G. Edward Griffin
 |
| Buy Here |
Chapter 2 Summary: The Name of the Game is Bailout
Although national monetary events may appear mysterious and chaotic, they are governed by well-established rules which bankers and politicians rigidly follow. The central fact to understanding these events is that all the money in the banking system has been created out of nothing through the process of making loans. A defaulted loan, therefore, costs the bank little of tangible value, but it shows up on the ledger as a reduction in assets without a corresponding reduction in liabilities. If the bad loans exceed the size of the assets, the bank becomes technically insolvent and must close its doors. The first rule of survival, therefore, is to avoid writing off large, bad loans and, if possible, to at least continue receiving interest payments on them. To accomplish that, the endangered loans are rolled over and increased in size. This provides the borrower with money to continue paying interest plus fresh funds for new spending. The basic problem is not solved, but is postponed for a while and made worse.
The final solution on behalf of the banking cartel is to have the federal government guarantee payment of the loan should the borrower default in the future. This is accomplished by convincing Congress that not to do so would result in great damage to the economy and hardship for the people. From that point forward, the burden of the loan is removed from the banker's ledger and transferred to the taxpayer. Should this effort fail and the bank be forced into insolvency the last resort is to use the FDIC to pay off the depositors. The FDIC is not insurance, because the presence of "moral hazard" makes the thing it supposedly protects against more likely to happen. A portion of the FDIC funds is derived from assessments against the banks. Ultimately, however, they are paid by depositors themselves. When these funds run out, the balance is provided by the Federal Reserve System in the form of freshly created new money. This floods through the economy causing the appearance of rising prices but which, in reality, is the lowering of value of the dollar. The final cost of the bailout, therefore, is passed to the public in the form of a hidden tax called inflation.
So much for the rules of the game. In the next chapter we shall look at the scorecard of the actual play itself.
Bonus quote on the hidden tax of inflation:
"The American people have no idea they are paying the bill. They know that someone is stealing their hubcaps, but they think it is the greedy businessman who raises prices or the selfish laborer who demands higher wages or the unworthy farmer who demands too much for his crop or the wealthy foreigner who bids up our prices. They do not realize that these groups also are victimized by a monetary system which is constantly being eroded in value by and through the Federal Reserve System." -- G. Edward Griffin, The Creature From Jekyll Island, pg. 33.Get the book for yourself or for others you want to wake up. It reads like a mystery novel and is filled with colorful metaphors to make the seemingly complex world of banking very easy to comprehend.
Visit RealityZone for your copy today. Summary is re-printed with permission from G. Edward Griffin.
PART 1: The Journey to Jekyll Island
7 comments:
The biggest problem with this analysis, an analysis all too often being fostered upon an unsuspecting and inquisitive public confident in its ability as layman to comprehend the intricacies referred to by egghead-academics like Bernanke and Geithner as "economics"; is that -economics is far less intuitive than that notoriously unintuitive science, -quantum mechanics-.
If your reading comprehension if par for the Internet, then you should re-read that last paragraph. It is one long sentence, and difficult to grip in the commonly shallow mind grasping meagerly and feebly for meaning.
You may not have grasped the gist of what I said.
I said, this is very heady stuff.
It is so heady in fact, it is marvelously easy to convince people you do know what you are talking about -when you write about economics- whether or not you are telling the truth -or- whether or not you even know what the truth is.
I do not know what the truth is.
I can only tell you what I suspect is true.
I learned something a long time ago -studying economics less earnestly than I do today, for I have more money today than I did when I was a student and learned a little about economics.
I learned that the strength of an economy may be judged fairly -by the amount of currency that can be issued without causing crushing inflation.
In a world economy there is an ongoing struggle, and only forced-cooperation between economies.
It is war, economics.
And that is the level at which these players play this game of economics, like it is a war, replete with weapons of mass destruction, points of no return, and a Waterloo of our own and everyone else too -that might become an obstacle.
G. Edward Griffin is an ideologue not unlike Ron Paul and Barack Obama.
I do not pay much attention to ideologues when I try to understand what is going on in the economy.
I know some things about this particular moment in the history of the world political economy.
There are more U.S. dollars -right now- tucked under more mattresses worldwide -than would equate to all the other currency issuances originating everywhere else in the world -all added together-.
Those who bet against the dollar, and even those who predict the dollar's demise, are betting against something akin to the tide coming back in, or the Sun coming up tomorrow.
If you are in theory going to dismantle the United States dollar, you will have to bomb the entire country back into the Stone Age, and reduce it to WWII Japan or Germany at the end -before all those people worldwide who sleep on those mattresses stuffed-full with dollars -will give them up as so much wastage.
Just what-the-fuck kind of chances do you think there are of that?
Don Robertson
http://MaineArtists.US
Limestone, Maine
As Voltaire once said," All fiat currencies eventually return to their intrinsic value- zero".
I thought Mark Twain said that...or was it Einstein?
G. Edward Griffin seems to want to let about 4/5 of the US starve and freeze to death while oligarchs continue to count their gold. He is definitely correct on the matter of the Federal Reserve, but his views on social welfare are barbaric. But hey, he's ticked off by brown folks on welfare!
"Just what-the-fuck kind of chances do you think there are of that"?
Probably quite good. You don't study history terribly well do you?
Don Robertson, sir, you talk through your hat.
And you almost lost me at "fostered" (to encourage) since I think the word you intended, and once mis-heard was "foisted" (to fraudulently pass off as genuine) and you thought you understood what it meant in context, but you didn't, even though you repeat it here, as "fostered". You mean "foisted". And you mean "laymen" not "layman". And you're still wrong even after that. That's because the way economics truly works, the way Griffin (whom many economics professors agree with) explains it, is actually quite simple. From someone who understands both, Griffin's treatment of economics is thorough, yet far simpler than QM.
You're spreading disinformation, and I suspect that you know that you are doing so. All of the points Griffin raises here that you've chosen (or are pretending) to take issue with are covered in much better detail in his book.
And you didn't miss a chance to slam Ron Paul in the piece, either, not least by lumping him in with the charlatan who got elected. They are absolutely different, again through your hat you're talking.
And "in theory" many currencies have been dismantled and replaced throughout the ages. Nary a bomb dropped. In fact, I don't believe any major currency was ever replaced in close temporal proximity to bombing.
The majority of all bombs ever in history have been dropped by the United States, and the currencies of most of those victim countries are exactly the same as they always were aside from inflation. Germany, Japan, Korea, Vietnam, Iraq, Panama, Salvador, Kosovo, take your pick.
All it takes to replace a currency is to allow people to trade it, all of it, at a good value, for something different.
The US itself has done this a few times in its history.
Please don't embarrass everyone by talking through your hat as if you think your audience are morons.
part 3: http://www.activistpost.com/2011/07/g-edward-griffin-protectors-of-public.html
Calling people ideologues does not make them so. For facts, why not read the book. I'm sure there's an old edition free at the library.
Post a Comment