*Written by L.B. Frank.

Wow, was I in for a surprise last night. I had the pleasure of attending a US Congressional Candidate Forum for District 19 last night. I’m not going to say what state I live in, nor the names of the people running for office. I will make up names for them that better exude their personality or my impression of them. The following are my thoughts on the questions and their answers.

There were 8 candidates on stage last night. We had a Mitt Romney Wannabe, a Lawyer Kid, a Guy They Say doesn’t have a Chance, a Bean Counter from Washington, a Mitt Romney Wannabe #2, a Duck Phillips, a Formerly Libertarian Leaning Radio Show Host, and a Democrat. 7 of the 8 people on stage are running in the Republican Primary for US Congressional Seat 19 in our district, the last guy is the only Democrat running for the seat.

They were asked a series of questions off of the GOOOH questionnaire, and a series of questions from the audience. I submitted three questions, and none were asked. Boo. They were asked the questions, and then they had to hold up a red or green sign whether they were for or against the topic.

The first question was “Would you support any legislation that would alter the promise made to those 55 and up when it comes to their Social Security benefits?”.  All but one said “No”. That is “No” to privatizing, “No” to voluntary disassociation, “No” to raising the cap, “No” to lowering benefits. The Formerly  Libertarian Leaning Radio Show Host was the only one that said we have a $16 trillion dollar debt, and was the only one that would say that we had to look at everything on the table. I can respect that. I submitted a question to be asked, that wasn’t, “Is Social Security a Ponzi scheme?” The way that Social Security is run right now, it’s relying on the forced confiscation of wealth earned by tax payers in the form of FICA withholdings on their paychecks. The Congressional Budget Office estimates that Social Security will run out of money and be in perpetual RED in as little as 2016. The last time I looked at the calendar, it’s 2012. So, in an effort to garner the votes and campaign donations from the nearly 300 people in attendance, they said “No, I would rather let the Social Security bankrupt our country instead of tell you the truth”.

The second question was “Would you support any legislation that would alter, remove, abolish the Tax Code as it stand now and replace it with a flat tax or the FairTax?” All Greens on stage. The Lawyer Kid said basically that he supports a flat tax and the FairTax is dangerous. The FairTax is a 194 page legislation, but takes an over 400 page book to explain. That is not even remotely true. The FairTax legislation is 133 pages as written today, the book written by Neal Boortz and Congressman John Linder is  188 pages, that includes the Table of Contents and the Index in the back. He said it was dangerous because we don’t know what it will do, but it is wholly acceptable to support a flat tax, even thought that only adds to the complexity of the 3 million word, 76,000 page Tax Code we currently have today. He was saying that it is wholly acceptable to only tax producers in our economy. He was saying that is wholly acceptable to continue to have the world’s highest corporate tax rate. He was saying that it is wholly acceptable to keep the IRS to track you down and put you in a cage if you make a mistake on your tax forms and point a gun at you and force you to pay your taxes in weekly withholdings, whether you can afford it or not. He completely misunderstood and misrepresented the FairTax, where there are no corporate taxes, where you don’t have to file taxes, where you keep 100 percent of your income and investments. Only The Guy They Say Doesn’t Have a Chance said that the FairTax returns the tax system to the original constitutional restrictions and treats everyone equally, removes loop holes and lobbyists. The rest of them basically said, “Yeah, pander, pander, pander.” No solutions, nothing. If we want to get serious in this country about the economy, about jobs, about the future, we have to look at a solution that is simple and makes sense that also takes power out of the hands of government and returns it to the people. The FairTax is that solution. If only these people on stage would stand behind it, they promise “To fight for you!” Bull, show me by supporting legislation that will get the government out of my finances, out of my pay check and won’t throw me in jail if I don’t understand something with 76,000 pages and 3,000,000 words.

Later the question was asked, “Would you support any efforts to use legislation to decriminalize marijuana?” Now, I’m going to be as honest as I can, even though I’m writing on the Internet where nothing is true yet everything is believable. I have never smoked marijuana. I have never put any drugs into my body other than alcohol, caffeine, and medications. It’s not something that appeals to me. But, I am a warrior for freedom. I am a defender of liberty. And when I heard this question last night, I thought “Finally! A question that actually has value!” Nope. These so-called liberty-loving Republican candidates said “NOPE”. The Repubs all raised the red flag of the War on Drugs. The Lawyer Kid said “It’s a gateway drug, it’s dangerous, I don’t want kids smoking it and also there is this thing in the Constitution called the Commerce Clause, so yeah, I don’t think it’s a good idea.” The rest of them parroted his sentiments. Even though I know at least one of them on that stage has smoked before. “Commerce Clause??” Really? If the user grows the plant themselves, in their own garden, on their own property, and uses it in their own home, while consenting to administering the smoke of some sort of vegetation into his or her own body and THAT is enough justifiable reason for the imperial federal government to reach into your home and yank you out and put you into a cage?

“Article I, Section 8, Clause 3: [The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes”

Where does it say that they have the authority to do so? These people, these men, these human beings, are appealing to us, the audience, the voters, more human beings, for  the authority and permission to hire men with guns to tell us how we are allowed to live. Don’t ever forget that. These holier than thou, righteous men want the power to tell you what you must do, what you are not allowed to do in your own home.

“IV Amendment of the Constitution: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.”

I’m sorry, but that is just wrong. And the worst part, the audience applauded them. Freedom dies every time the audience applauds unjust laws. They got us into $16 Trillion in debt, the “War on Drugs” has cost us a trillion dollars. After 40 years of this, even U.S. drug czar Gil Kerlikowske concedes the strategy hasn’t worked. “In the grand scheme, it has not been successful, forty years later, the concern about drugs and drug problems is, if anything, magnified, intensified.” We have already tried the whole prohibition thing, it doesn’t work. Violent cartels are making hundreds of millions, we are paying hundreds of millions to imprison hundreds of thousands for victimless crimes, we paying billions in a “war effort” that doesn’t make sense. If someone has a drug problem, they can be treated just like someone with an alcohol problem. If they are caught driving while intoxicated, treat them the same as with alcohol. The whole supply/demand paradigm works with drugs too, the demand is still there today, after forty years, but supplies are scarcer due to the black market effect and it raises the cost. If you increase the risk, you increase the cost. As the costs go up, but demand stays the same, the risk taking to get the money to purchase the product goes up, thus crime, violent crime. That is what should be punished and that is what would go down. Market forces would reduce the prices of the goods; reduce the crimes inherent in procuring the goods, tax dollars won’t go to waste in incarcerations. debt goes down.

If the thought that if it is dangerous and therefore should be outlawed is true, the candidates should have proposed to outlaw cotton candy, hamburgers and alcohol, among everything else in life. Too much of anything is bad for the body, the best way to reduce its use is through education and not more guns and more political power.

This Lawyer Kid and the rest of them are just pandering to the masses, while trying to sound strong, and in effect, trample on the Constitution, our Rights, they are treating us adults as children. We have brains, we can think, we don’t need a government to make decisions for us, and these people are trying to get the power to do so.

They asked a bunch more questions, like about ending the Federal Reserve, they all send “No”. “We need market stability” and crap like that. As if the market was worse prior to the Fed, fiat currency and so forth.

I walked away with more disgust in my stomach than anything else. They were cheered; it was like those in the audience didn’t even listen to them. “Yay! Take more of my rights away!” Remember the old saying “One man’s trash is another man’s treasure”? It’s the same thing with rights, just because you don’t use all of your rights, there might be someone else that does. Just because you don’t value some of your rights, doesn’t mean that there is another person’s freedoms being trampled on, and if their freedoms are being trampled on, so are yours.

This primary season and this November, please remember to vote on principles. Vote on what your heart tells you. Read the Constitution and vote down the line on what the Constitution authorizes and nothing else. These people last night, if elected, will get to vote on hundreds of issues over their time in office. They are promising you that they will vote on principles when they get there. You do the same. The way I see it, if they get to vote 100 times in Congress, and you only get to vote for them once, you have to make a decision that is 100 times more principled than theirs’. If everyone does the same, we might actually be able to vote a better class of people into Washington and have a better, freer future of us and our children. As for the Republican Party, I wished they learned from their mistakes from the past instead of repeating it like they did last night.

Ben Bernanke has decided that he needs to teach all of us why the Federal Reserve is good for America and about why the gold standard is bad.  On Tuesday, Bernanke delivered the first of four planned lectures to a group of students at George Washington University.  But that lecture was not just for the benefit of those students.  Officials at the Fed have long planned for this lecture series to be an opportunity for Bernanke to “educate” the American people about the Federal Reserve.  The classroom was absolutely packed with reporters and just about every major news organization is running a story about this first lecture.  So the Federal Reserve is definitely getting the publicity that it was hoping for.  You can see the slides from the presentation that Bernanke gave to the students right here.  It is pretty obvious that one of the primary goals of this first lecture was to attack those that have been critical of the Fed over the past few years.  In doing so, Bernanke “stretched” the truth on more than one occasion.

The entire event was staged to make Bernanke and the Federal Reserve look as good as possible.  Prior to his arrival, the students gathered for the lecture were actually instructed to applaud Bernanke….

The 30 undergraduates at George Washington University sent up a round of applause. It was, they’d been told beforehand, “appropriate, even encouraged, to politely applaud” Tuesday’s guest lecturer.

But as noted above, this lecture was not for the benefit of those students.  AUSA Today article even admitted that “addressing the public directly” was one of the real goals of this lecture….

For Bernanke, the GW lectures serve a dual function:

They give him a chance to reprise the role of professor he played for more than two decades, first at Stanford and then at Princeton, where he eventually chaired the economics department.

And they give him a way to expand his mission of demystifying the Fed. As part of that campaign, Bernanke became the first Fed chief to hold regular news conferences and conduct town-hall meetings.

In addressing the public directly, Bernanke has also sought to neutralize attacks on the Fed, some of them from Republican presidential candidates.

So what did Bernanke actually say during the lecture?

Well, you can read all of the slides right here, but the following are some of the highlights….

On page 6 of the presentation, Bernanke makes the following claim….

“A central bank is not an ordinary commercial bank, but a government agency.”

Well, that is quite interesting considering the fact that the Federal Reserve hasargued in court that the Federal Reserve Bank of New York is not an agency of the federal government and that the various Federal Reserve banks around the country are private corporations with private funding.

So did the Federal Reserve lie to the court or is Ben Bernanke lying to us?

And what other “agency” of the federal government is owned by private banks?

It is even admitted that the individual member banks own shares of stock in the various Federal Reserve banks on the Federal Reserve website….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

The Federal Reserve always talks about how it must be “independent” and “above politics”, but when they start getting criticized they always want to seek shelter under the wing of the federal government.

It really is disgusting.

On page 7 of the presentation, the following statement is made….

“All central banks strive for low and stable inflation; most also try to promote stable growth in output and employment.”

Well, on both counts the Federal Reserve has failed miserably.

Right now, if inflation was measured the same way that it was back in 1980, the annual rate of inflation would be more than 10 percent.

And when you take a longer view of things, the inflation that the Federal Reserve has manufactured has been absolutely horrific.

Even using the doctored inflation numbers that the Federal Reserve gives us, the U.S. dollar has still lost 83 percent of its value since 1970.

The truth is that inflation is a “hidden tax” that is constantly destroying the value of every single dollar that you and I hold.  Those that attempt to save money for the future or for retirement are deeply penalized under such a system.

As far as employment goes, the total number of workers that are “officially” unemployed in the United States is larger than the entire population of Portugal.

The average duration of unemployment is hovering near an all-time record high and almost every measure of government dependence is at an all-time record high.

So the Federal Reserve is failing at the exact things that Bernanke claims that it is supposed to be doing.

But instead of directly addressing many of the specific criticisms that have been leveled at the Fed, Bernanke instead chose to spend much of his lecture talking about the problems with adopting a gold standard.  The following are statements that were pulled directly off of the slides he used during his speech….

-”The gold standard sets the money supply and price level generally with limited central bank intervention.”

-”The strength of a gold standard is its greatest weakness too: Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions.”

-”All countries on the gold standard are forced to maintain fixed exchange rates. As a result, the effects of bad policies in one country can be transmitted to other countries if both are on the gold standard.”

-”If not perfectly credible, a gold standard is subject to speculative attack and ultimate collapse as people try to exchange paper money for gold.”

-”The gold standard did not prevent frequent financial panics.”

-”Although the gold standard promoted price stability over the very long run, over the medium run it sometimes caused periods of inflation and deflation.”

-”In the second half of the 19th century, a global shortage of gold reduced the U.S. money supply and caused deflation (falling prices). Farmers were squeezed between declining prices for crops and the fixed dollar payments for their mortgages and other debts.”

Bernanke spent more time on the gold standard during his speech than on anything else.  At one point during the lecture, Bernanke made the following statement….

“To have a gold standard, you have to go to South Africa or someplace and dig up tons of gold and move  it to New York and put it in the basement of the Federal Reserve Bank of New York and that’s a lot of effort and work”

Bernanke even blamed the gold standard for the Great Depression.  On a slide entitled “Monetary Policy in the Great Depression”, Bernanke made the following claims….

•The Fed’s tight monetary policy led to sharply falling prices and steep declines in output and employment.
•The effects of policy errors here and abroad were transmitted globally through the gold standard.
•The Fed kept money tight in part because it wanted to preserve the gold standard. When FDR abandoned the gold standard in 1933, monetary policy became less tight and deflation stopped.

Bernanke seems to want to frame the debate over monetary policy is such a way that the American people are given only two alternative systems to consider: the Federal Reserve and a gold standard.

But the truth is that there are a vast array of both “hard money” and “soft money” systems that would not include a central bank or a gold standard at all.

So the truth is that the American people would have many different systems to choose from if they wanted to shut down the Federal Reserve and set up something new.

In the past the U.S. government has issued debt-free money and it could certainly do so again.

But in his lecture, Bernanke did not even mention how the Federal Reserve creates money or how whenever new money is created more debt is created.

Under the Federal Reserve system, the money supply is designed to continually increase, and whenever more money is created more debt is also created.

In a previous article I discussed how more money is created on the federal level….

For example, whenever the U.S. government wants to spend more money than it takes in (which happens constantly), it has to go ask the Federal Reserve for it.  The federal government gives U.S. Treasury bonds to the Federal Reserve, and the Federal Reserve gives the U.S. government “Federal Reserve Notes” in return.  Usually this is just done electronically.

So where does the Federal Reserve get the Federal Reserve Notes?

It just creates them out of thin air.

Wouldn’t you like to be able to create money out of thin air?

Instead of issuing money directly, the U.S. government lets the Federal Reserve create it out of thin air and then the U.S. government borrows it.

Talk about stupid.

The designers of the Federal Reserve system intended to trap the U.S. government in a debt spiral that would expand perpetually.

So has their design worked?

Well, just look at the chart below….

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

So I guess you could say that the results have been spectacular.

The Federal Reserve system also greatly favors the big Wall Street banks that it is designed to serve.

When those big banks get into trouble, the Federal Reserve snaps into action.

According to a limited GAO audit of Fed transactions during the last financial crisis, $16.1 trillion in secret loans were made by the Federal Reserve to the big Wall Street banks between December 1, 2007 and July 21, 2010.

The following list is taken directly from page 131 of the GAO audit report and it shows which banks received money from the Fed….

Citigroup - $2.513 trillion
Morgan Stanley - $2.041 trillion
Merrill Lynch - $1.949 trillion
Bank of America - $1.344 trillion
Barclays PLC - $868 billion
Bear Sterns - $853 billion
Goldman Sachs - $814 billion
Royal Bank of Scotland - $541 billion
JP Morgan Chase - $391 billion
Deutsche Bank - $354 billion
UBS - $287 billion
Credit Suisse - $262 billion
Lehman Brothers - $183 billion
Bank of Scotland - $181 billion
BNP Paribas - $175 billion
Wells Fargo - $159 billion
Dexia - $159 billion
Wachovia - $142 billion
Dresdner Bank - $135 billion
Societe Generale - $124 billion
“All Other Borrowers” - $2.639 trillion

What about all the rest of us?

Did we get bailed out?

No, we were told that if Wall Street was rescued that the benefits would trickle down to the rest of us.

Unfortunately, that has not exactly worked out.  In article, after article, afterarticle I have detailed the horrible economic suffering that the American people are still going through.

But what Bernanke and the Fed have done is create inflation in commodities such as oil which is affecting the household finances of nearly everyone in America.

The average price of a gallon of gasoline in the United States is now up to $3.87.  That is an all-time record high for the month of March.

So far in 2012, the price of gasoline in the United States has risen by 17 percent.

Thanks Bernanke.

Over the past several decades, every time there has been a major spike in gasoline prices in the United States, a recession has always followed.  If you doubt this, just check out this amazing chart.

So will we soon see another recession?

If we are lucky.  Hopefully the next downturn will not be a full-blown depression.

The truth is that the Federal Reserve does not help us avoid booms and busts.  Rather, it creates them.  The Fed was at the heart of the housing bubble which helped bring on the last financial crisis when it crashed, and the current ultra-low interest rate policies of the Fed are creating more bubbles which will have devastating long-term consequences.

So Bernanke does not have anything to be proud of, and his track record has been absolutely nightmarish.

Hopefully the American people will not believe the propaganda and will take an honest look at the Federal Reserve.

When you take an honest look at the Federal Reserve, there is only one rational conclusion: Congress should shut it down, lock the doors and throw away the key.

Source: The Economic Collapse.

Sweden was the first European country to introduce bank notes in 1661. Now it’s come farther than most on the path toward getting rid of them.

“I can’t see why we should be printing bank notes at all anymore,” says Bjoern Ulvaeus, former member of 1970′s pop group ABBA, and a vocal proponent for a world without cash.

The contours of such a society are starting to take shape in this high-tech nation, frustrating those who prefer coins and bills over digital money.

In most Swedish cities, public buses don’t accept cash; tickets are prepaid or purchased with a cell phone text message. A small but growing number of businesses only take cards, and some bank offices — which make money on electronic transactions — have stopped handling cash altogether.

“There are towns where it isn’t at all possible anymore to enter a bank and use cash,” complains Curt Persson, chairman of Sweden’s National Pensioners’ Organization.

He says that’s a problem for elderly people in rural areas who don’t have credit cards or don’t know how to use them to withdraw cash.

The decline of cash is noticeable even in houses of worship, like the Carl Gustaf Church in Karlshamn, southern Sweden, where Vicar Johan Tyrberg recently installed a card reader to make it easier for worshippers to make offerings.

“People came up to me several times and said they didn’t have cash but would still like to donate money,” Tyrberg says.

CONTINUED at CBS News.

Stocks hovered around the flatline Wednesday as Fed Chairman Ben Bernanke dashed hopes for further monetary stimulus in his testimony to Congress.

Meanwhile, traders seemed to shrug off the Fed’s Beige Book report that said the economy grew at a “modest to moderate” pace in January and February.

The Dow Jones Industrial Average struggled to move back into positive territory, after finishing above the psychologically-important 13,000 level in the previous session for the first time since May 2008.

Coca-Cola [KO  69.89    1.04  (+1.51%)   ] gained, while H-P [HPQ  25.61    -0.57  (-2.18%)   ] slipped on the Dow.

“We’re seeing a more optimistic mood about the economy but there are still potential potholes,” said John Prestbo, editor and executive director of the Dow Jones Indexes. “The market takes two steps forward, one step back, so people will soon start to notice the progress and will be back in the frame of mind that things are getting better, which will translate into optimism.”

The S&P 500 and the Nasdaq also struggled for direction. The Nasdaq earlier crossed the 3,000 milestone for the first time since December 2000. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded below 18.

CONTINUED at CNBC.

Specific Reforms Required

The growth of the American government in the late 19th and 20th centuries is reflected in its increasing presence and finally monopolization of the monetary system. Any attempt at restoring monetary freedom must be part of a comprehensive plan to roll back government and once again confine it within the limits of the Constitution. That comprehensive plan may be divided into four sections: monetary legislation, the budget, taxation, and regulation. We shall begin with monetary reforms, and conclude with a word about international cooperation and agreement.

Monetary Legislation

Legal-Tender Laws

As we have seen, the Constitution forbids the states to make anything but gold and silver coin a tender in payment of debt, nor does it permit the federal government to make anything a legal tender. One of the most important pieces of legislation that could be enacted would be the repeal of all federal legal-tender laws. Such laws, which have the effect of forcing creditors to accept something in payment for the debts due them that they do not wish to accept, are one of the most tyrannical devices of the present monetary authorities.

Not only does the Federal Reserve have a coercive monopoly in issuing “money,” but every American is forced to accept it. Each Federal Reserve note bears the words, “This note is legal tender for all debts, public and private.” The freedom to conduct business in something else — such as gold and silver coin — cannot exist so long as the government forces everyone to accept its paper notes. Monetary freedom ends where legal-tender laws begin.

The United States had no such laws until 1862, when the Congress — in violation of the Constitution — enacted them in order to ensure the acceptance of the Lincoln greenbacks, the paper notes printed by the US Treasury during the wartime emergency. That “emergency” has now lasted for 120 years; it is time that this unconstitutional action by the Congress be repealed. Freedom of contract — and the right to have such contracts enforced, not abrogated, by the government — is one of the fundamental pillars of a free society.

CONTINUED at the Ludwig von Mises Institute. Written by Ron Paul.

The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.

The Fed’s zero interest rate policy accentuates the negative consequences of this steady erosion in the dollar’s buying power by imposing a negative return on short-term bonds and bank deposits. In effect, the Fed has announced a course of action that will steal — there is no better word for it — nearly 10 percent of the value of Americans’ hard earned savings over the next 4 years.

Why target an annual 2 percent decline in the dollar’s value instead of price stability? Here is the Fed’s answer:

CONTINUED at Business Insider.

The policies that the Fed embarked on in late 2007 are a sharp departure from the old way of performing monetary policy. In fact, it is difficult to state that the Fed is any longer in the business of traditional monetary policy — understood in the United States as aiming for low inflation and smoothed output volatility. A new breed of monetary policies better referred to as “quasi-fiscal” policies has become the norm.

The Fed’s policies have a fiscal flair to them for two reasons.

First, no longer are output and inflation the primary concerns. The Fed has framed any reference to inflation over the past four years in the context of either:

1. the low levels of price inflation erasing inflationary fears from pursuing unorthodox monetary policies, or
2. the threat of deflation, thus creating the “need” for monetary expansion to ward off its ill effects.

Inflation has not been a direct concern in the sense that the Fed’s role is to control it. Instead, it has been viewed as a constraint on Fed policies to pursue other ends.

Concerns about maintaining output have likewise taken a backseat. Monetary economists (Fed officials included) conventionally viewed monetary policy as a tool to minimize the output gap. During recessionary periods, just the right dose of monetary expansion should tempt employers to increase production and hire workers. The attention now, however, is on keeping banks capitalized through monetary expansion. By not allowing the bad debts on banks’ balance sheets to bring them to insolvency, the Fed is hoping to stave off a contagious banking crisis. The Fed is seemingly less directly concerned with maintaining output, and more with keeping banks afloat (which, admittedly, officials think will translate into employment).

The second reason that the Fed has been taking on decidedly fiscal activities is that its policies are directly affecting its own finances. Traditional monetary policy left the Fed’s balance sheet intact. Until this recession, the textbook explanation of how the Fed alters the money supply held true: it bought or sold Treasury bills, and the money supply correspondingly increased or decreased. By purchasing assets of lesser quality over the recession, the Fed has endangered its own balance sheet in the name of strengthening those of the preferred members of the banking system.

CONTINUED at The Ludwig von Mises Institute. Written by David Howden.

What would happen if the Federal Reserve was shut down permanently?  That is a question that CNBC asked recently, but unfortunately most Americans don’t really think about the Fed much. Most Americans are content with believing that the Federal Reserve is just another stuffy government agency that sets our interest rates and that is watching out for the best interests of the American people.  But that is not the case at all.  The truth is that the Federal Reserve is a private banking cartel that has been designed to systematically destroy the value of our currency, drain the wealth of the American public and enslave the federal government to perpetually expanding debt.  During this election year, the economy is the number one issue that voters are concerned about.  But instead of endlessly blaming both political parties, the truth is that most of the blame should be placed at the feet of the Federal Reserve.  The Federal Reserve has more power over the performance of the U.S. economy than anyone else does.  The Federal Reserve controls the money supply, the Federal Reserve sets the interest rates and the Federal Reserve hands out bailouts to the big banks that absolutely dwarf anything that Congress ever did.  If the American people are ever going to learn what is really going on with our economy, then it is absolutely imperative that they get educated about the Federal Reserve.

The following are 10 things that every American should know about the Federal Reserve….

#1 The Federal Reserve System Is A Privately Owned Banking Cartel

The Federal Reserve is not a government agency.

The truth is that it is a privately owned central bank.  It is owned by the banks that are members of the Federal Reserve system.  We do not know how much of the system each bank owns, because that has never been disclosed to the American people.

The Federal Reserve openly admits that it is privately owned.  When it was defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated unequivocally in court that it was“not an agency” of the federal government and therefore not subject to the Freedom of Information Act.

In fact, if you want to find out that the Federal Reserve system is owned by the member banks, all you have to do is go to the Federal Reserve website….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.  So it would be accurate to say that the Federal Reserve is partially foreign-owned.

But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned.

CONTINUED at The Economic Collapse.

A combination of several factors, including a declining dollar and the Federal Reserve’s announcement that it would keep interest rates at virtually zero until late 2014, helped to send gold and silver prices soaring to multi-week highs. Analysts expect the upward trend to continue as paper currencies founder and gloomy news continues to dominate the economic headlines.

The spot price for gold was around $1,725 by 2 p.m. Eastern time after jumping more than $60 since the day before, up almost 30 percent from a year ago and more than 7.5 percent over the last 30 days. It smashed through $1,700 on Wednesday for the first in six weeks.

“At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar,” Commerzbank analyst Daniel Briesemann told Reuters.

Analysts said the single most important factor behind gold’s strong rally was the Federal Reserve. On Wednesday, the privately owned central bank promised to keep short-term interest rates at rock bottom until late 2014, extending the date from its previous pledge to keep rates down until mid-2013.

Also bullish for gold — and bearish for the U.S. dollar, of course — was Fed boss Ben “helicopter” Bernanke’s veiled threat to unleash more so-called “Quantitative Easing,” known in simpler terms as creating new “money” out of thin air and pumping it into the economy by purchasing bonds. The dollar immediately took a hit against other major currencies.

“The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don’t get improvement in the pace of recovery and a normalization of inflation,” Bernanke said during a quarterly news conference after the Fed’s report was released. Analysts and central bank critics, already concerned about massive monetary “easing” in recent years, lambasted the idea that more money would solve the economic problems plaguing America.

“If the Federal Reserve thought the economy was improving, it wouldn’t need this artificial prop to keep sustaining it,” said Euro Pacific Capital head Peter Schiff, noting that wild money printing was helping to drive the nation and its economy off a cliff. “The President and the Federal Reserve are now conspiring to create a much bigger crisis.”

The Fed claimed it would be targeting a 2-percent rate of annual inflation for 2012. However, few analysts take the government’s “Consumer Price Index” (CPI) measure of inflation seriously — especially as Core CPI, one of the most frequently cited figures, omits price increases in key sectors like food and energy.

According to Schiff, the government’s claim based on CPI that inflation for 2011 was 3 percent is completely bogus. It was actually much higher, he said, noting that officials were using phony measures like the CPI to mask the true rate of inflation. And it is likely to be even higher in 2012 before eventually morphing into a full-blown currency and debt crisis in the coming years.

“The reason they have to keep [interest rates] so low is to artificially support a phony economy,” Schiff explained. “This economy is a disaster waiting to happen — the only thing standing between us and economic Armageddon is zero-percent interest rates.”

But it can’t go on forever, and the longer rates are kept so low, the worse the looming crisis will be. For now, Schiff, whose business trades gold and silver, said investors should protect their assets by purchasing precious metals “before the price goes any higher.”

An analysis by Bloomberg published on Wednesday showed that gold — which has increased every year for more than a decade — provided the best return on investment over the last five years when adjusted for volatility. And heavy-hitting financial firms cited in the report including Goldman Sachs and Morgan Stanley are forecasting that gold prices will keep rising to around $2,000 in 2012 or 2013.

“People are still very under-invested in gold, and so there is a huge scope of that increasing,” explained UniCredit analyst Jochen Hitzfeld, the most accurate precious-metals forecaster tracked by Bloomberg over the past two years. Other experts noted that gold is widely and accurately perceived as a safe-haven in times of economic turmoil.

While gold prices have been extraordinarily volatile — spot prices hit $1,923 in September before crashing to $1,523 by the end of 2011 — the longer-term rally has so far been relatively consistent over the past decade. Just 10 years ago, gold was worth less than $300 per ounce.

Silver, which has also seen drastic price fluctuations, was less than $5 per ounce 10 years ago. In 2011, it surged to an all-time high of around $50 before dropping back down to about $33.35 today. The U.S. dollar, meanwhile, has not been doing so well — even when measured against other depreciating paper currencies.

Even billionaire investor George Soros, whose well-publicized sale of some 99 percent of his gold holdings during the first quarter of 2011 spooked precious-metals investors, has jumped back into the market. According to Securities and Exchange Commission (SEC) filings cited by Bloomberg, the hedge-fund manager had increased his stake in SPDR Gold Trust, an exchange-traded fund tracking gold prices, to almost 50,000 shares as of September 30.

Central banks around the world were also buying up multi-ton quantities of gold bullion, according to data cited in news reports. And the trend shows no signs of slowing down.

In other bullish news for the precious metal, unconfirmed reports indicate India has started purchasing oil from Iran using gold rather than U.S. dollars. China could follow, too, according to news reports.

“It shows the exodus from the dollar is gaining speed,” noted precious-metals and currency trader Simit Patel on the investment analysis site Seeking Alpha. “With the major economies of the world facing $7.6 trillion in bond payments due this year, I think the tipping point for a shift out of dollars and into a new monetary system backed by gold is not as far off as it may seem.”

With the steep drop in prices during the last few months of 2011, some analysts and traders were reluctant to get back in the precious-metals market before the appearance of a solid bottom had solidified. But the big banks and respected analysts are forecasting that as long as the fundamentals — out-of-control money printing, sovereign-debt crises, wild government spending, and more — remain the same, gold and silver prices could see massive gains in 2012.

Source: New American.