Can The US Government Increase Our Nation’s Money Supply?
publication date: Jan 12, 2010
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author/source: Brad Hamill
One often hears economic pronouncements that can make you step back and scratch
your head in confusion. A few of these are: “The US dollar is going to plummet
and the stock market is going to crash” – along with “US government spending is
devaluing the US dollar”. Neither one of these can be made sense of, since both
are incorrect in their construction.
Let’s get to the basics of what the goals are for the current US government and the Federal Reserve. These goals have some similarities: power, greed, and wealth – but are quite divergent when it comes to the rest of what they’re after.
What if we were to write a “business plan” for these two entities. What would be written about their “objectives”? I assume they would look somewhat like the following:
Objectives
US Federal Government – Objective is to slowly build an oligarchy and establish a society based on Socialistic principles, while using the Marxian concepts of labor class warfare to achieve these ends. All future economic activity will be expended as service to the centralized national leadership. This will be accomplished through the building up of voluntary servitude and involuntary slavery.
Federal Reserve – Objective is to create a centralized bank within the United States that will act as a pipeline between us, as international bankers, and the United States government. We will control the issuance of their currency, the interest rates of their money supply, and the availability of their credit. Goal is to periodically take over assets that others have toiled for, and to control the macro level economic decisions of the nation.
Power of the US Federal Government
What if the Federal government created $5 trillion in new US Treasury securities and the Fed sold them at auction. Would our money supply balloon out of control – causing major inflation? No. The nation’s “base” money supply would not be affected AT ALL! Those $5 trillion of securities will have been paid for with existing money, not new money.
The Federal government does not have the power to create new money. Period. Yet you’ve learned from past tutorials that the government depends on inflation in order to amass its greedy power. How can they promote inflation when they don’t have control over the money supply? Can they do this through a new $700 billion of stimulus debt? No. Those US Treasury securities will be bought with existing money.
Here’s the point that most people don’t understand. One of the ONLY ways that the US government can increase the money supply is to take over a significant size of the EXISTING money supply (through new sales of Treasury securities) and then use that money that’s now in their control to encourage YOU and others like you to go into more debt.
There are two ways that new money can be created in our nation. The first way is for the Federal Reserve to purchase US Treasury securities from Primary Dealers (international bankers). The Federal government cannot demand that the Fed do this – and they have absolutely no power to force this. The government is stuck when it comes to this path.
The second way to create new money is for people and businesses to take out new loans (new debt). This automatically creates new money in the exact amount of the new debt – thus increasing the money supply.
The Federal government is left with the task of encouraging its citizens to take on new debt in order for it to retain its power structure. Now you should understand the true purpose of “Cash for Clunkers”, “First-time Homebuyers Tax Credit”, etc. We also see the Federal government giving out money for infrastructure projects – hoping that the recipients of this money will also create new debt as part of the project.
Is there any other way that the Federal government can increase our nation’s money supply? Yes, actually there is. The government could pass down an edict tomorrow that basically says: “Each US dollar is now worth two US dollars”. By doing this, they will have succeeded in doubling our nation’s money supply immediately. They will have also succeeded in probable armed revolt and anarchy in the streets – but it is the only way that they have direct control over.
Those remembering 1933 will recognize that as the year in which the US government made it illegal for citizens to own gold money. Gold was fixed at approximately $20/ounce when the edict came down. The government made sure that all gold coins were confiscated – and proceeded to devalue the US dollar in relation to gold by re-pegging gold at $35/ounce. Who made an instant profit of 75% on this deal? Those that still owned gold that could be used as money in our economy – the international bankers. The Federal government got the benefit of taxes on increased exports, since US dollar gold convertibility was still legal for foreign nations – making our products much cheaper to buy. The increased exports also had the fake effect of increasing our nation’s GDP number, so it looked for a time like we were heading out of the Great Depression.
What are some other ways in which the US Federal government can seek to drive inflation without having direct control over the money supply? How about controlling the supply and/or demand for various products and services?
How many have heard the stories about the government paying farmers to destroy certain crops, or to not even plant certain fields? Why would the government even care? They care because they target specific food groups that are considered “necessities” in the American diet and seek to inflate the prices through a reduction of supply against a certain level of demand.
The US Federal government targets a wide range of things in which they use dictatorial laws to encourage inflationary pressures. Inflation increases tax revenues, makes existing debt cheaper to pay off, and robs people of their long-term wealth, making them more dependent upon the oligarchy for sustenance.
In what other ways does the Federal government create wealth for themselves? Are there other ways that they can build up the asset side of their balance sheet in an effort to offset the tens of trillions of dollars worth of liabilities? Yes, through the stealing of non-monetary assets, such as forest land, ocean territory, etc. Does anyone REALLY believe that the Federal government gives one whit about the “Atlantic Salmon”? Instead, their focus is on using “endangered” species as a propaganda tool to steal the underlying assets. They put out web site like the following to prey on our children: Kids’ Corner. If the Federal government did not control so much real-estate then they would already be bankrupt. After all, it’s not like they produce much in the way of marketable items.
Power of the Federal Reserve
The Fed has complete control over the creation of our nation’s “base” money supply. The Fed decides when new money get created, how much gets created, the value of the Fed Funds Rate, and the value of the Discount Rate. The US government has absolutely NO say in any of these decisions.
The Fed (controlled by the international bankers) decides when to create inflationary or deflationary pressure. The international bankers, who control the Fed, decide when to extend easy credit or when to pull back the reins and make credit hard get.
Easier credit over a number of decades provides the opportunity for debt slaves (getting paid with claims on the future labor of others) to produce “wealth”, although that wealth is still encumbered by future labor if measured in our current economy. The debt slaves have been propagandized with the notion that money is wealth. They think that their hard work produces wealth. It does, if the “wealth” you’re referring to is the future labor of others. Their hard work produces absolutely no “true wealth” that is unencumbered from debt.
International bankers have collapsed credit availability quite a number of times throughout our nation’s relatively short history. They do this in order to force an economic collapse upon many people. The assets of those people are then taking by the banks – without the banks having needed to break a sweat over the assets they just stole.
International bankers will also use credit contractions for the purpose of tightening the puppet strings on our government. We had the pathetic scenario of our current President begging the banks to loan more money. Notice how he didn’t demand it. He couldn’t. Inflation is the “oxygen” of the Federal government.
The Fed doesn’t have too much control over supply and demand within our economy. They don’t really care about that. After all, the real economic power belongs to whoever controls the amount of money in an economy, not who controls what the money is spent on.
Conclusion
You can see how the US Federal government and the Federal Reserve can get along well together – assuming the Fed hasn’t initiated a credit contraction. It is during the periods of credit destruction that the US government finds themselves operating in panic mode.
The main question that needs to be asked is this: “Is the Fed just interested in stealing underlying assets, or does it have another larger purpose for this credit contraction?” None of us know, and that is what makes times like this so economically precarious.
We see where Venezuela has just devalued their currency in an effort to drive inflation and escape from the credit destruction that is enveloping their nation. We can also see the ramifications of what that is doing to their citizenry. Would the US government dare to try the same thing? I don’t think so. Not yet. Instead, they’ll go after other things – like pensions, retirement accounts, health care, and cap & trade legislation.
There is a way for people to escape some of this. It involves the formation of a “new economy” that runs parallel to our existing economy. This “new economy” would be extremely decentralized, and would utilize our current monetary forms.
Wouldn’t using our current money in a new economy still leave us open to inflation and deflation? Yes, but if you truly understand how the money supply works then you will begin to see how inflation and deflation would become less of an issue as more people begin to operate under the new economy. I’ll explain more on this another time.
Comments or questions? brhamill@hamill.com
If you are not currently on the Economic Update email list you can email me at: economics@datatogo.com to be added.
Let’s get to the basics of what the goals are for the current US government and the Federal Reserve. These goals have some similarities: power, greed, and wealth – but are quite divergent when it comes to the rest of what they’re after.
What if we were to write a “business plan” for these two entities. What would be written about their “objectives”? I assume they would look somewhat like the following:
Objectives
US Federal Government – Objective is to slowly build an oligarchy and establish a society based on Socialistic principles, while using the Marxian concepts of labor class warfare to achieve these ends. All future economic activity will be expended as service to the centralized national leadership. This will be accomplished through the building up of voluntary servitude and involuntary slavery.
Federal Reserve – Objective is to create a centralized bank within the United States that will act as a pipeline between us, as international bankers, and the United States government. We will control the issuance of their currency, the interest rates of their money supply, and the availability of their credit. Goal is to periodically take over assets that others have toiled for, and to control the macro level economic decisions of the nation.
Power of the US Federal Government
What if the Federal government created $5 trillion in new US Treasury securities and the Fed sold them at auction. Would our money supply balloon out of control – causing major inflation? No. The nation’s “base” money supply would not be affected AT ALL! Those $5 trillion of securities will have been paid for with existing money, not new money.
The Federal government does not have the power to create new money. Period. Yet you’ve learned from past tutorials that the government depends on inflation in order to amass its greedy power. How can they promote inflation when they don’t have control over the money supply? Can they do this through a new $700 billion of stimulus debt? No. Those US Treasury securities will be bought with existing money.
Here’s the point that most people don’t understand. One of the ONLY ways that the US government can increase the money supply is to take over a significant size of the EXISTING money supply (through new sales of Treasury securities) and then use that money that’s now in their control to encourage YOU and others like you to go into more debt.
There are two ways that new money can be created in our nation. The first way is for the Federal Reserve to purchase US Treasury securities from Primary Dealers (international bankers). The Federal government cannot demand that the Fed do this – and they have absolutely no power to force this. The government is stuck when it comes to this path.
The second way to create new money is for people and businesses to take out new loans (new debt). This automatically creates new money in the exact amount of the new debt – thus increasing the money supply.
The Federal government is left with the task of encouraging its citizens to take on new debt in order for it to retain its power structure. Now you should understand the true purpose of “Cash for Clunkers”, “First-time Homebuyers Tax Credit”, etc. We also see the Federal government giving out money for infrastructure projects – hoping that the recipients of this money will also create new debt as part of the project.
Is there any other way that the Federal government can increase our nation’s money supply? Yes, actually there is. The government could pass down an edict tomorrow that basically says: “Each US dollar is now worth two US dollars”. By doing this, they will have succeeded in doubling our nation’s money supply immediately. They will have also succeeded in probable armed revolt and anarchy in the streets – but it is the only way that they have direct control over.
Those remembering 1933 will recognize that as the year in which the US government made it illegal for citizens to own gold money. Gold was fixed at approximately $20/ounce when the edict came down. The government made sure that all gold coins were confiscated – and proceeded to devalue the US dollar in relation to gold by re-pegging gold at $35/ounce. Who made an instant profit of 75% on this deal? Those that still owned gold that could be used as money in our economy – the international bankers. The Federal government got the benefit of taxes on increased exports, since US dollar gold convertibility was still legal for foreign nations – making our products much cheaper to buy. The increased exports also had the fake effect of increasing our nation’s GDP number, so it looked for a time like we were heading out of the Great Depression.
What are some other ways in which the US Federal government can seek to drive inflation without having direct control over the money supply? How about controlling the supply and/or demand for various products and services?
How many have heard the stories about the government paying farmers to destroy certain crops, or to not even plant certain fields? Why would the government even care? They care because they target specific food groups that are considered “necessities” in the American diet and seek to inflate the prices through a reduction of supply against a certain level of demand.
The US Federal government targets a wide range of things in which they use dictatorial laws to encourage inflationary pressures. Inflation increases tax revenues, makes existing debt cheaper to pay off, and robs people of their long-term wealth, making them more dependent upon the oligarchy for sustenance.
In what other ways does the Federal government create wealth for themselves? Are there other ways that they can build up the asset side of their balance sheet in an effort to offset the tens of trillions of dollars worth of liabilities? Yes, through the stealing of non-monetary assets, such as forest land, ocean territory, etc. Does anyone REALLY believe that the Federal government gives one whit about the “Atlantic Salmon”? Instead, their focus is on using “endangered” species as a propaganda tool to steal the underlying assets. They put out web site like the following to prey on our children: Kids’ Corner. If the Federal government did not control so much real-estate then they would already be bankrupt. After all, it’s not like they produce much in the way of marketable items.
Power of the Federal Reserve
The Fed has complete control over the creation of our nation’s “base” money supply. The Fed decides when new money get created, how much gets created, the value of the Fed Funds Rate, and the value of the Discount Rate. The US government has absolutely NO say in any of these decisions.
The Fed (controlled by the international bankers) decides when to create inflationary or deflationary pressure. The international bankers, who control the Fed, decide when to extend easy credit or when to pull back the reins and make credit hard get.
Easier credit over a number of decades provides the opportunity for debt slaves (getting paid with claims on the future labor of others) to produce “wealth”, although that wealth is still encumbered by future labor if measured in our current economy. The debt slaves have been propagandized with the notion that money is wealth. They think that their hard work produces wealth. It does, if the “wealth” you’re referring to is the future labor of others. Their hard work produces absolutely no “true wealth” that is unencumbered from debt.
International bankers have collapsed credit availability quite a number of times throughout our nation’s relatively short history. They do this in order to force an economic collapse upon many people. The assets of those people are then taking by the banks – without the banks having needed to break a sweat over the assets they just stole.
International bankers will also use credit contractions for the purpose of tightening the puppet strings on our government. We had the pathetic scenario of our current President begging the banks to loan more money. Notice how he didn’t demand it. He couldn’t. Inflation is the “oxygen” of the Federal government.
The Fed doesn’t have too much control over supply and demand within our economy. They don’t really care about that. After all, the real economic power belongs to whoever controls the amount of money in an economy, not who controls what the money is spent on.
Conclusion
You can see how the US Federal government and the Federal Reserve can get along well together – assuming the Fed hasn’t initiated a credit contraction. It is during the periods of credit destruction that the US government finds themselves operating in panic mode.
The main question that needs to be asked is this: “Is the Fed just interested in stealing underlying assets, or does it have another larger purpose for this credit contraction?” None of us know, and that is what makes times like this so economically precarious.
We see where Venezuela has just devalued their currency in an effort to drive inflation and escape from the credit destruction that is enveloping their nation. We can also see the ramifications of what that is doing to their citizenry. Would the US government dare to try the same thing? I don’t think so. Not yet. Instead, they’ll go after other things – like pensions, retirement accounts, health care, and cap & trade legislation.
There is a way for people to escape some of this. It involves the formation of a “new economy” that runs parallel to our existing economy. This “new economy” would be extremely decentralized, and would utilize our current monetary forms.
Wouldn’t using our current money in a new economy still leave us open to inflation and deflation? Yes, but if you truly understand how the money supply works then you will begin to see how inflation and deflation would become less of an issue as more people begin to operate under the new economy. I’ll explain more on this another time.
Comments or questions? brhamill@hamill.com
If you are not currently on the Economic Update email list you can email me at: economics@datatogo.com to be added.
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