I hope you are wrong about the hyper inflation but I agree with you about the tricks. Tricks don't correct cultural dysfunction, they just enable it.
REH From: [email protected] [mailto:[email protected]] On Behalf Of Keith Hudson Sent: Thursday, September 22, 2011 4:16 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION Subject: [Futurework] A Double Twist by the US Government/Fed After their two-day meeting, the Federal Reserve (the US central bank) have announced "Operation Twist". It certainly is a twist. In fact, it's a re-twist on the twist that's already been carried out. What's being put over to the totally bemused public (and many financial journalists) is that the Government (the US Treasury) will 'buy' $400 billion of government long-dated bonds by 'selling' the same amount of short-dated bonds. This is supposed to be benign in that no new money is being created. Thus there'll be no danger of causing inflation. The idea behind it is that long-term interest rates of the currency will be brought down and thus tempt industry into investing in long-term plans and getting people back to work. Never mind that most consumer-production transnational corporations are already sitting on massive profits that they don't know what to do with, what's all this about the government 'buying' and 'selling'? The fact is that the US government is already insolvent and doesn't have the money to 'buy' the short-term bonds in the first place. Short-term bonds are either owned by private investors (e.g. pension funds) and have to be bought with real cash, or they've already been 'bought' by the Government (the US Treasury) and then placed in hock at the pawnbrokers (the Fed) which then prints the money. This is called Quantitative Easing. If the Government wants to get hold of the pawned short-term bonds, then they've got to pay the Fed in order to get them out of hock, just as anybody has to do at the pawnbrokers. The only way that the US Government can 'sell' the Fed-owned short-term bonds is by some form of subterfuge which breaks all accounting principles -- by the Fed pretending not to notice that their collateral is being burgled and then used to buy long-term bonds. And then, of course, the newly acquired long-term bonds will immediately have to be placed in hock with the Fed in order for the new money to be created. Thus the Government now owes not just $400 billion, but $800 billion. This is not only the $400 billion of short-term bonds it has burgled but another $400 billion of long-term bonds newly put in hock. Central banks are supposed to be independent from governments. They are supposed to have two distinct functions. One is to look after the value of the currency on behalf of the public by cudgeling the ordinary banks' proclivity to manufacture credit. The other is take care of taxpayers' money and cudgel the government if necessary if it tries to borrow way beyond what it's able to tax. On these two counts, whatever politicians may say, central banks have compromised themselves decades ago. By colluding together, governments and central banks have been defrauding their electorates with steady inflation for decades. By this new double-twist, the US government is set to defraud its electorate even further. Hyperinflation, here we come! This is what Paul Volcker, a past Chairman of the Fed, warned about in his New York Times article only two days before the Fed Committee sat. With three honourable exceptions, the Committee fell for Bernanke's specious argument after having been worn down over a two-day meeting. Keith Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2012/08/
_______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
