It Was All A Smokescreen
March 23, 2009
By Tom Barrett
While Obama had the media focused on the AIG bonuses, the Federal Reserve System was quietly buying $1.15 Trillion in debt from the US Treasury. The whole AIG scandal was nothing but a smokescreen.
The military has used smokescreens for generations. When I was in the Marine Corps I was taught to use smoke grenades to screen the movement of our unit from the enemy. The Navy has long used smokescreens to cover ship movements.
Obama and Company made masterful use of the AIG smokescreen to distract America's attention from a sneak attack on our prosperity. The AIG executive bonuses, while they inflamed America's populist sensibilities, amounted to exactly 1.27% of the money we have poured down the AIG drain. But according to economist Walter Zimmerman, the long-term effects of the Fed action will be devastating. These include the destruction of the US dollar and further erosion of our nation's position as the leading economy in the world.
What possible reason could Obama have for weakening the dollar and our economy? It's simple. Obama is not a patriot; he is an internationalist. He is firmly committed to seeing the United States as just another part of a world government. But the American people will never accept that as long as we are the strongest nation in the world. Obama is in the process of weakening us from within, so that eventually he can generate enough fear to make us accept domination by the handful of powerful people who plan to run the world.
Let's look at the undisputed facts. Timothy Geithner was Obama's pick to run the Treasury Department largely because he was a leading architect of the bailout plans. He personally oversaw the AIG deal. So for him to claim that he knew nothing about the huge executive bonuses that have everyone upset is worse than disingenuous - it's an outright lie. His defense was to point his finger at the Congress.
Five-term Senator Chris Dodd, himself one of the main architects of the mortgage crisis, introduced the amendment that specifically excluded from Congressional oversight bonuses given by bailed-out financial institutions to their executives, as long as they were contracted by February 11. In other words, Dodd tied Congress' hands, making some of his own liberal colleagues so mad that passed an unconstitutional law that would have taxed 90% of the bonuses.
Of course Dodd claimed he knew nothing about it; apparently someone put his name on the amendment! When that didn't fly he admitted that he did introduce the amendment, but that sneaky old "someone" changed it! (This guy is certainly good for laughs.) His final (we hope) version of the story is that THE TREASURY DEPARTMENT "pressured him" to introduce the amendment.
So Geithner and Dodd point their fingers at one another as Obama pulls their strings. And Obama, who knew all about the bonuses from Geithner, shakes with phony outrage. What drama! But, like all drama, the whole affair was a ploy designed to keep us from realizing that the action of the Fed has put American taxpayers trillions of dollars deeper in the whole. The AIG bonus details were leaked with perfect timing to provide the smokescreen for the Fed's move.
What exactly did the Fed do? They call it "monetizing our debt." It is a financial shell game in which the government "borrows" money from itself. What!?!?
Let me see if I can explain this. Let's say you are deeply in debt, and have no money to pay what you owe. You decide to lend yourself the money to pay off your dent. You know, take the money from one pocket and put it in the other one. A great plan if you can pull it off. But the problem is obvious. You don't HAVE any money to lend yourself.
The Fed doesn't have any money to buy the debt from Treasury, either. But that's not a problem, because they have something you don't have, something far better than money. They have a huge printing press and lots of worthless paper. When they print pretty stuff on that paper, it's still worthless, but it LOOKS like it's worth something. And, stupid sheep that we are, we accept this stuff as money.
It is not money. Money has value. This is currency - stuff that is supposed to represent money. Our currency USED to be money, because it was backed by precious metal - REAL money. But our currency stopped being money a long time ago because we were betrayed by two presidents and a host of criminal politicians.
Most of us believe FDR stands for Franklin Delano Roosevelt. In this context it stands for Final Destruction of Riches. In 1933 FDR made owning gold a criminal offense punishable by ten years in prison. He used the same excuse Obama uses - a national crisis - to betray his oath of office, the Constitution, and the people who trusted him. He was owned by bankers who didn't want real money in circulation. They wanted to have the power to print as much money as they wanted to.
It is important to remember two things about FDR's betrayal. First, the only reason people accepted the paper money printed by the bankers was that it was redeemable in gold or silver. It was easier than carrying around the heavy coins that the paper represented. But they never would have accepted it had they known that the gold that backed their money would disappear.
Second, Congress did not enact a law outlawing gold ownership. Roosevelt did it on his own using an Executive Order (something Obama is finding mighty handy today). FDR's criminal act of criminalizing gold ownership stood until 1975. It set the stage for another president to betray us.
"Tricky Dick" Nixon was the second actor in this shameful play. In 1971 he put step two in motion by taking our nation off of the gold standard. In doing so, he removed us from a stable financial system based on thousands of years of trust in gold as the world's primary medium of exchange. He replaced it with paper that had absolutely nothing to back it. In doing so he set us firmly on the inflation path.
Until 1971 anyone who owned dollars could present them to the US Treasury and receive one ounce of gold for every $35 dollars. This rarely happened, because (as I mentioned earlier), the paper money was far more convenient. But in the late 1960's, confidence in the dollar was shaken by the reckless spending of the liberals of that day. Like all politicians they spent money the country didn't have. No problem. They just printed more money.
But France and other nations saw that only a portion of our currency was backed by real money, and they started redeeming dollars. Since we didn't have enough gold to pay all we owed, Nixon told the world, "Sorry, we will no longer honor our solemn promise to those who hold our currency." In effect, he declared that the United States of America was bankrupt.
Which brings us to today. When you research inflation, you will find that its number one cause is an increase in the money supply. It also serves as an additional, hidden tax on citizens. When government can't find enough ways to tax us, they can always print more money. When the dollar's value drops, we receive less goods and services for that dollar.
By spending trillions we don't have, and then printing worthless currency to pay for it, Obama will cause inflation, and at the same time will get those tax increases he's been longing for. And, contrary to his promises, this tax will hit all of us, not just the "rich."
¬†Monetizing debt has NEVER worked, and it never will. Just ask any economist (except one who is on Obama's payroll) if monetizing debt has ever worked, in any country or at any time in history. You will learn that when governments borrow money from themselves and print money to pay the tab, the long-term results are always negative for the people.
The sad thing about all this is that we used to get upset over government wasting millions of dollars. Obama has made a million dollars seem like pocket change. In just a few months we have gone from millions to billions to trillions. We were just getting used to being outraged by the waste of billions when Obama shoved our collective face into the trillions he has spent - not to save our economy, but to advance his radical far left ideology.
Ron Paul on the Dollar and Gold
How the Fed Contributed to the Mortgage Crisis
Surviving the Crash
Facts About Inflation