The trick to wielding power is convincing people you are powerful. The Federal Reserve is a master at this persuasion.
- laziness; i.e., publishing press releases and official spin as “news”
- willful ignorance
- craven desire to tout the party line, lest the plumage of someone higher up become ruffled and the messengers be sent to the career guillotine
- adolescent faith in an all-powerful financial Deity (the Federal Reserve) being far less troubling than skepticism, and
- all the other lemmings are persuasively running in that direction, so it must be right
What the Fed Does Control
- The Fed controls the Fed Funds Rate; i.e., the lending rate between banks.
- The Fed can influence interest rates in the real economy by buying and selling Treasury bonds and other securities; i.e., increasing or decreasing liquidity/money supply.
- The Fed can make funds available to the financial sector. During the 2008 Global Financial Crisis, the Fed loaned over $16 trillion to large global banks. This is roughly equal to the entire gross domestic product (GDP) of the U.S.; all residential mortgages in the U.S. total about $9.4 trillion.
- The Fed can invoke the public-relations magic created by belief in its power to issue grandiose pronouncements; for example, “we’ll keep interest rates low essentially forever.”
What the Fed Doesn't Control
- It cannot force any enterprise or person to borrow more money.
- It cannot differentiate between productive investments and financial speculation/malinvestments.
- It cannot distribute money to households by dropping cash from helicopters; all it can do is make money available to banks.
Innovation and the Fed
The Free Lunch
The Square Meal
Avoiding the Bill
Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:
1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
5. Technological, financial and demographic changes in our economy
Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.
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