|3. Independence of CB
“The Federal Reserve System is considered to be an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive branch of government.” [TheFed-PF, p.2]
The Federal Reserve and other big banks fought a law suit filed by Bloomberg News, unsuccessfully, to keep the amount of bailout money transactions secret. The details of the released document from the Fed show that banks got $7.77 Trillion dollars by March 2009. The US GDP during 2008 was $14.2 Trillion [Ivry]. Initial estimate of this secret transaction was $12.8T [Pittman], it will never be known what the exact amount was.
You can thus imagine how much secret or black money is floating in US Economy and for that matter in all countries of the world. This will indicate all the economic data that people are using are all wrong. In other chapters we have shown how math and science are wrong, now we can see why economy is also wrong. We have built a house of cards using false money.
The real inflation is significantly higher than what we see in the news and published reports. All the theories and algorithms that have been researched to estimate inflations are all wrong. This $7.77T is only one report, which Bloomberg News forced the Fed to release; there is no guarantee that such things are not happening every year, year after year. This can happen because the Fed is a private bank, and there is no oversight by the government on the real money power of the Fed.
This Bloomberg News discloser report establishes many truths: (a) The Fed does not want to be transparent and accountable. (b) Government also cannot audit these transactions. (c) The real financial economy is very fragile, false, and requires constant bailout to maintain it. It is very similar to the notion that if you tell a lie then to maintain that lie you have to keep inventing bigger and bigger lies. (d) You cannot run a real economy of physical products and services using false money which is not an object of nature. (e) Privately controlled money supply cannot know how to run public economy. Public will always suffer as we can see all over the world.
Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie, and a former chief economist at the New York Fed, said “Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it” [Ivry]. Thus we see that the long hand of money power is controlling everything according to its wishes and people are powerless.
What is money power? The person who can print money has the money power. The CB has this power. It can print any amount, and give it to anybody it wants to, without any restrictions, as we have seen in the Bloomberg News report. Governments do not have any control over this money power of CB. Thus money power is in private hands. The interest rate, the CB charges is also unconstrained. As we have mentioned in previous chapters that money is free and its supply is unlimited, because money is not an object of nature and does not follow the laws of nature.
The entire money power is therefore an unethical system, which propagates and imposes corrupt activities throughout the world down to every individual being. This has changed the human values. Anyone in opposition can now become a victim of Galileo Phenomenon; and we see that it is happening all over the world in every decade.
The heart of capitalism is this money power, it is in private hands, and therefore there is no free market. Since there is no accountability and transparency of this money power, there is no reliability on any economic data. All economic data, supplied by the Fed or by different branches of government are all false. If you do not know how much money is floating in the market, then how can you create economic data?
Unless the intellectual community begins to realize and express that the money is not needed to run the economy, the money power cannot be removed and MLE cannot be implemented. Money is controlling all activities of the world for more than two thousand years. Clearly the CB is the source of this money power now. As mentioned before, CB is privately owned and cannot be controlled by government [Greenspan]. On the other hand using the money power, the CB controls all activities of the society including education and religion. It controls all private and government organizations, CIA, FBI, including military, and police force of every country. Most importantly majority of the population also thinks that money is necessary. Thus CB is the real king of our time, as was predicted by [Quigley, p. 324].
Actually whether the CB is private or not is not important. The important idea is who controls the money: its supply volume, its interest rate, ability to print money, and giving money to anybody it wants to, its unaccountability and non-transparency. That is the money power and it is in private hand, and the government does not have any control over this money power in any country.
The stated objectives [TheFed-PF, p.15] of the CB are the following. (a) Keep maximum employment (b) maintain stable prices (c) moderate long term interest rate and (e) contribute to higher standards of living.
The reality is that these objectives are not happening in our economy. We are still trying to recover from a major failure of economy, the recession of 2008. How can such recessions happen over and over again? The data, the graphs, and research reports show that the above reality is either intentional or CB does not have any knowledge, capability, and experience to run an economy. If it is intentional, and we show that is indeed the case, then it will prove the independence of CB; and that the CB is the King.
At one time the objective was to provide full employment, now it states maximum employment, without giving any number. The unemployment rate in Greece hits 27.9%, youth unemployment is at 58.8% in 2013 [Reuters]. Interest rate is beyond comprehensions. Big bank credit card companies are charging over 20% interest rate. Some money lenders are charging more than 50% interest to the poorest economic community. The economy should support the poor and vulnerable people most; instead we see that CB is exploiting them the most.
Standard of living of the bottom fifth of population is steadily decreasing over the years. On the other hand the top fifth’s income is steadily rising. We show that these are facts with publicly available data and their graphs in this chapter.
Thus we can see that the central bank does not want to run the economy along its stated objective. In fact a private body cannot run public systems; their view points are totally different. The philosophy of a private person in the present economic system is how I can take more; on the other hand public expects from its administrators the attitude of how I can give more and serve better. A King should not be exploiting its own people.
The underlying truth is that money is false; you cannot create anything true using something false, like money. Present society that this economy has created is nothing but a house of cards. To keep it erect every now and then we have to rescue it at the cost of massive catastrophe for the people. This analysis shows that there is no difference between the foundations of economics and that of math and science. They are all run by the same false money.
Textbooks on CB
If you read any undergraduate textbook on macroeconomics, you will not find the following facts about the central bank: (a) It is a private bank (b) Only this bank can print money (c) Governments do not have any control over the money supply and its interest rates (d) CB has unlimited supply of money and it can give it to anybody it wants without any restrictions, and (e) Money is free for CB.
Thus CB successfully influenced all the economics professors of all universities not to disclose in their textbooks: the freedom of the CB and its inner powers in controlling the economy. This is similar to physics textbooks also. You will never find a physics textbook discussing about the assumptions behind each theory and their consequences. In reality we are all part of money power and helplessly helping to propagate the all round lies.
In the absence of transparency, as seen by the Fed’s refusal to provide information to Bloomberg, no free market economy can exist. Roger (Garrison, 2009) writes
“Of all the losses suffered during the current recession (of 2008), one of the most notable (and well deserved) is the loss in reputation suffered by today’s macroeconomics textbooks.”
This is indeed true as we have also pointed out that the Fed controls the interest rate (FFR) completely independently, destroying the concept of free market theory at the core. If the Fed violates it then why do you think other banks and the CEOs will not do the same? In reality they are the agents of the Fed.
CB Chairman is Powerless
The position of the Chairman of the Federal Reserve is just a decorative post. It is the interface between the private owners and the government. The cost of such an office and its subordinate staff is not at all any problem, because the money is free for the Fed.
Ben Bernanke was the first person to detect and publish a characteristic of interest rate and unemployment data of the Fed [Das, 2011-2]. This was detected when he was professor at Princeton. Later when he became the chairman of the Fed, he could not control this characteristic of the interest rate to prevent the 2008 economic great depression, which happened when he was in office. Thus it shows that the chairman does not have any power to control the Fed. This is quite a natural problem in capitalism: no employee, whether a CEO or a manager or a mail man, has any power over their bosses of the company.
Carol Quigley points out [Quigley, p. 327], that these high ranking officers are puppets, they know that, and they can be removed from their positions at any time without any problem. No investigation will be performed for such actions. Greece Prime Minister George Papandreou had to resign within two weeks [Donadio] because he declared that he would put the bailout plan of the central bank for public referendum. Note that Prime Minister was a publicly elected official of a country. Thus money power can do anything it wants to, using its free and abundant supply of money. If a prime minister does not have power to stay in his office then how can a chairman have?