Tag Archives: FED

The “Demonetization of Gold” Agenda

The abolishment of the Dollar-Gold-Standard in 1973 is usually forgotten. Surprisingly even in economics it is not teached or discussed even though it provides a great example to economists about monetary policy, an economists role, and how important to the comma exact regressions are in reality (hint: less than you think). However, with the little which is provided now in historical archives of this incident we can already see the bottom line:

1. The US had a clear Agenda of demonetizing the gold. The goal in the longer run which they achieved was to get the Gold out of the monetary system. The reason is clear: Gold would have restricted the US empire to put the cost of its wars and expansion on the shoulders of others (especially the Europeans).

2. Central banks are not independent. All the above decisions were made in the oval office, i.e. the state not the FED. FED officials are supposed to serve a function. They are under constant political pressure and have to make compromises. Some crucial monetary variables are even fully out of their control like the decision of a gold standard or not or government debt management. In that case it doesn’t even matter how benevolent the FED is.

3. Reserve currency status is untouchable. Any theat to the reserve currency status and the enormous importance of the US banking (clearing) system is monitored with high attention. Foreign policy is used to maintain the status. A reserve currency allows the homeland to keep the peripheral dependent and always ‘linked’ to the center. Once you are dependent on dollars, you are at their will. In capitalism power expresses itself in and is reinforced by the monetary system as the appearence of money produces intended human behavior. Hint: In the current Ukrainian-Russian-USA conflict we see Putin exactly playing with the reserve currency status of the dollar as he knows how much it matters to the US while Western is not getting the full range of this.

My conclusion of this is as short as sad: Points 1-3 are all relevant to understand monetary economics. These facts have to be taken into account if economists want to really add value to public discussion (and if there are any, who feel that craving to actually understand the monetary phenomenon). Questions suddenly appear: Which is the White House’s agenda on the dollars position in the world today? To what extent does such an agenda influence todays monetary policy both at the FED and the White House? What are their instruments (IMF, DOJ, etc.)

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Applebaum’s mindbuggling NSA update: “We are under martial law”

I came across this recently held speech by Jacob Applebaum. Applebaum gives a short one hour wrap up about the powers of the NSA. It is just great after we all lost a bit the overview around the numerous leaks thanks to Snowdon. It really is clear that we live in the 1984’s world. Simply mindbuggling. All my fears and guesses, when the first articles of Snowdon came out, seem to be true, e.g. that the NSA is exchanging information with the British GCHQ (and many others).

Tons of remarks of the witful Applebaum let you guy “wow” and think in different dimensions unimagined before. E.g. the somewhat surprising question, why Hugo Chavez, whose regime was on the top 6 NSA spylist, may have gotten cancer. (Applebaum’s speculative answer I won’t recite here).

I cannot believe anybody can watch this and say “we all knew we were spied upon, nothing has changed from cold war times”.

Since we are left in a bit of a paranoid mood after Appelbaum’s speech 😉 : I couldn’t help but wonder what kind of information Twitter perceives to be “sensitive” and consequently decided not to show to me. Hint: Twitter doesn’t seem to like #ENDTHEFED 😛
twitter_censor0twitter_censor1– JAS

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Quote from the past: Decision Making at the FED

Why not bring something small from the past up and add some irony?

I just stumbled upon this hidden jewel in wikipedia as I was reading about the economist and ex-FED board member Alan Blinder. We get some insights about the decision making “process” of the most powerful institution of the world. A fool who is disconcerted by this ;-).

[Economist] Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. “Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant,” says Johnson.

In closed-door meetings, Blinder did what so few do: he challenged assumptions. “The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he’d come out and say, ‘Well, that’s not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.’ And it just created a stir inside – it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was disrupted.”

This put him in conflict with Greenspan and his staff. “A lot of senior staff… were pissed off about Blinder – how should we say? – not playing by the customs that they were accustomed to,” Johnson says

(Emphasis added)

Interpretation is left to the reader. Enjoy.


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“Notfalls rettet sich die USA via Notenpresse” – Eine Replik…

Kurz nachdem sich das US-Parlament und Regierung die Erhöhung der Schuldengrenze beschlossen, wusste es auch die Schweizer Tagespresse schon immer. Der Tagesanzeiger titelt heute:


Nach einigen (2011, Frühling 2013) Drohungen und Theater rund um den Staatsbankrott, setzt sich immer mehr ein anderes Verständnis des Geldes (um was es letzthin geht) durch. Das ist erstmal ein tolles Zeichen. Ich wage zu behaupten, dass dieser Artikel es noch vor zwei Jahren nie auf die Titelseite des Tagi geschafft hätte. Dies ist bemerkenswert und eine kleine Replik auf den Artikel wert:

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Who lost most wealth in the crisis?

I followed the St. Louis FED link and watched their (really booring) long video. Here’s the crucial slide. Guess what…(no surprise):

Welche Amerikaner haben am meisten in der US Finanzkrise verloren? Durchschnittlicher Vermögensverlust (in %) aufgeteilt nach Ethnizität, Alter und Bildung. Schlussfolgerung sei dem Leser überlassen – keine Überraschung. Quelle: FED St. Louis

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