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The Federal Reserve's Explicit Goal: Devalue The Dollar 33%


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2013 Jan 25, 2:50am   112,170 views  354 comments

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The Federal Reserve's Explicit Goal: Devalue The Dollar 33%

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 American’s 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:

“The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public’s ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling–a phenomenon associated with very weak economic conditions. Having at least a small level of inflation makes it less likely that the economy will experience harmful deflation if economic conditions weaken. The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term.”

In other words, a gradual destruction of the dollar’s value is the best the FOMC can do.

Here’s why:

First, the Fed believes that manipulation of interest rates and the value of the dollar can reduce unemployment rates.

http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/

#investing

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354   MisdemeanorRebel   2013 Feb 24, 11:58pm  

Reality says

Patricians ceased to exist as an independent class after Caesar and Octavian.

The Patrician class was revived by Constantine. However, there had always been orders of aristocrats and the wealthy, the honorable (medium and large landowners mostly) vs. the humbles (slaves, freedmen, and freemen). They still had financial entrance requirements and were hereditary.

Remember, I'm postulating a long class war that's being lost steadily by the lower classes to the upper classes over time.

Reality says

What Patrician and Plebian conflict would you be talking about in the 5th century? The Imperial rule makers loved the penniless masses in the Coluseums.

Why don't we start with the preceding 4th Century, since the West fell in the 5th.

Increasingly reduced status of the Plebes is signified by several things. First of all, the term Coloni, which originally meant colonists who were free farmers, came increasingly to mean Tenant Farmers / Debt Peonage. Also, the rights of these Tenant Farmers was made more restrictive. After Diocletian, we see a several new laws, including the right of Domini to literally chain Coloni suspected of trying to escape, mandating the collection of taxes due by the Coloni to the Dominus, banning the Coloni from voluntarily switching Domini, and a penalty against Domini who try to entice Coloni away from other Latifundia.

For non-farmers, Constantine (I believe, may have been Diocletian), promulgated laws requiring sons to follow in their fathers' trade.

There are abundant reports of tax collectors being greeted with increased hostility in countryside, reports of poor romans joining barbarian bands themselves (more on this in a bit), and of course a decline in trade, birth rate, and an increase in autarky on the latifunida. The large estates began to produce almost everything themselves, and the landowners spent less and less time in the cities in the West (but not in the East, where they continued to split time between urban and rural).

So here is the birth of manorialism which gave impetus to feudalism. Is becoming a tenant farmer not a reduction in status, both material and social? Is not being required to follow the trade of your father a restriction on upward mobility for many, particularly the lower classes?

Now from the fifth century, here's a bit from Salvian, a Christian who lived in Gaul in the 5th Century, explaining the appeal of going "Native":

None but the great is secure from the devastations of these plundering brigands, except those who are themselves robbers.

[Nay, the state has fallen upon such evil days that a man cannot be safe unless he is wicked] Even those in a position to protest against the iniquity which they see about them dare not speak lest they make matters worse than before. So the poor are despoiled, the widows sigh, the orphans are oppressed, until many of them, born of families not obscure, and liberally educated, flee to our enemies that they may no longer suffer the oppression of public persecution. They doubtless seek Roman humanity among the barbarians, because they cannot bear barbarian inhumanity among the Romans. And although they differ from the people to Whom they flee in manner and in language; although they are unlike as regards the fetid odor of the barbarians' bodies and garments, yet they would rather endure a foreign civilization among the barbarians than cruel injustice among the Romans.

So they migrate to the Goths, or to the Bagaudes (bandits, often mixed barbarian/roman, see Bulla Felix), or to some other tribe of the barbarians who are ruling everywhere, and do not regret their exile. For they would rather live free under an appearance of slavery than live as captives tinder an appearance of liberty. The name of Roman citi'en, once so highly esteemed and so dearly bought, is now a thing that men repudiate and flee from. . . .

www.fordham.edu/halsall/source/salvian1.html

(Italics mine)

Salvian also explains how all the orders of Roman society used "Taxes" for their own personal benefit, and complains about the Roman upper classes and their leadership of Trier.

A piece of evidence that Taxes became an excuse for shakedowns by the upper classes comes from a century prior when Julian was able to reduce taxes in Gaul by to a fraction of what they were, by a ruthless anti-corruption campaign. Only a fraction of the money or goods being paid in tax in Gaul before Julian's campaign was actually going towards government services. Another interesting moment under Julian, was that he tried to expand the Curia, as many well-to-do men were abandoning their civic duties to avoid taxation, because too many of the curia had brought exemptions from taxes by previous governments. The remaining tax burden was heavier because it was spread over fewer and fewer people; unfortunately Julian (one of my favorite emperors, BTW) didn't live long enough to continue this plan.

One also wonders if any official numbers about the soldiers in the limitanei and the mobile forces can be trusted, since we have abundant anecdotal evidence that high ranking officials often put many non-existent soldiers on the payroll, from which they drew a little 'extra pay'.

Another reason I believe the West collapsed and the East didn't is that Latifundia were more common in the West, Western Latifundia pursued a policy of self-reliance, we know that trade in the West declined and piracy resurfaced in the crisis of the 3rd Century (and flourished throughout the dark ages). And most important of all, the East was always more urbane, more commercial, and more 'industrial' than the West. In the past century several digs in the Levant, uncovered a increasing prosperity and growth of both cities and rural villages during the 300s-600s. In fact some places continued to grow after the Arab conquest.

There is every sign of a great FU-based decentralization (mostly in the West) taking place after the Thirty Tyrants and accelerating into the 4th and 5th Century.

One might even say, tongue in cheek, that the Romans decided to "Go Galt". The poor to avoid shakedowns and proto-serfdom from the Domini, and the Domini to avoid their obligations to the Roman State and pocket the tax money for themselves.

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