Tag Archives: Federal Reserve Districts

Trump Vs The Federal Reserve (Fed)

Federal Reserve “Palace”, Eccles Building Washington DC

Are you one of those who listen to the political pundits bad-mouthing Trump for criticizing the Federal Reserve policies and its Chairman Powell?  If you think the President is wrong to criticize the FED, consider the following.

The Federal Reserve (FED) is an extra-constitutional institution that was created in 1913 to stop financial crisis and provide stability to our nation’s credit, its banks, and to protect consumers.  Ironically the FED did nothing to prevent or end the Great Depression, and the recessions that have plagued this nation including the recessions of 1980 and 2008.  Following the recession of 1980 that was accompanied by runaway inflation, the FED was given additional powers to “control” inflation.  In short, our nation’s entire fiscal health, and the health of our banking systems, rely on an institution that is not mentioned in the US Constitution; is totally governed by 7 unelected citizens; and is advised only by 12 individuals from the banking industry that the FED is supposed to manage.  

The Fed is led by the Federal Reserve Board (FRB) comprised of seven Presidential appointed “governors”.  Below the are two additional levels of UNELECTED BUREAUCRATS.  Below the FRB, is the Federal Open Market Committee (FOMC).  Its membership is comprised of the seven members of the FRB plus five of the twelve  Federal Reserve Bank Presidents.  The Federal Advisory Council comprised of twelve REPRESENTATIVES OF THE BANKING INDUSTRY.  The FAC “advises” the FRB on all matters under its jurisdiction.  

Finally, the Federal Reserve Act created Twelve (not sure why they were hung up on the number twelve) Federal Reserve Banks, each of which is responsible for member banks located in its district.  (This was before national and international banks!)  

Each of these FED banks has a President appointed by its board of director.  While District Federal Reserve Banks are purported to be independent from its member banks, the MEMBER BANKS DO ELECT SIX OF THE NINE OF THE REGIONAL FEDERAL BANK’S BOARD!  

Sorry for the dissertation on the structure of the FED but the key points are:

  • The Fed is Extra-Constitutional
  • The Fed management is devoid of any elected individuals
  • The FED is controlled by 7 non-elected officials that are appointed by Presidents.
  • The banking industry itself controls the boards or members of Federal Reserve Advisory Council and the District Federal Reserve Banks.
  • The FED creates banking regulation and regulates private banks, PERIOD.  No elected official or agency of the Executive Branch has any sway over these banking regulations.  
  • Yes, the President can nominate the members of the FED Board and the nominees have to be confirmed by the Senate but any actions undertaken by the FED is not subject to Congressional or Executive Oversight!

So, the Federal Reserve can “create” money; manage how much of our cash is available to world; set funds rate which sets interest rates; print  money then buy back US debt also known as Quantitative Easing and monetizing the debt!  All this without any check or balance, nor anyone on the FED being elected by US voters!

YOU THINK THE FEDERAL DEBT IS $22.3 TRILLION!  NOPE, THE FED HAS “BORROWED (PRINTED) ANOTHER $4 TRILLION FOR A TOTAL NATIONAL DEBT OF $26.3 BY USING QUANTITATIVE EASING.  

Should the President Publicly Challenge the FED?  Someone Better!

During the Obama Presidency, the FED not only pumped $4 Trillion into the economy by borrowing (printing) money, they also drove interest rates down to zero Then when President Trump came in, the FED began to pay down, (remove cash from the economy), and then went through 6 additional Fed Rate increases (this increases your credit card and mortgage Interest rates) beginning in March 2016 raising the interest rate to 1%, until December of 2018 raising the funds rate to 2.5%. 

All of these actions depress the economy! 

These actions by the FED were justified as making sure inflation did not get out of control as the Trump economy was booming!  What, there wasn’t and still isn’t any inflation!

What you need to know is that raising interest rates slows economic growth, and what supposed “conventional wisdom” defines as inflation!    It is a mechanism that has been used to curb INFLATION.  Paying down the monies borrowed by the FED also slows down economic growth by taking cash out of the market. The FED set a target of 2% inflation following the Jimmy Carter presidency that featured an exploded inflation rate accompanied by the FED exploding interest rates to over 16%.    During the Trump administration and the economic growth under Trump in 2019, teh economy has yielded an inflation rate AT A LOWER RATE THAN THE 2% FED TARGET!  Thiws is why The President keeps saying that especially the last Fed interest rate hike in 2018 was deflationary and seriously damaged the growth of our economy.

The FED, the National Debt, and Globalism:

Why is the FED fighting against the Trump economy?  Why is the National Debt still rising?  and Where is the FED in all of this?

Remember, the FED is totally comprised of and controlled by International bankers.  The vast majority are globalist in that they believe that a “balance” among nations economically is good for all.  The only problem is that the FED charter has nothing to do with making sure nations, other than America, are financially sound.  Some argue that international economic stability is our responsibility.  Then why don’t we have a say in the really dumb decisions made by EU nations, China, Russia and other nations that are driving their own economies into the toilet?  Why is our economy held hostage by poor decisions being made by other countries!

Why is our National Debt still rising?  Two reasons, One is an corrupt Congress that does not have the guts to change its own rules allowing spending to keep climbing due to automatic increases each year.   Two, a FED, aided and abetted by Congress, the US Chamber of Commerce, and the Business Roundtable, that constantly depresses the US economy and makes sure that our growth and ensuing tax revenues do not strengthen our economy vis-à-vis other nation’s economic growth.  If the US economy is flat, then even if Congressional spending is flat, we can never pay down our national debt.  IF the Trump economy can generate an annual increase in our Gross Domestic Product in the 3-4% range, tax revenues will increase and eventually start chipping away at our national debt.  (Why not raise taxes?  Raising taxes decrease tax revenue.  Tax decreases increases tax revenues.  This is a historical fact!) 

The FED makes sure that our international globalist can move their investments and businesses out of the US into countries that increase their profits.  THE FED AND THESE SELF-INTERESTS AND FOREIGN NATIONS promote foreign countries to maintain tariffs on US imports further depressing US growth and US job promotion.  

President Trump’s

BUY AMERICAN, HIRE AMERICAN

is the Antithesis to the goals of the FED, the Globalists, the US Chamber of Commerce, the Business Roundtable and the Progressive Left.

This is why the President is taking on the FED chairman Powell directly and in the public square.  Continued rate hikes without inflation in excess of 3% is recessionary and contrary to the US National Interest.  The President understands that no matter what he does in terms of regulation and tax cuts, the FED can counterbalance his moves by merely printing more money or raising interest rates.  The President’s economy is generating inflation because for every job gained, PRODUCTIVITY per hour is increased.  For every good produced in this country versus China or elsewhere, GDP and tax revenues into the US treasure are increased!  

TARIFFS, NOT REALY A TAX ON US CITIZENS.

You hear every day that US Tariffs on other nations good being brought into the us are TAXES ON US CONSUMERS.  Not True in the Long Run and Not really true in the short to medium term.  Why?  Ask yourself, “How can the US inflation be less than 2% if ur Tariffs are increasing the cost of the good we import to any significant degree?  Answer, they are not! 

The exporting country, say China, cannot afford to loose production nor revenue due to US tariffs.  Also remember, that China is a communist country whose economy is totally controlled by its communist party.  So, China will devalue their own currency to offset some or all of the tariffs.  How does this work?  Say they export an item to the US that costs them $1.00.  We put a 25% tax on that item so the cost of that item would be $1.25.  By devaluing their currency by say 10%, the real tariff cost for the item is $1.125.  Then, in order for the Chinese factory to not loose the $0.125 per item, the Chinese government creates a subsidy for the factory in the amount of $0.125 per item.  In the end, the item cost is still $1.00 to US Consumers.  This is exactly what is happening to China today!  

In the short term, most of the exporters of Chinese goods have forward contracted with Chinese manufacturers to by their goods at a set price over a period of time.  Most are hedged against the Chinese currency to avoid loses due to Chinese currency manipulation.  So, in the short-term, the goods sold to US consumers do not carry a price increase. 

For items like electronics, South Korea and Japan have forced prices down by $150 or so per television over the past 18 months for example.  Our tariffs on Chinese TVs would have no impact on US consumers for specific items as they can buy the less expensive Korean or Japanese TVs.  In the medium to long term, these exporters can seek other country’s suppliers especially Viet Nam, Japan and South Korea.  During this same time frame, the Chinese manufacturers who have non-Chinese partners, will see their non-Chinese partners move their investments to other countries or even the US to avoid the tariff impacts.  Many already have plants in multiple non-Chinese countries.

So, President Trump has to fight for the US consumer on many, many fronts.  The FED is certainly at the top of the list as they can kill the impact of Trump economic moves and even drive the US into a Recession.  The FED can also manipulate our currency and overvalue it and kill our ability to export, especially agricultural goods that are priced on international markets.  

Congress is also a stumbling block as they typically support their big donors, regardless of party, and these include the US Chamber of Commerce, the Business Roundtable, the Koch Bros. and others.  While they give lip service to supporting America First, just listen to these political hacks when Trump threatens tariffs on Mexico and others.  In this case, the day Trump threatened to impose a 5% tariff on Mexico, their Peso was devalued at over 5% thus negating the impact of the tariffs in the short-term.  Congress will always stand behind global interests, until we institute term limits and expel these hacks from Congress.

Keep Up the Good Fight!

So, when you hear the talking heads and political hacks decrying Trump Tariffs, consider the sources.  Trump knows that the Chinese tariffs may in time case some of the Chinese goods to be more expensive for US consumers.  In the meantime, he has ramped up US energy production to drive down gas prices for consumers and manufactures alike in order to buffer potential Chinese price increases. 

What always gets me is to hear pundits say that it is better for US consumers to be able to by cheap goods from China than to have those goods produced in the US.  Good for Who?  If you have been laid off at a factory and receiving unemployment or welfare, your purchasing power has been seriously reduced.  Further, rather than you paying taxes and increasing revenue into our treasury, and keep circulating your wage income within the US, you are taking from our treasury and the dollars we are spending with China leave this country and are never recirculated within the US!  Moving jobs out of the US no matter the cost of a tennis shoe is never a net benefit to this nation.  

———————

Note:  if you have a chance, read “Why America Will Fail-Unless the People Take Back Their Country” by clicking on this link: https://wp.me/pY51c-yo  It will explain in more depth the structure of the FED and other institutions and how many of our economic safeguards have been removed intentionally by the globalist.

RD Pierini

@RDPierini

 

Hat Tips

https://en.wikipedia.org/wiki/Federal_Reserve

https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

https://www.investopedia.com/terms/f/federalfundsrate.asp

https://www.investopedia.com/articles/03/122203.asp

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019

https://www.quora.com/What-should-be-the-ideal-inflation-rate-for-country-like-India-and-why

Top 10 Countries with Largest National Debt-to-GDP in 2018