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An Entitlement Society

by Paul Kahn

The Census Bureau of the united states reported in September of 2011 that the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it.

1 out of 7 Americans is currently getting food stamps.

That’s a 100% increase from 2008.

What is happening to the middle class?
Why is it dramatically shrinking and the people who are poor increasing?
Why is it that 90% of American’s income is SHRINKING, yet the income of the top .01% is increasing by more than 20%??

2 words: Our Monetary Policy

Here’s basically how the current system transfers wealth from the poor and middle class to the super wealthy:

1) federal reserve engages in price fixing and artificially lowers interest rates in order to “stimulate” the economy.

2) money becomes cheap to borrow (“easy credit”)

3) with these “low” rates, people buy homes, cars and buy lots of stuff and put this on their credit cards (because of the low interest rate)

4) with all this money being spent, all of this creates an increase in demand. sometimes all of this easy credit ends up causing a soaring demand for housing. sometimes it creates a soaring demand for stocks. it creates the “bubbles” or “booms”. Note that this “boom” in the economy is not real as the money being spent is not from real savings, but from credit. It is not a boom based on an increase in productivity or ingenuity, but is artificially created through easy credit.

5) as the demand increases for goods and services, prices begin to rise. it now takes more dollars to pay for the same thing. this is “inflation”. since the fed created an artificial demand for so many things, the inflation rate soars to between 5-9%, when you count food and energy (they tell us it is about 1-2% but the current cpi conveniently does not count this, even though it is what we spend a good deal of our money on). It is extremely important to note that this sky high inflation (rising prices) was indirectly caused by the federal reserve when they lowered interest rates and provided such easy money. This process is repeated over and over again when the fed “stimulates” the economy, which creates one boom and bust after another. It also continues to cause higher and higher prices (inflation) and 5-8% is NOT a normal phenomenon or part of a healthy economy.
As prices continue to increase, the dollar becomes worth less and less.  In fact, the federal reserve has managed to debase our currency by over 99% since 1913. See below. You can find this fact anywhere including in government statistics.

6) As prices continue to rise, the fed starts to raise interest rates in the hopes of make sure they don’t rise too quickly. This causes a collapse and the bubble bursts. sorry, but that great “boom” was artificially created! Back to earth we come! Sorry homeowners! Sorry all you retired people who lost your money in the stock market!

Back to inflation which is the most important thing here. This inflation hurts the weakest ones in the economy. It is a stealth tax that is literally robbing the wealth of people in this country. If you save $1000 this year, it is worth between $920-$950 next year. After 5 years it is only worth anywhere between $550-700 when you count compound interest. Why would you save then? Why not just spend all of that $1000 now and actually get the full $1000 worth? That’s exactly what is happening. People are not saving. Why would you save when you LOSE money? What if you put it in to an investment like a cd or money market account? Sorry, but the fed artificially lowered interest rates to stimulate the economy, so once again, no incentive to save when you are making .001%. and inflation is 5-9%. The fed, through its policies, is pushing people to spend rather than save.

SLOWLY the cost of living increases. The banks get to spend the freshly created dollars at their maximum value, while people like you and i work HARDER, but makes LESS in value.
This is the reason why the top 1% control 50% of the financial wealth in this country and why it has remained this way for so long. This transfers the wealth from the middle class and the poor to the rich. It happens slow enough and is complex enough that 99% of the population either doesnt notice it, doesnt understand it or both.

Our monetary policy and policies of the federal reserve are serving the ultra rich. What happened when the banks overextended themselves with all of those bad loans they made? They got bailed out, by you and I, the taxpayer. What happened to those 4 million people who bought houses and made the same mistake of overextended themselves? Sorry! Too bad! No bailouts for you, just for the special interests! They lost their homes.

The only way the current system works is if we continue to spend and go into debt. This is why the federal reserve gives us access to such easy money. This has created an enormous problem. Americans as a whole are carrying more personal debt than in any other time in history. The combined amount of personal debt in the US is $2 trillion which is about the GDP of England. That means Americans are in debt more than a country earns in a year.  And that $2 trillion debt boils down to $117,951 per household.  In the 1960s the average American saved 11 percent of their paycheck and in the 1990s it had decreased to 5 percent and then in 2003 it fell to 2.3 percent.

By now you can understand that the policies of the federal reserve:
1) are transferring wealth from the middle class and the poor to the rich
2) are devaluing the dollar
3) are encouraging people to make bad decisions and spend money they don’t even have, rather than save

So why do the people not vote to abolish it the federal reserve?
1) They dont understand and are not aware that their money is being taken every year
or
2) They are either hooked on the entitlement programs like medicare or social security OR falsely believe they are needed to help those less fortunate then them or both.

How do I help someone less fortunate then me or who has access to less resources than I do?

Simple. I either volunteer my time or I contribute to a charity. I am not alone.
In 2011, a year of a severe recession, Americans still donated more than $300 billion to charity. In fact, charitable giving has generally risen faster than the growth of the American economy for more than half a century. Despite this fact, many people still think Americans should be forced to contribute to government run entitlement system like medicare and social security. These people are good, hard working Americans that truly care about others and want to help those less fortunate then them. There are very good intentions behind this idea. The only unfortunate problem is, it doesn’t work.

Besides the obvious unconstitutional, immoral and destructive act of forcing people to contribute to a system they may not agree with, it simply isn’t working.
The money that is taken from productive citizens to fund these programs is not enough. Not even close. Every American household would have to pay $500,000 each in order to pay for the current entitlement obligations and this number grows every year. The government plainly admits that both social security and medicare are going bankrupt. In order to attempt to meet the current obligations of all of these programs, the government needs the federal reserve to be able to print the money to fund them – no amount of taxation can pay for them.

Ask yourself this question: if the government is trying essentially to re-distribute wealth (taking money from those who have more resources and giving it to those with less), it is working? Do we have a fairly even wealth distribution in this country?

I think we can all agree that something is seriously wrong with this. This is certainly not what these compassionate people that voted for these entitlement programs wanted! Note that the bottom 20% are getting poorer and the top 10% are getting richer, while the top 1% are making money head over foot. There are many sources you can find that show this data. The top 10% controls 95% of the financial wealth in the United States. These facts speak volumes and I encourage you to do your own research. Not only is this idea not working, it is actually perpetuating the very thing it is trying to prevent. Instead of helping the poor and the less fortunate, we are voting for a system that is actually increasing the amount of people who are poor, while making the rich even richer. This system is systematically robbing the wealth of its citizens without their knowledge.

Henry Ford once said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” The elite in this country, the big banks, the top 1%, are well aware of this. They don’t want this system to change they want to keep the status quo. Why do you not hear about this theft from the politicians? Because they are part of the same system and reap their own benefits. Their benefits are huge campaign contributions from the big banks:

Romney top campaign contributors:

1. Goldman Sachs $499,430
2. JPMorgan Chase & Co $322,400
3. Morgan Stanley $281,350
4. Credit Suisse Group $277,250
5. Citigroup Inc $267,050
6. Bank of America $213,650

Obama top campaign contributors:

1.University of California $1,648,685
2. Goldman Sachs $1,013,091
3. Harvard University $878,164
4. Microsoft Corp $852,167
5. Google Inc $814,540
6. JPMorgan Chase & Co $808,799
7. Citigroup Inc $736,771

source: opensecrets.org

They don’t work for you and I, they work for the special interests and the big banks. This is why the banks got bailed out, not the people who lost their homes. Politicians have short term thinking. They are in office for 4 or 5 years and they try to maximize income, so the focus is on short run profits for the big banks and corporations. None of our presidents, senators or congressman, speak of what is really happening, with the exception of congressman Ron Paul. John F. Kennedy was the last one who did something to abolish the federal reserve (signing executive Order 11110) and he was assassinated. Hard to digest that? Read on.

In late 2008, the TARP Bailout bill was passed and they told us that loans of “$800 billion” were given to failing banks and companies. A recently audit of the federal reserve, which they vehemently opposed and tried to stop for 2 years, revealed that there were actually $16 trillion in secret bailouts. The money had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. Goldman Sachs alone received 814 billion dollars. The Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious – the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs. Why did so much of this money go to foreign banks? It’s easy to answer that question when you look at the top ten shareholders of the Federal Reserve banking system. 70% of them are located in foreign countries.
This is the largest theft in human history, an amount larger than the entire GDP of the united states, yet this story was not covered by our mainstream media.

The only way the current system works is if we continue to spend and go into debt. This is why the federal reserve gives us access to such easy credit. This is now created a huge problem. Americans as a whole are carrying more personal debt than in any other time in history. The combined amount of personal debt in the US is $2 trillion which is about the GDP of England. That means Americans are in debt more than a country earns in a year.  And that $2 trillion debt boils down to $117,951 per household.  In the 1960s the average American saved 11 percent of their paycheck and in the 1990s it had decreased to 5 percent and then in 2003 it fell to 2.3 percent. We have less and less actual money. We are being enslaved by the debt of electronic blips on a computer screen. As if this weren’t bad enough, our government has also been just as frivolous amassing a debt of over $16 trillion.

A government regulated and centrally planned economy has never produced personal prosperity or enhanced human freedom at anytime in history. Yet for over 100 years, we continue to vote for this monetary system, despite the fact that the dollar and our standard of living is being destroyed. In the years before the fed, the value of the dollar went UP (goods and services actually cost LESS) because we had a stable money supply (money could not just be printed at will) and interest rates were subject to supply and demand. Our history shows us that in a market free from central planning, prices go down.

THE SOLUTION

Money Backed By Gold (sound money)
When money is not backed by something valuable, it is simply a piece of paper! It therefore only has value because we all agree on this value. But the only reason we agreed the paper had value in the first place was because the paper used to be a receipt, a representation of that thing of value. We abandoned the gold standard entirely in 1973 and since then our currency is only worth something because we all agree it has value. What we do not realize is that this value is shrinking every single year because the federal reserve keeps printing more and more. We never agreed on that! When money is backed by gold, no one can just print more of it. This eliminates the vicious cycle of easy money which creates the huge booms and bust and instability in our economy. It also eliminates the sky high inflation. Prices are kept stable and actually decrease over time. Since we can no longer just print money, we have to live within our means and we will no longer amass a huge debt, freeing generations from being a slave to this madness. We will no longer be able to fight unjust, undeclared wars and be the policeman of the world. We will only go to war when absolutely necessary and only when the people and congress declare it. Our national defense will be so much stronger when we bring the troops home to protect our own country and stop spending $1 trillion a year overseas maintaining our empire.

Eliminate The Fed Allowing the Free Market To Set Interest Rates
The solution is to allow the free market to set interest rates, NOT the federal reserve. When banks have more money, it is only because people are actually saving. When more people are saving, the banks have more money. When the banks have more money (more supply), they can now lower their interest rates, attracting more borrowers and making more loans. When people are saving less because of a weaker economy, the banks have less money (less supply) and therefore interest rates go up. This is not a bad thing! People should be DISCOURAGED from making loans, buying cars and houses and putting things on their credit cards when the economy is weak. This is the beauty of the free market.

More information on the federal reserve:
http://www.youtube.com/watch?v=rFf4TxiFDho
http://www.youtube.com/watch?v=yCdlsZLNSJE

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