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The Fed Trashes the Dollar


If it is the first responsibility of the Federal Reserve to protect the dollars that Americans earn and save, is it not dereliction of duty for the Fed to pursue a policy to bleed value from those dollars? For that is what Chairman Ben Bernanke is up to with his QE2, or "quantitative easing."

Translation: The Fed is committed to buy $600 billion in bonds from banks and pay for them by printing money that will then be deposited in those banks. The more dollars that flood into the economy, the less every one of them is worth.

Bernanke is not just risking inflation. He is inducing inflation.

He is reducing the value of the dollar to make U.S. exports more competitive and imports more expensive, so that we will consume fewer imports. He is trying to eliminate the U.S. trade deficit by treating the once universally respected dollar like the peso of a banana republic.

Sarah Palin has nailed cold what Bernanke is about:

"We shouldn't be playing around with inflation. It's not for nothing Reagan called it 'as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.'

"The Fed's pump-priming addiction has got our small businesses running scared and our allies worried. The German finance minister called the Fed's proposals 'clueless.' When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it's time for Chairman Bernanke to cease and desist.

"We don't want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings."

Egging Ben on is the Nobel-prize winning New York Times columnist Paul Krugman. Fed policy is too timid, says Krugman.

When Bernanke said we are not "going to try to raise inflation to a super-normal level," he blew it, says Krugman, and "there goes the best chance the Fed's plan might actually work."

What the Fed should do, he says, is change expectations "by leading people to believe that we will have somewhat above-normal inflation ... which would reduce the incentive to sit on cash."

But "sit on cash" is a definition of saving. Is saving bad? Once, Americans were taught that saving was a good thing.

Not to Krugman. He wants to panic the public into believing the money they have put into savings accounts and CDs will be rapidly eaten up by Fed-created inflation, so they will run out and spend that money now to get the economy moving again.

Whatever the economics of this, the morality of it is appalling.

Imagine a husband and wife with a bright child who are saving to send the boy to the best prep school, then Princeton, then, hopefully, Harvard or Yale Law, so the boy can realize his dream of being a great lawyer and perhaps one day sitting on the Supreme Court.

Krugman is recommending that the Fed goose the money supply to cause a general fear of inflation, so that couple will run and get their money out of the bank and start spending it, because, if they don't, their own government will start destroying the value of their savings.

This is Weimar economics.

As for inflation, are not the prices of gold, silver, oil and other commodities flashing signals that it is on the way?

In denouncing Bernanke, even the Chinese are not all wrong. They have followed the monetary policy we created at Bretton Woods in 1944, where we tied the dollar to gold at $35 an ounce, while other nations tied their currencies to the dollar at fixed rates of exchange.

China is being denounced for manipulating its currency when Beijing is adhering to a strict dollar-renminbi exchange rate, while our Fed is manipulating the dollar price to seek competitive advantage.

The other Chinese complaint is that they lent us trillions to buy Chinese goods and now we are robbing them by depreciating the dollar-denominated Treasury bonds they accepted in return for their goods.

Pay back your banker in Monopoly money, and you will find you are soon unable to borrow from anyone anywhere.

In four years, the American people have delivered three straight votes of no confidence in the U.S. government. The Fed, however, retains a confidence that it does not deserve, when one considers that, when it was created in 1913, a $20 bill could be exchanged for a $20 gold piece.

Today, it takes seventy $20 bills to buy a $20 gold piece, which means the dollar can buy in 2010 what you could get for 2 pennies in 1910. Quite a record for a central bank set up to protect the dollar.

If Bernanke's inflation does not generate growth, confidence in the Fed will also vanish. Then a crisis of capitalism will be at hand.

Historians will not deal kindly with the men who traded the horse of U.S. economic nationalism for the rabbit of the Global Economy.

To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at



3 Comments | Post Comment
I have been very frugal during most of my life, and I am indeed upset about my savings being devalued by the Fed - especially when interest rates are so low.

I don't feel bad about China losing purchasing power due to dollar devaluation, however. The Chinese counterfeit our goods and steal our ideas.
Comment: #1
Posted by: Bruce Long
Fri Nov 12, 2010 7:24 AM


Comment: #2
Posted by: mike gushee
Fri Nov 12, 2010 7:06 PM
Death to Our Body Politic

“If it is the first responsibility of the Federal Reserve to protect the dollars that Americans earn and save, is it not dereliction of duty for the Fed to pursue a policy to bleed value from those dollars? For that is what Chairman Ben Bernanke is up to with his QE2, or "quantitative easing."
Patrick J. Buchanan

What “duty; what “responsibility?”

This “quantitative easing,” is the Newspeak of Big Brother.

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes...Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."
- Napoleon

The responsibility of the Fed is to the shareholders alone, meaning the robber barons who have wrested control of the nation's purse strings away from the American people.

What was the so-called “bailout of the banks,” beyond a modern-day Danegeld extortion of the American people?

“If Bernanke's inflation does not generate growth, confidence in the Fed will also vanish. Then a crisis of capitalism will be at hand.”
Patrick J. Buchanan

And what is this financial post which can cause an American president to kowtow in fealty, to relinquish his voice, which is the voice of the American people?

"Mr. Greenspan needs to make his decision independent of what I think. I learned a pretty good lesson during the transition, and that is I commented out loud about one of the actions he took. That's the last time I'm going to comment about the actions Mr. Greenspan takes. He's an independent voice, and needs to be an independent voice."
- [Notional] President George W. Bush, speaking in regards to the Federal Reserve Board Chairman, 2001

What does the nation need?

There was never any “confidence” in this private banking cartel, which has done nothing but swindle the American people since its inception. How can the American people feel “confident” in a gigantic Ponzi scheme?

"The shareholders of these banks which own the stock of the Federal Reserve Bank of New York are the people who have controlled our political and economic destinies since 1914. They are the Rothschilds, Lazard Freres (Eugene Mayer), Israel Sieff, Kuhn Loeb Company, Warburg Company, Lehman Brothers, Goldman Sachs, the Rockefeller family, and the J.P. Morgan interests."
- Eustace Mullins, in his book "The Secrets Of The Federal Reserve"

It is well apparent that there is already a “crisis of capitalism” at hand, with the rioting in Greece, France and other countries which have been swindled by the international bankers. Why should America wait patiently for total financial meltdown and chaos in the streets?

Would it not be far more preferable to send the United States military on a mission to seize the stolen assets of the American people from these swindlers? It is they who have unleashed the unwitting third world corporate shock troop known as “guest worker” onto once vital nations, as a parasite to sap their respective national cultures and wills, as destroyers of culture, in the “culture war.”

This central bank insists on operating as an “independent” contractor with other people's money(OPM). It demands autonomy and bullies our elected officials into conceding control of the nation's purse strings to what President Andrew Jackson described as a “den of vipers” to be routed out.

This arm of the robber barons must be totally destroyed, before it destroys the United States of America. But don't take this writer's word for it; there are others among the Founding Fathers, who have spoken forcefully on this issue:
If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash."
- George Washington

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, (i.e., the "business cycle") the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
- Thomas Jefferson

The record number of foreclosures and the national bank account which is now fourteen TRILLION dollars in arrears, stand as a stark testament to the truths this nation's founders espoused, regarding fiat money.

The Fed is NOT answerable for its many crimes against humanity, as every time an audit is proposed by conscientious lawmakers, the issue is beaten back down into oblivion, by those who control the purse strings--and by extension, the puppet strings of our degenerate lawmakers, who have abdicated the power to coin money and declare war.

The nation and the national security become forfeit to the wiles of these predatory lenders, who continue to operate with impunity.

The American people have created a “new political party;” it is a tea party called "The Second American Revolution" and the cause which fires it, is the same struggle which animated the Founding Fathers; a debt-free monetary system, based on tangible assets.

"The colonies would gladly have borne the little tax on tea and other matters, had it not been that England took away from the colonies their money, which created great unemployment and dissatisfaction. Within a year, the poor houses were filled. The hungry and homeless walked the streets everywhere. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the International Bankers was probably the Prime reason for the Revolutionary War."
- Benjamin Franklin, as quoted from his autobiography

The wealthiest and strongest nation on earth has been dreaming dreams of poverty, under the mass hypnosis generated by these Svengalis of the financial sphere, with their shell-and-pea game.

Now is the moment of truth for every man who fashions himself a conservator of his country. Any “Pledge to America,” by any political party, must include the bedrock principles of abolishing the Federal Reserve and ending all involvement in the phony storefront of the international bankers; the United Nations.

The new Republican “pledge,” was a bottom feeders oath, which continues to abdicate responsibility for stewardship of the nation's purse, to the wolves of the central banking cartel.

Patrick J. Buchanan is certainly the one politician--along with Ron Paul--who understands all of the points delivered here and he deserves kudos for bringing these questions of manifest destiny of a people, out into the open arena of ideas, for dissection.

The mandate of heaven is clear, as it comes from both the Founding Fathers and the current age of Americans, who are fighting to wrest control of their country back from the United Nations and one world government.

The issue at hand is the survival of the nation-state concept, under the onslaught of the steamroller assault by the U.N., to impose one world government, via the international bankers.

Will U.S. lawmakers step up manfully to the plate to “do their job,” as the governor of Arizona requested of the “president?” Or is the new “hope and change” the Republicans tout, simply more shifting around of the deck chairs on S.S. Titanic?

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, more sure way 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 in which not one man in a million is able to diagnose."
- John Maynard Keynes

What is now transpiring is the final act in the drama of the centuries, which will determine if the dream of America's founders will prevail, or whether mankind will continue to live under the serfdom of a fractional reserve banking system, whose financial steed runs roughshod over the tilled fields of the American worker for sport.

"The issue which has swept down the centuries and which will have to be fought sooner or later is The People vs. The Banks."
- Lord Acton, Lord Chief Justice of England, 1875
Comment: #3
Posted by: T.H. Asgardson
Fri Nov 12, 2010 7:25 PM
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