The Wells Fargo bank account scandal took center stage in the news last week and in all likelihood will continue to make headlines for many weeks to come. What Wells Fargo employees did in opening bank accounts without customers' authorization was obviously wrong, but in true Washington fashion the scandal is being used to deflect attention away from larger, more enduring, and more important scandals.
What Wells Fargo employees who opened these accounts engaged in was nothing more than fraud and theft, and they should be punished accordingly. But how much larger is the fraud perpetrated by the Federal Reserve System and why does the Fed continue to go unpunished? For over 100 years the Federal Reserve System has been devaluing the dollar, siphoning money from the wallets of savers into the pockets of debtors. Where is the outrage? Where are the hearings? Why isn’t Congress up in arms about the Fed’s malfeasance? It reminds me of the story of the pirate confronting Alexander the Great. When accused by Alexander of piracy, he replies “Because I do it with a small boat, I am called a pirate and a thief. You, with a great navy, molest the world and are called an emperor.”
Over two thousand years later, not much has changed. Wells Fargo will face more scrutiny and perhaps more punishment. There will undoubtedly be more calls for stricter regulation, notwithstanding the fact that regulators failed to detect this fraud, just as they have failed to detect every fraud and financial crisis in history. And who will suffer? Why, the average account-holder of course.
Any penalties assessed against Wells Fargo will be made up by increasing fees on account-holders. Clawbacks of bonuses, if they occur, will likely face resistance from the beneficiaries of those bonuses, leading to protracted and costly lawsuits. Even if the Wells Fargo CEO and top executives of Wells Fargo step down, the culture at Wells Fargo is unlikely to change anytime soon. As one of the largest banks in the world, Wells Fargo knows that it is not only too big to fail, but also too big to prosecute. At the end of the day, no matter how much public posturing there is, Wells Fargo and the regulators will remain best buddies. And those regulators who failed to catch this fraud will be rewarded with more power and larger budgets, courtesy of the US taxpayer.
Through all of this, the Federal Reserve will continue its policy of low interest rates and easy money. Retirees who hoped to be able to live off the interest on their investments will find themselves squeezed by continued low interest rates. Those living on fixed incomes will see their monthly checks buying less and less as the prices of food staples continue to rise. The fat cats on Wall Street will continue to have access to cheap and easy money while those on Main Street will face a constantly declining quality of life.
It is well past time for the Federal Reserve to face the same music as Wells Fargo and the bad actors on Wall Street. It is, after all, the Federal Reserve's creation of money out of thin air that enables all of this fraudulent behavior in the first place, so why should the Fed remain untouchable? Let's hope that someday Congress wakes up, hauls the Federal Reserve in for questioning, and puts as much pressure on the Fed as it does on private sector fraudsters.
Monday
WHY ARE WE GIVING $38 BILLION TO RICH AND POWERFUL ISRAEL? by RON PAUL
Last week’s announcement of a record-breaking US aid package for Israel underscores how dangerously foolish and out-of-touch is our interventionist foreign policy. Over the next ten years, the US taxpayer will be forced to give Israel some $38 billion dollars in military aid. It is money we cannot afford going to a country that needs no assistance to maintain its status as the most powerful military in the Middle East.
All US foreign aid is immoral and counterproductive. As I have often said, it is money taken from poor people in the US and sent to rich people overseas. That is because US assistance money goes to foreign governments to hand out as they see fit. Often that assistance is stolen outright or it goes to the politically connected in the recipient country.
Just as bad is the fact that much of what we call “foreign aid” is actually welfare for the wealthy here at home. The aid package to Israel is a very good example. According to the agreement, this $38 billion will all go to US weapons manufacturers. So the real beneficiaries are not the American people, and not even Israeli citizens. The real beneficiaries are the US military-industrial complex. Perhaps the money won’t even leave Washington – it may simply go across town, from the Fed to the Beltway bomb-makers.
While even US government aid to desperately poor countries should be opposed on moral and practical grounds, it is even harder to understand US aid to relatively rich countries. At a nominal per capita GDP of over $35,000, Israel is richer than Japan, Italy, and South Korea. Not long ago Business Insider published a report by the Institute for the Study of War showing that the Israel is the most powerful military force in the Middle East. We know they have hundreds of nuclear weapons, a sophisticated air force, drones, and even nuclear weapons-equipped submarines.
So why is the US giving a rich and incredibly well-armed country a record amount of military aid? Part of it is that the US government believes it can coerce Israel to do Washington’s bidding in the Middle East. History shows that this is a foolish pipe dream. If anything, US aid subsidizes Israeli human rights abuses in Gaza and elsewhere.
Another reason is a very powerful lobby in Washington, AIPAC, that pressures Members of Congress to focus on Israel’s interests instead of US interests. Members of Congress should look at our economy, with effectively zero interest rates, an anemic non-recovery from the 2008 crash, historically low participation in the work force, and inflation eroding the value of the dollar and conclude that this might not be the best time to start handing out billions of dollars in foreign aid. Unfortunately most Members of Congress find it impossible to say no to special interest groups like AIPAC.
Here’s a better aid package for Israel: free trade, travel, friendly relations, and no entangling alliances. Israel should be free to pursue its national interests and we should be free to pursue ours. If individual Americans feel compelled to provide assistance to Israel or any other country or cause overseas they should be allowed. But the rest of us should not be forced to do so. Trade, not aid.
All US foreign aid is immoral and counterproductive. As I have often said, it is money taken from poor people in the US and sent to rich people overseas. That is because US assistance money goes to foreign governments to hand out as they see fit. Often that assistance is stolen outright or it goes to the politically connected in the recipient country.
Just as bad is the fact that much of what we call “foreign aid” is actually welfare for the wealthy here at home. The aid package to Israel is a very good example. According to the agreement, this $38 billion will all go to US weapons manufacturers. So the real beneficiaries are not the American people, and not even Israeli citizens. The real beneficiaries are the US military-industrial complex. Perhaps the money won’t even leave Washington – it may simply go across town, from the Fed to the Beltway bomb-makers.
While even US government aid to desperately poor countries should be opposed on moral and practical grounds, it is even harder to understand US aid to relatively rich countries. At a nominal per capita GDP of over $35,000, Israel is richer than Japan, Italy, and South Korea. Not long ago Business Insider published a report by the Institute for the Study of War showing that the Israel is the most powerful military force in the Middle East. We know they have hundreds of nuclear weapons, a sophisticated air force, drones, and even nuclear weapons-equipped submarines.
So why is the US giving a rich and incredibly well-armed country a record amount of military aid? Part of it is that the US government believes it can coerce Israel to do Washington’s bidding in the Middle East. History shows that this is a foolish pipe dream. If anything, US aid subsidizes Israeli human rights abuses in Gaza and elsewhere.
Another reason is a very powerful lobby in Washington, AIPAC, that pressures Members of Congress to focus on Israel’s interests instead of US interests. Members of Congress should look at our economy, with effectively zero interest rates, an anemic non-recovery from the 2008 crash, historically low participation in the work force, and inflation eroding the value of the dollar and conclude that this might not be the best time to start handing out billions of dollars in foreign aid. Unfortunately most Members of Congress find it impossible to say no to special interest groups like AIPAC.
Here’s a better aid package for Israel: free trade, travel, friendly relations, and no entangling alliances. Israel should be free to pursue its national interests and we should be free to pursue ours. If individual Americans feel compelled to provide assistance to Israel or any other country or cause overseas they should be allowed. But the rest of us should not be forced to do so. Trade, not aid.
---
Tuesday
THE FED PLANS FOR THE NEXT CRISIS by RON PAUL
In her recent address at the Jackson Hole monetary policy conference, Federal Reserve Chair Janet Yellen suggested that the Federal Reserve would raise interest rates by the end of the year. Markets reacted favorably to Yellen’s suggested rate increase. This is surprising, as, except for one small increase last year, the Federal Reserve has not followed through on the numerous suggestions of rate increases that Yellen and other Fed officials have made over the past several years.
Much more significant than Yellen’s latest suggestion of a rate increase was her call for the Fed to think outside the box in developing responses to the next financial crisis. One of the outside the box ideas suggested by Yellen is increasing the Fed’s ability to intervene in markets by purchasing assets of private companies. Yellen also mentioned that the Fed could modify its inflation target.
Increasing the Federal Reserve's ability to purchase private assets will negatively impact economic growth and consumers’ well-being. This is because the Fed will use this power to keep failing companies alive, thus preventing the companies’ assets from being used to produce a good or service more highly valued by consumers.
Investors may seek out companies whose assets have been purchased by the Federal Reserve, since it is likely that Congress and federal regulators would treat these companies as “too big to fail.” Federal Reserve ownership of private companies could also strengthen the movement to force businesses to base their decisions on political, rather than economic, considerations.
Yellen’s suggestion of modifying the Fed’s inflation target means that the Fed would increase the inflation tax just when Americans are trying to cope with a major recession or even a depression. The inflation tax is the most insidious of all taxes because it is both hidden and regressive.
The failure of the Federal Reserve’s eight-year spree of money creation via quantitative easing and historically low interest rates to reflate the bubble economy suggests that the fiat currency system may soon be coming to an end. Yellen’s outside the box proposals will only hasten that collapse.
The collapse of the fiat system will not only cause a major economic crisis, but also the collapse of the welfare-warfare state. Yet, Congress not only refuses to consider meaningful spending cuts, it will not even pass legislation to audit the Fed.
Passing Audit the Fed would allow the American people to know the full truth about the Federal Reserve’s conduct of monetary policy, including the complete details of the Fed’s plans to respond to the next economic crash. An audit will also likely uncover some very interesting details regarding the Federal Reserve’s dealings with foreign central banks.
The large number of Americans embracing authoritarianism — whether of the left or right wing variety — is a sign of mass discontent with the current system. There is a great danger that, as the economic situation worsens, there will be an increase in violence and growing restrictions on liberty. However, public discontent also presents a great opportunity for those who understand free-market economics to show our fellow citizens that our problems are not caused by immigrants, imports, or the one percent, but by the Federal Reserve.
Politicians will never restore sound money or limited government unless forced to do so by either an economic crisis or a shift in public option. It is up to us who know the truth to make sure the welfare-warfare state and the system of fiat money ends because the people have demanded it, not because a crisis left Congress with no other choice.
Much more significant than Yellen’s latest suggestion of a rate increase was her call for the Fed to think outside the box in developing responses to the next financial crisis. One of the outside the box ideas suggested by Yellen is increasing the Fed’s ability to intervene in markets by purchasing assets of private companies. Yellen also mentioned that the Fed could modify its inflation target.
Increasing the Federal Reserve's ability to purchase private assets will negatively impact economic growth and consumers’ well-being. This is because the Fed will use this power to keep failing companies alive, thus preventing the companies’ assets from being used to produce a good or service more highly valued by consumers.
Investors may seek out companies whose assets have been purchased by the Federal Reserve, since it is likely that Congress and federal regulators would treat these companies as “too big to fail.” Federal Reserve ownership of private companies could also strengthen the movement to force businesses to base their decisions on political, rather than economic, considerations.
Yellen’s suggestion of modifying the Fed’s inflation target means that the Fed would increase the inflation tax just when Americans are trying to cope with a major recession or even a depression. The inflation tax is the most insidious of all taxes because it is both hidden and regressive.
The failure of the Federal Reserve’s eight-year spree of money creation via quantitative easing and historically low interest rates to reflate the bubble economy suggests that the fiat currency system may soon be coming to an end. Yellen’s outside the box proposals will only hasten that collapse.
The collapse of the fiat system will not only cause a major economic crisis, but also the collapse of the welfare-warfare state. Yet, Congress not only refuses to consider meaningful spending cuts, it will not even pass legislation to audit the Fed.
Passing Audit the Fed would allow the American people to know the full truth about the Federal Reserve’s conduct of monetary policy, including the complete details of the Fed’s plans to respond to the next economic crash. An audit will also likely uncover some very interesting details regarding the Federal Reserve’s dealings with foreign central banks.
The large number of Americans embracing authoritarianism — whether of the left or right wing variety — is a sign of mass discontent with the current system. There is a great danger that, as the economic situation worsens, there will be an increase in violence and growing restrictions on liberty. However, public discontent also presents a great opportunity for those who understand free-market economics to show our fellow citizens that our problems are not caused by immigrants, imports, or the one percent, but by the Federal Reserve.
Politicians will never restore sound money or limited government unless forced to do so by either an economic crisis or a shift in public option. It is up to us who know the truth to make sure the welfare-warfare state and the system of fiat money ends because the people have demanded it, not because a crisis left Congress with no other choice.
Monday
HOW TO SOLVE THE ILLEGAL IMMIGRATION PROBLEM by RON PAUL
Republican presidential candidate Donald Trump’s recent speech on immigration really missed the point. I understand Trump’s frustration over the US government’s inability to control the US borders and keep out those who would come to this country illegally. Trump was right that the media ignore legitimate questions we have on our immigration policy and he is right that special interests have a great interest in maintaining the status quo.
However when it comes to really solving the immigration problem he gets it all wrong. And instead of making us more free and prosperous, his solutions will accelerate our downward slide toward authoritarianism.
First let’s consider his idea of building a big wall between the US and Mexico. It is said that all one needs to get over an eight foot fence is a nine foot ladder. Or perhaps a shovel. So walls are never very good at keeping people out. But they are very good at keeping people in. Just ask the East Germans. The communist government claimed in 1961 that it had to build a wall around the portion of Berlin it controlled to keep the population safe from the evil capitalist wreckers and saboteurs. It didn’t take long for the world to realize that the real threat to the East German leaders was that the people trapped in East Berlin would try to get out. We have all seen the horrific videos of East German civilians risking – and losing – their lives to escape that prison of razor wire and cinder block.
Is this really what we want for our own future?
What a wild conspiracy theory, some may claim. The wall would never be meant to keep us from leaving. Well ask the IRS. Under a tax enforcement provision passed in 2015, the US government claimed the right to cancel any American citizen’s passport if Washington claims it is owed money.
Trump also made E-Verify the center of his immigration speech. He said, “We will ensure that E-Verify is used to the fullest extent possible under existing law, and we will work with Congress to strengthen and expand its use across the country.”
While preventing those here illegally from being able to gain employment may appeal to many who would like to protect American jobs, E-Verify is the worst possible solution. It is a police state non-solution, as it would require the rest of us legal American citizens to carry a biometric national ID card connected to a government database to prove that the government allows us to work. A false positive would result in financial disaster for millions of American families, as one would be forced to fight a faceless government bureaucracy to correct the mistake. Want to put TSA in charge of deciding if you are eligible to work?
The battle against illegal immigration is a ploy to gain more control over our lives. We are supposed to be terrified of the hoards of Mexicans streaming into our country and thus grant the government new authority over the rest of us. But in fact a Pew study found that between 2009 and 2014 there was a net loss of 140,000 Mexican immigrants from the United States. Yes, this is a government “solution” in search of a real problem.
How to tackle the real immigration problem? Eliminate incentives for those who would come here to live off the rest of us, and make it easier and more rational for those who wish to come here legally to contribute to our economy. No walls, no government databases, no biometric national ID cards. But not a penny in welfare for immigrants. It’s really that simple.
However when it comes to really solving the immigration problem he gets it all wrong. And instead of making us more free and prosperous, his solutions will accelerate our downward slide toward authoritarianism.
First let’s consider his idea of building a big wall between the US and Mexico. It is said that all one needs to get over an eight foot fence is a nine foot ladder. Or perhaps a shovel. So walls are never very good at keeping people out. But they are very good at keeping people in. Just ask the East Germans. The communist government claimed in 1961 that it had to build a wall around the portion of Berlin it controlled to keep the population safe from the evil capitalist wreckers and saboteurs. It didn’t take long for the world to realize that the real threat to the East German leaders was that the people trapped in East Berlin would try to get out. We have all seen the horrific videos of East German civilians risking – and losing – their lives to escape that prison of razor wire and cinder block.
Is this really what we want for our own future?
What a wild conspiracy theory, some may claim. The wall would never be meant to keep us from leaving. Well ask the IRS. Under a tax enforcement provision passed in 2015, the US government claimed the right to cancel any American citizen’s passport if Washington claims it is owed money.
Trump also made E-Verify the center of his immigration speech. He said, “We will ensure that E-Verify is used to the fullest extent possible under existing law, and we will work with Congress to strengthen and expand its use across the country.”
While preventing those here illegally from being able to gain employment may appeal to many who would like to protect American jobs, E-Verify is the worst possible solution. It is a police state non-solution, as it would require the rest of us legal American citizens to carry a biometric national ID card connected to a government database to prove that the government allows us to work. A false positive would result in financial disaster for millions of American families, as one would be forced to fight a faceless government bureaucracy to correct the mistake. Want to put TSA in charge of deciding if you are eligible to work?
The battle against illegal immigration is a ploy to gain more control over our lives. We are supposed to be terrified of the hoards of Mexicans streaming into our country and thus grant the government new authority over the rest of us. But in fact a Pew study found that between 2009 and 2014 there was a net loss of 140,000 Mexican immigrants from the United States. Yes, this is a government “solution” in search of a real problem.
How to tackle the real immigration problem? Eliminate incentives for those who would come here to live off the rest of us, and make it easier and more rational for those who wish to come here legally to contribute to our economy. No walls, no government databases, no biometric national ID cards. But not a penny in welfare for immigrants. It’s really that simple.
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