Ever since the great economic crisis of 2008, I have read over 20 books on this topic to figure out what’s the matter with our country. I think that I finally figured it out. The problem is that it’s not easy to explain, but let me give it a try.
Let’s say, I am at McDonalds and I want to buy a Big Mac for $3.00. I look in my pocket and I discover that I have no money. Damnit, because I am hungry and I really wanted a Big Mac. All of sudden, I look in my shoe and there magically is 3 one dollar bills. Now I can pay for the Big Mac, but I don’t give the money to McDonalds. There is a guy also standing in line, and I give him the money. He then loans me back the $3, and I now have my Big Mac. The problem is that I now owe this guy $3, plus any interest due until I pay back all $3.
Pretty stupid story, huh? But as I have analyzed this situation, this is the fundamental problem with the United States economy. Instead of finding the money in their shoe, our Federal Government just prints the money out of thin air. Then the Fed lends it back to the US to rack up our world record debt. The US Government does not need an independent non government entity to lend it money, it can just print it out of thin air and then spend it. If they did that, they would not owe the principle nor the interest.
So here’s the dirty secret that no one wants to say. The US government will never pay back the principle. Not going to happen and the Fed knows it. The only pertinent question is whether the US pays off the interest. Remember that debt ceiling stunt in July 2011? It meant nothing because the US won’t ever pay off its debts and the Fed and China know it.
The only question is whether we continue to pay the interest. But that is kind of irrelevant too because the interest rate is zero. So any new debt has no principle and no interest. That’s the same as if we printed it ourselves. Yay!
But wait, then why doesn’t the economy recover? After all, that should do the trick. Obama’s stimulus should have worked if the interest rate was zero and we never have to pay back the principle. So here’s what I figured out. The reason is that the Fed is NOT just loaning dollars to the US Government. They are using our dollars for lots of other stuff like the IMF, and the World Bank. For our economy not to recover after all the stimulus, the % of Fed Money that is not going to American things must be a big percentage. I am guessing like 50% of the money is going elsewhere. Of course, we aren’t allowed to know because the Fed refuses to be audited.
So here’s the news flash. I have done a bunch of analysis about whether other countries have an independent central bank like we have in the United States. I have searched and searched, Brazil, China, England, Switzerland, Canada, India, Russia and on and on. All of their central banks are controlled by the government. Which means that they don’t owe that bank interest nor principle on money it prints.
In all my research, there is only one other currency that is more fucked up than the dollar. Can you guess? It’s the Euro. Now the European Central Bank prints out the money, and then all of the countries like Greece, Ireland, Spain must pay back the interest and the principle. If they had their own currency, then they could just print it, and not owe either. But now we have a bank that is more powerful than the countries itself. The European Central Bank is now making an attempt to control all of these countries under the guise of austerity.
As an American, I have now decided that I am against the Euro. The entire concept of a bank more powerful than a country is wrong. Americans in general are against consolidation of power as a threat to liberty and I heartfully agree. I think that almost any American would agree that the Euro is evil and it is unhinging as we speak. But here’s my epiphany. I believe that the reason that the US economy has not recovered is that the Fed is spending/loaning a ton of dough propping up the Euro. I believe that a ton of our stupid Too Big Too Fail Banks are very very long in the Euro, and therefore, Greenspan and Bernanke are propping up the Euro.
Think about it. Where is the economic crisis focused? The US and Europe. It’s not all Europe because the UK (Not Ireland), Switzerland and other non Euro European countries are doing just fine. So are Canada, Brazil, Australia, China, Japan. The only ones in trouble are the ones that have a flawed central bank structure.
The book that helped me see all of this is called Web of Debt. In that book, there is an analogy with the Wizard of Oz in every chapter. Did you know that the Wizard of Oz was written after the Great Depression? The yellow brick road is the gold standard. Oz means ounces of gold. And the Wizard is the Fed Chairman. The point behind the Wizard of Oz is that the Fed is an illusion until you pull back the curtain. I am hoping I pulled the curtain back a little bit.
The book, Web of Debt, offers several solutions, but given the political environment in the United States, we can’t get there. Obama certainly had a chance but his first act as President was to reaffirm Ben Bernanke. Then he chose Tim Geinter, a Wall Street insider as treasury secretary. After the huge economic downturn and all the shame, Obama has prosecuted NOONE.
Worse yet is Romney. If Romney is elected, we are guaranteed that the fundamental problem of Wall Street and the Fed will not be addressed. I believe that no matter whether Romney or Obama are elected, there will be another huge crash in the next 4 years. The last crash was in 2008, and prior to that it was just after 9/11, or roughly 7 years between the two crashes. I believe each crash will happen with great frequency and depth. So before 2015, there will be a big one. Then and only then will the American people elect someone that is not bought by Wall Street and the healing can begin.