve did not exist prior to the major reorganization of the Fed in 1935 (Banking Act of 1935). Prior to that time, the "Federal Reserve Board" (created in 1913 under the Federal Reserve Act) had a Board of Directors. The directors' salaries were significantly lower and their terms of office were much shorter prior to 1935. In effect, the Federal Reserve Board members in Washington, D.C. were significantly less powerful than the governors of the regional Federal Reserve Banks prior to 1935.

Prior to 1935, the heads of the twelve district "Federal Reserve Banks" were called "Governors." In the 1935 act, the district heads had their titles changed to "President" (e.g., "President of the Federal Reserve Bank of St. Louis"), as part of a major shift of power to Washington.

Thus, Marriner Eccles was the first actual 'Chairman of the Board of Governors of the Federal Reserve Board.' The others prior to 1935 were 'Chairman of the Board of Directors of the Federal Reserve System,' with much more circumscribed power.

Background on Fed Chairmen since the Great Depression

5) Eugene I. Meyer (September 16, 1930May 10, 1933)

...
Meyer went to Washington, D.C. during the First World War as a "dollar a year man" for Woodrow Wilson, becoming the head of the War Finance Corporation and served there long after the end of hostilities. President Calvin Coolidge named him as chairman of the Federal Farm Loan Board in 1927 and Herbert Hoover promoted him to chairman of the Board of Governors of the Federal Reserve System in 1930. He served in that capacity from September 16, 1930 to May 10, 1933.

Meyer strongly supported government relief to combat the Great Depression taking on an additional post as chief of the Reconstruction Finance Corporation, Herbert Hoover's unsuccessful attempt to aid companies by providing loans to businesses. Upon Franklin D. Roosevelt's inauguration in 1933, he resigned his government posts.

Months later in 1933 he bought the Washington Post at a bankruptcy auction, the paper having been ruined by its spendthrift socialite owner, Ned McLean. Over the next twenty years, Meyer spent millions of dollars of his own money to keep the money-losing paper in business, while focusing on improving its quality; by the 1950s, it was finally consistently profitable and was increasingly recognized for good reporting and important editorials...
[Eugene Meyer's Washington Post later drove a President Nixon from the White House...]

6) Eugene R. Black (May 19, 1933August 15, 1934)

Black practiced law for 28 years until he became president of the Atlanta Trust Company in 1921, and in 1928, he became Governor of the Federal Reserve Bank of Atlanta. When the Wall Street Crash of 1929 happened, he and two cashiers rushed to Nashville, Tennessee to supply currency and credit to banks in the city and surrounding region. The situation worsened with other cities in the region experiencing bank runs. Black kept his district afloat by rushing large quantities of cash to banks that were experiencing runs and extending credit to any bank that could offer any asset of value. He kept this policy active through the Great Depression into 1933. He, along with George L. Harrison, the Governor of the Federal Reserve Bank of New York, recommended open market purchases to increase reserves. His insistence on expansionist policies led to the President appointing Black as chairman of the Federal Reserve Board of Governors in 1933.

First Chairman of the Board of Governors of the Federal Reserve System

7) Marriner S. Eccles (November 15, 1934February 3, 1948)

...
After a brief stint at the Treasury Department, he was appointed by President Roosevelt as the Chairman of the Federal Reserve between 1934 and 1948. He stayed on the Board of Governors until 1951, when he resigned over acrimony between the Fed and the Treasury Department prior to the 1951 Accord. He also participated in post-World War II Bretton Woods negotiations that created the World Bank and International Monetary Fund. He later retired back to Utah to run his companies and write his memoirs, titled Beckoning Frontiers.

Marriner Eccles is often seen as an early proponent of demand stimulus projects to fend off the ravages of the Great Depression. Later, he became known as a defender of Keynesian ideas, though his ideas predated Keynes' The General Theory of Employment, Interest, and Money. In that respect, it is generally accepted that he considered monetary policy of secondary importance, and that as a result he allowed the Federal Reserve to be submitted to the interests of the Treasury. In this view, the Federal Reserve after 1935 acquired new instruments to command monetary policy, but it did not change its behavior significantly. Further, his defense of the Federal Reserve-Treasury accord in 1951 is sometimes seen as a reversal of his previous policy stances.

The Eccles Building that houses the headquarters of the Federal Reserve in Washington, D.C. is named after him.

After his return to Utah in 1951 after government service, Eccles further consolidated industrial and family assets, finally organizing a series of foundations representing assets that he had managed for various family members. These foundations have served Utah and the Intermountain West in support of educational, artistic, humanitarian, and scientific activities. Marriner Eccles died in Salt Lake City, Utah in 1977 and was entombed in the Larkin Sunset Lawn Mausoleum. Mr. Eccles was inducted into the Junior Achievement U.S. Business Hall of Fame in 1999.

8) Thomas B. McCabe (April 15, 1948April 2, 1951)

The 1951 Accord:

The 1951 Accord, also known simply as the Accord, was an agreement between the U.S. Department of the Treasury and the Federal Reserve that restored independence to the Fed.

During World War II, the Fed pledged to keep the interest rate on Treasury bills fixed at 0.375 percent
[perhaps necessary during the war years, but insanely inflationary]. It continued to support government borrowing after the war ended [no justification for this], despite the fact that the Consumer Price Index rose 14% in 1947 and 8% in 1948, and the economy was in recession. President Harry S. Truman in 1948 replaced then Chairman of the Federal Reserve Marriner Eccles with Thomas B. McCabe for opposing this policy [this is the trouble with letting politicians set monetary policy...], although Eccles's term on the board would continue for three more years. The reluctance of the Fed to continue monetizing the deficit became so great that in 1951, President Truman invited the entire Federal Open Market Committee to the White House to resolve their differences. William McChesney Martin, then Assistant Secretary of the Treasury, was the principal mediator. Three weeks later, he was named Chairman of the Fed, replacing Eccles.

9) William McChesney Martin, Jr. (April 2, 1951February 1, 1970)

With Robert Rouse, Woodlief Thomas, and Winfield Riefler of the Fed, Martin negotiated the 1951 Accord. The Federal Open Market Committee (FOMC) and Secretary Snyder accepted the Accord and its compromises, and it was approved by both institutions. The Chairman of the Board of Governors at the time of ratification was Thomas B. McCabe, who would officially resign from his position just six days after the statement of the Accord was released. The Truman Administration saw the resignation of McCabe as the perfect opportunity to recapture the Fed almost immediately after it had supposedly broken away. Truman selected Martin to be the next Chairman of the Board of Governors, and the Senate approved his appointment on March 21, 1951.

Contrary to Truman's expectations, however, Martin guarded the Fed's independence, not just through Truman's administration but also through the four administrations that would follow. To the present day, his term as Chairman is the longest term the Board of Governors has seen. Over nearly two decades, Martin would achieve global recognition as a central banker. He was able to pursue independent monetary policies while still paying heed to the desires of various administrations. Although the objectives of Martin's monetary policy were low inflation and economic stability, he rejected the idea that the Fed could pursue its policies through the targeting of a single indicator and instead made policy decisions by examining a wide array of economic information. As Chairman, he institutionalized this approach within the proceedings of the FOMC, gathering the opinions of all governors and presidents within the System before making decisions. As a result, his decisions were often supported by unanimous votes on the FOMC. His most famous quote about his central banking philosophy was that the job of the Federal Reserve is "to take away the punch bowl just as the party gets going," referring to the need to raise interest rates when the economy is at its most active.

He was selected as the administrator-designate of the Emergency Stabilization Agency; part of a secret group created by President Dwight D. Eisenhower in 1958 that would serve in the event of a national emergency that became known as the Eisenhower Ten.[2]

After the presidential election of 1960, Republican Party candidate Richard Nixon blamed his defeat on Martin's tight-money policies (NYTimes Magazine, 01/20/2008.)

Externally, Martin was perceived as being the dominant decision maker at the Fed. Throughout his tenure, he defended the right of the Fed to take actions that would sometimes conflict with what the President wanted. He regularly asserted that the Fed was responsible to Congress and not to the White House.

10) Arthur F. Burns (February 1, 1970January 31, 1978)

Burns served as Fed Chairman from February 1970 until the end of January 1978. He has a reputation of having been overly influenced by political pressure in his monetary policy decisions during his time as Chairman and for supporting the policy, widely accepted in political and economic circles at the time, that Fed action should try to maintain an unemployment rate of around 4 percent. (See also: Phillips curve)

When Vice President Richard M. Nixon was running for President in 1959—1960, the Fed, under the Truman-appointed William McChesney Martin, Jr., was undertaking a monetary tightening policy that resulted in a recession in April 1960. In his book Six Crises, Nixon later blamed his defeat in 1960 in part on Fed policy and the resulting tight credit conditions and slow growth. After finally winning the presidential election of 1968, Nixon named Burns to the Fed Chairmanship in 1970 with instructions to ensure easy access to credit when Nixon was running for reelection in 1972.

Later, when Burns resisted, negative press about him was planted in newspapers and, under the threat of legislation to dilute the Fed's influence, Burns and other Governors succumbed. Inflation resulted, which Nixon attempted to manage through wage and price controls while the Fed under Burns maintained an expansive monetary policy. After the 1972 election, price controls began to fail and by 1974, the inflation rate was 12.3 percent. Burns also had to cope with the 1973 oil crisis.

Another factor contributing to inflation under the Burns Fed was the belief among Burns and other Fed Governors that "the country" was not willing to accept rates of unemployment in the range of six percent as a means of quelling inflation. From the Board of Governors meeting minutes of November 1970, Burns believed that:

....prospects were dim for any easing of the cost-push inflation generated by union demands. However, the Federal Reserve could not do anything about those influences except to impose monetary restraint, and he did not believe the country was willing to accept for any long period an unemployment rate in the area of 6 percent. Therefore, he believed that the Federal Reserve should not take on the responsibility for attempting to accomplish by itself, under its existing powers, a reduction in the rate of inflation to, say, 2 percent... he did not believe that the Federal Reserve should be expected to cope with inflation single-handedly. The only effective answer, in his opinion, lay in some form of incomes policy.[2]

During Burns' tenure, the consumer price index rose from 6%/year in early 1970 to over 12%/year in late 1974 after the Arab Oil embargo, and eventually falling to under 7%/year from 1976 to the end of his tenure in January, 1978, with an annual average rate of consumer price inflation of approximately 9% during his term. Negative economic events included multiple oil shocks and heavy government deficits arising in part from the Vietnam War and Great Society government programs. The high interest rates set by Paul Volcker were able to mitigate certain policy outcomes derived from the earlier actions of Burns and the FOMC under his leadership.

The verdict of history

Economics historian Bruce Bartlett gives Burns poor marks for his tenure as Fed chairman because the inflationary forces that began in 1970 took more than a decade to resolve. "The only disagreement among economists is whether Burns fully understood the mistakes he was making, or was so wedded to incorrect Keynesian theories that he didn't realize what he was doing. The only alternative is that he was under irresistible political pressure from Nixon and had no choice. Neither explanation is very favorable to Burns. Economists now recognize the Nixon era as Exhibit A in how the adoption of bad economic policies in pursuit of short-term political gain eventually turns out to be bad politics as well."
[I like this quote]

11) G. William Miller (March 8, 1978August 6, 1979)

Miller succeeded Arthur Burns as Fed Chairman i n January 1978. He inherited a high inflation economy, still suffering from the increase in oil prices from OPEC. The change in the Consumer Price Index was 4.9% in 1976 and 6.7% in 1977. Nevertheless, Miller maintained a Keynesian belief that inflation could "prime the pump" of the economy, and would at any rate be self-correcting. He thus pursued a strongly doveish policy and opposed raising interest rates. The effect of this was to send the dollar's value spiraling downward. In November 1978, only 11 months into his term, the dollar had fallen nearly 34% against the German mark and almost 42% against the Japanese yen, prompting the Carter administration to launch a "dollar rescue package" including emergency sales from the U.S. gold stock, borrowing from the International Monetary Fund, and auctions of Treasury securities denominated in foreign currencies. This proved only a short-term fix; while temporarily steadying the dollar, it soon resumed its fall. The portmanteau stagflation, the combination of stagnation and inflation, increased in popularity during this time to describe the high rate of inflation that was failing to spur the economy.

Miller's lackadaisical measures against inflation caused distress among members of the Carter Administration itself. Treasury Secretary Blumenthal, Inflation Adviser Alfred Kahn, and Chief Presidential Economist Charles Schultze all advocated for increasing the interest rate prior to the April 1979 meeting, where Miller opposed such measures. Carter had to admonish his own staff over the press leaks used to carry on the dispute.

Miller was not perceived as having great prestige; not coming from an economics or Wall Street background, he was seen as an "outsider."
[This should remind people that "outside Wall Street" doesn't necessarily mean "good"] A 2003 article in The Economist said that "America's central bankers have all made their weight felt across the political sphere, with the possible exception of William Miller, whose brief tenure in 1978-79 was notable for his attempts to ban smoking at the board." It is rare for the influential chair's opinion to not carry the vote at the Federal Reserve's meetings, but Miller was outvoted by the Board of Governors at a meeting in 1979 where he opposed an increase in the discount rate, the rate at which the Federal Reserve lends to banks. [Fed chaiman losing a vote... pathetic]

Economic historians have generally considered Miller's short tenure unsuccessful. The high inflation that Miller allowed required harsh "shock therapy" treatment by his successor Paul Volcker to bring under control, which sent the U.S. economy into recession from 1980-1982. Steven Beckner, a Federal Reserve analyst, offered a particularly harsh assessment:

Under Arthur Burns, who chaired the Fed from 1970 to 1978, and under G. William Miller, who was chairman from January 1978 to August 1979, the Fed provided the monetary fuel for an inflation that began as a flicker and grew into a fearsome blaze... If Nixon appointee Burns lit the fire, Miller poured gasoline on it during the administration of President Jimmy Carter. Without question the most partisan and least respected chairman in the Fed's history, this former Textron executive worked in tandem with fellow Carter appointee, Treasury Secretary W. Michael Blumenthal, in pursuit of monetary policies that were expansionist domestically and devaluationist internationally. The goals were to spur employment and exports, with little thought to the dollar's value. By early 1980, inflation was running at 14 percent.

—Steven Beckner, Back from the Brink: The Greenspan Years

12) Paul A. Volcker (August 6, 1979August 11, 1987)

In 1952 he joined the staff of the Federal Reserve Bank of New York as a full-time economist. He left that position in 1957 to become a financial economist with the Chase Manhattan Bank. In 1962 he joined the U.S. Treasury Department as director of financial analysis, and in 1963 he became deputy under-secretary for monetary affairs. He returned to Chase Manhattan Bank as vice president and director of planning in 1965.

From 1969 to 1974 Mr. Volcker served as under-secretary of the Treasury for international monetary affairs. He played an important role in the decisions surrounding the U.S. decision to suspend gold convertibility in 1971, which resulted in the collapse of the Bretton Woods system. In general he acted as a moderating influence on policy, advocating the pursuit of an international solution to monetary problems. After leaving the U.S. Treasury, he became president of the Federal Reserve Bank of New York from 1975 to 1979, leaving to take up the chairmanship of the Federal Reserve in August 1979.

In 1975, Mr. Volcker also became a senior fellow in the Woodrow Wilson School of Public and International Affairs at Princeton University.

Chairman of the Federal Reserve

Paul Volcker, a Democrat, was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.

The federal funds rate, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in '81 as well.

These changes in policy contributed to the significant recession the U.S. economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression. Volcker's Fed also elicited the strongest political attacks and most wide-spread protests in the history of the Federal Reserve
[responcible monetary policy isn't always popular...] (unlike any protests experienced since 1922), due to the effects of the high interest rates on the construction and farming sectors, culminating in indebted farmers driving their tractors onto C Street NW and blockading the Eccles Building.

13) Alan Greenspan (August 11, 1987January 31, 2006)

On June 2, 1987, President Reagan nominated Dr. Greenspan as a successor to Paul Volcker as chairman of the Board of Governors of the Federal Reserve, and the Senate confirmed him on August 11, 1987. After the nomination, bond markets experienced their biggest one-day drop in 5 years. Just two months after his confirmation he was faced with his first crisis — the 1987 stock market crash. Noted investor, author and commentator Jim Rogers has claimed that Alan Greenspan has lobbied to get this chairmanship.

...
During the Asian financial crisis of 1997—1998, the Federal Reserve flooded the world with dollars, and organized a bailout of Long-Term Capital Management. Some have argued that 1997-1998 represen ted a monetary policy bind — as the early 1970s had represented a fiscal policy bind — and that while asset inflation had crept into the United States, demanding that the Fed tighten, the Federal Reserve needed to ease liquidity in response to the capital flight from Asia. Greenspan himself noted this when he stated that the American stock market showed signs of irrationally high valuations.

In 2000, Alan Greenspan raised interest rates several times; these actions were believed by many to have caused the bursting of the dot-com bubble. In autumn of 2001, as a decisive reaction to September 11 attacks and the various corporate scandals which undermined the economy, the Greenspan-led Federal Reserve initiated a series of interest cuts that brought down the Federal Funds rate to 1% in 2004. His critics, notably Steve Forbes attributed the rapid rise in commodity prices and gold to Greenspan's loose monetary policy which is causing excessive asset inflation and a weak dollar. By late 2004 the price of gold was higher than its 12-year moving average.

...
Alan Greenspan is blamed by the followers of the Austrian School for creating excessive liquidity which caused lending standards to deteriorate resulting in the housing bubble of 2004-2006 and the market meltdown beginning in 2008.

14) Ben S. Bernanke (February 1, 2006 — )

In 2002, when the word "deflation" began appearing in the business news, Bernanke gave a speech about deflation. In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing more money. (He referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation.) Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press." In a footnote to his speech, Bernanke noted that "people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation." For example, while Greenspan publicly supported President Clinton's deficit reduction plan and the Bush tax cuts [Greenspan played politics], Bernanke, when questioned about taxation policy, said that it was none of his business, his exclusive remit being monetary policy, and said that fiscal policy and wider society related issues were what politicians were for and got elected for. Indeed, in his undergraduate economics textbooks he somewhat distances himself from the rhetorical economic libertarianism of Greenspan.


Major Wars and the Dollar's devaluation

The problem with fiat currencies is that governments always try to finance wars through the printing press. The US is no exception. Notice the over 80% of the dollar's devaluation in the last century has occurred during America's three costliest wars.



USAgold explains the Gold Reserve Act.

January 30, 1934

The "Gold Reserve Act" became law. It had passed through Congress in five days, with minimal debate. Under this act,
the Federal Government took away title to all "Gold Certificates" and gold held by the Federal Reserve Bank (the independent Fed?) and vested sole title with the U.S. Treasury. The Fed banks were to be provided with "Gold Certificates" in return for their Gold, but these certificates had no specific value in Gold assigned to them. When one witness testifying before the Senate Committee protested, he was taken aside by an Administration Senator and the situation explained to him:

"Doctor, you don't understand about these gold certificates. These are not certificates that you can get gold. These are certificates that gold has been taken away from you."

January 31, 1934

The day after the passage of the Act, President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine".
The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or 40.94%. The Treasury, which had become the possessors of all the nation's Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now "owned" the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.

My reaction: I have a lot to write about all this, which I will do after I have gotten some sleep.


Anyone want to try predicting what I am going to write?

------------

The Fed and its Chairmen have been dominated by the executive branch for most of its history.

1) To ensure easy credit at the time of elections, Presidents have selected Fed Chairmen known to favor expansionist or Keynesian beliefs.

2) In 1934, the Federal Government confiscated all gold held by the Federal Reserve Bank.

3) The 1935 Banking Act stripped power from regional governors of the Federal Reserve Banks and moved it to the Board of Governors in Washington, where it could be controlled by treasury more effectively.

4) During war times, the Fed has repeatedly submitted to interests of the Treasury. For example, in WW II, the Fed pledged to keep the interest rate on Treasury bills fixed at 0.375 percent, thereby monetizing the US national debt and devaluing the dollar.

5) Fed has been recruited by the Treasury to help finance numerous interventions in gold and currency markets.

6) etc...

Conclusion: Washington influence is a far bigger threat to the Fed's independence (or lack thereof) and the dollar's value than Wall Street. This connection needs to be severed to restore honest money to the US. For example, the monetary authority which replaces the Fed should NOT be based in Washington DC.

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24 Responses to *****Chairmen of the Federal Reserve And Washington Influence*****

  1. Gunther says:

    Hello Eric,
    is it possible to display the value-loss of the Dollar on a logarithmic scale?
    This would show better what is happening right now.
    The inflation numbers are official; how would the graph look with shadowstats' numbers?
    Gunther

  2. Anonymous says:

    excellent writeup thus far. Thank you!! Dollar value prior to the fed would be interesting.

    Guess? The root of all evil is my best guess without getting into details.

  3. Anonymous says:

    simplistically, that the dollar is truly about to plummet and/or that we're due for another major war?

  4. Anonymous says:

    Guess on the subject to write about next: When needs must, print dollars!

  5. Anonymous says:

    Forgot to add, that will be at the instigation of the Treasury with arm twisting, thumbscrews, the rack... on members of the Fed. Good to have a war or some other cataclysmic event to blame it on. The global warming delusion is one such peg!

  6. . says:

    Based on the graph of the dollars' value that you've supplied, it's appears evident that its approach to zero is both (relatively)immanent AND an intrinsically systemic result.

    So this, in conjunction with the role played by the Federal Reserve during times of war, would ordinarily identify a natural progression of interest.

    More specifically however, the logical progression would seem to devolve on a closer reading of comments made by Bernanke during recent 'grilling.'

    And that's my two cents on the matter... which is probably also trending towards zero value.

  7. It might make sense to stay on a gold standard, and keep a more balanced budget. Also, there need to be more accurate measures of inflation and unemployment. Also, the scam of banks getting around the reserve requirement needs to stop.

  8. if I were to guess, the next major war to plummet the dollar. Funny how iran is going through all this right now.

  9. Anonymous says:

    What a rollercoaster the last 90 years have been, even the intelligent must find it difficult to navigate.

    BTW, would the purchase of a 30 year treasury at 21% be an investment of a lifetime? (with some hindsinght regarding defualt risk ofcourse)

  10. Anonymous says:

    > ... purchase of a 30 year treasury at 21% ...

    Just curious (I'm not a US citizen): Were there really 30 year treasuries at 21%?

  11. Numonic says:

    A gold standard would make the pain shorter but it wouldn't get rid of the problem, which is credit/price fixing which a "standard" is. What we need is to practice hoarding and no more lending/banking. We don't need third party banking, we need to become our own bankers and hoard and watch our money ourselves and by "our money" I don't mean the amount of money in each of our own personal safe keeping but the supply of what we use as money. That means not only knowing how many ounces of silver you have but knowing how many ounces of silver there is to have in the world. Unless we have this knowledge, where we store our money in(whether it be gold, silver, platinum or palladium) will be risky. It's the ones with the most knowledge about the supply of the money and other things that can be used as money that are the most wealthiest. It's a delicate balance of keeping your personal savings secret(for burglary purposes) but at the same time knowing the amount of other people's savings. But this information of other's savings is not easy to come by as they will be as secretive as possible, so knowledge will be very valuable as it is today. Those who know the true supply of debt and Fed Notes and physical silver are in a far better position than those who don't and think that they are wealthy with all their savings in Fed Notes. One thing most people need to realize is that the value of things is determined by our desire or need for those things. If we want to keep something from diminishing we raise the value/price of that thing so that it is harder for it to run out. The things we don't want/need we decrease the price/value of so that it runs out quickly. The thing is we need gold and silver. Gold/Silver have allot of industrial uses that are essential to bringing a poor country out of it's poverty. The good thing is that we haven't depleted the earth of silver, we've depleted the earth of above ground silver and silver producers. As credit doesn't deplete the earth of it's products but it's producers, turning producers in to consumers. This move to hoarding will happen whether we like it or not, I'm just suggesting what is destined to happen. Gold and Silver just happen to be the best form of currency right now for practicing hoarding, not to say it will be in the future, platinum and palladium might be or something else with better fundamentals.

  12. Jimmy says:

    Numonic,

    What do you think will happen to silver spot price? It has dropped from 16 to 14. A stock market correction seems coming. Silver spot price can continue to drop. Deflation might dominate near term. Could silver spot drop again to 8-9 per oz USD, like late last year? That could be a nightmare as I bought lot of silver as my emergency fund at around 12/oz USD. Hopefully physical silver preserves more purchase power than USD.

  13. Anonymous says:

    I have something that everyone should read once. Go to Facebook. Add me, Keane Park, as your friend. Go to my notes and read my entry about the Hopi Indians. Just like the Matrix, you'll have to choose between the red and the blue pill.

  14. Numonic says:

    Jimmy spot gold and silver prices will rise very high but do not hold the paper silver/gold, hold the physical one as the reason for the rise in prices of paper(spot) silver/gold is defaults(not only failure to deliver the physical metal but failure to deliver the face/spot value worth in Fed Notes.) So when spot gold is $2000/oz it means less people are getting paid $2000 for the paper silver/gold.

    I explain it in another of Eric's blogs:

    In "*****The Amazing Correlation Between US Secretaries Of The Treasury And Gold Prices***** "

    http://www.marketskeptics.com/2009/06/amazing-correlation-between-us.html

    I say:

    "But here's how to understand why gold and silver prices in the spot market will rise. In the spot market the supply of gold and silver is measured as the supply of debt for that gold and silver. If we are headed for massive defaults on debt, this enormous debt will be destroyed just as massive debt is being destroyed all over the economy. So all that over leveraged debt is going to end and the debt will shrink. Now since the supply of gold and silver is measured as the supply of debt for it, the more debt that is removed(defaulted) the less supply of gold and silver will be registered in the market. Their plan backfires. Because credit WAS so easy to create with a paper currency, the plan was to flood the market with credit to make it look like the market was being flooded with physical gold and silver and this is how they manipulated the price down but now that credit is contracting due to an over stretched Federal Reserve Note( which most thought impossible being that the currency is paper and seemingly so easy to produce) the manipulation will come to an end. That enormous skyscraper of debt in the gold and silver market will be evaporating and as the supply of the debt is removed, the market registers it as if the physical supply of gold and silver is being removed because the supply of gold and silver in the spot market is measured by the amount of debt. See how their original plan backfires? If there is allot of debt for gold, then the market registers it as if there is allot of physical gold but if the debt for gold decreases, the market will register it as if the physical gold supply is decreasing. And if gold is near $1000 now without any real visible traces of defaults like you said and we all know how over levereaged gold and silver is in the spot market, the spot price of gold and silver has a long way up to go. Spot gold and silver will reach astronomical prices. But WARNING! do not put your money in these paper markets because as I said, the rise in price will be due to massive defaults, so if you put your money in it you will not get your money back (the bond/trust you hold will be illiquid) but everyone that bases their price of physical gold and silver on the spot price will raise their prices just as much and you win holding the physical metal, even if you can not trade the metal for cash because of the massive shortage of cash, the metal is liquid as it's intrinsic value is high due to it's industrial properties(gold and silver) that makes infrastructure easier to help rebuild a collapsed poor economy. Gold and Silver is for the poor, don't let anyone else tell you otherwise."

  15. Anonymous says:

    Eric I hope you're not going to talk about an impending dollar crash, because if you you should read this:

    "Dollar to Rise Most Since 1981 by Year End, Best Currency Forecaster Says"

    http://www.bloomberg.com/apps/news?pid=20601087&sid;=afH0UJDfj.GU

    I think it's time to admit, son, the dollar crash propaganda is bullshit.

  16. Daniel says:

    Yes, those sorting gold/silver don't have enough physical gold/silver to deliver.

    But on the other hand, how many people on the long side, really has enough money to demand physical delivery? They buy those contract using leverage too. They might be as broke as those on the sorting side.

    So one side lack money to buy, the other side lack physical metal to deliver. It's an zero sum trade again.

    So it is arguable that the argument of gold/silver skyrocket due to default is a valid argument.

  17. PaxAmericana says:

    "Washington influence is a far bigger threat to the Fed’s independence (or lack thereof) and the dollar’s value than Wall Street. This connection needs to be severed to restore honest money to the US. For example, the monetary authority which replaces the Fed should NOT be based in Washington DC."

    The Fed's independence is far less important than its abolition. What is needed is what the Constitution demands: gold and silver.

  18. Numonic says:

    Daniel, it's not the lack of physical gold/silver that is the problem, it's the lack of Federal Reserve Notes that's the problem(problem for the banking system not humanity). And it's not that there are people withdrawing massive amounts of Fed Notes, it's that although the percentage of people withdrawing Fed Notes in comparison to the debt has stayed the same, the number of people withdrawing Fed Notes has grown as the debt has grown.

    I explain it in the "California About To Start Issuing IOUs " blog.

    http://www.marketskeptics.com/2009/06/california-about-to-start-issuing-ious.html?showComment=1246237090107#comment-c7306711408794166080

  19. Numonic says:

    "Best currency forcaster" hahahaha. Are they serious? At least they could title it "Dollar to Rise Most Since 1981 by Year End due to ???" but to title it with "best currency forcaster" they're just being lazy, they can do better than that.

  20. Anonymous says:

    Numonic I guess you never took the time to read the article, for otherwise you wouldn't be jumping to faithless laughter (though you do because you base your assumption on the title alone).

    But I guess it comes too no surprise to me that propagandists would be so unwilling to open the box of truth that was given to them.

    So, Numonic in light the aforementioned fact I dare you to open, and read what lies inside this link.

    "Dollar Rises as China Says No Sudden Change in Reserve Policy"

    http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNHdBbZ5fvAU

    Again, the dollar collapse propaganda is nothing but pure bullshit; and this truth comes from the horses mouth itself: China.

    Laugh now ye of little faith!

  21. Marco says:

    @Anonymous - Best Currency Forecaster

    The article "Dollar to Rise Most Since 1981 by Year End, Best Currency Forecaster Says" - is REMOVED! (from each site I search too...?)

    Pity...

    You can in short explain perhaps what it said and what is the base for this prediction?

    It is obvious, that everything in connection with USD and US authorities is pure - manipulation.
    I would not be surprised that US authorities manipulate USD to this "prediction" - from your link I could not find.

    More interesting will be to see your explanation of sudden USD weakening last year, just before LB collapse???

    As I remember the USD was at this time at relation about 1EURO=1.6 (!) USD...?
    After LB collapse USD started unexpected to - rise...? Neither US economy, nor US financial system were better after it...?
    Anyway - somehow the USD become "stronger"...?

    How you explaining this strange "behaviour"...?
    (Obviously - you expected the similar behaviour again?)

  22. Numonic says:

    Whether China holds our debt or not, we will default on it. The strength of the bonds isn't determined by how many people hold it, it's determined by it's solvency and right now we are insolvent. China can stand on the train tracks and get hit by the train or it can move out of the way. Either way the train is not stopping.

  23. stibot says:

    Marco, link to the article has been probably changed, now Dollar Rises as China Says Currency May Dominate Global Trade. Enjoy :-)

    Anon, wish you good luck with your dollars and forecasters' analyses and stop abusing in our church.

  24. Anonymous says:

    Please can you put the source of your data. Preferably a link or the data that illustrates the chart from Bureau of labor statistics. Thanks.

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