9 Things We Learned From the Fed's First Press Conference

Well simply put they can read the writing on the wall. Like most bad ideas, eventually there comes a time when it is abandoned and replaces with a new idea. The Fed is no exception. Congress created and empower the Fed and now that the lunacy which is the US monetary system has proven its worth there is some squeeking from the loose wheel that is Congress about returning control of the finances to the Treasury, that and the fact that it is unlikely that the US has 14 trillion in gold bullion to back its currency, unless the prices goes to 50 million dollars an ounce.

Exactly how long will the US Congress continue to hide the fact that it was duped by bankers 70 odd years ago into creating a magic money machine. I remember when I was 12 and the Fed, how it works and how it came to be was explained to me. I remember thinking " and they did this willingly?" Even at 12 I could spot the scam, yet I'm supposed to believe elder statesmen were that stupid?

I have listened to Bernake in all kinds of different scenarios and every encounter was full of misdirection, doublespeak and outright fabrication. The kind of banter that comes from a person who's power depends on confusion and secrecy because the truth is too foul and because their power depends on the continued cooperation of those they seek to confuse and misdirect.

Unlike Greenspan, Bernake is not so good at cloaking his deceptions and this has led to big doubt in congress about the Fed. So now the strategy is one of the selective reveal. Let them see there is a new you on the horizon when your intent is to be the same old you, for as long as you can hold out.

With any luck Congress will take back the power they gave away, if they still can without being murdered for even thinking about it, and maybe its not too late for the US. Somehow I doubt it though, the damage has been done and it is extensive indeed. The engine that drove the US economy 50 years ago, Manufaturing, is gone, replaced with service sector diplomas. The can do spirit that came with Victory in WWII has been replaced with outsourcing and cheap imports. Remember when the stamp Made in Japan signified a cheap import? Well now the Stamp " Made in the US" is usually found on antiques or has been replaced with "Assembled in the US" because the components are imported.

So what happens when the Fed has completely bankrupted the country? Do they hold a big sale? do they get to keep their house? How do you reposess a country? How does the world exact its pound of flesh?

Well this is just a guess but I'm thinking they don't. I'm betting they kill the Fed, move the treasury in house and outright default. It's the only way out of the insane amount of debit. Unlike when you and I go bankrupt though, the US will face a possible military conflict as China seeks revenge for its losses. And by the US , I mean every major power that isn't China. But in the end we either have an economy or we learn to speak Chinese.

Secretsquirrel 5:36PM August 19, 2011