The Creature From Jekyll Island?

[OlJarhead]

Have any of you read this book?

I've been reading a LOT lately (about 50 books give or take in the last two years) and just finished 'The Creature From Jekyll Island: A second look at the creation of the fed.  What an amazing book!

Thomas Woods wrote 'Meltdown' which was a good primer (though I read it about a year ago) for this one as The Creature is a much longer (and slower) read.  But having read both of these books I can tell you I have a far better understanding of why we're in the mess we're in and why we won't likely get out of it.

Hint/Spoiler -- before reading this book (and others) I have often said that the problem in America is that it's just too easy to eat Doritos, drink beer and watch football.....now I understand why.

Yikes!

If you want to understand the mess we're in read this book!

[glenn kangiser]

Sassy read it -

Too big for me...

[OlJarhead]

Sassy read it -

Too big for me...

Her thoughts?

What amazed me were his predictions which so far have been pretty spot on.

[MountainDon]

I think if one is going to take the time to wade through "The Creature From Jekyll Island" one owes it to themselves to do the same with "Secrets of the Temple: How the Federal Reserve Runs The Country". And perhaps the less lengthy "Money: Whence It Came, Where It Went".

[OlJarhead]

I think if one is going to take the time to wade through "The Creature From Jekyll Island" one owes it to themselves to do the same with "Secrets of the Temple: How the Federal Reserve Runs The Country". And perhaps the less lengthy "Money: Whence It Came, Where It Went".

Thanks Don

As soon as I finish Three Men of Boston and about 5 or 6 other history books! hehe

[Dallas2build]

Never read it, but I am all too familiar with it's premise.  I believe the founding fathers warned repeatedly against the feds very creation.  But then again, we stopped paying attention to what they intended long ago.

As for Jekyll, it has been one of my favorite vacation destinations for years.  I remember when it laid in total ruin before the state decided to pour any real money back in it at all.  Climbing through some of those old mansions was fascinating.  Now it is a great place for a very quiet retreat.

[muldoon]

I have my own thoughts on the fed, which should be obvious anyone who has read my rants for the past few years on this forum.  But I thought another perspective may be beneficial here.  Even if it is one I don't 100% agree with, I think it is very informative about where this country really is. 

I saw this today, but the publish date was April 30.

http://uruknet.info/index.php?p=m65575&hd=&size=1&l=e

There was a strange moment last week during President Obama's speech at Cooper Union. There he was, groveling before a cast of Wall Street villains including Goldman Sachs chief Lloyd Blankfein, begging them to "Look into your heart!" like John Turturro's character in Miller's Crossing...when out of the blue, the POTUS dropped this bombshell: "The only people who ought to fear the kind of oversight and transparency that we're proposing are those whose conduct will fail this scrutiny."

The Big Secret, of course, is that every living creature within a 100-mile radius of Cooper Union would fail "this scrutiny"--or that scrutiny, or any scrutiny, period. Not just in a 100-mile radius, but wherever there are still signs of economic life beating in these 50 United States, the mere whiff of scrutiny would work like nerve gas on what's left of the economy. Because in the 21st century, fraud is as American as baseball, apple pie and Chevrolet Volts--fraud's all we got left, Doc. Scare off the fraud with Obama's "scrutiny," and the entire pyramid scheme collapses in a heap of smoldering savings accounts.

That's how an acquaintance of mine, a partner in a private equity firm, put it: "Whoever pops this fraud bubble is going to have to escape on the next flight out, faster than the Bin Laden Bunch fled Kentucky in their chartered jets after 9/11."

And that's why this SEC suit accusing Goldman Sachs of fraud is really just a negotiating bluff to give Obama's people some leverage--or it's supposed to be, anyway--according to the PE guy. He dismissed all the speculation that the fraud investigations would turn on other obvious villains like Deutsche, Merrill, Paulson & Co., the Rahm Emmanuel-linked Magnetar and so on.

"You don't get it, Ames. Even Khuzami, the SEC guy in charge of the Goldman case, is a fraud; the ****er was Deutsche's general counsel when they pulled the same CDO scam as Goldman. You have no idea how deep this goes."

And it's clear that a lot more people here are aware of how fundamentally rotten things are but they're not willing to face the big fraudonomics bummer yet, preferring instead to stick with specific accusations.

My position on this was, "Good, throw the book at those crooks too, I don't see what the problem is here."

This was exactly what I argued a week ago, during a verbal slapfight with that acquaintance of mine. We were making a scene in a Midtown yuppie restaurant, arguing over just how much damage Wall Street had caused, and what to do about it.

His position was indefensible, and he knew it, so he switched tactics:

"OK Ames, which bankers would you throw the book at? Because you're arguing that they're all guilty. So which ones do you go after? Two of them? Three? Half of them?"

"Every last one of them. Lock 'em up in one of their private prisons."

"Not gonna happen, Che."

"Che? Me? Listen, Scarface, I'm about law and order. Don't any of you PE degenerates believe in that anymore?"

"OK, here's the deal, Che. I'm going to walk you through this nice and slow so that even an agave-sweetened hippie like you can understand this. Stick with me, this is gonna be a little complicated. Ready?" And so he began.

"Let's say the government decides one day, 'You know, we oughta listen to Che here, let's throw the book at every firm and every executive that our people can make a case against. Because you know, gosh, it's all about rule of law and blind justice, just like Che says.' OK, so now this means indicting just about every serious player in finance, so they take down Goldman Sachs, they take down Citigroup, JP Morgan, BofA... and they also serve all the big funds who are at least as guilty, if not more. So they shut down Pimco, Blackrock, Citadel... maybe they indict Geithner and Summers, haul in some of Bush's crooks... right?"

"Too bad they don't serve popcorn here, this is getting good."

"OK, now guess what you've just done? You've just caused the markets to completely tank. Remember what happened after the Lehman collapse? Remember how popular that made every politician in Washington? Still wondering why they coughed up a trillion bucks? They were scared for their lives; that's why they voted for that bailout. You'd have done the same goddamn thing. But if we go after everyone guilty of fraud and theft, the market crash this country would see would make 2008 look like Sesame Street. Open that can of worms labeled 'Fraud' and the whole ****ing economy collapses. You may as well prosecute people for masturbating. No one will know where the fraud investigation stops and who will be charged next--everyone will try to cash out, and the markets will tank to zero. And guess what happens when the markets tank to zero? Every ****ing American with a retirement plan, or an investment portfolio, or a 401k--every state pension plan in the country, every teacher's pension fund, every fireman's pension--every last one of them will be wiped out. That's what the Lehman collapse taught us."

"Us? It didn't teach anything but that this country is run by maniacs."

"Jesus H. Christ, Ames– you're even more clueless than the idiots who managed the Lehman collapse. I mean, didn't everyone get it how badly those idiots screwed up with Lehman? It was the biggest screw-up this hemisphere has ever seen. You had Secretary Paulson and Fed Chief Bernanke scratching their asses not knowing what to do, so then they go, 'OK, we're supposed to be a free market economy, and we're supposed to be the Republicans--let's try something different for a change since nothing else is working. Let's go out on a limb and actually give this "free market" thing a whirl. Who knows? Maybe the "free market" really works the way we always say it does. Nothing else seems to work, let's let the free market decide Lehman's fate. Maybe corporate-socialism isn't the answer.' So they hung Lehman out in the free-market, and BAM! The. Shit. Hit. The. Fan. No shit, dudes--the free market is for suckers, didn't your daddy teach you idiots that? Not only did Lehman collapse--everything collapsed; confidence in the entire system collapsed. And here's what I'm trying to explain to simpletons like you: Our economy is just a confidence game. Don't ask me how it got this way, don't care."

I tried saying something insulting to him, but he just talked right over me, lurching forward baring his laser-whitened teeth.

"I'm sure you have the answer, you and Ron Paul and all the other pot-smoking libertarian do-gooders have it all figured out. But what I'm saying is, no confidence means end of the confidence game. That's what Lehman showed. Every single player in finance suddenly had to face the fundamental problem--this whole ****ing economy is built on fraud and lies and garbage. So when Lehman collapsed, every single player panicked, going, 'If Lehman was nothing but a Ponzi scheme--and I know what I'm running is a Ponzi scheme--holy shit, that means everyone else is running a Ponzi scheme too! Run for the exits!' No one trusted anyone else, everyone pulled out, and the entire global economy collapsed just like that. And that meant your parents, my parents, every teacher, every fireman, every person in the country going into retirement, every price on every asset--wiped out.

"And here's what I'm trying to get you to understand: In the grown-up world, when an entire country's savings accounts are wiped out because of some do-gooder and his law books and his Thomas Jefferson 'What about free and fair markets?' crap, that is a big problem--people don't give a **** about Jefferson and 'free and fair markets,' they just want their savings to be worth something. And people are right: Jefferson was an imbecile. He should have been a folk singer, not a Founding ****ing Father. But that's another issue that's over your head--the point is, the guy who destroys this economy because it's 'the right thing to do' will have to flee for his life, and whatever president or political party was in power when that decision was made will be out of power for the next 200 years. That's why Washington panicked and passed 'the bailout,' they didn't want to be the fools whom all the Ponzi victims blame for tanking the Ponzi scheme, so they broke the glass and pumped up a newer, bigger Ponzi scheme. It was an expensive 14 trillion dollar lesson in, 'Stay the **** away from free-market experiments, assholes!' How naive are you people to actually believe that 'free market' crap? The problem is when people in power are stupid enough to listen to guys like you: all the do-gooder libertarians and the do-gooder free-market Republicans who forgot that they're supposed to lie. Hello!"

"Libertarian, me? Since when was I ever a libertarian?"

"That's my point: Fools like you don't even know who you are anymore. They forgot that they're supposed to lie about all that libertarian free-market shit, keep it far the **** out of policy. But instead of just lying about free-markets while secretly propping up Lehman, the idiots actually tried pulling off a 'free-market' miracle, and we had to pay $14 trillion just to find out what I could have told them for no fee at all, which is: 'Hey, assholes, you're supposed to be hypocrites, OK? You're supposed to be two-faced free-market liars, not libertarian Quakers! You're not supposed to believe in anything--your job is to get up in front of the public and lie about free markets and the rest. Period.'

"That's it, how ****ing hard is it? Look, watch my face: Say one thing out of one side... and do the other out of the other side. Got that? Let everyone else whine and cry about, 'Ooh, that's not fair, ooh, that's a bailout, that's socialism, that's corruption.' That's what losers do--they whine. You, for example, Che--you whine all the time, and look at you... Can you pay the bill for this meal? Is there a libertarian on earth who can afford to buy a decent meal in Manhattan? And now, look at me: I'm a hypocrite. Hell yes I am! I lie every day of my life, I lie to myself in my sleep. Hell, I'm lying to you right now, in fact I don't even know what the **** I'm saying anymore because I'm so used to lying. And yet--who's the guy with the black card? Who's the one who's going to pick up the check tonight? Guys with power, guys like me, we lie. You got that? 'Lie' as in 'My Lai' the massacre--as in, 'My Lai you long time, me so free-markety.' You distract the dumbshits with free-market B.S. because hey, for whatever reason, that's what the public likes to hear, it doesn't really matter what lie you feed them so long as it's the lie that puts them in a trance. And then behind the scenes, you do the very opposite: You fix the game, you cover up this problem here with those funds there, you move shit around, you skim budgets and you subsidize the system, you cover up the bad shit and once in a while throw a has-been to the wolves to keep the public entertained--that's the way the system works, and anyone who's an adult understands that. And everyone who doesn't understand that can go form an online libertarian chat group and complain with all their little libertarian friends about free markets and Jekyll Island and 'Wahhh! It's not not fair, waahhhh!'"

"What's with the libertarian accusation?"

"It's just that you all sound the same to me. Libertarians, hippies--is there really a difference? You all whine alike: 'It's not fair, man! Ooh! You can't do that, it's fraud, it's corruption, ooh no!' Or: 'It's the income inequality, man; Goldman Sachs controls us all man; it's socialism for the rich; it's all too scary for my retarded 5-year-old libertarian brain!' Seriously, anytime I meet libertarians like you--"

"Listen--I'm not a ****ing libertarian, OK? I want free handouts. How clear do I have to make this? Me--handouts. Me--Big Government. I want to collectivize your productive cash, because I am a resentful parasite. Are you capable of processing a single word of what I'm saying to you, Spaz?"

"Uh-huh, sure, whatever. Here's the thing: I think it's great that you and your friends memorized Road to Serfdom in between Star Trek episodes--no really, I'm happy for you. Yeah, we're all so proud. But here's the thing: We grown-ups are really, really busy now trying to sort out the free-market mess you made with that Lehman move of yours. Yeah, so why don't you run along to your libertarian chat rooms and have your little debates about Jekyll Island and the gold standard, because it really means a lot to us. And report back to me as soon as you have it all figured out, m'kay? Just get the **** out of my face and leave the adults alone."

It got a lot more vicious and personal than this, but when our verbal slap-fight ended--and he paid the bill--I thought about what he said, and it made a lot more sense. Fraud has become so endemic in this country that it's woven its way into America's DNA, forming a symbiotic relationship that can't be undone without killing off the host. If they push it just a little too hard, the entire American economy could crash, asset values could tank, and that means tens of millions of extremely pissed off retirees and Baby Boomers. As the Wall Streeter put it: "Whoever is responsible for bursting this latest bubble by exposing all the fraud--and tanking all the markets--will not only be out of power for at least a generation, but they'll all have to get radical reconstructive surgery on their faces and seek political asylum somewhere remote. No one wants to be that guy, and that's why it's not going to happen."

That may be true, but all bubbles to eventually burst, all Ponzi schemes do collapse. The only question is when. For those of us not on the verge of retiring, the sooner we have this day of reckoning and get it over with, the better.

Fraudonomics: 10 Fun Fraud Facts


Ever since I got kicked out of Russia and forced back home, I've been collecting all kinds of news articles about fraud, in a document file titled "America Is Russia." Here's a little taste of the wonderful world of American Fraud:

1). Accounting Fraud: Last year, America's leading banks were insolvent. They had tens or hundreds of billions in losses on their books, and the only way to wipe those losses out would be to either a) own up to the mess, raise enormous amounts of money on top of all the bailout money; or b) get out a big fat eraser, and wipe those losses off the books as if they never existed. The first option was nice and all, but a real hassle. So Geithner and Larry Summers chose Door Number Two: Accounting Fraud. They forced the FASB to accept a rule-change in the accounting methodology called "mark-to-model" which let banks decide how much their assets were worth, rather than letting the markets decide. So if for example a BofA owned a complex security called "Orion Butt Fungus" that was worth 5 pesos on the open market, but BofA was too broke to go out and raise 5 pesos to cover that loss, under the new accounting rules, the government told BofA that rather than pricing "Orion Butt Fungus" at what the market will actually pay for it, why not first ask, "How much would BofA like 'Orion Butt Fungus' to be worth, in a perfect world?'" If BofA answers, "Doyee, gee I dunno, how about $500 million?" then under the "mark-to-model" accounting rules, BofA could now value "Orion Butt Fungus" at $500 million, and voila! Their problems are over. That wasn't so hard, was it? Suddenly, BofA looks like it knows how to pick winners! And no one's going to second-guess them, because everyone else is mark-to-modeling their "Orion Butt Fungi" too! The end result: under the old rules, BofA would have had to raise money just to cover its debts, sort of like you and me have to do, and that's just a lot of money going to waste. But now that its portfolio is so profitable, BofA has a much easier time raising money, which it uses to pay ginormous bonuses to its executives.

2). Big Pharma Fraud. Remember that scene early in Fight Club, when Edward Norton explained his job, when it was more profitable to let a car defect go and pay whatever lawsuit settlements come from the deaths, and when it's better to recall the cars because the number of deaths will result in too many lawsuits? This is humanitarian do-gooder stuff compared to the savage real-world fraud-for-profit model that drives America's drug companies. It's really simple and it goes like this: the more fraud a drug company commits, so long as it's off-the-scale fraud with the most horrible consequences for the victims, the drug company's profits always outdo the criminal fines and lawsuits by factors of 20, 30, 100... It's as simple as that. Because the billion in penalties here or the two billion in class action lawsuit settlements there are always far less than the tens of billions you earn from pushing harmful drugs on unsuspecting idiots. To wit: Between May 2004 and March 2010, a handful of top drug companies like Pfizer, Eli Lilly and Bristol-Myers paid over $7 billion in criminal penalties for bribing doctors to prescribe drugs for unapproved uses, with sometimes deadly consequences. However, as a Bloomberg report noted, the fines are always a fraction of the profits--Pfizer alone paid almost $3 billion in criminal fines since 2004, yet that was just one percent of their total revenues; Eli Lilly got busted bribing doctors to prescribe a schizophrenia drug, Zyprexa, to elderly patients suffering from dementia, even though company-run clinical trials showed an alarming death rate of 31 people out of 1,184 participants (double the placebo rate). Whatever--the market for elderly dementia patients meant billions in extra revenues. So Eli Lilly continued pushing Zyprexa on the elderly for another four years until it the Feds busted them. Eli Lilly got hit with $1.42 billion fine, but that was peanuts compared to the $36 billion it earned on Zyprexa sales from 2000-2008. To make it happen, the drug companies buy off all the checks and balances: lawsuits revealed the enormous bribes they pay to doctors, and even America's medical journals are so corrupted by drug company influence that they're no longer reliable as much more than hidden advertisements, according to a recent UCSF study. Medical journals are 5 times more likely to publish "positive" drug reviews than negative reviews, and one-quarter of all clinical trials are never published at all, leading doctors to prescribe drugs assuming they have all the information. The result: prescription drugs kill one American every five minutes ...while Americans pay more for drugs than anyone in the world, spending a total of $12 billion on drugs in 1980 to spending $291 billion in 2008--a 1,700% increase. America is ranked only 17th in the world in life expectancy.

3). Alan Greenspan: Fraudonomics Maestro. America's central banker from 1987-2006 once told a do-gooder regulator not to **** with the bankers' fraud schemes, because in Greenspan's mind, fraud was not a crime and didn't need to be regulated. Then Greenspan forced the regulator, Brooksley Born, to resign. Just in time for his next and final act as Central Bank chief: from 2001-2004, Greenspan pumped up the biggest housing bubble in human history by holding rates down to nothing, while touring the country promoting the glories of subprime and Alt-A mortgages. Then in late 2005, when the bubble was ready to burst, Greenspan tendered his resignation and switched over to the other side, signing lucrative contracts with three investment firms all of which bet big against gullible American homeowners, and reaped billions. First, Greenspan signed up to work for Deutsche Bank, which is being sued for securities fraud for selling an Abacus-like CDO to a Warren Buffett-owned bank, M&T; Greenspan also worked for Pimco, which earned $2 billion in a single day in September 2008, when Fannie Mae and Freddie Mac were nationalized with Greenspan's lobbying help; and lastly, Greenspan went to work for Paulson & Co., the hedge fund that raked in $1 billion off the same Abacus CDO deal that brought the SEC fraud suit against Goldman Sachs. It's an unusually perfect record for Greenspan, given his atrocious forecasting record at the Fed. It recalls the old Greenspan circa 1984-5, when he worked as a lobbyist for Charles Keating trying to push regulators off his back and vouching on the record for Keating's character...Keating was eventually jailed for fraud in the worst savings and loan collapse of all.

4). Municipal Debt Fraud. America's $2.8 trillion municipal bond market is rife with fraud of the sort you'd expect in an emerging tinpot economy: opacity rather than transparency, plenty of corruption and kickbacks, resulting in decimated budgets and services cutbacks in communities across the country. The problem all stems from way the bonds are issued these days: instead of holding open tenders, nearly all are the result of backroom deals. Back in 1970, only 15 percent of municipal bond contracts were awarded through no-bid contracts; last year, 85% of muni bond deals were assigned in no-bid, non-transparent agreements. Studies show that no-bid bonds invariably cost municipalities more than bonds resulting from open tenders. So far, fraud and corruption charges have been leveled against state employees and city councilors in Florida, New York, New Mexico, Alabama and California, to name a few. Muni bond defaults soared from just $348 million in 2007 to $7.4 billion in 2008--that's an increase of 20 times– with growing numbers of cities, counties and states on the verge of bankruptcy.

5). Journalism fraud. The Washington Post got caught whoring out their venerable editorial staff to corporate lobbyists for anywhere from $25,000 to $250,000 a date, depending on the access. The Atlantic Monthly admitted to TalkingPointsMemo that it routinely sold access to its editorial staff for cash. As for business journalism, all sorts of articles and studies have asked the obvious question: "How did every mainstream business outlet miss the financial collapse of 2008?" Among all the self-flagellating mea-kinda-culpas, you won't find the word "fraud" in their answer. Speaking of business journalism and fraud, The Business Insider, one of the top business news blogs, published a pair of articles defending Goldman Sachs against the SEC fraud charges. The author of the articles defending Goldman Sachs is Business Insider's co-founder and editor, Henry Blodget. In 2003, Blodget himself was charged with securities fraud by the SEC for repeatedly misleading clients into buying stocks of companies that in private emails Blodget referred to as "piece of shit." Under the terms of Blodget's settlement with the SEC, he agreed to a lifetime ban from the securities industry, and he paid $4 million in fines and disgorgements. Since he is not barred from the world of business journalism, Blodget was able to post an article last Friday headlined: "HOLD EVERYTHING: The SEC's Fraud Case Against Goldman Seems VERY Weak."

6). Fraudonomics K-12. If you want your kid to grow up to succeed in a fraud-based economy, you need to teach him the ABC's of cheating starting at a young age. This is one area where America's schools aren't failing their students. Cheating is so rampant in schools that nowadays if the student doesn't cheat on his exam, chances are his teacher or administrator will cheat on his test for him. One in five elementary schools in Georgia are currently being investigated for tampering with the students' standardized test scores--although suspicious patterns of erasing and remarking answers showed up in half of the state's elementary schools. In California, as many as two-thirds of its public schools admitted to fudging its students' standardized test scores. A survey of graduate school students found that 53 percent of business school grad students admitted to cheating, more than any other grad school discipline. Overall, up to 98 percent of college students today admit to cheating, compared to just 20 percent who cheated in 1940.

7). Boardroom Fraud. Corporate America's boardrooms are stacked up these days in tight, intertwined relationships that turn public companies into crime scenes, plundering money from unsuspecting shareholders and divvying up the loot among the directors and top executives. In 2008, Chesapeake Energy's stock price collapsed from $74 per share to $9.84, wiping out $33 billion in shareholder value. The CEO, Aubrey McClendon, gambled and lost 94% of his stock in the company on a margin call, personally losing about $2 billion. So what did the board of directors do? They voted to award McClendon $112 million for 2008, the highest of any CEO in America. Shareholders were outraged, calling it a "bailout," and several pension funds tried suing Chesapeake, but the courts in Oklahoma blocked the lawsuits. That's because Aubrey McClendon is sort of the George Bush of Oklahoma--a spoiled ****-up with a rich and powerful granddaddy--Robert Kerr, former governor and senator, and founder of Kerr-McGee--meaning plenty of VIP connections for the loser grandkid. So on Chesapeake's board, you had Aubrey's cousin, Breene Kerr; Frank Keating, Republican ex-governor of Oklahoma whose son Chip (and Chip's wife) works for Chesapeake; Don Nickles, Republican ex-Senator of Oklahoma who co-funded with Aubrey the Republican anti-gay marriage campaign in 2004; Richard Davidson, the former head of Union Pacific, whose corrupt board of directors lavished Davidson with tens of millions in bonuses and a $2.7 million per year pension when he retired... Now multiply a board of directors like this by the sum total of "Corporate America" and you get...a corrupt, tin-pot corporate culture masquerading as a civilized First World corporate culture. That's us. (You can read about this problem in an excellent new book Money For Nothing: How The Failure of Corporate Boards is Ruining American Business and Costing Us Trillions.)

. Corrupt credit rating agencies. The only way big institutional investors like pension funds could justify buying a piece of the Orion Butt Fungus CDO pie was if ratings agencies like S&P or Moody's gave it a top-notch seal of approval: AAA rated, with a little star on the forehead for good behavior. And in the world of fraudonomics, good behavior looks like this email from a Standard & Poor ratings analyst in December 2006:

    "Rating agencies continue to create an even bigger monster _ the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters."

The happy ending to this story is that a huge percentage of thieving scum like this emailer saw their hopes become reality: they got wealthy and retired before the CDO market crashed in a trillion-plus dollar heap of shit. And if they didn't retire, even better--because bonuses in 2009 were soaring, thanks to the always-gullible American taxpayer.

9). Regulatory Fraud: In the OTS, OCC, Fed, pension benefit guaranty agency and of course the SEC, where whistleblowers were routinely ignored because the regulators were too busy painting their monitors while surfing sites like www.****-my-wife.com.

10). Judicial Fraud: Juvenile court judges in Pennsylvania took millions of dollars in kickbacks from privately run prisons in exchange for sentencing thousands of innocent kids to juvenile prison terms. Chronic on-the-bench masturbation is running rampant: an Oklahoma judge was accused of using a penis pump on the bench, while nearby in Texas, a Harris County judge masturbated and ejaculated on a defendant's hand. Speaking of Texas, the entire juvenile prison system there was turned into a sex abuse racket involving Texas state officials–over 750 official complaints about prison administrators molesting or raping underaged inmates in all 13 juvenile facilities had been officially logged between 2000 and 2007.

The list goes on and on. Hell, even our literature was corrupted with fraud: James Frey's addiction "memoir" A Million Little Pieces turned out to be A Million Pieces of Bullshit, the biggest literary fraud of our time. Fooled readers sued, Oprah chewed him out and Frey is now a bestelling "fiction" author.

This is just scratching the surface, but you get the point. We're way past the point of redemption. No wonder everyone's dreaming of a violent apocalypse to wipe the slate clean, and take us away to another plane where everything would be better. Anything but this.
_______

It is not as clear and cut an dried as " the fed is to blame".  The problem is systemic, and the cancer is total.  I do not know what the solution is. 

[OlJarhead]

It is not as clear and cut an dried as " the fed is to blame".  The problem is systemic, and the cancer is total.  I do not know what the solution is. 

The problem is solvable -- allow the free market to actually be free (it has not yet - ever - in banking) and insist on 100% (non-fractional) backing of any paper money with silver (gold can be used but better to use silver).

At the end of Jekyll he gives a 16 point plan which is a good start on how to solve the problem -- but know this:  Socialism is the end game.  The banking cabal WANTS more government regulation.  Don't think so?  Read 'The Creature'.

What they want is government control of everything since they own the government...DOH!

[MountainDon]

Socialism is the end game.  The banking cabal WANTS more government regulation. 

Socialism may be somebody's goal, but I do not believe that was the goal of the folks who got together to form the original Fed. That was a group of capitalists who wanted nothing but to make money and more money and secure the money they made. I don't see how those guys would have wanted their plans to end in world socialism.

That's why I said read some other books.  The author of "the creature" does not necessarily speak the entire and complete truth. I believe that like many 'expert' authors he has his own agenda... one part of which is to sell books to make himself rich as he capitalizes on peoples distrust of the Fed. But that is only my opinion and I know it is not shared by everyone.

[ballen]

Simple answer....for individuals all the up to countries.....DON'T SPEND MONEY YOU DON"T HAVE.
That is all.

[OlJarhead]

Socialism is the end game.  The banking cabal WANTS more government regulation. 

Socialism may be somebody's goal, but I do not believe that was the goal of the folks who got together to form the original Fed. That was a group of capitalists who wanted nothing but to make money and more money and secure the money they made. I don't see how those guys would have wanted their plans to end in world socialism.

That's why I said read some other books.  The author of "the creature" does not necessarily speak the entire and complete truth. I believe that like many 'expert' authors he has his own agenda... one part of which is to sell books to make himself rich as he capitalizes on peoples distrust of the Fed. But that is only my opinion and I know it is not shared by everyone.

For the most part we agree -- however there is very compelling evidence that he is right.

In the end, it comes down to one thing:  The FED was created to protect the banks and to provide a mechanism in which the tax payers would pay for any failing on the part of the banks through inflation or taxation (mostly inflation).

Since the FED's creation we have seen nothing but constant boom/bust cycles and inflation.

Another good read is Thomas Wood's book "Meltdown".

[muldoon]

Since the FED's creation we have seen nothing but constant boom/bust cycles and inflation.

I dont agree with this statement.  The 1800s were full of economic crashes. 
In fact, we can easily chronicle the banking panics and economic crashes in the United States pretty easily.

1792 - http://en.wikipedia.org/wiki/Panic_of_1792 
1796 - http://en.wikipedia.org/wiki/Panic_of_1796%E2%80%931797
1819 - http://en.wikipedia.org/wiki/Panic_of_1819
1825 - http://en.wikipedia.org/wiki/Panic_of_1825
1837 - http://en.wikipedia.org/wiki/Panic_of_1837
1847 - http://en.wikipedia.org/wiki/Panic_of_1847
1857 - http://en.wikipedia.org/wiki/Panic_of_1857 (this one particularly bad leading to civil war)
1866 - http://en.wikipedia.org/wiki/Panic_of_1866
1873 - http://en.wikipedia.org/wiki/Panic_of_1873
1884 - http://en.wikipedia.org/wiki/Panic_of_1884
1890 - http://en.wikipedia.org/wiki/Panic_of_1890
1893 - http://en.wikipedia.org/wiki/Panic_of_1893
1896 - http://en.wikipedia.org/wiki/Panic_of_1896
1901 - http://en.wikipedia.org/wiki/Panic_of_1901
1907 - http://en.wikipedia.org/wiki/Panic_of_1907
1910 - http://en.wikipedia.org/wiki/Panic_of_1910%E2%80%931911
-- Fed created 1913
1929 - http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
2007 - http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010

...
So after the fed we saw 20 years of stability and then a major disruption in line with the disruptions being seen every decade before it.  then after the faults of the great depression were codified in law, we saw 70 years of mostly stability.  then those laws were repealed, leverage was increased, commercial banks were allowed to speculate, and 5 years later we have a hard crash.

The fault here seems pretty clear to me, it's the fraud and the laws being repealed that had the greatest impact.  We had 70 years of stability under the fed.  Now I do have a huge problem with *THIS* fed.  But I dont have a problem with the idea of a fed.  In fact the very worst thing we could do is to let congress print money without re-percussion -- THAT would lead to the catalyst of what everyone is fearing in hyperinflation.  Then you really would have money with nothing backing it. 

Another thing that you mentioned earlier was that we should go back to hard currency backed with precious metals.  Well, we were on gold standard but that didnt stop the depression from happening.  It didnt stop the dozen economic crashes before it either.  Because those are CREDIT lead crashes.  Specifically credit can look and act alot like money.  When credit is over-extended because risk is ignored or fraud is encouraged, this leads to imbalance.  When it snaps back, the loss of credit is amazingly destructive.  Had we been on gold it still would not have changed the fact that waitresses and hair stylists were getting mortgages for 400k homes. 

Which is what leads me to my last point, the point I was trying to make above.  The cancer is very ingrained here.  More than 50% of the populace wants to continue to profit from fraud.  All talk is about getting home prices back up; not about letting markets correct.  No one wants to face that music.  Everyone wants to profit from the same dance.  Or they are in the other boat, the leeches.  They want their entitlments and do not want anything to disrupt it. 

Perhaps 5% of this country truly wishes for the rule of law.  Because it's too big a pill to swallow.  It means that everything you have ever believed or thought i likely wrong.  No matter how broke we are, the people wont go along with that.  See Greece for how a entitled populace likes the idea of austerity.  See every other bananna republic see how they defend against any real form of corruption removal.  It is 100% entrenched. 

It cannot be fixed because it has been "business as usual" for so long that removing the parasite would kill the host.  And no host is going to let you voluntarily kill it. 

--
jeckyll island seems to be under the impression that those dollars are printed on a printing press instead of borrowed.  the very nature of borrowed implies it must be paid back.  the debt behind this is backed with collateral. 

The "printing press" did not occur at the fed, it occurred at local branch style banks all across the nation in the form of lending.  That printing press is dead my friend. 

[OlJarhead]

Since the FED's creation we have seen nothing but constant boom/bust cycles and inflation.

I dont agree with this statement.  The 1800s were full of economic crashes. 
In fact, we can easily chronicle the banking panics and economic crashes in the United States pretty easily.

1792 - http://en.wikipedia.org/wiki/Panic_of_1792 
1796 - http://en.wikipedia.org/wiki/Panic_of_1796%E2%80%931797
1819 - http://en.wikipedia.org/wiki/Panic_of_1819
1825 - http://en.wikipedia.org/wiki/Panic_of_1825
1837 - http://en.wikipedia.org/wiki/Panic_of_1837
1847 - http://en.wikipedia.org/wiki/Panic_of_1847
1857 - http://en.wikipedia.org/wiki/Panic_of_1857 (this one particularly bad leading to civil war)
1866 - http://en.wikipedia.org/wiki/Panic_of_1866
1873 - http://en.wikipedia.org/wiki/Panic_of_1873
1884 - http://en.wikipedia.org/wiki/Panic_of_1884
1890 - http://en.wikipedia.org/wiki/Panic_of_1890
1893 - http://en.wikipedia.org/wiki/Panic_of_1893
1896 - http://en.wikipedia.org/wiki/Panic_of_1896
1901 - http://en.wikipedia.org/wiki/Panic_of_1901
1907 - http://en.wikipedia.org/wiki/Panic_of_1907
1910 - http://en.wikipedia.org/wiki/Panic_of_1910%E2%80%931911
-- Fed created 1913
1929 - http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
2007 - http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010

...
So after the fed we saw 20 years of stability and then a major disruption in line with the disruptions being seen every decade before it.  then after the faults of the great depression were codified in law, we saw 70 years of mostly stability.  then those laws were repealed, leverage was increased, commercial banks were allowed to speculate, and 5 years later we have a hard crash.

The fault here seems pretty clear to me, it's the fraud and the laws being repealed that had the greatest impact.  We had 70 years of stability under the fed.  Now I do have a huge problem with *THIS* fed.  But I dont have a problem with the idea of a fed.  In fact the very worst thing we could do is to let congress print money without re-percussion -- THAT would lead to the catalyst of what everyone is fearing in hyperinflation.  Then you really would have money with nothing backing it. 

Another thing that you mentioned earlier was that we should go back to hard currency backed with precious metals.  Well, we were on gold standard but that didnt stop the depression from happening.  It didnt stop the dozen economic crashes before it either.  Because those are CREDIT lead crashes.  Specifically credit can look and act alot like money.  When credit is over-extended because risk is ignored or fraud is encouraged, this leads to imbalance.  When it snaps back, the loss of credit is amazingly destructive.  Had we been on gold it still would not have changed the fact that waitresses and hair stylists were getting mortgages for 400k homes. 

Which is what leads me to my last point, the point I was trying to make above.  The cancer is very ingrained here.  More than 50% of the populace wants to continue to profit from fraud.  All talk is about getting home prices back up; not about letting markets correct.  No one wants to face that music.  Everyone wants to profit from the same dance.  Or they are in the other boat, the leeches.  They want their entitlments and do not want anything to disrupt it. 

Perhaps 5% of this country truly wishes for the rule of law.  Because it's too big a pill to swallow.  It means that everything you have ever believed or thought i likely wrong.  No matter how broke we are, the people wont go along with that.  See Greece for how a entitled populace likes the idea of austerity.  See every other bananna republic see how they defend against any real form of corruption removal.  It is 100% entrenched. 

It cannot be fixed because it has been "business as usual" for so long that removing the parasite would kill the host.  And no host is going to let you voluntarily kill it. 

--
jeckyll island seems to be under the impression that those dollars are printed on a printing press instead of borrowed.  the very nature of borrowed implies it must be paid back.  the debt behind this is backed with collateral. 

The "printing press" did not occur at the fed, it occurred at local branch style banks all across the nation in the form of lending.  That printing press is dead my friend. 

The depression of 1920?  You missed that one...in fact you missed other downturns...is it selective?

Before the FED with had 3 central banks and various legislation regulating and governing banks. 

Now, I'll go back and read all of your post but suffice to say your research is lackiing.

[OlJarhead]

Another thing that you mentioned earlier was that we should go back to hard currency backed with precious metals.  Well, we were on gold standard but that didnt stop the depression from happening.  It didnt stop the dozen economic crashes before it either.  Because those are CREDIT lead crashes.  Specifically credit can look and act alot like money.  When credit is over-extended because risk is ignored or fraud is encouraged, this leads to imbalance.  When it snaps back, the loss of credit is amazingly destructive.  Had we been on gold it still would not have changed the fact that waitresses and hair stylists were getting mortgages for 400k homes. 

Apparently you have no idea what I am talking about.  My tendinitus will make it tough to properly respond but you are wrong sir.  Indeed, misinformed or mislead.

Actually we were on a dual metal standard with Silver being the primary metal and gold the secondary.  However, this is a poorly conceived system at best because both metals will fluctuate in value between each other thus there should only be one standard (silver) with the alternate of gold but not with a specific relationship (that ought to be run by the free market).

As for the failure of that system, nothing could be further from the truth -- the failure was in the FRACTIONAL Reserve system and the concept that it was still ok for government to print FIAT money whenever they needed to by granting banks the power to do so.

Assuming or thinking that we actually had a 100% backed precious metals money is demonstrative of WHY you need to read this book or 'Meltdown' or another book which actually goes through the creation of banking, the fractional reserve system and the use of FIAT money in the US (and the rest of the world).

[OlJarhead]

jeckyll island seems to be under the impression that those dollars are printed on a printing press instead of borrowed.  the very nature of borrowed implies it must be paid back.  the debt behind this is backed with collateral.

The "printing press" did not occur at the fed, it occurred at local branch style banks all across the nation in the form of lending.  That printing press is dead my friend. 

It is clear you have not read this book.

[muldoon]

jarhead, I appreciate the spirited discussion. 

The depression of 1920?  You missed that one...in fact you missed other downturns...is it selective?
Before the FED with had 3 central banks and various legislation regulating and governing banks.
Now, I'll go back and read all of your post but suffice to say your research is lackiing.

I did not miss the recessions, I counted only true banking panics and depressions.  Yes there were hard times in the 70s and early 80s, yes the dotcom was a bad recession.  S&L crises was terrible.  But they were not global banking panics.  I am referring to huge GDP reductions. 

It is clear you have not read this book.

Actually I have.  In fact if you use the search feature on this site you'll see Jeckyll has come up before on this site and been discussed.  You can also feel free to read my old posts from the past several years to see my opinions on others.  I am no Fed Reserve supporter by any means.  But I do want to understand the mechanics of the situation.  And when the real underlying facts are revealed not only is it very ugly, the manifestation that we see in our daily lives is very obvious. 
Your free to go on thinking the dollar is worth nothing, but I don't see anyone pushing wheelbarows of money around to buy bread do you?  In fact, everywhere I look I see the opposite.  People don't have enough money.  Foreclosures, layoffs, state spending cuts, benefit reductions, increased taxes, higher policing and fining.  For something that isn't supposed to be worth anything it sure seems to me that plenty of people want it pretty bad.  Your thinking of money as something on a chart, other people think of money as something they can spend.  Collectively the destruction of private credit has had the net affect of drastic deflationary process.  Attempts to "fire up the press" has been a dead end because you cannot push on a string. 

As for the failure of that system, nothing could be further from the truth -- the failure was in the FRACTIONAL Reserve system and the concept that it was still ok for government to print FIAT money whenever they needed to by granting banks the power to do so.

Assuming or thinking that we actually had a 100% backed precious metals money is demonstrative of WHY you need to read this book or 'Meltdown' or another book which actually goes through the creation of banking, the fractional reserve system and the use of FIAT money in the US (and the rest of the world).

I do enjoy reading, thank you for the suggestions. 
Fractional lending surely has its problems.  The biggest problem happens when you remove the restrictions on what banks can do and they take on huge losses and two have no reserves to back them up.  We have seen this event occur hundreds of times in the history of the world, but we continue to repeat it. 

[OlJarhead]

jarhead, I appreciate the spirited discussion. 

The depression of 1920?  You missed that one...in fact you missed other downturns...is it selective?
Before the FED with had 3 central banks and various legislation regulating and governing banks.
Now, I'll go back and read all of your post but suffice to say your research is lackiing.

I did not miss the recessions, I counted only true banking panics and depressions.  Yes there were hard times in the 70s and early 80s, yes the dotcom was a bad recession.  S&L crises was terrible.  But they were not global banking panics.  I am referring to huge GDP reductions. 

The depression of 1920 was indeed a depression. http://mises.org/daily/3788

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

I wouldn't count on Wikipedia for my source.

As for not included recessions that's silly.  For one, no one has a clear definition of 'depression' so it is easy for political reasons to call one the other (recession/depression) and secondly a 'recession' is an economic down turn.  When one looks at recessions and depressions over course of the countries history one finds that the creation of fiat money and/or the use of fractional reserve banking has caused issue over and over and over again (dot com bubble?).  Indeed, the great depression was the result of the same as well as the decade long period that could have been avoided.

It is clear you have not read this book.

Actually I have.  In fact if you use the search feature on this site you'll see Jeckyll has come up before on this site and been discussed.  You can also feel free to read my old posts from the past several years to see my opinions on others.  I am no Fed Reserve supporter by any means.  But I do want to understand the mechanics of the situation.  And when the real underlying facts are revealed not only is it very ugly, the manifestation that we see in our daily lives is very obvious. 

Then I've very confused by your statement before since the author makes a point several times to reference the fact that the dollar is backed by debt.

You said

jeckyll island seems to be under the impression that those dollars are printed on a printing press instead of borrowed.  the very nature of borrowed implies it must be paid back.  the debt behind this is backed with collateral.

The "printing press" did not occur at the fed, it occurred at local branch style banks all across the nation in the form of lending.  That printing press is dead my friend.

So I was very confused since he also points out that only a fraction of 'dollars' are actually printed - he goes into great detail to explain what you are trying to say here -- so perhaps you have forgotten what you read?  My suggestion that you didn't read the book was because your statements (that you read it and that the author thinks there are printing presses and your references to the nature of borrowing are contradictory)

Your free to go on thinking the dollar is worth nothing, but I don't see anyone pushing wheelbarows of money around to buy bread do you?  In fact, everywhere I look I see the opposite.  People don't have enough money.  [\quote]

There is no such thing.  There is FIAT money and the concept that people don't have enough is a Keynesian concept.  Real money (that which is actually backed by something and is not fractionalized) works -- as for people not paying their mortgages, read Meltdown please.  The idea that someone making $8/hr should be able to afford a $500,000 home is the reason people can't pay their mortgages.  The CRA made this possible and was pushed through -- why?  You think it was deregulation?  Really?  Then perhaps you should do more reading.  Kinda like the health care debate -- people think the free market is the problem all the while waiting for the state to approve a new hospital -- DUH.  The Federal Government pushed the CRA, cranked up the debt, had the FED Create more money (which devalues the dollar further) and all the while folks think the free market is the problem -- while government regulators continue to make things worse.

Foreclosures, layoffs, state spending cuts, benefit reductions, increased taxes, higher policing and fining.  For something that isn't supposed to be worth anything it sure seems to me that plenty of people want it pretty bad.  Your thinking of money as something on a chart, other people think of money as something they can spend.  Collectively the destruction of private credit has had the net affect of drastic deflationary process.  Attempts to "fire up the press" has been a dead end because you cannot push on a string.  [\quote]

Sorry Muldoon but your missing the boat entirely.  Just because people can still spend dollars does not mean all is well in the world.  When the continental was deflated 2100% people still spent them.  Doesn't mean nothing was happening.

As for deflation -- where do you live?  The only deflation I see is in the housing market which it needs to bring it back to reality.  The real inflation figures however around 9% right now.
http://news.yahoo.com/s/afp/20100503/bs_afp/useconomyinflation_20100503125400
Bear in mind that when the Federal Government posts inflation rates it usually takes food and gas out -- which makes no sense at all.
http://inflation.us/foodinflationspiralingoutofcontrol.html

As for the failure of that system, nothing could be further from the truth -- the failure was in the FRACTIONAL Reserve system and the concept that it was still ok for government to print FIAT money whenever they needed to by granting banks the power to do so.

Assuming or thinking that we actually had a 100% backed precious metals money is demonstrative of WHY you need to read this book or 'Meltdown' or another book which actually goes through the creation of banking, the fractional reserve system and the use of FIAT money in the US (and the rest of the world).

I do enjoy reading, thank you for the suggestions. 
Fractional lending surely has its problems.  The biggest problem happens when you remove the restrictions on what banks can do and they take on huge losses and two have no reserves to back them up.  We have seen this event occur hundreds of times in the history of the world, but we continue to repeat it. 

And we will continue to repeat it as long as we allow the Government to regulate it.

If the free market regulated itself the bank would fail and soon learn not to do it -- and people would learn to use banks with good reputations.

I do agree by the way, that people don't want change -- they will vote for the money printers and bailouts every time -- because they don't understand they are paying a tax via inflation.

[ScottA]

I'll chime in here by saying the money linked to metal is a problem. It's nice to have money that is backed by something real but here's the problem. Money really represents the value of labor not the value of silver or gold or debt. Since new labor is done every day new money must be created every day or an equal amount of labor consumed every day otherwise you end up with a money shortage sooner or later. Just like with the current system the money would flow into fewer and fewer hands causing labor to lose more and more value every day.

The trick then is to find a way to balance the creation and the destruction of money in a way where there is always an amount in circulation relative to the amount of labor being preformed every day and the value of stored labor in the form of goods. The fiat money system does this but it also makes money flow unnaturaly, in the form of intrest, to places that are not performing much labor like banks. This creates more problems than it solves. The only way to fix the problem is to somehow get greed out of the equation. As long as greedy people can find a way to make the system work in their favor there will never be a fix.

[OlJarhead]

I'll chime in here by saying the money linked to metal is a problem. It's nice to have money that is backed by something real but here's the problem. Money really represents the value of labor not the value of silver or gold or debt. Since new labor is done every day new money must be created every day or an equal amount of labor consumed every day otherwise you end up with a money shortage sooner or later. Just like with the current system the money would flow into fewer and fewer hands causing labor to lose more and more value every day.

The trick then is to find a way to balance the creation and the destruction of money in a way where there is always an amount in circulation relative to the amount of labor being preformed every day and the value of stored labor in the form of goods. The fiat money system does this but it also makes money flow unnaturaly, in the form of intrest, to places that are not performing much labor like banks. This creates more problems than it solves. The only way to fix the problem is to somehow get greed out of the equation. As long as greedy people can find a way to make the system work in their favor there will never be a fix.

Not quite -- indeed, there is no such thing as a 'money shortage' that is Keynesian thinking at best. 

It takes labor to mine gold or silver and turn it into a coin and thus it EXACTLY represents what is done everyday.

Under the free market what money exists will effectively purchase the items required provided legal tender laws are not forced on the citizenry (like they are today).

Metal backed money has proven the only means of securing currency and maintaining stability.  It worked once for over 800 years, today we have FIAT money which has continued to lose value since it's creation.  The Federal Reserve Note (there is no US Dollar by the way, that's a misnomer) has lost 95% since it's creation.....why?  Because it is backed by less then nothing, it is backed by debt which is made of loans that are often not paid and then to compound the problem the fractional reserve system which is controlled by the FED exacerbates the problem.