Investment: Interest Rate Manipulation


Interest Rates

 

 

This is a long one - You will undoubtedly be captivated by this Herculean literary effort. Maybe print this one out and leave in your library, next to the spare towels, soap or toothpaste. If you get through this - read The Birth of the Federal Reserve

THE FEDERAL RESERVE

To most a discussion of the Federal Reserve is a mundane topic, worthy of little excitement. You will soon see that Mario has a slightly different view. The history of this monster is an intriguing subject fraught with at minimum questionable intentions of long term worldwide social and financial manipulation, at maximum a conspiracy with world economic domination as its objective.

Although the Chairman of the Federal Reserve Bank is appointed by the President, The Federal Reserve is a not a branch of government, but a private corporation. It was originally proposed and later founded by several of the world’s wealthiest bankers, some say to line their own pockets and to provide overflowing tax revenues. It was an ingenious plan and worked remarkably well.

The Federal Reserve accomplishes some positive things for our economy. This is why we accept it as being important in our lives - that and the fact that most people now alive have known nothing else. We suffered through serious banking problems which needed creative solutions. Most believe interest rate and money supply manipulation is critical to a sound and consistently growing economy. We read weekly about the genius economic minds possessed by those at the Federal reserve, and especially the chairman - and most would agree there are few who could "manage the economy" as well. The question we ask is: Why does it need managing?

Some charge that irreparable damage has been done by the creation of the Federal Reserve. It can be seen as enormous yet at the same time nearly imperceptible. This effect has been so gradual that to discuss it brings the accusation of paranoid conspiracy theorists. How could clear thinking people believe that anyone or any group would conspire to rule the financial world knowing that they (those conspirators) would almost certainly not live long enough to see it fully develop? Nonsense – or is it?

BRIEF HISTORY

For as long as I can remember, there has been a Federal Reserve and Federal Deposit Insurance Corporation to keep me worry free about my savings. Maybe this is because the Federal Reserve was organized in 1913, the FDIC in 1933, (finalized in 1935) and I was born sometime after that. Like many, it has been a part of my existence all of my life. I once felt safe because of it. I take for granted the fact that it is there. I make personal financial decisions based on my interpretation of their current of potential actions.

Nineteen hundred thirteen was a momentous year for our country. We established the Federal Reserve and another well known monstrous institution besides. Come on guess. What other bureaucratic beast was conceived that year? Here are a few hints: We pay for it every day and agree most days (happily) to receive nothing in return; It is a common belief that the more we pay, the less we should receive; there is a minimum amount required to be paid, but no maximum.

If the above hints don’t trigger your faded memory from high school history class, let me remind you that 1913 was also the year that our income tax law passed which allowed the government to legally take our money without our consent. The 16th Amendment to the Constitution declared that income tax should no longer be unconstitutional. Was it a coincidence that these two significant financial changes took place in the same year? Or was there a greater goal for the Federal government and the well heeled bankers, a collusion?

TAX HISTORY

Prior to the implementation of the income tax, we had only minor experience with taxation. We had some types of property and sales taxes, but income tax was unconstitutional. In 1862 an income tax was levied to help fund the Civil War, then abandoned a few years later.

In 1894, Congress instituted an income tax but it was declared unconstitutional by the U. S. Supreme Court the following year. Finally in 1913, it was declared ratified by enough states to become our 16th amendment to the Constitution. There is evidence that several states never actually ratified this amendment, and that it was passed illegally by a lame duck secretary of state who was himself to benefit from the tax and banking reform. Some believe it was such an important measure for our congressional leaders and bankers to allow a little thing like constitutional procedural regulations and the possibility of a prison sentence to stand in the way of its passage. It passed and has forever altered our lives.

The income tax amendment was so important to the bankers and the funding of the Federal Reserve Act that the politicians ignored the requirements for legal passage and apparently fraudulently passed several states which had actually vetoed the amendment. Could it be that income tax was established primarily to fund the potentially exorbitant cost of the Federal Reserve System?

The income tax and the Federal Reserve were born in the same year. They had to be … and we all lived unhappily ever after.

ORIGINAL TAX RATES

Had income tax rates been immediately prohibitive and cumbersome to all, more would have been done to stop this amendment’s illegal passage through congress. We the people would have revolted. Unfortunately, since the tax was to apply initially to only the very wealthy, it was not much of a concern to the masses. If it doesn’t immediately and directly affect us, apparently we don’t care it the other guy is taxed.

The critical consideration for those in power was to initiate income taxes, not to tax everyone - yet. Since most people were initially unaffected, and couldn’t envision the possibility of ever directly becoming affected themselves, they did not complain. Who listens to the whining of the wealthy capitalists when even the affluent and altruistic bankers were behind the tax?

Only the very prosperous were caught in the first income tax net. Then, as today, there was no compassion for the rich. Little did we know that it was the super rich from the banking industry who were backing these proposals because they would reap enormous benefits.

The income tax rate range was initially set at 1% and rising to a maximum of 6% depending on income and some (but not enough) were outraged at its passage. This was just the first proverbial shot across our wage earning bow. It was targeted to only the highest wage earners, the vast majority of workers were originally exempt. It wasn’t until 1939 that the income tax reached 5 percent of our population, only a few years after the creation of the FDIC. Another coincidence?

Income tax resistance had been shrunk like a glacier floating south in the North Atlantic and was now beginning to melt completely away. It was just a matter of time before we were all to drown in the sea of taxation. The bankers piloted the ice trawlers which insulated them from what some considered a complex conspiratorial governmental restructuring plan.

MANIPULATING THE DEPRESSION

It was at this time in the mid 1930s that the world was going through probably the worst economic crises in recorded history. Major factors contributing to the continuance of the Great Depression were economic policies. The F R had raised interest rates when they should have been lowered causing financial collapses worldwide as companies couldn’t repay or restructure their debts. Was this done purposely? Had the rates been decreased, the depression would not have been so deep. Since the Federal Reserve was responsible for setting those rates, what are we to think? Regardless of intent, clearly the wrong plans were implemented – if the purpose was to affect the economy in a positive way. But was it?

If we are to assume that it was merely an error by the board members and the chairman, that they tried to help with the best of intentions but unfortunately made matters worse, then why have a Federal Reserve? If we believe they did this purposely, again, why agree to submit to such a powerful entity?

FDIC IS BORN

The mid 1930s and the depth of depression caused the Federal Reserve to seek a needed companion to assist in the preservation of the banks. The Federal Deposit Insurance Corporation was born. Had the depression not been so severe, there would not have been a need for an FDIC.

As fewer American producers were able to remain in business due to the higher interest rates, the United States instituted stiff tariffs on imported goods to keep competition out of the country in an attempt to help our own producers. Naturally the foreign exporting nations responded in kind. Those companies still strong enough to export to other nations were now forced to sell here, where there were fewer buyers, limiting sales. History tells us that the inexperience of a newly manipulative government worsened the depression.

Or did they know exactly what they were doing?

As one of the final moves in the attempt to save the economy, the Federal government raised income tax on more of those still somehow able to make any money. Obviously this was not very smart as it left the taxpayers with fewer resources with which to continue to produce as well as to hire others – so more were to become dependent upon their government. Since the income tax was already in place, an act of congress was not necessary to merely raise tax rates. Taxes were raised. The recession worsened.

THE GOVERNMENT'S ARGUMENT

We were and still are told that we are lucky to have those wise men at the Federal Reserve. It is in place to save us. Our deposits are protected. We have not suffered bank runs as we did in the 1800s, although the Federal Reserve didn’t help much with the bank runs of depression era collapses of the 1930s, because it was still a little weak. This led to the creation of the FDIC, and greater expense for us.

All in all, it is true that we really haven’t had the banking problems so prevalent throughout the nineteenth century, so it does work. The questions arise: Are we really better off than before the Fed? Does the reduction of banking problems translate directly into more money for the ordinary citizen, the banker and Federal government? Is worldwide economic manipulation an activity in which governments should engage? Or did the creation of these entities and the safeguards demand too high a price from the consumer? Are we protected or is it really the bankers and governments that reap benefits through our ever inflated tax payments?

Banks pay premiums to the FDIC for Federal insurance coverage. This allows them to operate under the system. We have seen bank problems, but in the end, the Federal reserves eventually helps brokers a merger, restructures debt, or in the worst case, the government actually pays depositors. Where does the money come from to take on such potentially disastrously expensive risk? The FDIC premiums are only a small part. Taxpayers bear the major brunt of this risk.

The risk has been transmogrified from the possibility of bank deposit failure to a guaranteed tax liability.

MONEY SUPPLY MANIPULATION

The Federal Reserve controls the money supply. When the Fed wants to increase "loosen" the money supply to get the economy rolling faster, it expands the amount of credit available in the banking system, lowers the reserve requirement, or cuts the discount rate (the rate at which banks borrow funds from the Federal Reserve). These actions are taken fairly regularly. Remember, the more money in circulation, the more taxable transactions are occurring, the more tax revenue is generated.

To slow down "tighten" the money supply, the Fed takes opposite actions and raises interest rates. Occasionally there is a need for a slow down, mostly to avoid a major catastrophe at a later time – a soft landing so to speak.

Recent history suggests that that Fed action is not an especially fool proof financial manipulation tool. Remember Alan Greenspan used terms like "Illogical exuberance" and "soft Landing" when he announced interest rate increases? I don’t seem to see that we have had a very soft landings - maybe I missed something.

When the government sells treasuries to the banks or to the public, what is it they have to sell? Simply a promise to pay a stated interest plus principal at a later time. If this money is spent on government services, where does the money come from to pay it back? You guessed right again - taxes.

The money to buy back the government securities is repaid by an edict from the government to us to pay it – or else.

WHY TINKER?

Here in the United States, monetary policy is determined by the Federal Reserve’s Board of Governors, most specifically and currently, The Chairman. For the most part, they appear to take an unbiased laissez-faire (hands off) approach. They are capitalists who believes the economy should run itself with only minor Federal intervention. They do have the power to manipulate markets. Seems easy enough to drive the economy up or down at least some.

This begs the question: If interfering so little is so very successful, why interfere at all? Why not let the markets dictate their own policies and interest rates? We can’t now, it is too ingrained in our economy. We seem to want the rewards profitable markets bring, but not the risks.

It is important for any investor to try to understand how the Chairman of the Federal Reserve thinks. Much of what happens economically in this country is the result of that attitude towards business and finance. This is a very powerful position. Some tinker too much, some wait too long to make moves. Tinkering too much with the economy might very well lead to more chaotic conditions. Naturally which ever political party’s president is sitting in the White House will be saddled with the blame. So their relationship to current presidential administrations could mean one move as opposed to another to try to sway public opinion and elections. Yes – the truth hurts.

The flow of money is a major factor in the growth or lack thereof of our entire economy. The Chairman of the Federal Reserve is seen by many as one of the most powerful people in the world today.

FIAT MONEY

The flow of money keeps the economy rolling. We’re advised to save, but if we do, and purchase fewer things from safety pins to waterfront mansions, the economy does not flow as smoothly. Money changing hands, or flow, is what makes the markets work. Who wants a stagnant economy? It may not be so bad if we gave it a chance.

With each drip in the flow of money is an opportunity for taxation. Maybe this is why the governments want such an active economy. Maybe this is why we have been trained to work so many hours to try to keep up.

Follow this progression through a few more loans & deposits and we have bank deposits and loan outstanding approaching $20 Million – without printing any more money. Deposits are technically liabilities of the bank.

Banks earn boatloads of money without investing much if any of their own, and create for themselves real money - almost. Additionally, they have virtually eliminated their own risk and cleverly arranged for us to guarantee their activities.

You have heard of those overnight loans the banks take. They are made when reserves don’t make the 10% minimum. Happens all the time. If ever you see a bank balance sheet, a good idea is to divide the assets by about 20 or so and then compare it to its liabilities. It changes the financial picture a bit.

The bank magically converts most of our deposits into assets for themselves in the form of loans. This is called fiat money – money created from fiat (or edict) from other money. It is derivative money – money derived from other real money.

For example, if I deposit $1 Million into the bank, the bank has only a liability. That liability is a promise to pay me my money when I want it - plus interest. It owns nothing - yet. By lending out $900,000 of my money with a paper application and a good signature, they have created an asset. Now, someone else owes the bank $900,000 plus interest, that is now an asset of the bank - a note receivable. Banks are able to create assets without using any of their own money and by taking little or no risk. The more they lend, the more money they can create for themselves without using any of their own money at all. Pretty cool if you ask me. (See Birth of the Federal Reserve) for more detail on Fiat money).

Many of the transactions generated from this money are taxable events. I buy this, you sell that, she employs him, etc. The government wins at almost every turn. Why not encourage such activity? The more money movement, the greater the tax revenues. More money lent, more bank income, more tax. A relatively simple formula. I want in.

There is a direct correlation between how much money banks lend and the amount of tax revenues generated. If lending were too restrictive, tax revenues would suffer significantly.

What would happen if the banks ran amuck and lent maximum amounts of money all of the time? What happens when a loan (or loans) in the money link goes unpaid? Not much. This is why banks have no problem lending billions of government (meaning citizen) backed dollars to third world countries with little chance of repayment. Bad loans will be restructured and even more money is then not repaid. Everyone is happy.

DON’T WORRY – BE HAPPY

Why worry about this house of cards? The government will take care of us. We feel safe because of the FDIC, they protect our bank deposits. Lets see. If a bank should get into trouble – generally from making bad loans, what happens? Don’t worry, your money is safe, tax dollars will pay to save the institution.

Analyze the banking thought process. The more good loans, the more money the bank earns. They have to follow certain regulations, but basically the more the merrier. When some of these smaller loans fail, they may lose a little, but generally they have some property as collateral so small loan deadbeats are little more than an inconvenience.

If a mega foreign loan defaults, banks are covered by the insurance of the taxpayers, and a complete unwillingness by government to allow a bank failure.

There is little incentive for a bank to be more prudent than a competitor. Banks are not allowed to fail with taxpayers money deposited into it.

BANKING CRISES HISTORY

Through the early 19th and into the early 20th century, our banks went through several crises which included bank failures. One crisis about every twenty years or so. We had two central banks prior to the creation of the Federal Reserve, but mostly we got along without one. We had banks fail, wealthy bank owners lost their fortunes, depositors lost money, and widows lost their homes. The solution came in 1913 when the Federal Reserve was born along side its evil twin, the U. S. Income Tax Code.

The reason they told us we needed a Federal Reserve was to safeguard our money, so that depositors would be protected from banker’s greedy practices, or unforeseen cyclical economic downturns. With potential trouble brewing over in Europe, we may need to defend ourselves from foreign aggression. Income tax was a way to raise money to save the American people from those lunatics across the sea. Part of what we heard was true. Our deposits are protected – it is now our earnings that are not. We are taxed into oblivion.

Many bankers were in favor of the income tax as well as the formation of the Federal Reserve. They were willing to pay the premiums for the insurance to protect us (they took it out of our earnings). In fact, it was big bankers who originally suggested it several years earlier at a secretive meeting on a luxurious Island off of the coast of Georgia.

BAZILLIONAIRE BANKERS WANT TAX?

There seems to be no other conclusion to reach than that the establishment of a baby Federal Reserve, proposed by bazillionaire bankers was the original reason for the income tax. When additional revenue was occasionally generated from tax, a new public need could always be found to finance. It rarely occurs to government officials to return any of our money. This new found need usually became permanent and would now have to be funded in perpetuity, spiraling our income tax rates ever skyward.

If money doesn’t move, tax revenues decline and those programs would falter, unless of course taxes are raised again. When tax revenues drop, these new services must continue to be funded, so tax rates increase to those still able to pay. If that still doesn’t produce enough money, there is always borrowing through sale of treasury securities. We’ll pay the government note when the revenues eventually come in – with more taxes. On and on it goes.

LENDING ADVANTAGE

Obviously, there is tremendous profit in lending money. This profit compounds exponentially when an institution is not only legally allowed, but encouraged to lend money it doesn’t have. Imagine how much money you would make if you could lend mortgage money for 30 year notes without actually having any money. It isn’t quite that simple, but that is pretty much what happens. Banks create fako money from deposits. This money can not exist without the previously deposited "original" funds.

Bankers sought a method too ensure that they could continue to make a bundle of money without directly absorbing their own investment risk. Government wanted a technique whereby more money could be created so that more tax revenues could be generated from the circulation of that money. The 16th Amendment to the Constitution granted congress the power to lay and collect income taxes. The creation of the Federal Reserve guarantees banks solvency while encouraging lending, and therefore spending, which generates more tax. It was sold to the public through the fear of their own economic safety.

Eliminate Risk

There is risk to lending one’s own money. What if the borrower doesn’t pay? There is not very much risk in lending money cloned from other money. Not only is there little risk, but if the borrower fails to pay, the FDIC steps in to help, again with someone else’s (taxpayer) money. They save us by taxing us to pay for the bankers errors. Oh, and our deposits are insured.

Sure, banks and their stockholders take some risk. When times become seriously difficult though, they know they will be bailed out. They can continue to carry on without the normal and healthy investment fear under which most of us operate.

Our economy has been operating a very long time under these rules. We should realize how potentially fragile it can become. Maybe the rest of the world, (even countries without a version of an FDIC of their own) has a better idea. Taxes are lower, or even eliminated maybe because they have no expensive Federal Reserve to support. They rely on ours to mitigate their risk.

SAFETY

Is an American bank deposit a better and safer investment than one situated in an offshore bank? Given the fact that the safeguards (excessive tax rates to protect the FDIC) are already in place, we should consider this question. Before you answer, take these facts into consideration. Money market mutual funds have been operating in this country for decades without FDIC insurance and have never lost a cent. The offshore bank does not have U. S. insurance, but many insure privately. Private insurers generally require a higher level of reserves and a more conservative lending policy, in effect, it is required to be a more solvent and responsible bank. Some banks rely solely on their history of sound investing and have no insurance at all. The trouble is, an investor might actually have to do some work researching his bank – we’ve been trained to not bother with that.

Federal Deposit Insurance tends to give us all a warm and comfortable feeling. Does the existence of the Federal Reserve help you to sleep better? Are these costs worth the price? It seems to me that our governments have been a little devious, but there is room for disagreement.

The establishment of the Federal Reserve combined with the institution of the income tax has had the effect of transferring a potential investment risk from a bankers possibility of loss during down business cycles to the taxpayer’s guarantee of continuous loss through an onerous income tax burden.

Most people don’t look at the financial stability of an American bank prior to making deposits. We don’t have to – we know that our deposits are insured up to certain maximum limits by our exorbitant tax rates. What if we had no Federal Reserve or FDIC to protect us? Wouldn’t we be a little more careful to which bank we would entrust our savings? Many sound economies are run this way. In these countries banks compete for business with stability and safety considered important factors. It isn’t here, we just look for the highest rates of return and jump from one bank to the next without hesitation. Which makes more sense?

The motivating question for most of us is: "What’s in it for me?". We are already paying for the FDIC with our tax dollars, why not use it and at least benefit from our tax payments in some small way? I have to agree. If your only reason for having a bank account is FDIC insurance, go for it – it’s expensive, but it does work and we’re paying for it anyway.

Today many of us don’t have as many assets in banks. We use mutual funds, stocks and other less guaranteed investments. The FDIC does not offer protection for these assets, yet we feel safe about them because we are more familiar with the machinations of the system. We’re confident that the economy will be manipulated if need be.

As our country matured, the growth in revenue fed an ever increasing governmental appetite for political power and influence, spiraling our tax rates out of control to maintain an ever-growing political bureaucracy. Maybe we should do something about it. Most of us have no power to alter economic policy, but we can adjust our personal level of financial participation in it.

IS STAGNATION SO BAD?

We are told that inflation is a healthy result of a prosperous market. Stagnation is bad. Our leaders seem to like to see inflation run at about 3 – 4% per year. This has been ingrained into us for years. Why? Because it demonstrates "Growth" we’re told. Growth of what?

If the overall economy is stagnant, i.e., growing at rate of 0.0% does that mean I personally must be stagnant? I don’t think so. Does it mean your company must be stagnant? If prices remained fixed, and I work hard, I could be much better off than I am now as I accumulate more stuff at zero growth.

If the overall economy is not moving and growing, if goods and services are not costing more and more, the government must be stagnant unless taxes are raised. They don’t really mind, but our rulers realize that raising tax rates is not popular with the hard workers in our society. They much prefer to accomplish this through inflation whenever possible.

If most goods and services cost more by about 3 – 4% every year, and we have to pay more every year, naturally we must then earn at minimum 6 - 8% per year to keep up with inflation and taxation. If we don’t, we fall behind the curve. Where does the money come from that is increasing at that rate? It is printed from the treasury in either cash or treasury promises.

When we see inflation reports, assuming they are accurate, we should remind ourselves what it truly represents. That inflation figure is a close representation as to what our economy has lost to the government this year.

We are accustomed to receiving raises in wage because our economy demands it. Would it be so bad if we had no inflation and worked for that goal rather than the 3% or so currently considered ideal? Lets see.

No inflation...

A car would cost the same next year as this year unless there was some perceptible improvement to the vehicle for which drivers were willing to pay more.

Other goods and services would cost the same, again unless there was some noticeable value enhancement.

We would receive no raise without demonstrating obvious job improvement, and we would deserve none. But, what we previously had to buy, milk, real estate, brandy, would not increase in price, so we would have lost nothing.

We would receive wage increases only if we were worth more to the company to which we are employed. We could then buy more things, or save more money. This would be completely based on merit – it would have to be.

Is it not normal to improve at one’s job? We improve at our job over time. We receive increases in pay supposedly for that improvement based on inflation. We are not financially rewarded for increased ability due to inflation erosion. Because we are getting better we are allowed keep pace with inflation and taxation. Not a good deal. In order to generate true personal financial progress, we must increase our income each year by around eight to ten percent. This is why we are falling behind.

PERCEPTION OF PROSPERITY

When we earn more money, we feel like we are doing well. If inflation runs at 3%, we must increase our earnings by about twice (or more) that much to sustain any real growth. From our raises in pay we have to subtract taxes and inflation to determine if we have enjoyed any real growth.

Ten years ago maybe we earned half as much as we do now. We believe we are getting somewhere, but the reality is we’re not. We are treading water and we’re just rising with the tide. We can’t quite figure out why we don’t feel prosperous, but we’re happy because we have the perception of success due to increases in earnings.

With a constant money supply, we would receive wage increases only if we were worth more to the company. Goods and services would cost more only if they were superior.

Part of the Federal Reserve’s job is to expand and contract the money supply to maintain equilibrium in the economy. What would happen if they didn’t bother? Would it be so bad if the same money was floating around year after year?

If there were no more money circulated, if the same money was used over and over again without new money being introduced into the economy, we would have little or no inflation. Personal prosperity would be based on what we provided for which others were willing to compensate us.

Some items would increase in price when the demand for those things increased. This is natural. Maybe your copy of the hand written diary of a Titanic survivor becomes more valuable because of a recent Hollywood movie. It would only be worth more if someone would sacrifice a greater percentage of all money to acquire it.

Intentionally manufactured inflation has been at the core of our world falling onto a deep division of class. We see it more clearly in some of the "Developing" nations, but right here we have our own royalty class. There are those at the top who no matter how high the tax or inflation rates become, are either benefiting from the system or are virtually unaffected. They usually support the system as it is - of course. Then there’s the rest of us.

WOMEN MUST NOW WORK

Due to the increasing cost of living causing the erosion of our purchasing power, the lone head-of-the family man alone as sole breadwinner, gradually began to lose the battle with inflation. As a hunter-gatherer, man is not pleased with this turn of events. He can no longer gather enough to care for his family.

Women began to enter the work force in mass in the decade of the sixties because it was financially necessary. Is it a coincidence that divorces, single parent households, and substance abuse have increased more rapidly since that time? Some say it is not related - others blame the Federal Reserve and tax policies.

Most marriages now end in divorce. Could the pressure of earning a decent living with less time (and money) for recreation or vacations have anything to do with familial discord? The explosion of single parent households created another opportunity for the government to act to "protect the children and families" with money and tax legislation. They allocated (some say legislatively extorted, - stole) more money from those who actually earned it to those who didn't. Is this the American way?

Studies now are attempting to show that many women who stay home with the kids and out of the work force acquire a sort of "Mommy brain mush" syndrome. It seems that dealing with young children every day is bad for the mother especially because she is not socializing enough with other adults in the work force. In other words, get out there and circulate some money and generate taxable events - let someone else deal with the kids, pay others to parent them and generate still more tax by paying their salaries.

We now have a generation of women who've worked outside the home for a while, are used to it and accept it. They can't conceive of any other way to financial survival. Many working women are upset because they often earn less than a man performing the same job. Not only do many not want to be there (although most would never admit it) but darn it, if they have to be out there, they want to be paid more - and why not?

Our tax laws do not allow for child care benefits for stay at home parents, but we receive tax credits if both work and place the kids in day care. Is this an attempt to coerce more stay at home mothers into the work force?

There is increased pressure of earning a living and providing for a family today. How do we do this while protecting the bankers with our taxes in an environment of continually increasing consumer prices? Are we struggling more because of government's greed, or do we just want more expensive toys? Is it our own fault for wanting to posses so many things unavailable in the 1950s? Why shouldn't we have it? What about time - isn't that valuable? We are partly to blame for buying into and participating whole-heartedly in the system.

Collectively we can't do much. As individuals though we can do a lot. We can partially insulate ourselves from the deteriorating effects of inflation and taxation. It takes some discipline to recognize expenses we needn't incur while providing those essentials and luxuries truly important to our individual idea of a great standard of living. We have to think before we unconsciously spend and contribute to the insanity of the money-go-round.

WHAT HAPPENED?

If it is assumed that we believe that the Federal Reserve must act in certain cases to keep our economy on the right track, than we must further assume that a free economy based on relatively unfettered capitalism can not work. If a free market then is not what we have, what have we?

Although we write comically about the gender battles regarding money, this is a serious matter. Men are not too happy about the fact that most can not make enough money in today's economy to provide a comfortable standard of living for an entire family as Dad or Granddad once could. It is emasculating. Maybe its because our standard of living is higher by virtue of technological progress. But if we must work so hard to accomplish it, is it worth the price? We hunter-gatherers are forced to give up so much of our hard earned money that many can not gather enough to meet this new standard, and the woman must now also hunt for survival.

There are also many women who, if it were at all financially feasible, would prefer to stay at home and care for their children. A woman may not be too happy that her husband can not or does not earn enough for the family, but she accepts it because it has been so for over 30 years now, her mother probably worked at least some, and most of her married friends work full time. Sometimes she does blame the husband either directly or indirectly, and a battle begins.

The prospect of working full time while relying on relatives or worse, paid surrogates for the care of their children bothers some women. It concerns them that they believe they are forced by financial circumstances to leave most of the nurturing and moral upbringing of their own children to others.

The perpetual erosion was set in motion in 1913.

The Federal Reserve is the bad seed of the root of all evil.