Hugo Chavez Takes Over the Federal Reserve
by Andrew MellonTime was when countries believed in strong currencies — strength measured not in the rhetoric of bearded wise men but of bank vaults flush with gold coin.
Venezuelan tyrant Hugo Chavez recently announced that he would be devaluing his currency on New Year’s day. As the Wall Street Journal reported:
News of the devaluation came just after the central bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a 3.3% decline in 2009.
Both pieces of news suggest Mr. Chávez is having an increasingly difficult time balancing his populist policies with economic reality, according to economists. His government’s widespread nationalizations of private industry have sapped economic growth, while public spending has sparked inflation that the government has tried to contain by measures such as price controls.
There are a couple of striking aspects to this news. First, in the above excerpt one could easily replace Mr. Chávez’s name with Mr. Obama’s. Nationalizations or de facto nationalizations cripple an economy by replacing functional markets driven by the people with dysfunctional economies driven by central planners and have a secondary effect of chilling entrepreneurship, and thus competition, innovation and capital formation that drive economic growth.
Constantly imposing costs implicit and explicit on the private sector (i.e. those who must survive by providing a product demanded by consumers in quantities, of qualities and for prices willingly paid by these consumers), including the cost of propping up failed businesses and inflating asset prices, disincentivizes people from partaking in mutually beneficial commercial activity.
These consequences apply equally to the Venezuelans as they do to Americans.
Second, what is staggering is that the Venezuelan government is honest enough to admit that it is devaluing its currency. Rather than conjuring up terms such as quantitative easing or liquidity injections to obfuscate the public from the simple fact that it is overnight stealthily taxing, reducing the savings, favoring chosen political constituencies and ultimately driving up the prices that its people must pay for goods and services, the Venezuelan government admits its vices, though it surely sees them as virtues.
The public sees the effects of such policy. According to the report,
Ordinary Venezuelans reacted to the move with a mixture of dismay and resignation. “We don’t have an economy based in reality,” said Francisco Holinek, a furniture salesman in Caracas, the capital.
What makes Venezuela an economic basket case? By imposing price controls, Chavez and his cronies have attempted to solve the problems in markets they have distorted by usurping private property through taxation and outright theft, government spending and currency devaluation, with more intervention.
Their logic goes something like this – if prices rise uncomfortably high due to inflating the money supply, then they just need to forcibly put a lid on these prices. They think that somehow they are either blessed with the mystical ability to master economies, or that their public is ignorant or scared enough to not challenge such machinations.
Sadly, the folks at the Federal Reserve and throughout the US government when it comes to our economy again are only better by degrees and absolved of criticism due to their cleverness and more genteel socialism, involving redistribution of wealth to a greater number of constituencies.
In the labyrinth of regulations, taxes, subsidies, bailouts and money printing that are part of our supposed capitalist economy, the same logic the Venezuelans use is pervasive. Our paternal representatives can manage the economy and when their interventions lead to problems, intervene again to correct them, plugging one leak and creating ten more.
Why do such problems fester and multiply? Because prices have meaning. Prices take into account the tug-of-war between the producer who wishes to sell his product for the highest price possible and the consumer who wishes to buy the product for the lowest price possible. These prices are determined by countless transactions and take into account not only supply and demand, but the costs to the producer in creating such a product and to the consumer in trading his wealth for it. No one man or group of men can determine price, be it that of iPads or India ETFs.
Most importantly, when a government distorts the cost of debt, including its own, by artificially reducing interest rates through currency devaluation, this ultimately throws out of whack the prices of all products in booms and busts, busts which may go on for many years if not allowed to self-correct.
The results of such policy will not only be a crushing of an economy leading to persistently high unemployment, decreased purchasing power and the insolvency of government, but more fundamentally the crushing of the creative spirit of the individual who will no longer receive rewards commensurate with his entrepreneurial acumen but only his ability in political guile.
To restore a semblance of capitalism in this country will require recognition of the evils of fiat currency specifically and central planning generally in all of its forms crude and coy, and an understanding that any government intervention to the benefit of a given party will naturally represent a cost to many other ones and ultimately the loss of the soul of the country in its individualism.
When an entire political and economic system is based on payoffs overt or covert to infinite constituencies, such a system will cease to sustain itself. When the political entrepreneur conquers the market entrepreneur, this is the death knell of economic growth and progress. And we the people have shamefully sanctioned this by allowing the government to serve the interests of particular groups instead of treating us all equally.
Perhaps the painful medicine of economic reality must be administered for the people in this country to understand that such a system as we have today is not only destructive but immoral and must be replaced. At the end of the day the truth always remains, and what must happen always will. Nature bestows on us its lessons, and we avoid those that history has taught again and again at our own peril.
Though I hope with all of my heart that we can avoid economic calamity, save for a swift and truly radical turn in public opinion it appears to be an inevitability with the question when, not if. Let no one say that proponents of economic liberty did not stand athwart history, yelling stop!
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70 Comments
Hugo, Obama's Hero! Enough said.
What is going to ultimately end up happening is that if governments continue to trash their currencies for political expediency the free market creates it's OWN gold standard based currency.
I've already resorted to barter when I can, I like trading my services for things not money.
Socialist thug economic policies ALWAYS leads to the only thriving market being the black market.
Thomas Jefferson was adamantly opposed to the idea of a privately owned federal bank and said " I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies".
He KNEW what a danger it was for the government to be able to print their own money…
In December 1913 while many members of Congress were home for Christmas, the Federal Reserve Act was rammed through Congress and was later signed by President Wilson. At a later date, Wilson admitted with remorse, when referring to the Fed."I have unwittingly ruined my country". ….And yet he did nothing to stop it!!!
So does that mean we are facing a Zimbabwe type of economy? I truly believe someday Barry will be in prison for what he has done to this country.
This has been happening to us since the Fed's inception in 1913; Hugo needs more media and academics to spin the story so that people actually start thinking his economic planning is the cure rather than the ill. It's worked here for almost a century.
I wonder if Republicans have the stomach to take on the Fed much less end it. Ron Paul will probably remain a lone voice in the wilderness.
Are you kidding, he won't even be IN this Country when enough people finally wake up to what he's done – they have drunk so much Koolaid – to be able to throw him in prison.
Well, Wilson was a socialist douche. I don't think he regretted it that much. And apparently he didn't.
At least Chavez admits to being a COMMUNIST.
"Our paternal representatives can manage the economy and when their interventions lead to problems, intervene again to correct them"
"The more the plans fail, the more the planners plan." —–R. Reagan
Chavez must have his eventual "get away" money in Gold or Euros.
And just WHY do you think I began referring to o as oHugo jr. at least six months ago?;-D
FIGHT on PATRIOTS!!!
.
Use monopoly money…Your circle of friends use it. Everybody starts with, let's say $500. Stamp or write the lst 4, of your driver's license (that's your name in code)
Establish a value…."an hour of your time is worth an hour of my time" OR "Tradespeople value is $10/hour"
During the early 80's recession we did this. I lived in a rural area at the time. The Bar Owner was the "banker" who issued the Funny Money.
Note: Not convertible to Greenback Cash…We couldn't get small retailers involved.
The creation of the Fed and the decoupling of our currency from the gold standard is only a part of our problems, and both should be changed. Adding legislative manipulation and outright corruption in the name of political power have nearly reduced our currency to Wiemar Republic standards. Let's make sure that Obama doesn't turn himself into another Hitler in order to "rescue" the country.
And the Republicans are where? Right in the back pocket of the Federal Reserve and the IMF and the World Bank – like all politicians everywhere. How do you think these GD SOB's keep getting elected? By stealing your money they are stealing your time, effort, and life. There will be no change in Washington with this new Congress. Already Boner has decided to compromise and reach across the aisle. (Is that what a reach around is?) Folks, buckle up.
Just how long must we wait for the "soak the rich" crowd to realize that it is the politicians that are soaking all of us for everything they can get their grubby hands on?
He sure as hell can not survive on his charm! But a few super tankers full of oil can haul him away and that he has.
Not surprised at all.
It's the interest charges that upset the economies.
Why? No currency is in circulation for the interest portion of the loan. After the lst payment is made, with interest charges, the economy is "shorted" currency to pay off the principal.
Look, the problem starts with the very lst deal.
So, the only additional charge with a loan would be for a service charge only. That's out of picket, your cash.
So, the "fed" needs to go, and be replaced with a bonafide US National Bank, that operates like the "fed" but charges no interest for distributioning OUR MONEY!
As with all despots Chaves continues to find obstacles in his way, he must continue to devour more and more independent agencies and businesses that frustrate his ultimate goal. The parallels with our government (I was going to say this administration,but it's bigger than that) are obvious.
Tell me something that would actually surprise me, like Obama has decided to pay as you go.
Otherwise, it's just Monday.
As long as there is something backing it, anyone should be able to issue currency.
I suspect Obambi has his in gold, stashes away in Kenya. Probably hauled a ton or two to India and had his minions smuggle it from there. Part of the reason for those huge fleet he took.
The sad news is that we have been heading this way for decades.
I'm gonna take a giant leap here and assume that the populace within Venezuela are predominately Catholic. Based on this premise, there are Godless-Politicians ruling the God-Fearing. Whether it be economics, policy initiatives or the immoral edicts pressed onto the people of that country, i find it hard to sympathize with the general masses. The Venezuelans have allowed, over time, to be held hostage with out the benefit of Nature's Law and are now paying the price in the form of Socialism. Didn't Cicero firmly believe that the Creators Law cannot be repealed, amended or vanquished from the natural order of mortal life? i'm blessed that we here in the United States still have the wherewithall to combat the tyranny that is yet to come.
It all goes back to the brilliance of those who recognized the worth of self-governance, which our Founders have recognized as the only way to preserve liberty and justice. The Venezuelans have lost their way by allowing the Tyrant that is Hugo to shape their misery and future. Even with all the oil-richness possessed by that nation they find themselves at odds with prosperity and freedom.
Oh, and btw, Patriots of this movement, Happy New Year and may all Your prayers for this Great Republic be heard by the Creator of Natures Law!!!!!
When you slap Adam Smith's invisible hand, it doesn't obey. It just moves away. Central planners just seem too stupid to see this.
Shocker. Forcing a Country into Communism ruins the economy and the Country!
Isn't this the same Hugo Chavez (& 10 other Latino Countries) that joined w Obama to sue Az at the 9th Circuit?
Isn't Hugo Chavez Hillary Clinton's friend. They've been hanging out together lately.
Welcome new 112 Congress! Give em hell!
When a product is diluted, whether it be OJ, coffee, or currency , it''s just not as good.
<Ann likes undiluted OJ, strong coffee and a stronger dollar>
Maybe the "H" in BHO's name actually stands for Hugo"-?
Certainly, he closely resembles this tyrant.
Hilarious! and true.- ' At least Chavez admits to being a Communist'
Oblammy is a Marxist muslim Communist who despises US. and works with Foreigners against U.S!
Very prescient article. While we all learn to accept less for the "greater good" our children and grand-children will hardly know the difference. Or so they think.
BINGO!!! Along with golf. Obama may know already that Communists despise golf though! Whatever will he do???
Unless the new congress can stop the insanity in the White House all this isn't going to end well.
New Congress:
- REQUIRE the Federal Govt to balance their budget. I'm sick of them squandering our Tax Money with no accountability!
- Do not raise the debt ceiling. Make them cough up their stash. Have obama call the Middle East for wire transfer
- Or use Congressman Issa's money trail investigations into waste and fraud. Take that money back for U.S!
- Go after ObamaCommunistCare right away! – - It's a Communist power grab of our FREEDOMS!
- Knock back Unemployment to it's original use- – A bridge between jobs. Back to 6 months again. The newspapers are filled with Help Wanted Ads. Make them work their way up in the work world like we did!
- Enforce our Fed Immigration Law now! Clean out America. It's ruining our Economy and our Culture!
- Don't let the phrases "Religious tolerance" or "Diversity" or "Discrimination" have any power. They have been perverted to manipulate U.S! zero tolerance for anyone who does not follow The Constitution!
- for starters………..
America is CLOSED FOR RENOVATIONS. No more interlopers. We're battling a marxist muslim takeover right now.
Know what I found surprising about this? I had assumed he took ober their Fed years ago. What was the tyrant waiting for?
Preach it bro. Austrian economists ftw.
Visit mises.org weekly if not more, everyone.
Namaste! I was Austrian before I even knew what it was.
Hey Ann, on a cautionary note undiluted O. J. has been rumored to be deadly.
North Korea devalued its currency as well. Destroy people's life savings and destroy the free market. It's all about concentrated power in a collective society. I'm sure Obama's taking notes.
Thanks for the warning…We only drink it in 4oz doses.
But, nothing more deadly than undiluded Marxism.
Last night I took the family out for dinner. We fed four people dinner, desert, drinks. I ate prime rib, with extra salt, in honor of Mayor Bloomberg's snowstorm performance. I paid $70.00 this includes a 25% tip for the waitress, always tip the waitress heavy considering they have to put up with my sunny disposition:) I do not have the patience to watch professional sports, but up there on a huge tv was the NY Giants . . . the family and I had a fantastic time.
Think of that. In this country with near 15% unemployment. A President at war with the productive economy. A state government (NY) under the rule of another Cuomo for 6 long years. We were able to do all of this, while packing heat for the protection of myself, and other innocent life there.
In Venezuela – how much would have this cost? Gazzillions? Let's count it out. First you've got to have a job with enough disposable income. To afford a night out. This will take a fair amount of bootlicking in that commie country, Austin Goollsby could give lessons. Next you'll have to find a safe place to eat and way to get there. Remember you can't carry a gun, let alone own one, we will call that a gazzillion dollars in and of itself. Finally, there is the risk your stuff faces when you leave to go get the meal, theft is rampant in Venezuela, what ever is left alone, grows legs and walks away.
Why would we want to give up the American way of spiritual acceptance via faith in God, and the freedom to express it materially with others through hard work, hell, it aint even that hard any more. In the old days you had to work to the bone to get one millionth of what you get today just by being borne in the United States of America.
Please don't give this up. It is rarer then my prime rib was.
Once we lose it under the banner of socialized medicine it will be gone forever.
Funny there are no Trolls here extolling the virtues of this ruinous economic malfeasence perpetrated by the MigetTyrant.
I have a time line for the new Congress.
-By April the Health care reform bill be repealed.
-By July Imam Hussein Obama be Impeached sitting in GITMO so we can have the Best Independence day ever.
-By Thanksgiving the remaining liberals in congress be under indictment.
/ If not we the people can abolish the current Government and start over by force if necessary …
Chavez has already devalued the Bolivar once already in last 12 months and nationalized the grocery stores to ration food. They have the highest inflation in the world.
We live in Obamazeula and are not far behind if we do not stop him. I'll never forget that in 2009 Obama joined Chavez in the failed attempt to install the marxist Zalaya as a dictator in Honduras over the Constitutional Republic of the people.
Sounds like Obama must have carefully read Hugo's book several times after Chavez gave it to him. I thought there was a little love in their eyes as they shook hands that day.
I think you are missing a few there but to start, Id go and rephrase your last one.
- Dont let 'policital correctness' have any power, and just drop the whole thing entirely.
- Slowly defund Social Security to allow people to move to more private savings that they manage on their own.
- Immediatly defund and relieve power to the EPA, FCC, dept. of Edu, and many others down the list.
- After cutting spending, half or more across the board, fix the tax system to either a flat-tax system or our old sales/tariff tax system.
- Drop all public unions, no more contracts/deals, just cut them out period.
Obummer admits it but the msm covers for him
I spent some time in Venezuela on business about 11 years ago and the poverty was appalling, Caracas is a city of cardboard and tin shanties perched on hillsides with no water or heat. The main boulevard has European designer stores for tourists but the open culverts that flow with human feces are not condusive to shopping. Police are everywhere and even a purse snatcher is shot on site with no questions asked.
In contrast, the governement buildings are opulent as are the elite personal residences but there is no freedom of movement. Everything is controlled. Chavez is another Mugabe and my heart goes out to the people of Venezuela.
I like your way of thinking friend..
A tribute to Obama….see reply
http://www.youtube.com/watch?v=Xd82HxYyHZg&fe...!
I guess hugo got clearance for devaluation from hiliary and obozo hussein
the corollary to this is that there is NO SUCH THING as a government entity that, at any level, for any purpose, altruistically puts the needs of the citizens/taxpayers ahead of its own interests. as i, and many, many others have been asking for years, where are the thousands upon thousands of utterly selfless bureaucrats going to come from to run our healthcare system, after we've driven the evil scourge of private profiteers out of business?
Maybe he should have read history.
"Bring your desires down to your present means. Increase them only when your increased means permit." Aristotle
wait for it. eventually one of the 'equal spreading of misery' morons will chime in to crow about how the evil 'rich' are getting their just deserts…
"disincentivizes people from partaking in mutually beneficial commercial activity."
Not entirely correct, Mr. Mellon. You will see a black market emerge in this country that will put the likes of the Mafia and the drug cartels to shame. When the lawless rule, lawlessness becomes the law.
The Governments of the world may dream of some 1984 style utopia, but what happens when we collectively decide we aren't going to play by their rules any longer? Two plus two DOES equal four.
America, look to the lessons of the Great Depression and Prohibition. That is where they are taking us, and that is where we will find the answer.
Viva la revolution!
Chavez has a single product economy – oil. Devaluation of his currency will wreak havoc internally but not so much internationally. Oil is currently still priced in dollars. However, with the runaway printing of dollars here and govt regulation interfering in our own energy market, I see a major price increase across the board for everything within the US – inflation.
A dollar today is equivalent to about three cents at the time the Fed began managing the currency in 1913.
In other words,since 1913, the dollar lost about 97% of it's value under Fed management.
You speak with the voice of a prophet. I fear he is setting the stage for some very bad things indeed- either as architect or perpetrator.
Well said. Same here, then one of my friends pointed that out, told me of the web site and authors I should read. It's amazing stuff.
One shot, One Hugo down…do it for the children of Venezuela
In late November, Venezuela was hammered by torrential rains and flooding that left 35 people dead and roughly 130,000 homeless. If George Bush had been president, instead of Hugo Chavez, the displaced people would have been shunted off at gunpoint to makeshift prison camps–like the Superdome–as they were following Hurricane Katrina. But that's not the way Chavez works. The Venezuelan president quickly passed "enabling" laws which gave him special powers to provide emergency aid and housing to flood victims. The disaster victims are now being fed and taken care of by the state until they can get back on their feet and return to work.
The details of Chavez's efforts have been largely omitted in the US media where he is regularly demonized as a "leftist strongman" or a dictator. The media refuses to acknowledge that Chavez has narrowed the income gap, eliminated illiteracy, provided health care for all Venezuelans, reduced inequality, and raised living standards across he board. While Bush and Obama were expanding their foreign wars and pushing through tax cuts for the rich, Chavez was busy improving the lives of the poor and needy while fending off the latest wave of US aggression.
Washington despises Chavez because he is unwilling to hand over Venezuela's vast resources to corporate elites and bankers. That's why the Bush administration tried to depose Chavez in a failed coup attempt in 2002, and that's why the smooth-talking Obama continues to launch covert attacks on Chavez today. Washington wants regime change so it can install a puppet who will hand over Venezuela's reserves to big oil while making life hell for working people.
Have you read the book "The Law That Never Was" by William (Bill) Benson and M.J. "Red" Beckman outspoken critics of the 16th Amendment – which they claim the 16th Amendment was never properly ratified by the States and is Constitutionally illegal. Look it up, very interesting read.
I believe that. I do think that obama has his pay load stashed over there. 40 Airplanes for that trip? Right.
When some little brainwashed socialist Dem sits down to their computer and gets a screen saying "computer temporarily down. Contact your Government" and that lasts for years………………..
Then the little purple shirts, ACORN, bleeding heart liberals, & global warming twits et al. will realize they've been had!
They'll be looking for the "rich" to help them but the rich will either have moved out of the US, or be bankrupt and working as gardeners at the White House. – -
See kids, we told you Capitalism, not Communism, but you didn't listen, with your Ivy League Socialist degrees from Communist Professors like Sunstein!
(O.J. Simpson was the reference)
Marxism is more sinister, indeed.
Wow, Red, I completely forgot about him. May he die in prison.
According to Hollywood pundints, Obama, the Clintons and Carter… he is not a communist.
Uh Huh! And I am the Queen of England.
Let’s face the bottom line:
The U.S. government has simply become a collection of poser puppets for the banking family of the Rothschilds. The Rothschilds have been in enslaving the People of the US via the fraudulent criminal conspiracy known as the illegal, unConstitutional Federal Reserve. The entire US government is now simply a puppet of the Rothschild banking dynasty.
All I want to hear are three magic three letter words,
“End the Fed”
Every political candidate must be evaluated based upon this single all telling crucial issue. You are either with the People or you are with the Rothschilds and their agents, the international bankers.
This is the new American litmus test.
http://smashabanana.blogspot.com
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