Thursday, February 17, 2011


How Much Has the Fed Lost?

"The Federal Reserve has spent over one trillion dollars buying mortgage backed securities, so-called toxic assets. How much are these assets worth? It's a simple question but one that is exceedingly difficult to answer not the least because the Fed has resisted being audited in defense of its so-called independence. One might say the Fed's actions have been hidden behind a veil of independence."

Chrysler Group LLC (pronounced /ˈkraɪslər/) is an American multinational automaker headquartered in the Detroit suburb of Auburn Hills, Michigan. Chrysler was first organized as the Chrysler Corporation in 1925."

I put this from WIKIPEDIA;
"On June 10, 2009, Chrysler Group LLC emerged from a Chapter 11 reorganization and announced a plan for a partnership with Italian automaker Fiat. Fiat holds a 25% stake in the new company, with an option to increase its stake to 35%, and up to 51%, if it meets financial and developmental goals for the company.[9] Fiat's stake cannot go beyond 49% until the government has been paid back in full."

I put this out to give an "out" for what I an seeing.

To give a quasi Nom de plume - i will call it the Illuminati.

I had had a Taiwanese friend that saw the UPPERS and called the "the smart guys"

This tag seems appropriate for this discussion.

" * 1797
o 3 Years
o Caused by gold-based deflation in Britain hitting US economy
o Price failures

The Bank of England was unable to maintain specie payments during that country’s war with France. This produced a cascade effect of currency shortages that easily crossed to the trade-based economy of the United States, where it caused massive inability to pay debt and lack of capital investment.
* 1807
o 6 Years
o Caused by Trade restriction, in effect protectionism, exacerbated by the disbanding of the Bank of the United States, its first central bank
o a ballooning of debt, and subsequent failures
o snowballing unemployment
o Key trigger for the War of 1812

In response to abuses by France and Great Britain, Thomas Jefferson committed the greatest mistake of his career, bringing the US economy crashing down in economic depression. His attempts to ban all foreign trade left Americans unemployed, glutted with some products and short on others. The end of the country’s first central bank produced its own disruption, right at the moment when the US would have been recovering from the worst of the embargo.

* 1819
Deflation punishes investment and property ownership, attacking capitalism at its roots

Deflation punishes investment and property ownership, attacking capitalism at its roots
o Two Years
o Caused by contraction of money by the Second Bank of the US
o Credit crisis
o Deflation
o Cotton and other price failures

In 1819, the Second Bank of the United States forced a reduction in money supply, creating a credit crisis, forcing downward pricing pressures resulted in a collapse of banks, cotton prices, and prices in general.
* 1832
o Two years
o Caused by contraction of money when the National Bank was shut down by “Hard Money” advocate Andrew Jackson
o Credit crisis
o Price failures
o Massive unemployment
o Bank failures

In 1832, another contraction of credit and money causes a series of bank failures. Part of the lack of money supply was caused by Andrew Jackson shutting down the Second Bank of the United States…akin to shutting down the Fed. Ironically, a longer-term effect of shutting down this second central bank was a bad spate of inflation, as the normal banks struggling to take up the slack printed and loaned their own money, as the Constitution allowed. _____________________________________________________________
* 1836
o Six years
o Caused by new mandate of silver-backed currency creating a money shortage
o Credit failure
o Record unemployment dwarfing 1832
o Bank failures
o Cotton price collapse
o money supply down 58%

In 1836, just a few years later, Jackson’s effort to force the use of “hard money” (gold and silver) produced ANOTHER contraction, causing real estate prices to plummet, as well as prices in general. Remember, suddenly declining prices are as harmful to the economy as rising prices. You don’t get something for nothing. Banks in the 1830s retained a stable ratio of gold to currency…this meant that when the economy grew, the ratio of money to the economy’s wealth plunged, creating negative price tensions that always result in economic failure. Within a year, 1837, yet another price contraction occurred, including cotton price failures, bank failures, an explosion of unemployment (normal with globally falling prices), continued real estate price instability…this gold-caused depression lasted six years, the second longest in US history. _____________________________________________________________
* 1857
o Two years
o Metallic currency causes a cyclical price collapse
o Stock prices collapse
o 900 mercantile firms, in New York alone, fail
o Agricultural prices fail, triggered by a decline of demand form Europe
o Real estate prices collapse
o Significant unemployment increase
o money supply down 23%

In 1857, another cyclical wave of price/money collapse, as is inevitable under a commodity-based currency. Stock prices plunge, banks fail, prices fall…prices fall in almost every gold-based economic depression, because the economy grows but the currency cannot, creating a shortage that forces prices back down, causing rampant unemployment, bank failures, bubble-bursts of whole industries, et cetera. This lasts two years. Oh, by the way, the 1819 collapse lasted two years, too. That’s pretty much the minimum for an economic depression, whereas that would be abnormally long, for a modern recession. _____________________________________________________________
* 1869
o Two years
o Gold directly causes an economic failure
o Gold prices collapse
o Stocks fail
o Rail companies collapse, paralyzing the economy

GreenbackAnother depression. Gold was DIRECTLY at fault for this one: Gold goes through a speculative bubble, suddenly collapsing in price, much like in 1981. This is the famous Black Friday. Gold speculators like the gold bugs you guys have to beware heeding attempted to drive the price up even higher (as they’re trying now), causing the price to spike, then collapse. As in 1981, and as will soon happen again, everyone attempting to invest in gold is pretty much bankrupted. This failure lasted two years. _____________________________________________________________
* 1873
o Either 5 years, or is the start of a 23 year span of economic weakness known as the Long Depression
o Caused, in large part, by a switch to the Gold Standard producing a prolonged money shortage
o Credit collapse
o Banks fail
o Insufficient money even to do normal business/trade, therefore
o 18,000 businesses fail

After only two years of economic recovery, DEFLATION itself directly causes a FIVE year depression. Credit collapses, banks fail, as do over ten thousand businesses (remember, the population of the US was a fraction of what it is, today, so that’s even worse than it sounds). This was caused, in part, by the attempt to “reign in” money supply, to synchronize it more tightly with gold. _____________________________________________________________
* 1893
o 3 years (or else, it’s the final throw of the Long Depression started by gold in 1873)
o A shortage of gold creates a deflation of the US Dollar, causing the usual economic depression
o 500 banks fail
o 18% unemployment
o commodity prices collapse, including steel, grain, cotton, and timber
o 15,000 businesses fail

A return to a metal-based currency sets off another depression, the worst one until the Great Depression (which was, itself, actually a series of two depressions, the 1929 depression having gone into recovery in late 1932, and then failed under the idiotic minstrations of FDR). This depression starts with a contraction of credit, a run on banks (which is common when people expect money to be backed by metal) over 500 of which fail, the collapse of the stock market (this happened in 1869, too, forgot to mention that), then the failure of SIXTEEN THOUSAND businesses. It lasts four years…three times longer than a bad post-metal recession. But it’s also deeper and harder than the previous six year depression, making it our second worst.

* 1901
Because of the worry that dollars leaving the country would create a domestic currency shortage, in the late 19th century countries often coined separate money for foreign trade, like this US Trade Dollar

Because of the worry that dollars leaving the country would create a domestic currency shortage, in the late 19th century countries often coined separate money for foreign trade, like this US Trade Dollar
o 1 year
o Declining money supply meets rising stock market
o Stock market collapse

The US strictly adopts the gold standard, producing yet another price contraction, shattering the stock market (makes our current stock decline seem like a golden age). Bank failures, economic malaise that spread globally - the US is an economic superpower already, though people don’t realize it yet, and their foolishly metal-based business cycle hurts everyone. _____________________________________________________________
* 1907
o A shortage of money supply caused yet another disaster
o Bank failures, nationwide
o Stock failure, loss of over 50% of value

As money supply contracted, J.P. Morgan convinced various wealthy New York bankers to act as a private Federal Reserve, shoring up the banking system, and halting this economic failure…note that it worked better than any government-mandated monetary rescue before or since, including those by the Federal Reserve, FDIC, or the recent $700,000,000,000 bailout. Recognition of the dangers of an unmanaged metal currency, and the power of an influx of money to fight economic depression, resulted in an unfortunate swing to the other extreme as a “solution”: The founding of the Federal Reserve System. _____________________________________________________________
* 1920
o 2 years
o The Federal Reserve draws down money supply, exacerbating the economic failure caused by WWI and increasing socialist control of national economies worldwide
o Banks fail
o Stock market crashes
o Prices plummet

Government centralization of economies during WWI resulted in worldwide economic weakness, but with a new player: the Federal Reserve, founded in 1913, suddenly began tightening money supply. Because money was still based upon gold, this did not result in a modern recession in the US, but an actual economic depression. This economic failure was credited with the defeat of Woodrow Wilson’s successor, James Cox, in the 1920 election.

On the other hand, this depression was abnormally short, primarily because the Harding administration’s response was NOT more government intervention, “stimulus” programs, Keynesian economics, but simply to leave their hands off and let the correction happen.
* 1929
When money deflates, people choose to just hold onto it, starving the marketplace and causing a spiral of ever more deflation

When money deflates, people choose to just hold onto it, starving the marketplace and causing a spiral of ever more deflation
o 11 years
o The Federal Reserve draws down money supply, right when banks are needing it to serve its function of providing liquidity, causing massive failures
o Banks fail
o Stock market crashes
o Depressionary spiral
The Great Depression was not, initially, all that great. It was deep, but was of a normal length, with two quarters of recovery by the end of 1932. Unfortunately, while FDR campaigned on balancing the budget, cutting government spending, regulation, and taxes, he actually expanded all of those things, enagaging in “stimulus” activity that caused the depression to drag on another eight years. One major factor in its eventual recovery was the ending of the gold standard in 1933.


In 1933, the US removed the dollar from the gold standard. Starting with its first recession in 1948, and going through 2007, the US — no longer strongly dependent upon the value of metal commodities for the value of its currency — did not suffer the severity of depressions, but instead tended to have relatively minor economic recessions when the Federal Reserve suddenly raised interest rates, causing a contraction of GDP growth.

* 1948
o 18 months
o Sharp inflation, except for:
o Decline in commodity prices
o Increased employment: 3.5% unemployment

The Federal Reserve suddenly cut interest rates, as the economic damage of WWII was being fully realized.
* 1953
o 12 months
o Moderate increase in unemployment
o GDP dropped by 6% in one quarter
o 6% unemployment

In 1952, the Federal Reserve contracted the money supply, which led to an economic recession, aggravated by the realization of the economic damage caused by the Korean War — Wars are always bad for economies, but this is usually not revealed until the war ends.
* 1957
o 8 months
o 7.5% unemployment
o 9% GDP decline
o Price inflation

The Federal Reserve again raised rates and cut money supply. Because of the economic dominance of the US, this recession spread across the whole globe.
* 1960
o 10 months
o 6.9% unemployment
o 5.7% inflation
o Decline in goods production

Very minor downturn, on the heels of yet another sudden rate hike by the Fed. Largely confined to an increase in unemployment and inflation, like most recessions.
* 1969
o 11 months
o Moderate unemployment
o Decline in GNP
o Decline in goods production
* 1973
o 16 months
o 8.7% unemployment
o 12.2% inflation
o Dramatic decline in goods production and investment
o 11.2% interest rate

Economic upheaval caused by the end of the Breton Woods accord, the scandal and resignation of Richard Nixon, and the massive increase in oil prices caused by the OPEC embargo, produced one of the most significant recessions of the post-gold era, leading to prolonged stagflation.
* 1980
o 6 months
o 7.8% unemployment
o 12.2% inflation
o Significant investment decline
o 20% interest rate

After the end of the official recession in 1975, the economy never reached its normal economic growth, in part because of continued high oil prices, price controls unsuccessfully placed on oil that caused shortages of supply, massive increases in government regulation and spending, and price inflation caused by the high oil prices combining with the Federal Reserve’s expansion of money. By 1980, it was attempting to cut money supply again, and this era of “stagflation” climaxed in another, very short, official recession.
* 1981
o 16 months
o 10.8% unemployment
o 12.2% inflation
o Dramatic investment decline
o 21.5% interest rate

The dramatic economics changes of the Reagan administration (and the end of the Carter administration, who actually started the process, for example “deregulating” banking), albeit good in the long run, exacerbated the symptoms of stagflation in the short-term, especially a dramatic tightening by the Fed, leading to a rapid and dramatic economic downturn.
* 1991
o 8 months
o 6.1% unemployment
o 6.5% inflation
o 11.2% interest rate

Tax hikes, a spike in oil prices, significant interest rate hikes and Fed tightening, a general reversal of “Reaganomics” with the expansion of government under the Bush administration, the bailout of the Savings and Loan industry by the Federal government, preserving bad debt and inefficient businesses, the Gulf War, and other factors led to this significant, and persistent economic downturn, which was no longer officially a recession in 1992 or 1994, but was still a stagnant economy leading to two dramatic upset elections.
* 2001
o 8 months
o 6% unemployment
o 1% inflation
o 6.5% interest rate
o Prolonged stock market downturn

Ongoing Fed tightening, on the theory that economic growth is always and must be stopped, had led to a dramatic stock market decline starting in 2000. The spike in oil prices, expansion of government, and direct economic disruption caused by the 9-11 attacks exacerbated this already-building downturn, producing a relatively short “recession”, that did not actually include two quarters of official shrinkage, followed by a prolonged period of relatively slow economic growth, in which, for example, the Stock Market never actually recovered to its previous levels (which, historically, it had almost always done within two years of a decline). A decade later, the stock market still had not resumed normal rates of growth, despite occasionally having “record” gains that simply made up this or that part of the previous losses, yet never made significant new ground.



* 2007
We face, as was normal during the days of the gold standard, massive bank runs, a credit freeze, price failures

We face, as was normal during the days of the gold standard, massive bank runs, a credit freeze, price failures
o ongoing
o 9.4% unemployment
o 1% deflation
o Bank failures
o Commodity price collapse
o Bank failures

While the economy never fully returned to normal economic growth, it staggered along for several years, but by 2007 the pressure of ever-increasing oil prices, years of increased government regulation, two voluntary wars, and enormous new “foreign aid” spending added up to a currency shortage that produced the first economic depression since 1938."

This list is form

OK so in the MONETARY SYSTEM there are fictionalizations.

Thsoe tha understand this can benefit, and most of us are "SQUEEZED" - MORE TO THE TOP - MORE TO THE BOTTOM - LESS TO THE MIDDLE!!!

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