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Milton Friedman vs. The Federal Reserve

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posted on Dec, 3 2006 @ 05:33 PM
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We're still working around the 1979, 1980 time period here with regards to the FED.



If the exercise of power were measured in terms of how swiftly and intimately it altered the behavior of others, then the Federal Reserve was arguably the most powerful instrument of government, certainly in the realm of economic behavior. Congress could raise taxes or authorize new spending, but that process took many months of legislative debate and its actual effects would usually not be felt by citizens until many months later. The Presdient established the broad directions for tax-and-spending policies and, in extreme circumstances, might activate emergency controls over the economy. neither Congress nor the White House, however, could affect private lives with the immediacy and universal reach of the Federal Reserve's power, its ability to send instant signals rippling through every family's financial decisioons, to change the incentives in virtually every business transaction. The paradox for democracy was obvious: the Washington institution that was most intimately influential in the lives of ordinary citizens was the one they least understood, the one most securely shielded from popular control.

A pyschologist would describe what was going on in these terms: the Federal Reserve was operating a vast national program in behavior modification.

source: "Secrets of The Temple" by William Greider. Copyright 1987 by Simon & Schuster


Now...this nest paragraph describes how UNEVENLY citizens of this country bear its burdens:



The real cost of higher interest rates fell unevenly on citizens, banks and businesses, depending inversely on their level of incomes and profits. The wealthiest and most successful suffered least; struggling businesses and families of limited income paid the highest price. That was the most elementary point of political inequity, and it stemmed not simply from federal reserve policy but from high interest rates interacted with the U.S. tax code. Every taxpayer, large or small, was entitled to deduct interest payments from his taxable income, but these deductions naturally became more valuable if one was in a higher-income bracket and was taxed at a higher rate. A corporation saved, for instance, 46 percent of its interest costs on its tax bill. A wealthy individual, paying the maximum tax rate, would recover 50 percent of his interest payments in tax savings or as much as 70 percent if all of his income was from stocks and bonds and other investments. This effectively cut the real cost of higher interest rates in half for them - while others paid the full freight. This differential was always present, but it became magnified as interest rates rose.


And at least 2 people in this thread were trying to say that tax breaks were fair for everyone.......They are not!




The idea that the government rationed and commodity was naturally repugnant to the free-market ethos of American politics. A system that rationed money in a way that favored the largest enterprises and wealthiest individuals would seem to be especially offensive. Except very few understood that this was how monetary policy worked and the government - both elected politicans and the federal Reserve - had little incentive to make things clearer for people.

This was another good reason why most politicians preferred not to tamper with the staus quo. To correct the inequities, they would have to directly attack the prerogatives of the strongest interests.



Our system rations money to help large enterprises and the wealthiest of individuals. Most people didn't then and don't now understand any of this....and this is how everyone involved likes it.

JFK tried to go against the Status Quo. He tried to get rid of the FED. Tried to change the way things were done...tried to change monetary policy. And...what happened to him?? He got killed for it.

Within the FED...we are talking about the richest international banks and the people that run them. The International Banking Cabal. These people have more money than they will ever know what to do with....while millions of people are starving to death on this planet (they have more than enough money to feed every one of them and provide medical care for each of them for the rest of their lives). They have enough money and power to get ANYTHING they want: money and power to start wars, kill presidents and other leaders, power to make the poor poorer and their rich friends and associates richer, power to own governments including the United States. These psycopaths are capable of anything and the list of their crimes must be insanely large.

The FED needs to be disbanded and all the countries it owns and controls need to get their crap back in order!

One thing I liked about what Milton Friedman had to say in one of his quotes was.....that one thing the internet will do to help this situation, is make it more difficult for our government to collect taxes. AMEN!



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