A growing number of Americans are becoming aware of the Federal Reserve System, what it is, how it has precipitated our financial crisis, and how it continues to pursue policies that delay economic recovery and weaken the dollar. The Fed's actions, combined with the federal government's bailout bills and stimulus packages, have struck a nerve in the American people. The eighties brought us Japan's "miracle economy". The '88 Dukakis presidential campaign delivered the "Massachusetts miracle" - not many years later renamed "Massachusetts miserable." The Asian Tiger "miracle economies" (and markets!) were all the rage in the mid-90s - until their systems blew apart. Here at home, there was all the "New Paradigm" and the "New Era" hoopla. And until the recent crisis and double-digit GDP downdraft, many bravely trumpeted Ireland's Celtic Tiger miracle. The year 2009 will most likely expire without commemorating the centenary of a most momentous event in history that figures prominently as the main cause of the Great Financial Crisis of the century. This event was the so-called legal tender legislation in 1909. The bank notes of both the Banque de France and the Reichsbank of Germany were made legal tender by law, first in France and then, a very short time later, also in Imperial Germany. The rest of the world followed suit. In this way all roadblocks were removed in the way of financing the coming world war through credits and monetizing the resulting debt through the issuance of bank notes. On March 23, 2009, China made public announcements to overhaul the global monetary system, thereby questioning the role of the US dollar as the reserve currency.1 Chinese officials have gone on record saying they want to move the global currency peg away from the dollar in favour of currency diversification as indicated by China's push for OPEC to price oil in a basket of currencies (including the yuan) instead of dollars. Even within the ranks of analysts who have some understanding of the problems caused by fiscal and monetary "stimulus", it is commonly held that an economic/financial crisis requires "liquidity injections" and government intervention in order to overcome the immediate obstacle. It is acknowledged that the 'assistance' provided by the government and the central bank will have negative consequences in the long run, but it is generally argued that the long-term negatives can be dealt with after the dust settles. Newer Posts »