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WSJ: How the Fed Favors The 1%

Austrian-school hedge fund manager Mark Spitznagel skewers the Fed showing how inflation favors the 1%:

A major issue in this year's presidential campaign is the growing disparity between rich and poor, the 1% versus the 99%. While the president's solutions differ from those of his likely Republican opponent, they both ignore a principal source of this growing disparity.

The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm: the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political ...

That didn't make Paul Krugman (the Nobel Committee's idea of an economist) too happy. The Conscience of a Liberal writes

The naive (or deliberately misleading) version of Fed policy is the claim that Ben Bernanke is “giving money” to the banks. What it actually does, of course, is buy stuff, usually short-term government debt but nowadays sometimes other stuff. It’s not a gift. ...
I mean, what is the un-artificial, or if you prefer, “natural” rate of interest?

Well, Ron Paul thinks the natural rate would be the market rate of interest. What do you think it should be?

H/T to member John J.

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“Your entire thesis based upon politicians acting responsibly"

Exactly… without honest government you can kiss a workable money system good bye.

“If the Bank of Canada is a perfect money system, then why is it that it no longer functions as intended?”

Because of dishonest government.

“I specifically mentioned two other commodities that have been useful for 6000 years as a medium of exchange.”

Yes and those two other commodities can be horded by private interests and manipulated in a rigged market.

“The greenback helped a mass murderer commit genocide against his own people.”

That’s a dishonest argument because it purposely sidesteps the subject matter of this debate, which are not the motives behind the Civil War and any honest observer will notice that but it seems that’s the only recourse you have left. And that’s what cult-like thinking produces… dishonest recourse.

"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix

Honest Government?

You are the one being dishonest. Copper and silver have not been hoarded nor can they be hoarded. They are industrial metals. You are grasping at straws here.

The greenback was only in existence for a short time and is not a viable argument given it's short life span. You know this to be true yet this is all you have to hang your hat on. A dysfunctional Central Bank and a currency which existed in war time and was quickly retired.

In know way does my comment regarding Lincoln side step the issue. That is precisely the issue. Fiat currency allows for certain circumstances to come about. Without the greenback, Lincoln would not have been able to afford the war and destroy the republic.

There is no such thing as honest government. If you believe that, then I have some real estate on the moon to sell you.

A copper backed US dollar...


"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix

Copper Penny

Pennies were 90% copper until 1982. People could buy a lot with mere pennies in the early twentieth century.

Newt Gingrich, you support

Newt Gingrich, you support sound money? Who knew? Lol, just kidding

WTH? This comment was

WTH? This comment was supposed to go below another one of Clint's comments, where he says he has land of the moon to sell, in case anyone was wondering why I made that joke about Newt Gingrich



The creation of money must

be a public responsibility. Yes... we need government that can be trusted.... that's the only way... a publicly owned central bank that issues debt free currency on behalf of the people is the answer....

"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix

I use to think like you. It

I use to think like you. It is bull. Money should be whatever someones wants to accept and hold. Telling me I have to use gold or government money is absolutely unacceptable. A choice to use gold, government money, asset backed securities, Canadian tire money, hair, buttons, sticks, seashells etc.. belongs to me, no one else. Whoever provides the best product will be who I get my money from. Any law restricting my right to trade with whatever I want to use or whatever you want to use is absolutely unethical and will become a target for unscrupulous minds. With complete freedom of choice that becomes completely impossible over the long term.

its quite complex

"1) the low interest rates makes speculation easy. This benefits hedge funds and bank investment houses because they typically make daily overnight loans to gamble with.

2) the extra money that the government has due to fed money printing goes to things we couldn't otherwise afford. Big military perks like 2200 a month for free housing for junior officers and also the money that fills states like california so they can offer full on middle class housing (called section 8) to the poor at enormous cost. This proposition that the poor get to live better than the middle class (because they have guaranteed income, no layoffs, healthcare) causes a 50 billion dollar a year debt in california which the fed pays off 30-40 billion of every year.

3) Faced with competition for housing with with Military who get it for free, and the poor who get it for free, and the lack of housing due to the rapidly expanding ghetto areas, essentially has doubled and tripled the cost of rental housing for middle class Americans. That get reflected into real estate prices causing a starter home in california to run at 600,000 dollars. No one earns enough to afford them so they start to sit empty. The banks have already gotten paid for their mortgage when the Fed put 2 trillion of them on their balance sheet, so there is no way for the market to correct. Prices stay high, middle class stays broke and defeated. "

- giavellireport.com

Military don't get free housing

Military members don't get free housing. They get a tax-free housing allowance if they live off post, but they earn this. It is part of their compensation package.

I live on base

We pay 1700.00 per month for housing. It is definately not free. My husband has been in the USMC for 17 years, we have never gotten a free sandwich. People perceive things as free if they don't physically see the money before the military spends it from them, irresponsibly, at that. Then they won't even let me put a F*&%in Ron Paul sign on my lawn!

As a matter of fact, tell me any "freebie" a military member gets, and I'll tell you how its a lie. Nothing in this world is free for honest people. Not that you intended to lie, but we all here at the DP know that most things involving Government is a lie, and free ANYTHING for the military is a sham.

You will hate me for this, and I apologize because I know you

and your husband are probably great and well meaning people, but YOU don't pay $1,700 for housing. WE the tax paying, law abiding citizens pay for your housing as the government extracts our hard earned money to support a military that should not exist in the first place. Sorry to be so harsh, but anyone that works directly for the government is taking money from the real producers. Sorry, but the sad reality is the Military Industrial Complex uses our money to support what are essentially the largest gangs in the world, our military forces that are trained to carry out orders to protect the largest corporate interests on the planet. See it for what it is. The truth shall set you free. Being employed by the military and US Government is a gravy train robbing the rest of us who work so hard and have no interest in policing the world or our own citizenry. I don't know about you, but I just want to live in peace and live my short life on this planet without being controlled by greedy bankers and military conquering interests.


This nonsense about "the 1%"

has been nothing less than class warfare promoted by Canadian anarcho-socialists and picked up by American socialists. Screw 'em.

reedr3v's picture

I'd like to see more refutations of Krugman's

apologia for the Fed.

I'd love to read the remainder of the WSJ article but can't...

without subscribing. :( Sounds like a good one. Anyone able to post it in its entirety ('legally')?...


too....the one article i'm dying to read...and i can't.

To read the article...

Highlight "How the Fed Favors The 1%" and paste it into Google and hit search. Click on the first link that comes up under news.

For some reason, the Wall Street Journal gives you an article free pass if you get to its articles through Google.

"I ain't the dying type."

Reader, writer, soldier.



Sweet. Thanks for the tip...

It worked! :)