End of the Fed: It Can’t Do Any of the Things It’s Supposed to Do

[The following is by TDV’s Senior Analyst, Ed Bugos]

Janet Yellen has been in the news with her often-stated determination to create price inflation.

Why Fed officials are so scared to death of the deflation we all look for at the shopping mall each weekend is anybody’s guess. Ours is that it keeps the crony banking system and its inflated bureaucracy afloat – on a sea of green, like in a yellow submarine.

But it doesn’t really matter. The Fed can’t do what Congress has decided it needs to do, anyway. That’s because the Fed is a state-empowered monopoly. And its dictates amount to price fixing, which never works.

And as people wake up to this reality, the credibility of the Fed continues to erode.  This is the central bank’s most pressing current issue. Let’s examine it further.

The Fed is subject to two legislative priorities. One is to generate price stability and the other is create”maximum employment.”

Price stability is not only impossible to achieve but not even desirable in a capitalist (free market) order. The price system is like a navigation tool and a feedback mechanism at the same time. It provides information and incentive.

What’s important is that when something changes, prices change to reflect it.

What the academics really mean is they want the Fed to avoid too much inflation or too much deflation in the price level. But they treat this as if the source of such deviations were everything other than their own actions. Even Milton Friedman, the economist who wove the academic cloak that Fed officials hide behind, knew that inflation and deflation were “always and everywhere” monetary phenomena.

The Fed’s objectives are a ruse: an intellectual cover: a lie! They exist to obscure the true objective of the Fed, which is to insure the current, corrupt banking order, and finance an insanely burgeoning bureaucracy.

Back in 2009, when markets were declining by 50 percent, Ben Bernanke supposedly sent US$15 trillion to banks around the world.

This was illegal, as the Fed is a domestic entity. That money was disbursed as short term loans and supposedly little of it has come back.

That tells you all you need to know about the REAL purpose of the Fed. The Fed is intended to support and manage a worldwide banking cartel, using resources it syphons from taxpayers and savers.

There are anti-monopoly laws on the books around the world. Yet the “central” banks are exempt from such legislation. Central banks are SUPPOSED to work with other central banks, guided and harmonized by the incredibly powerful and secret Bank for International Settlements located in Switzerland (long ago created by Morgan and his British banking friends). Having monopoly central banks around the world coordinate their destructive money production helps nobody except a handful of impossibly wealthy bankers and elites.

The primary purpose of the modern central banking system is to centralize power and control.  If you want to understand what it really is and what its purpose is (hint: it’s not good for you) watch this:

The American Dream - The Dollar Vigilante

Since central banks are extra market forces, unresponsive to prices, their interventions in the interest rate can’t be sustained. But the frequent collapses they engender are never wasted, always justifying the further accumulation of power by a few who are devoted to the continual globalization of finance. You see,  they win when they’re inflating the boom and they win when it collapses. It’s a win, win… for them.

The current role of central banks is obscured by a deluge of propaganda, because if what central banks REALLY did were clear, people would ensure their destruction.

But on any level central banking makes little sense. If the market can’t support an industry then it should die. If society needs banks and bankers’ money, they can survive without the government’s help. This kind of thinking is revolutionary. I know.  But that’s just what we do here at The Dollar Vigilante.  But therein also lies another very important objective of central banking: to help the fractional reserve banks expand credit and their assets infinitely. Only, this mode of expansion is self serving; it does not add to the wealth of the society, but only redistributes it. The fact is that the banks and government are insolvent. And as ruin spreads, so does the modern blight of authoritarian globalization.

There is only one thing that can check this trend. That’s the competition of the free market. Take away legal tender monopoly. Reduce the scope of the powers of the regulatory bodies or, even better, eliminate them altogether.

Most people understand the banks are doing something nefarious today. But their naive belief in government prevents them from seeing that the banks could not do what they do without the government.

Someday people will see the system for what it is.  We won’t stop until they do. They will recognize the wizards “behind the curtain” and realize that the wizards have only contempt for them and intend to ruin them. That is the day the Fed will cease to concern itself with price stability and growth – because the Fed will cease to exist. And that will be the first really good news for price stability and growth since the Fed was founded a century ago.

In fact, the Fed and other central banks are under increasing attack because of their abysmal performance and its exposure on the internet. The world’s financial system is in a state of considerable flux as a result.

This is one of the most important issues facing investors today and it is one that will receive a good deal of attention at our upcoming investment summit in Acapulco, Mexico on February 18th.

I’ll be there and I urge you to join me. Please make your reservation HERE.  It is nearly sold out now so I hope you can make it.

And once you’ve signed up for the Summit, you’ll want to stay for the anarcho-capitalist, three-day Anarchapulco freedom fest. I’ll be there for that as well.

Never has the world’s financial system been so fraught and never has the future seemed so doubtful. All these issues will receive a thorough going-over at our investment summit. Please come lend your voice to our discussion – for the sake of your own prosperity and your family’s and friends. I hope to see you there.

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Ed Bugos

Mr. Bugos is the Dollar Vigilante's Senior Analyst and founding partner. He is an Austrian economist and has been a dedicated investment professional since 1989, having started his career as a stock and futures broker on Howe Street at one of Vancouver's leading brokerage firms. Ed retired in 2000 warning clients about the tech bubble, and launched an online digest forecasting gold's revival and bull market when it was just $285. He saw the value in bitcoin as a potentially sounder alternative to the present fiat currency system as early as 2011 before many of his Austrian peers. Ed has built a career record of being early on major economic trends, bullish and bearish.


  1. jclbiz on February 4, 2016 at 7:48 pm

    With you guys ,Rob Kirby, Jim Willie et al I get it. Thanks for all you do.
    Jack Lovett

  2. terry shead on February 5, 2016 at 7:04 am

    Rothschild and his brothers are the problem, this is the cancel you have to cut out, I was taken back how many central banks he owns or should I say what doesn’t he own?

  3. Jay on February 5, 2016 at 4:51 pm

    Effort is really there on this article.

    I would opt for a less convicted style. Let the reader decide where they stand between the government/MSM narrative and the opposite.

    Also, Occam’s Razor is worth consideration with ALL conspiracy theories. We don’t know the likelihood of an event, but we do know that they most likely explanation is the likeliest one.

    Does it matter who’s pulling the puppet strings? Rothschild, Illuminati, whatever. Skip the history and we can save time. History however often repeats itself.

    Good analysis needs to focus on what is happening now. With so much media noise, providing a clear perspective is vital.

    Just because we don’t agree with the narrative doesn’t mean there are elements of truth in it.

    We expend more and more focus on translating from the media narrative–out of MSMese–, which is distracting enough without added possibilities/potentialities to consider.

  4. johntalleos on February 6, 2016 at 1:57 pm

    Lot of platitudes and unqualified statements. If you want to sell your idea to a fellow adherent of Austrian economics, you got to do better than this article

  5. travis690 on February 7, 2016 at 8:05 pm

    One point I always make about the way the Federal Reserve works is to ask: If they were doing their function correctly, why would they want the product they create to be worth less in the marketplace? Why would they want to have a weak currency?

    I can’t think of any business that wants to put a product into the marketplace that they feel should be worth less than the value charged. Yet this seems to be the goal of every central banker when they talk about wanting to create price inflation.

    • Dave, Voluntaryist Webmaster on February 7, 2016 at 11:27 pm

      Sure. But their product isn’t the currency. Their ostensible product is economic stability, which they do make more valuable (by making it more scarce!). However, their real product is power, and they sell it to politicians. They play an ugly game and they cheat by getting governments to label unethical behavior (currency debauchery) as “legal”.

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