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


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2013 Jan 25, 2:50am   114,195 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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350   MisdemeanorRebel   2013 Feb 22, 1:21am  

Reality says

Goes to show the depth of brainwashing you had. In case you did not know, the lastest excavations show that even the Roman roads were built on top of existing roads.
...
Roads were carved out by travelers and traders for thousands of years. The government road building process started with brigands setting up toll barriers on roads!

Or a great hole in your education. Don't kids learn about Roman Roads in School, anymore?

Even back in Elementary School, the big thing about the Romans was their road building. Yes, US-1 was built over existing roads, as was most of '22, and a great many improved roads were built over existing trails and tracks just about everywhere for most of history.

The empire was crisscrossed with road investments, including paved and gravel roads. Even the lesser dirt roads were carefully engineered, with drainage, milemarkers, curbs, bridges, etc. There's a world of difference between a surveyed, leveled, engineered road with drainage and mile markers (even if it's an unpaved earth road) and a 'natural', unimproved track created simply by the passage of game and men over time.

The road building of the Romans wasn't rivaled in scale or quality in the Western World until the 19th Century.

I don't see what your point is. If it's to somehow discount the massive investment the Roman state made in infrastructure, the offices of road building offices like Aedile and Quaestor were highly prestigious offices because of how important the roads were to Rome.

Reality says

If she didn't, the Italian sailor Columbus would have received funding already promised to his brother by the King of England.

Already promised? I know Columbus and his brother appealed to other governments across Europe, but they didn't get any commitments. You have any evidence that Henry VII accepted Columbus' proposal and was prepared to fund him?

Anyway, what difference does it make to the core of the argument? Had Henry VII or the Venetian Doge or anyone else funded him, it's still a government project.

Reality says

You do realize we are talking about high middle age western Europe, right? Not Russia, Turkey or China. Serfs by then had become peasants in Western Europe and could leave their lords' land without permission. That's been the case since the re-emergence of European cities in the 11th century and the Black Death in the 13th century.

Yes, serfdom was on the wane in Western Europe (and conversely becoming dominant in Eastern Europe), but it wasn't eliminated in England until the late 1500s and the late 1700s in France. Spain didn't ban serfdom until 1837.

Speaking of serfs, how would you describe the economy of the Spanish Colonies from the 1500s onwards? Wonder where they got the idea to put the Indians in a repartimientos system and require a mix of rents, corvee labor, etc. from?

The elimination of serfdom was a long trend that took centuries. ;)

Going back again to the core of the argument, the vast majority of feudal revenue came from rents, monopolies, and services extracted from the lower classes. And, in the case of the "Catholic Kings", largely from the confiscated property of Jews and Arabs.

351   MisdemeanorRebel   2013 Feb 22, 1:29am  

Reality says

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

I said:
thunderlips11 says

one of the manifestations of the class conflict within Rome between the Patricians (and later the "New men" and the Equites)

352   Reality   2013 Feb 22, 2:05am  

thunderlips11 says

Reality says

Goes to show the depth of brainwashing you had. In case you did not know, the lastest excavations show that even the Roman roads were built on top of existing roads.

...

Roads were carved out by travelers and traders for thousands of years. The government road building process started with brigands setting up toll barriers on roads!

Or a great hole in your education. Don't kids learn about Roman Roads in School, anymore?

Even back in Elementary School, the big thing about the Romans was their road building.

Like I already noted, your knowledge base is very limited to the statist variety that they used to brainwash kids. What Appius had was the classic government project: the official having the government spend tons of money on his pet project, so his relatives and friends can be employed far above market rate. The Roman roads were built on top of existing roads that had existed for hundreds if not thousands of years. Of course this being government project, it was not long before sychophants recording it in court history so the later generations would sing praises of the state. In reality, the taxation to pay these projects enriching the ultra rich while impoverishing the middle class, was one of the reasons leading to the gradual demise of the Republic. BTW, just like the Eisenhower highways, the Appian Way was also started for national security reasons: the Samnite War in 3xxBC.

thunderlips11 says

There's a world of difference between a surveyed, leveled, engineered road with drainage and mile markers (even if it's an unpaved earth road) and a 'natural', unimproved track created simply by the passage of game and men over time.

The roads discovered under the government built Roman Roads were also engineered. They had been there for hundreds if not thousands of years before the Roman state paved over them. It should not be a surprise. Privately funded turn-pike roads existed for over a century before Eisenhower national highway project . . . yet how much praising do you hear about that? as opposed to the constant statist praise for the Eisenhower highways.

thunderlips11 says

The road building of the Romans wasn't rivaled in scale or quality in the Western World until the 19th Century.

The Roman Republic also advanced widespread use of indoor plumbing to a level that was not seen again until the 19th and 20th century. That's just reflective of the high level of economic development thanks to trade. It's also reflective of how devastating Roman Empire was: brought the economy down to a level that would take over 1000 years to recover to a comparable level of trade.

thunderlips11 says

Anyway, what difference does it make to the core of the argument? Had Henry VII or the Venetian Doge or anyone else funded him, it's still a government project.

The important point is that in those two-way transactions, those regional lords were just acting as money-bags, instead of governments. Their function was little different from being a big plantation owner with a lot of money. The sailors were free agents, not ruled subjects of the lords until after taking the money (and only nominally anyway as part of the deal).

thunderlips11 says

Yes, serfdom was on the wane in Western Europe (and conversely becoming dominant in Eastern Europe), but it wasn't eliminated in England until the late 1500s and the late 1700s in France. Spain didn't ban serfdom until 1837.

We are not talking about Spain, but Portugal, remember? In any case, the official banning is not the same as nobody was free until then, or even most people being serfs. The US did not ban slavery until 1865, yet the majority population in the US or colonial North America had never been slaves, not even in the 1500's! You'd be really out of your mind to think England were mostly worked by serfs attached to land until the late 1500's, France until the late 1700's, or Spain until 1837. By the time governments made laws to ban it, the reality on the ground had long changed. It's Western Europe we are talking about, not bureaucratic Russia (perhaps your favorite type of state). Old style serfdom started to phase out in the 11th century when people in Western Europe could escape to free cities and stay there for a full year and become free; the Black Death in the 13th century made serfdom unworkable in western Europe. Sure, serfdom still existed in small pockets in western europe, just like slavery existed in the US up through 1865, heck even exists today informally despite the laws!

thunderlips11 says

Speaking of serfs, how would you describe the economy of the Spanish Colonies from the 1500s onwards? Wonder where they got the idea to put the Indians in a repartimientos system and require a mix of rents, corvee labor, etc. from?

Where do you think the human traffickers of today get the idea of keeping and trafficking sex slaves? Individual greed combined with government laws that do not treat all people being equals (i.e. some people being "illegal" in the eyes of the man-made law).

thunderlips11 says

The elimination of serfdom was a long trend that took centuries. ;)

But whatever was happening in 1837 had little to do with something a person or two persons said or did in 1237. General trends spanning hundreds of years (subject to later development) and causality of specific events are two entirely different things.

thunderlips11 says

Going back again to the core of the argument, the vast majority of feudal revenue came from rents, monopolies, and services extracted from the lower classes. And, in the case of the "Catholic Kings", largely from the confiscated property of Jews and Arabs.

So which specific category did Isabella belong? Like I said, if you want to claim looting rich Jewish and Arabic merchants is good for science, you will have to make the case yourself.

353   Reality   2013 Feb 22, 2:09am  

thunderlips11 says

Reality says

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

I said:

thunderlips11 says

one of the manifestations of the class conflict within Rome between the Patricians (and later the "New men" and the Equites)

You still seem to be confusing BC and AD. "New man" was a concept from about 200BC to 1st century BC. Even Equite as a rank became insignificant a century before the end of WRE.

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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