The Federal Reserve does not have a capitalistic bone in its entire body. The Fed, led by Chairman Ben Bernanke, is circumventing capitalism by slashing the interest rates to near zero and by injecting trillions of dollars into the economy.
My book, “The Red Fed,” is coming out in 2013. It examines the Federal Reserve and shows how the Fed has moved from supporting capitalism to providing monetary support to socialism and communism. This book is a sequel to my first book, “A Warrior for All Times,” which is coming out this year.
The Fed has promoted socialism by purchasing mortgage-backed securities, Treasury issuance, and other assets. Some have called this printing money out of thin air, but what it does is give the executive branch more leeway for borrowing and spending in its socialistic programs.
The result has been high inflation and a weakened dollar. The former purpose of the central bank was to preserve the integrity of currency by controlling inflation and letting the economy guide itself. In other words, the Fed was supposed to support capitalism by dealing with occasional panics. Interest rates generally are increased to slow down inflation. The Fed, with its fraudulent purpose, has no desire to stop inflation, thus interest rates hover near zero. The Fed’s new world goal is to promote a world economy supported by socialistic and communistic governments.
Steve Forbes, Forbes magazine editor and former presidential candidate, called Bernanke a “terrible central banker,” trying so hard to guide the economy that he has lost sight of his primary role, which is to control inflation, keep the economy healthy, and let the economy guide itself.
Bernanke’s low interest rate is allowing inflation to heat up. The resulting increased prices of gasoline alone are having an effect on our economy. The actual inflation rate is hidden from the American people. The spark of inflation could ignite into a major gasoline fire that could engulf and consume our entire economy.
Martin Feldstein, former Reagan economic adviser and Harvard professor of economics, indicated that the printing of money or “quantitative easing,” which creates a large volume of reserves also creates a risk for inflation.
Feldstein stated, “Traditionally, the volume of bank deposits that constitute the broad money supply has increased in proportion to the amount of reserves that the commercial banks had available.” He continued, “Increases in the stock of money have generally led, over multiyear periods, to increases in the price level.”
“Therefore, faster growth of reserves led to faster growth of the money supply – and on to a higher rate of inflation.” He concluded, “The Fed in effect controlled – or sometimes failed to control – inflation by irritating the rate of growth of reserves.”