http://www.p2pfoundation.net/Transfinancial_Economics

The Fed’s excuse was it was too much trouble to keep the public informed of the results of their monetary policy initiatives – the Fed is responsible for the overall monetary policy of this country. Nothing to see here, just keep moving, folks.

In reality, the M-3, which includes the SIV-Derivatives capital markets, took off in spades, making that ten-year period seem like child’s play. The ShadowStats guys keep up with the M-3 equivalent in money growth.
http://www.shadowstats.com/article/money-supply
Basically, it has been more like 15 percent average growth since 2005, rather than the 10 percent in your article.

Pete, another clarifying comment I would add is this. With the M-3 money supply growing an average of 10 percent, how come we have inflation averaging only 3 percent?
The answer is, of course, that CPI only measures the things in the ‘consumers’ basket of goods.
Not in that basket are either SIV-derivatives (financial[??] assets) and underlying housing assets.

So, a vast quantity first went into the housing stock, then into ABS and MBS securities and then up the financial ladder, ending up as derivatives and credit-default-swap financial thingies, which are, in turn, the far over-weighted TOXIC assets at the heart of our teetering financial collapse.

The inflation of the money supply ended up there. Too bad it’s all debt-money.

joe

Indeed the Constitution doesn’t prohibit changes. It has an article devoted to how the Constitution may be amended. That means that Congress is not enabled to amend the Constitution except by following the procedure described in Article V.

Saying Congress can change the constitution of the nation simply by enacting a law would also allow Congress to give the power to declare War to Blackwater or give the power to appropriate funds to Bernie Madoff. Congress simply does not have those powers. Article V describes how such changes could be made: including the ways the people could give the Federal Reserve the power to coin money and regulate the value thereof.

In terms of the money needed to pay back a loan, here’s another example If I borrow $10,000 using a mortgage we require $10,000 to make the loan. To pay back the loan only requires $79.69 of money in circulation paid each month (based on 15 years at 5% interest). For a 30 year mortgage it only requires $54.39 of money in circulation.

On the other hand, for a $10,000 bond it requires only $10,000 to make the final redemption payment and $42.00 each month to make the interest payments before redemption (though the 10,000 redemption and the final $42.00 interest payment might be very close together in time or even in the same payment).

1) The Federal Reserve holds treasuries until maturity. In other words it never monetizes the debt (though there are rumors it did so a bit during our current crisis). When securities reach maturity the treasury makes redemption payment to the Fed. The Fed then reinvests those redemption payments by buying treasuries at treasury auction (note how they buy them at primary auction and not from secondary markets). So after originating new money and buying securities on the secondary markets to provide the seignorage to wall street, then they play this shuttle game with the treasury where the treasury passes tax dollars to the fed (redemption) and the fed passes them immediately back to the treasury (reinvestment). This goes on and on as the Fed accumulates more and more treasuries until the Fed can take advantage of a crisis situation to unload those treasuries without destroying money (more on this below).

2) as for an audit, the Fed presumably keeps its own books in order and even has itself partially audited from time to time (and makes those audits available to the public). However the public self-directed independent audits do not include any of the crucial information relevant to monetary policy. For example: how much seignorage income has the Fed enjoyed (and then laundered) each year from 1913 to 2009?

3) Indeed they used the thin air machine to dispossess the banks of their toxic assets. It is possible they might have also simply loaned treasuries directly to unload those treasuries from their Fed portfolio without destroying any money. In that way the bank put up toxic assets as collateral but receive treasuries instead of money as loans.

4) Certainly the lack of transparency is ridiculous. More so the argument that the Fed could possibly insulate the process from politics. What they (the banking cartel) mean is that they will wield the political power on their own behalf and insulate the process from democratic institutions and the people.

5) Whether the $265 billion in holdings destroyed money or not depends on whether the fed unloaded them for money or something else. Most likely the Fed unloaded the $265 billion in treasuries for toxic assets of the same face value (as collateral). In that case no money is destroyed directly (though some might be destroyed or created the fractional reserve lending).

6) Bernanke’s response about other tools might have been an obfuscation of the fact that they were unloading treasuries without destroying money.

7) That’s an excellent point on the interest on excess reserves. Obviously the Fed is only concerned about the needs of its banking cartel members and not concerned about the people.

The interest that the Fed pays out will most likely simply subtract from the amount returned to the Treasury. There are some requirements that the Fed programs be self-financing but obviously such a program to pay interest on excess reserves has no revenue possibilities.

I don’t have anything to add to your last two point in your last comment. However I will say that while monetary reform is a solution, it all depends on what kind of monetary reform. We need to break apart the powers of the Fed, return the power to originate money to the Congress (as the constitution requires) and place the other powers in newly created departments within the executive branch. The power to regulate banks should be handled by a department or bureau independent and insulated from the financial industry. The power of seignorage should go to the general fund or to wherever Congress so directs it and not to Wall Street. The inherent power of the electronic clearing house should be handled by an executive branch department and insulated from other non-democratic influences. The power of lender of last resort will no longer be necessary once our financial system and monetary system are not entangled (once we have a 100% reserve requirement on demand deposits).

The solution is monetary reform.
There will be no relationship between the Fed and the bankers’ monies.
Focus on the AMI proposal for a legislative remedy to an honest money system. It’s coming to the fore very soon. Be ready.
Full-reserve banking.
Bankers of all kinds lend real money.
Money is created as equity, not as debt.
The Money System Common.
It’s our money system.