program, 40 million young people count on the feds to not foreclose on their lives. The only significant asset that remains out of their grasp is gold. And they may grab that soon. It wouldn’t be the first time. In 1933, Franklin Roosevelt’s Executive Order 6102 decreed that all gold should be turned in to the U.S. Treasury at $20 an ounce. Then, after the gold was in his hands, he was able to devalue the U.S. dollar by 75%, pricing gold at $35 an ounce. Gold was cash back then. And Roosevelt was trying to avoid the very thing we’ve seen happen in Argentina, Cyprus, and, most recently, Greece – a dash for cash. With free money available to them, the feds today could easily close that door, too – declaring private gold reserves illegal. They might offer to buy it for, say, $1,500 an ounce. Who would object to a 25% premium? The feds are the lenders and buyers of last resort. As the quality of assets declines, more and more assets – debt and equity – end up in their hands. Gradually,
controlling interest in almost all the world’s publicly listed companies. And who would object? Stock prices would go through the roof. As for the nation’s debt – public and private – who minds if the feds buy it... and disappear it? Nobody. As the price of debt goes up, the financial industry becomes richer. And government – and recipients of government money – are happy, too; the money just keeps flowing in their direction. Leading economists – notably Ken Rogoff of Harvard and Willem Buiter of Citigroup – also encourage the feds to outlaw cash... giving them a trifecta of financial control. They would have a grip on America’s equity, debt, and bank accounts. Already, government- sponsored agencies Fannie Mae and Freddie Mac are backing approximately 60% of new U.S. mortgages since 2008. Meaning the feds effectively own $4.8 trillion worth of U.S. housing. The Federal Reserve owns a further $4.5 trillion in debt. And through the student loan
interest rates, in which the government is actually paid to borrow. That is already happening. In Europe, rates have fallen so low that currently, Switzerland can borrow for 10 years at a MINUS 0.2% rate. This allows the government – and only the government, because it is the only institution that can positively, absolutely guarantee that you will get your money when you are supposed to – to go to heaven without dying. Further disturbing my sleep has been a report from Japan that the central bank has intervened directly in the stock market. The significance of this is staggering. Because now, the feds have in place the means – apparently – to take control of nearly all our wealth. The government borrows. The central bank buys its debt. Then it never asks to be repaid. As Japan shows, it can also buy stocks with the same free money. Bidding against a buyer who gets his money for nothing will be impossible. Gradually, the feds could acquire a
American Consequences | 33
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