Government lies are legion.
So many are its lies, that narrowing them down to three of the most important is a demanding task. But our current crisis has been chiefly enabled by monetary policy, fiscal policy and the global military empire.
So I have chosen to focus on lies about each: the Federal Reserve, the orchestrator of monetary policy; the U.S. budget, the accounting of government fiscal policy and just a little of the war lies of the empire. I am sharing just a smattering of this astonishing record of duplicity in three areas, for life is short, or at least far too short to recount all of the state’s lies about each.
Lie #1: The Federal Reserve Is a Bank
Practically everything the government says about banking is a lie. Central banks are not banks. The Federal Reserve, the central bank of the United States, is not a bank.
A bank is a company in the free market that competes with other banks in offering willing customers a safe place to make deposits and earn an interest rate return, while also competing to offer loans from these deposits to willing borrowers.
Central banks are government-created bureaucracies that do nothing of the sort.
The Federal Reserve is typical of central banks. It is not a free market institution in which people willingly make deposits. Instead, it wields monopoly power over actual banks. In place of managing deposits and loans, it creates money out of nothing by a variety of means, including debt monetization, in which it buys government debt by simply creating a credit in the account of a commercial bank with a nothing more than a booking entry. This act is made possible only by the state’s creation of a legal monopoly empowering the central bank to do what, if done by a private bank, would be a crime called counterfeiting.
Central banks, like the Federal Reserve Banks, thus have the ability to unilaterally boom and bust their economies at will. And they have done so throughout their history, either to the benefit of the commercial bank cartels, in response to political pressure, or because of outright economic ineptitude.
The representation of central banks as actual banks produces confusion in which they are said to earn “profits.” For example, a January 2012 Federal Reserve press release reporting its “earnings” announced $76.9 billion in 2011 net income. This was described in stories in The New York Times and The Financial Times as the Fed’s “profits,” as would a story about any commercial bank describing its profits.
Yet, in what sense does the Fed show a “profit” or have “earnings”? It is as inappropriate as would be describing the collections of the Internal Revenue Service as “profits.”
Where are the Federal Reserve’s “profits” derived? They are the result of printing new dollars to buy assets; that is, they are the result of diluting the purchasing power of every dollar you or anyone else has. It is not any different than a dairy watering down 100 gallons of milk to sell 110 gallons. It is fraud. But it is a fraud legalized by act of Congress.
But the Federal Reserve is not alone. Another non-bank is the World Bank, which loans money to governments and government enterprises. The World Bank has been a useful place to pasture failed U.S. government warmongers like the disastrous Vietnam War Secretary of Defense, Robert Strange McNamara and Iraq war co-author, Paul Wolfowitz. Both were named World Bank president even as their deadly wars raged on.
The World Bank gets almost all of its money by way of the International Bank for Reconstruction and Development (IBRD) — also not a bank — which gets its money from taxes, the largest share coming from the American people. The IBRD also sells World Bank bonds, but they too are guaranteed by taxpayers.
American tax dollars go to other multi-national organizations such as the Asian Development Bank, the African Development Bank and the Inter-American Development Bank. None of which are banks.