Tag Archives: Federal Reserve

Business, Cryptocurrency, Economy, Featured, Podcast, Technology

Elon Musk Wrong About Bitcoin Energy Consumption?

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ELON MUSK Wrong About Bitcoin Energy Consumption? – powered by ise.media

Elon Musk and Janet Yellen are suddenly ‘concerned’ about Bitcoin’s environmental impact. But is Bitcoin really that harmful? Our interview with Bob Burnet explains just how wrong their statements are and how Bitcoin is actually paving the way for energy efficiency.

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Economy

Trump’s Fed Nominee Advocated Abolishing Cash

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Trump Federal Reserve Board of Governors nominee Marvin Goodfriend reportedly advocated on two different occasions the elimination of cash from circulation in an effort to prevent individuals from hoarding cash in the event that the Federal Reserve were to push a negative interest rate policy during a financial crisis.

The Mises Institute notes that Goodfriend first floated the idea in a 1999 paper called “The Case for Unencumbering Interest Rate Policy at the Zero Bound” and again promoted the concept at a 2016 Federal Reserve conference in Jackson Hole, Wyo.

Goodfriend reportedly said that the Fed needs the option to push interest rates negative, which would cause consumers to pay fees in order to keep their money in savings accounts, and that cash should be eliminated to prevent banking consumers from pulling their money out of banks to avoid paying those fees.

Bloomberg notes that Goodfriend suggested a few theories for how to phase out cash. He floated eliminating large bills to make cash less convenient. He suggested that the Fed charge banks and/or consumers fees for issuing paper currency. He advocated that the issuance of cash be taxed such that consumers only receive 90 cents when withdrawing a dollar. He also called for abolishing cash outright. The Wall Street Journal notes that Goodfriend additionally suggested that cash bills should contain a magnetic strip so they can be scanned and tracked as they move through circulation.

The Federalist’s Connor Boyack wrote, “From Sweden to India and Venezuela to Australia, governments around the world have already taken steps to eliminate cash from their economy. This is particularly attractive in countries like China, with a government that wants to be able to track its citizens at all times.”

Cash purchases are notoriously difficult for regulators to monitor.

In a January Senate confirmation hearing, Goodfriend downplayed his seriousness in advocating the policy.

“I wrote a paper in 1999 for a Federal Reserve System conference which asked what would happen if interest rates went to zero, and what could the Federal Reserve do. I didn’t propose that, that was an academic paper showing what could be done….It was not a proposal. It was an emergency matter we considered as a matter of thinking about these things before anyone ever imagined anything could happen like that,” he said, omitting any mention of his 2016 speech on the subject.

While Goodfriend’s nomination enjoys the support of most Senate Republicans, it has stalled so far in the face of opposition from Senate Democrats and Republican U.S. Senator from Kentucky Rand Paul.

Harvard economist Kenneth Rogoff, who supports Goodfriend, said, “Thank goodness there will be someone at the Fed with the foresight to realize that world needs to start thinking about how central banks can best deal with the inevitable next deep financial crisis. And negative interest rate policy is the best idea out there by a wide margin; hopefully we won’t need it anytime soon. Still, I believe that within a decade, all the world’s major central banks and treasuries are likely to have taken the simple steps necessary to create the foundations for effective negative interest rate policy in deep recessions or financial crises.”

The Mises Institute’s Tho Bishop, who questioned whether Goodfriend is the “worst Federal Reserve nominee of all time,” wrote, “Instead of correcting course from the interventionism of the Greenspan-Bernanke-Yellen, Goodfriend is doubling down on the same fundamental misunderstanding on the role of interest rates in an economy. Rather than a macroeconomic policy tool that can be used by central planners to speed up and slow down an economy, interest rates are instead important market prices coordinating the supply and demand of money on the market.”

Cryptocurrency

St. Louis Federal Reserve Admits Bitcoin is Much Like Other Currencies

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(DFN) The St. Louis Federal Reserve in the U.S. issued a blog post based on a paper written by Berentsen and Schär that draws three main similarities between Bitcoin and other national currencies.

Watch Related:
https://www.youtube.com/watch?v=xGkymaMtSPM&t

The blog post touches on one, no intrinsic value in either, two, limited supply, and three, no middle man. Berentsen and Schär discussed how Bitcoin has no intrinsic value since it only has the code, computations, and developers behind it, but they also highlighted that “[s]tate monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either.” They mentioned how the USD is no longer back by gold and only has the trust of the U.S. government and its status as legal tender to back the currency.

They also discussed that there is a limited supply of Bitcoins – at 21 million coins. They did not mention the limited supply of other coins such as Dash. Importantly, they added that scarcity is what grants value to an item and even though Bitcoin’s price fluctuates a lot, there is still an upper limit to its volume. They also mentioned that the U.S. Federal Reserve technically “does not print money”, but has the ability to “increase or decrease the monetary base.”

The final point discussed that there is no middle man when using Bitcoin since Bitcoins are sent directly between individuals without any “credit relationship aris[ing] between the buyer and the seller.” They added that “[i]n that way, bitcoin was designed to be a lot like cash.”

Money Manipulations

The blog post by the St. Louis Fed based on the paper does reveal that the Fed is recognizing the role that cryptocurrencies are playing as currencies despite their volatility. The second point does deserve to be broken out further in that it relates back to point one. While it is true that the Fed does not physically print money and helicopter drop the money to citizens, it does do something similar via the Federal Open Market Committee (FOMC). The FOMC buys bonds (to inject more money into the economy) or sells bonds (to take money out of the economy) and this is all done electronically so the Fed does not actually print money, but still manipulates the amount of money in the economy (the monetary base). They can also manipulate the money supply via interest rates, minimum reserve ratios, and other tools. These manipulation can relate back to point one about the intrinsic value of Bitcoin and cryptocurrency.

As a prerequisite, the difference between intrinsic value (internal value from the item) and extrinsic value (value applied from an outside party) should be mentioned to be a blurry line. Gold is often said to have intrinsic value because it is more scarce and can be used for jewellery or computer parts, but ultimately, even that value somewhat arises from the extrinsic value that consumers place on the services of gold. So the task then becomes not to look for an intrinsic value, but to find the chief source of the extrinsic value for Bitcoin and other cryptocurrencies. Since many cryptocurrencies have their supplies written into their code, which have not been broken, the extrinsic value of cryptocurrencies when compared to fiat would arise from consumers actively preferring the inability to manipulate the money supply.

Another appeal of cryptocurrencies has not been its similarities to cash, but instead its improvements upon cash. Individuals are now able to store their own wealth for a fraction of the fees typically charged by banks without fear of losing their money through theft or natural disasters (as would be the case if personally storing all cash on hand) or having their money devalued. Some cryptocurrencies are making better improvements upon cash than others.

Dash is maximizing everyday usage

Dash has excelled in making Dash usable in everyday transactions. Dash has so far ensured consistently low transaction fees and fast confirmation times further increasing its similarities and improvements relative to cash. In addition, Dash has been able to increase merchant adoption throughout the world since Dash is more viable in everyday transactions than many other cryptocurrencies. This has led to clusters of active Dash communities like those in New Hampshire and Venezuela.

Dash has been able to accomplish this through its unique governance and treasury system, which has enabled decentralized funding and decentralized coordination of teams to create a spontaneous order of consumer solutions. Dash has been able to seamlessly upgrade its network to maintain low transaction fees and fast confirmation times. The Dash community has created outlets throughout the world to educate consumers about Dash and cryptocurrency. There have also been numerous online and physical stores beginning to accept Dash as they realize its potential. Dash is leveraging its comparative advantages to create confidence and offer consumers services that the current cash and monetary system do not offer.

 

Written by Justin Szilard

 

This article was republished with permission from Dash Force News.

Civil Liberties, Economy, Politics, US

Congressman Proposes Bill to Return to Pre-1913 Gold-Backed US Dollar

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Washington, D.C. – West Virginia Congressman Alex Mooney recently proposed legislation “to define the dollar as a fixed weight of gold.” Mooney harshly criticized U.S. monetary policy, citing the 96 percent loss since “the end of the gold standard in 1913,” which in real life terms means that means a dollar in 1913 would now be only be worth .04 cents.

“The United States dollar has lost 30 percent of its purchasing power since 2000, and 96 percent of its purchasing power since the end of the gold standard in 1913. Under the Federal Reserve’s two percent inflation objective, the dollar loses half of its purchasing power every generation, or 35 years,” the bill stated.

The legislation notes that the “international gold exchange standard from 1914 to 1971 did not provide for a United States dollar convertible into gold, and therefore helped cause the Great Depression and stagflation.” H.R. 5404 goes on to explain the purported advantage of having a gold-backed dollar that is actually convertible to gold.

[Watch: Truth in Media: 100 Years of the Federal Reserve]

“The gold standard puts control of the money supply with the market instead of the Federal Reserve. The gold standard means legal tender defined by and convertible into a certain quantity of gold. Under the gold standard through 1913, the United States economy grew at an annual average of four percent, one-third larger than the growth rate since then and twice the level since 2000,” Mooney said.

Some experts, however, have questioned whether the U.S. actually has enough physical gold to back the U.S. dollar, as the country is notoriously secretive about its physical gold reserves and there has never been an full independent audit of its gold.

America is believed to possess roughly 8,133.5 tons of physical gold in its official reserves, with 58 percent reportedly held in Fort Knox, Kentucky, 20 percent at West Point in New York, 16 percent at the U.S. Mint in Denver, Colorado, and 5 percent believed to be held at the New York Fed.

Ronan Manly, a precious metals expert for Singapore’s BullionStar, told RT that he believes that actual U.S. gold reserves are likely smaller than claimed.

“The entire story around the US gold reserves is opaque and secretive. There has never been a full independent audit of the US gold reserves, and the custodians of the gold, the US Mint and the Federal Reserve of New York will not let anybody into the vaults to view the gold or to count it,” Manly told RT.

Manly also raised doubts about the purity of the gold stored in American vaults being up to industry standards.

“Even the details that have been provided on the supposed US gold holdings show that a majority of the gold bars are low purity and in weights that don’t conform to the industry standard ‘Good Delivery’ gold bar specifications,” Manly said. According him, this gold can’t be traded on the international market because of the low quality.

While some may have doubts about the U.S. gold supply, the legislation maintains returning to “the gold standard puts control of the money supply with the market instead of the Federal Reserve,” while keenly noting “The Federal Reserve’s trickle down policy of expanding the money supply with no demand for it has enriched the owners of financial assets but endangered the jobs, wages, and savings of blue collar workers.”

Economy, Featured, States Rights, US

Wyoming Legislature Passes Bill Making Gold, Silver Legal Tender

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The Wyoming State Senate passed the Wyoming Legal Tender Act (House Bill 103) last Wednesday by a vote of 25-5. The bill had previously passed the state’s House of Representatives by a vote of 44-14.

After the House reconciles differences in amendments with the Senate version of the bill, it moves on to Republican Wyoming Governor Matt Mead’s desk for consideration.

If signed into law, the bill would recognize gold and silver as legal tender for payment of debt and taxes in the state and would remove the state’s ability to tax the sale of gold and silver specie.

Former U.S. Congressman from Texas Ron Paul said in a statement on the passage of the bill, “Passage of the Wyoming Legal Tender Act is the latest sign that dissatisfaction with the Federal Reserve’s money monopoly— and the movement to change our fiat currency system led by my Campaign for Liberty— is alive and growing. This bill would not have passed through the legislature without the hard work of Wyoming Campaign for Liberty state coordinator Cathy Ide and all of the dedicated activists who made sure the Wyoming legislature knew the people wanted them to restore their legal right to use real money instead of Federal Reserve notes. Governor Mead should listen to the people and sign this bill into law without delay.”

“As the economy slides into another Fed-created downturn, I predict the movement to pass state legal tender laws will grow. My Campaign for Liberty group is ready to help pass these laws in as many states as possible,” added Congressman Paul. His Campaign for Liberty is currently mobilizing grassroots activists to press Wyoming citizens to contact Governor Mead in support of the bill.

According to NewsCenter1, GOP State Rep. Roy Edwards described why legislators want to remove the tax on specie, saying, “Imagine going to the grocery store and asking the clerk for change for a $20 bill and being charged 80-cents in tax [on the change]. That’s what we’re doing in Wyoming by charging sales taxes on precious metals and we’re taking steps to change that.”

Constitutional tender expert Professor William Greene told the Tenth Amendment Center, “Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”

If the bill were to become law, Wyoming would join a handful of other states who have passed various measures to encourage the use of gold and silver as legal tender, including Utah, Arizona, and Texas.

Featured, Government Accountability, Politics, US

Rand Paul to Introduce ‘Audit the Fed’ as Amendment to Senate Banking Bill

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Washington, D.C. – Senator Rand Paul (R-KY) announced on March 5 that he will introduce his “Audit the Fed” legislation, which would permit a full audit of the Federal Reserve System, as an amendment to the Senate Banking Bill. The Senate is expected to vote on the Banking Bill, S. 2155— officially known as the Economic Growth, Regulatory Relief, and Consumer Protection Act— this week.

“While we have made great strides in reviving our economy through curbing overzealous regulation and cutting taxes, lasting prosperity will escape us if we do not hold the enabler of big government and our astronomical national debt accountable. It’s time for the Senate to side with the American people by removing the shackles on congressional oversight and lifting the Fed’s veil of secrecy. It’s time for us to pass Audit the Fed,” Paul said in his press release.

Passage of the Federal Reserve Transparency Act (S. 16), commonly referred to as Audit the Fed legislation, would require the nonpartisan, independent Government Accountability Office (GAO) to conduct a thorough audit of the Federal Reserve’s Board of Governors and reserve banks within one year of the bill’s passage and to report back to Congress within 90 days of completing the audit.

Paul remains steadfast in his commitment to this legislation that he and his father, former Rep. Ron Paul (R-TX), worked for years to pass, with the intent to stop the Federal Reserve’s “unchecked” and “arguably unconstitutional” meddling in the free market economy.

[RELATED: Truth in Media: 100 Years of the Federal Reserve]

Senator Paul’s 2016 Federal Reserve Transparency Act received nearly unanimous Republican support, in addition to support from Sen. Bernie Sanders (I-VT) and Sen. Tammy Baldwin (D-WI). Ultimately, the bill fell short of the required 60 votes for cloture after Senate Democrats leadership shot it down.

In January 2017, Paul reintroduced the Federal Reserve Transparency Act (S. 16), widely known as “Audit the Fed”. Appearing on Fox New with Tucker Carlson on February 7th, Paul explained why it is important for Congress to scrutinize the Federal Reserve’s monetary policy.

“The main lobby against auditing the Fed is the Fed,” Paul said. When Carlson asked what the major arguments against auditing the Federal Reserve would be, Paul cautioned:

“Some see that the Fed pays for this enormous debt and they love big government, and they know we have to have big debt for big government, and they have to pay for it, so they don’t want to mess with the Fed because right now it is able to accommodate this enormous debt.”

“The reason I want oversight is people get hurt in the downturn,” Paul continued. “So in 2008, when the housing market went bust, I blamed that on the Federal Reserve. We’re right in the middle of another boom. Anybody seen the stock market lately? It is a boom, just like the real estate boom of 2008, and it will come to an end. I wish I knew exactly when, so I could give your viewers some investment advice, but it will end. There will be a correction. We have a huge bubble in the stock market created by easy money, free money, everybody has it. Free money! Federal Reserve will hand you bouquets of money. But there will be repercussions, and that will be the downturn. There will be a response or reaction to all of this extra money.”

On the prospect of Trump signing the legislation if it were to make it through Congress, Paul said, “We’ve talked about Audit the Fed before and the fact that he supported it during his campaign. I think he will sign Audit the Fed if we can get it to him. The hardest part that we have to overcome is the institution of the Fed itself. The biggest lobbyist on Capitol Hill against auditing the Fed is the Fed.”

“I think it always has a chance of passing, but the hardest part is actually getting a vote on things,” Paul told Reason in an interview. “You never know unless you try.”

https://www.facebook.com/SenatorRandPaul/videos/1847346481984813/

 

Election, Politics

Federal Reserve Governor’s Clinton Donation Raises Questions About Fed Independence

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Federal Election Commission records indicate that Federal Reserve Governor Lael Brainard has contributed a total of $750 to Hillary Clinton’s presidential campaign over three different donations, which took place between November of 2015 and January of 2016.

It is currently legal for Fed governors, who are appointed by the president and help steer the private central bank’s monetary policy decisions, to donate to political campaigns and causes. However, it is uncommon for them to do so, and Brainard’s donations have sparked questions as to whether her advocacy for Clinton undermines the Federal Reserve’s claim that it is politically independent.

Brookings Institution senior fellow Sarah Binder, who said that the contributions “could provide fuel for Republican narratives about the proximity of the Fed and the board to the Obama administration,” told Bloomberg Politics, “If there is an issue here, it is one of optics. It is a question of where governors want to draw their own lines and how they want to be perceived.”

[RELATED: Bernie Sanders Calls for Full Independent Audit of Federal Reserve]

Brainard was appointed to her position as Fed governor by President Barack Obama and took office in 2014. Her husband, Kurt Campbell, once served under then Secretary of State Clinton as assistant secretary for east Asian and Pacific affairs.

Federal Reserve Chair Janet Yellen has vociferously opposed political efforts to launch a full audit of the Federal Reserve, claiming that doing so would weaken the bank’s independence from political whims. “Central bank independence in conducting monetary policy is considered a best practice for central banks around the world. Academic studies, I think, establish beyond the shadow of a doubt that independent central banks perform better,” she said last year according to The Hill.

The Daily Caller characterized the donation as “an unusual practice for an organization that strives to maintain political independence,” and Zero Hedge called it “proof that Fed members have a clear ideological bias.”

[RELATED: Trump: Fed Chair Yellen Not Raising Rates ‘Because Obama Told Her Not To’]

While it is uncommon for a Fed governor to donate openly to political campaigns, so much so that Brainard is the only one to have done so thus far this presidential election cycle, it has happened before in the past according to Bloomberg Politics. Former Federal Reserve governor and vice-chair Alice Rivlin, an appointee of former President Bill Clinton, donated $500 to the Democratic National Committee in 1998 at a time when she was actively serving as vice chair of the Federal Reserve Board of Governors.

The Hill notes that in November of 2015 U.S. Senator Rand Paul (R-Ky.) raised questions about the Fed’s level of political independence and called for an investigation into whether Federal Reserve funds are being used in “improper or illegal lobbying” of Congress.

For more election coverage, click here.

Follow Barry Donegan on Facebook and Twitter.

Election, Featured, Politics

Trump Rips Cruz for Not Showing Up to Vote for Audit the Fed

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2016 Republican presidential candidate and real estate mogul Donald Trump took to Twitter on Monday to criticize rival candidate and Sen. from Texas Ted Cruz for his decision to skip a key vote on legislation that would allow Congress to audit the Federal Reserve.

https://twitter.com/realDonaldTrump/status/701868541545295872

In January, the bill colloquially referred to as Audit the Fed appeared for a vote before the full Senate for the first time in history, and, though a majority of senators voted in favor, some Senate Democrats effectively blocked the legislation with a filibuster, raising the threshold of votes needed to pass the bill to 60.

Every Senate Republican voted in favor of the bill except Senator from Tennessee Bob Corker, who opposed the bill, and Sen. Ted Cruz, who did not show up to vote that day despite having long advocated in favor of a Federal Reserve audit.

Democratic presidential candidate and Sen. Bernie Sanders broke party ranks and voted in favor of Audit the Fed along with Republicans.

[RELATED: Trump: Fed Chair Yellen Not Raising Rates ‘Because Obama Told Her Not To’]

Audit the Fed is considered the signature piece of legislation of former Republican Congressman Ron Paul’s entire political career. The latest iteration of the bill was introduced in the Senate by his son, Senator Rand Paul (R-Ky.). As such, support for the bill is deeply and viscerally ingrained in the Republican Party’s libertarian and Tea Party wings.

The Guardian’s Ben Jacobs wrote, “By skipping the vote on auditing the Fed, Cruz [risked] jeopardizing some of the credibility he has built in this faction of the Republican party. Auditing the Federal Reserve has long been an animating cause of Paul and his supporters and it has taken on major symbolic significance.”

After Cruz missed the vote, he sent an email to conservative commentator Glenn Beck, which read, “I strongly support auditing the Fed. Indeed, I was an original co-sponsor of Ron Paul’s Audit the Fed bill. Unfortunately, it was clear early on that yesterday’s vote wasn’t going to succeed (it fell 7 votes short). And, at the same time that the vote was scheduled, I had longstanding commitments to be in New Hampshire — for a Second Amendment rally, and a 1500- person State of the Union town hall. If my vote would have made a difference in it passing, I would have cancelled my campaign events to be there. Because the vote was not going to succeed, I honored my commitments to be with the men and women of New Hampshire.”

[RELATED: Reality Check: Ted Cruz Doesn’t Vote To Audit Fed, Took Personal Loan for Campaign from Goldman-Sachs]

Audit the Fed supporters argue that the nation’s central bank needs an audit because it operates under too much secrecy and is failing at its mission of keeping the U.S. dollar stable. Opponents of the bill say that the Federal Reserve needs to maintain independence to prevent monetary policy from being politicized by Congress.

“The Federal Reserve’s inflationary policies distort the economy, creating bubbles, which in turn create a booming stock market and the illusion of widespread prosperity. Inevitably, the bubble bursts, the market crashes, and the economy sinks into a recession,” said Ron Paul in 2015, articulating a chief complaint of Fed opponents. Paul believes the Fed should be abolished and that interest rates and dollar values should be set by the market.

In January, Ben Swann released a Reality Check segment, seen below, that highlighted the fact that Cruz declined to vote on “such an important bill about which he seems to speak so passionately.”

Reality Check: Ted Cruz Doesn't Vote To Audit Fed, Took Person…

Sen. Ted Cruz missed a very important vote this week on a bill he co-sponsored, to Audit the Fed. It happened just as we all learned that his ties to big banks may run deeper than previously thought.Learn more: http://truthinmedia.com/reality-check-ted-cruz-doesnt-vote-audit-fed-took-personal-loan-campaign-goldman-sachs/

Posted by Ben Swann on Thursday, January 14, 2016

For more 2016 election coverage, click here.

Follow Barry Donegan on Facebook and Twitter.

Economy, Editor’s Pick, Featured, Politics, US

Roll Call: How U.S. Senators Voted on Auditing the Fed

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The Federal Reserve Transparency Act of 2015 failed to advance on Tuesday. While the Senate voted 53-44 in favor of the bill, sixty votes were required for the bill to move forward. The full roll call showing how each U.S. Senator voted can be seen below.

YEA: 53

Alexander (R-TN)
Ayotte (R-NH)
Baldwin (D-WI)
Barrasso (R-WY)
Blunt (R-MO)
Boozman (R-AR)
Burr (R-NC)
Capito (R-WV)
Cassidy (R-LA)
Cochran (R-MS)
Collins (R-ME)
Cornyn (R-TX)
Cotton (R-AR)
Crapo (R-ID)
Daines (R-MT)
Enzi (R-WY)
Ernst (R-IA)
Fischer (R-NE)
Flake (R-AZ)
Gardner (R-CO)
Graham (R-SC)
Grassley (R-IA)
Hatch (R-UT)
Heller (R-NV)
Hoeven (R-ND)
Inhofe (R-OK)
Isakson (R-GA)
Johnson (R-WI)
Kirk (R-IL)
Lankford (R-OK)
Lee (R-UT)
McCain (R-AZ)
McConnell (R-KY)
Moran (R-KS)
Murkowski (R-AK)
Paul (R-KY)
Perdue (R-GA)
Portman (R-OH)
Risch (R-ID)
Roberts (R-KS)
Rounds (R-SD)
Rubio (R-FL)
Sanders (I-VT)
Sasse (R-NE)
Scott (R-SC)
Sessions (R-AL)
Shelby (R-AL)
Sullivan (R-AK)
Thune (R-SD)
Tillis (R-NC)
Toomey (R-PA)
Vitter (R-LA)
Wicker (R-MS)

NAY: 44

Bennet (D-CO)
Blumenthal (D-CT)
Booker (D-NJ)
Boxer (D-CA)
Brown (D-OH)
Cantwell (D-WA)
Cardin (D-MD)
Carper (D-DE)
Casey (D-PA)
Coons (D-DE)
Corker (R-TN)
Donnelly (D-IN)
Durbin (D-IL)
Feinstein (D-CA)
Gillibrand (D-NY)
Heinrich (D-NM)
Heitkamp (D-ND)
Hirono (D-HI)
Kaine (D-VA)
King (I-ME)
Klobuchar (D-MN)
Leahy (D-VT)
Manchin (D-WV)
Markey (D-MA)
McCaskill (D-MO)
Menendez (D-NJ)
Merkley (D-OR)
Mikulski (D-MD)
Murphy (D-CT)
Murray (D-WA)
Nelson (D-FL)
Peters (D-MI)
Reed (D-RI)
Reid (D-NV)
Schatz (D-HI)
Schumer (D-NY)
Shaheen (D-NH)
Stabenow (D-MI)
Tester (D-MT)
Udall (D-NM)
Warner (D-VA)
Warren (D-MA)
Whitehouse (D-RI)
Wyden (D-OR)

Not Voting: 3
Coats (R-IN)
Cruz (R-TX)
Franken (D-MN)

Business, Economy

Businesses Take Negative Outlook After Federal Reserve Raises Rates

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An interest rate hike earlier this month looks to negatively affect some businesses as they are least prepared to handle it.

In the first increase in rates since 2006, the Federal Reserve raised interest rates by 25 basis points on loans earlier this month. While some tout the move as being a good sign for the economy, a recent survey of companies by Standard & Poor shows numerous companies with low credit ratings and negative outlooks in a recent survey.

As part of the Federal Reserve’s increase in rates, the bank announced its intention to gradually increase the rate further as economic conditions permit.

It could take a few years for the current increase to impact companies as they look to refinance existing debt or take out new loans.

The number of companies described as “weakest-links” by S&P came in at 195, the highest number since March of 2010. The bulk of the weakness comes from the oil and gas and financial sectors, accounting for 34 and 33 of the 195 respectively.

A two year slide in the price of oil has caused a significant decrease in domestic drilling for oil, with companies such as Pioneer Natural Resources already cutting 250,000 jobs with additional layoffs expected. CEO Scott Sheffield stated in an email the company has plans to trim 20 to 30 percent of it’s budgets in 2016, a reality which can be seen across the oil and gas industry.

Bond markets are also a factor, combining with the interest rate hike and the projected profit weakness in a number of sectors. A measure of the amount of risk priced into bonds, known as the U.S. distress ratio, came in at 20.1% in November. This is the highest level for the index since September 2009 when the ratio hit 23.5% according to S&P.

Of the indicators used by S&P, the oil and gas industry accounts for the highest dollar value of distressed debt which comes in at 37% of outstanding debts. The metals, mining and steel industry, while not as consequential in terms of dollar value, is shown to have 72% of its assets as distressed.

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Business, Economy, Election, Featured, Government Accountability

Bernie Sanders Calls for Full Independent Audit of Federal Reserve

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2016 Democratic presidential candidate and U.S. Senator from Vermont Bernie Sanders wrote an op-ed for The New York Times on Wednesday calling for the Federal Reserve to be audited independently by the Government Accountability Office on an annual basis.

Meanwhile, Senate Majority Leader Mitch McConnell (R-Ky.) has scheduled a historic Jan. 12 vote on a bill, colloquially referred to as “Audit the Fed,” which was introduced by Sen. Rand Paul (R-Ky.). The bill would authorize the GAO to perform full audits of the Federal Reserve System.

“To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment. Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates,” wrote Sen. Sanders.

[RELATED: DNC Disciplines Sanders Campaign for Accessing Confidential Clinton Voter Data]

He added, “What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.”

Sanders called for the Glass-Steagall Act to be reinstated, a Depression-era banking regulation that created a wall of separation between consumer and investment banks prior to its repeal by former President Bill Clinton. He also suggested that the Fed should be prevented from providing incentives to encourage banks to sit on cash reserves.

“As a condition of receiving financial assistance from the Fed,” said Sanders, “large banks must commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners.”

[RELATED: Rand Paul Challenges Bernie Sanders To Hour-Long Debate On Socialism vs. Capitalism]

Sanders argued that the Federal Reserve suffers from a lack of transparency. “In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Fed during the financial crisis. We need to go further and require the Government Accountability Office to conduct a full and independent audit of the Fed each and every year,” he said.

Audit the Fed legislation first became a hot political topic as a result of the sudden, meteoric 2008 rise to popularity of libertarian icon and former Congressman Ron Paul (R-Texas), who made the push for Fed transparency a central focus of his entire political career.

The Dodd-Frank amendment that Sen. Sanders is referring to that provided for a limited audit of the Federal Reserve drew strong criticism from Congressman Paul back in 2010, as Paul felt that Sanders had hijacked his momentum for a full audit and replaced it with a more limited, watered-down version. Congressman Paul’s full Audit the Fed legislation had already passed the House prior to Sanders’ push for a tamer audit in the Senate.

In the above-embedded video from 2010, an irate Ron Paul can be seen saying, “I had expected Bernie Sanders to offer S. 604 which is the same as H.R. 1207, which is Audit the Fed bill, and at the last minute he switched it and watered it down and, really, it adds nothing. It’s a possibility that it even makes the current conditions worse… We need to get as many messages as possible to any senator you can think of — especially to Bernie Sanders’ office — that we don’t want this version. We want a true audit of the Fed. We need to know what the Open Market Committee does and we need to know what they’re doing overseas with the agreements with central banks and financial institutions and other governments.”

For more election coverage, click here.

Business, Economy, Editor’s Pick, Featured, Politics, US

Federal Reserve Raises Interest Rate for First Time Since 2008

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WASHINGTON, December 17, 2015- For the first time since the bottom of the financial crisis in 2008, the Federal Reserve raised interest rates and has signaled its intent for further increases.

“The Fed’s decision today reflects our confidence in the U.S. economy,” Chair Janet Yellen said at a news conference on Wednesday.

The move was welcomed by Wall Street as the Dow Jones Industrial average ended the Tuesday session with a 224 point gain.

“The Fed reaffirmed that the pace of rate hikes would be slow,” James Marple,TD Economics senior economist wrote in a research note. “The Fed’s expectations for rate hikes next year are set alongside a relatively cautious and entirely achievable economic outlook.”

The hike of the key rate of a quarter-point, placing it between 0.25 and 0.5 percent, ends a seven year period of near-zero borrowing rates. This increase is expected to have mild implications for the mortgage and car loan industries as these notes tend to be tied to 10-year U.S. Treasury yields, which will likely remain low as inflation remains below the Fed’s 2% target.

Rates for other forms of loans such as home equity credit lines and consumer credit cards have already begun to rise with Wells Fargo being the first to announce an increase from 3.25 percent to 3.50 percent shortly after the Fed announcement.

Yellen also stated the hike had a defensive component.

“We’ve worried about the fact that with interest rates at zero, we have less scope to respond to negative shocks,” she told the press.

The ability for the Fed to react to future challenges relies on the central bank’s ability to manipulate interest rates and thus allowing the key rate to rise provides for more long term flexibility.

The policy statement released by the Fed cited “considerable improvement” in the job market as well as confidence that inflation would begin to rise. Included in the statement, Fed officials offered predictions that the rate banks charge on overnight loans, the federal funds rate, would end 2016 just over 1 percent.

The central bank’s action was unanimously approved by a 10-0 vote, a victory for Chairwoman Yellen.

Adjustments on other rates included an increase of 0.25 percent to 0.5 percent on the interest paid by banks to hold funds at the Fed and a decrease in the discount rate it charges banks for emergency borrowing from 1 percent down to 0.75 percent.

The moves by the Fed were not seen favorably by all. Long time critic Sen. Rand Paul (R-Ky.) asked “Should the government be involved with setting prices?” and also stated that “What amazes me about the Federal Reserve setting interest rates is that almost to a person, conservative economists in our country will say, wage and price controls are a mistake.”

Austrian economist Peter Schiff told his radio audience, “When the Fed called off the rate hike last time we got a huge bounce in the stock market. The reason the Fed gave was weak global economic conditions. None of those problems have been solved and it can be argued that global economic conditions are weaker now than in August.”

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Economy, Politics

Fed Chair Janet Yellen, Ralph Nader Trade Blows Over Interest Rates

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In October, five-time independent presidential candidate Ralph Nader wrote an open letter on behalf of Americans with savings and money market accounts to Federal Reserve Chair Janet Yellen criticizing the Fed’s near-zero interest rate policies. Yellen broke from the stoic tradition of Fed chairs in the past and directly responded in a letter to Nader.

In the open letter published by the The Huffington Post, Nader wrote:

[pull_quote_center]We are a group of humble savers in traditional bank savings and money market accounts who are frustrated because, like millions of other Americans over the past six years, we are getting near zero interest. We want to know why the Federal Reserve, funded and heavily run by the banks, is keeping interest rates so low that we receive virtually no income for our hard-earned savings while the Fed lets the big banks borrow money for virtually no interest. It doesn’t seem fair to put the burden of your Federal Reserve’s monetary policies on the backs of those Americans who are the least positioned to demand fair play.[/pull_quote_center]

[RELATED: Ralph Nader Blasts Huffington Post’s “Censorship” of Trump Political News]

He added, “We hear the Federal Reserve’s Board of Governors and the various regional board presidents regularly present their views of the proper inflation and unemployment rate, and on stock market expectations that influence their calculations for keeping interest rates near-zero. But we never hear any mention of us – the savers of trillions of dollars who have been forced to make do with having the banks and mutual funds essentially provide a lock-box for our money while they use it to make a profit for their firms and, in the case of the giant banks and large mutual funds, pay their executives exorbitant salaries… We are tired of this melodrama that exploits so many people who used to rely on interest income to pay some of their essential bills. Think about the elderly among us who need to supplement their social security checks every month.”

On Nov. 23, Yellen responded to Nader with a letter of her own, in which she blamed the “hardship” suffered by savers and “particularly seniors on fixed incomes” on what she described as a “continuing aftermath” of the 2007-2008 financial crisis and the “severe recession that followed.”

“It may help to review a few basic facts,” Yellen lectured. “These lower borrowing costs for millions of American families and businesses helped support asset prices—including home prices and, as you note, stock prices. More importantly, by making consumer purchases more affordable and encouraging businesses to invest, low interest rates supported the economic recovery and the creation of millions of jobs.”

“Would savers have been better off if the Federal Reserve had not acted as forcefully as it did and had maintained a higher level of short-term interest rates, including rates paid to savers? I don’t believe so. Unemployment would have risen to even higher levels, home prices would have collapsed further, even more businesses and individuals would have faced bankruptcy and foreclosure, and the stock market would not have recovered,” she wrote.

[RELATED: Trump: Fed Chair Yellen Not Raising Rates ‘Because Obama Told Her Not To’]

Nader’s open letter controversially suggested that Yellen consult her Nobel Prize winning economist husband George Akerlof on interest rate policy, a move that many observers interpreted as a sexist gaffe.

Slate’s Jordan Weissmann, who described Nader’s comments as “gross mansplaining,” wrote, “So, why is Yellen taking time to respond to a man who hasn’t been politically relevant for 15 years? This is purely speculation, but I don’t really think Janet Yellen cares all that much about Ralph Nader. But the man’s criticisms of the Fed just happen to closely mirror arguments made by some conservatives, who have made bashing the central bank a major economic theme of the GOP primary. So Nader’s letter gives her an excuse to very pointedly respond in writing to their accusations without looking too overtly political. Or maybe the woman just really took umbrage at that husband line.“

Economy, Politics

Federal Reserve Oversight Bill Passes House, Obama Veto Threat Looms

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The Republican-led U.S. House of Representatives passed the Fed Oversight Reform and Modernization Act (FORM) on Thursday.

The bill would require the Federal Reserve to establish and publicize a mathematical rule by which it adjusts monetary policy, limit the private bank’s emergency lending powers, and expand the Government Accountability Office’s authority to audit the Fed’s monetary policy decision-making.

According to Zero Hedge, the proposal passed by a vote of 241-185.

[RELATED: World Bank Warns Developing Nations On Federal Reserve Interest Rates]

Republican Speaker of the House Paul Ryan said in a statement lauding the bill’s passage, “If the Federal Reserve explained to the public how it made its decisions, the American people would have greater confidence in them. Families could better plan for the future, invest their money wisely, and create opportunity for all of us. I thank Chairman Hensarling and the Financial Services Committee for offering this commonsense legislation.”

A Tuesday letter from Federal Reserve Chair Janet Yellen to House Speaker Paul Ryan and House Democratic majority leader Nancy Pelosi read, “The bill would severely impair the Federal Reserve’s ability to carry out its congressional mandate and would be a grave mistake, detrimental to the economy and the American people.”

“There is no consensus among economists or policymakers about a simple policy rule that is best suited to cover a wide range of scenarios,” she added.

[RELATED: Texas to Repatriate $1 Billion in Gold from Federal Reserve to New State Depository]

A statement by FORM supporter and House Financial Services Committee Chairman Jeb Hensarling read, “Since the financial crisis, the Fed’s historically unconventional monetary policy and vastly expanded powers granted by Dodd-Frank would make the Fed unrecognizable to members of Congress who created it 100 years ago… While the Fed’s unusual monetary activities and power have increased, there has regrettably been no corresponding increase in its transparency and accountability. The FORM Act will correct that.”

The White House has reportedly threatened to veto the bill. “If the President were presented with (the legislation), his senior advisors would recommend that he veto the bill,” read an Obama administration statement.

Election, Featured, Politics

Trump: Fed Chair Yellen Not Raising Rates ‘Because Obama Told Her Not To’

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At a press conference at Trump Tower in New York City on Tuesday, 2016 Republican presidential candidate Donald Trump said interest rates should be raised and accused Federal Reserve Chair Janet Yellen of politicizing monetary policy.

When a reporter asked Trump whether he believes that the Federal Reserve should raise interest rates from long-held record-low levels, Trump replied:

[pull_quote_center]The question is should the Fed raise rates? They are not raising them because Obama has asked them not to raise them. In my opinion, he wants to get out of office, because we are in a bubble and when those rates are raised, a lot of bad things are going to happen or potentially going to happen. And in my opinion Janet Yellen is highly political and she’s not raising rates for a very specific reason: because Obama told her not to because he wants to be out playing golf in a year from now and he wants to be doing other things and he doesn’t want to see a big bubble burst during his administration.[/pull_quote_center]

[RELATED: Donald Trump Denies Calling Afghanistan Invasion a Mistake]

He added, “Janet Yellen should have raised the rates. She’s not doing it because the Obama administration and the president doesn’t want her to. And if she does it, you see what happens every time there’s even a thought of raising them just a little bit…”

Reuters reported that Trump then lamented what he described as the U.S. dollar’s lack of competitiveness and said, “If you look at the (currency) devaluations of China, of Japan, of many, many different countries, they’re making it impossible for our companies to compete with them because we don’t have leaders that know how to say to China, ‘Don’t do that. Don’t do that, because if you do that, we’re going to put a big fat tax on you.’”

White House press secretary Josh Earnest brushed off Trump’s comments in a Tuesday press conference and said that the Obama administration “goes to great lengths” to enable the Fed to set monetary policies that benefit the U.S. economy.

For more election coverage, click here.

Election, Politics

Ben Carson: U.S. Dollar ‘Not Based on Anything. Why Would We Be Continuing to Do That?’

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During an interview on economics last week, 2016 GOP presidential candidate Ben Carson raised questions about U.S. monetary policy and said that as president he would not authorize any government spending increases.

Outlining his government spending policy, Carson told Marketplace:

[pull_quote_center]If we simply refuse to extend the budget by one penny for three to four years, you got a balanced budget. Just like that. So this is not pie in the sky, very difficult thing to accomplish. Having said that, one of the bugaboos that has kept us from reducing government in the past is sacred cows. What I would do is first of all, allow the government to shrink by attrition. Don’t replace the people who are retiring, thousands of them each year. And No. 2: Take every departmental head, or sub-department head and tell them, ‘I want a 3 to 4 percent reduction.’ Now anybody who tells me there’s not 3 to 4 percent fat in virtually everything that we do is fibbing to themselves.[/pull_quote_center]

When Carson was asked by Marketplace host Kai Ryssdal whether he would support now-routine increases to the U.S. debt limit, he replied, “Let me put it this way: if I were the president, I would not sign an increased budget. Absolutely would not do it. They would have to find a place to cut… I would provide the kind of leadership that says, ‘Get on the stick guys, and stop messing around, and cut where you need to cut, because we’re not raising any spending limits, period.’”

[RELATED: Ben Carson Says He Would Secure U.S.-Mexico Border with Drone Strikes]

He added, “I mean if we continue along this, where does it stop? It never stops. You’re always gonna ask the same question every year. And we’re just gonna keep going down that pathway. That’s one of the things I think that the people are tired of.”

Carson then raised questions about America’s fiat monetary system and said that it enables out-of-control spending:

[pull_quote_center]Now the only reason that we can sustain that kind of debt is because of our artificial ability to print money, to create what we think is wealth, but it is not wealth, because it’s based upon our faith and credit. You know, we decoupled it from the domestic gold standard in 1933, and from the international gold standard in 1971, and since that time, it’s not based on anything. Why would we be continuing to do that?[/pull_quote_center]

Responding to a question asking him to pinpoint the gravest issue facing the U.S. economy, Carson said, “I think our debt is horrendous. You know, one of the things that happens with this level of debt is that it’s very difficult for the Fed to raise interest rates. And why is that such a problem? Well it used to be that Joe the Butcher would take 5 percent of his earnings every week and put it into a savings account. And he would watch that grow over two, or three, or four decades. And by the time he was ready to retire, he was in good shape. Now, poor people and middle-class people really don’t have a mechanism to grow their money. The only people who can grow their money are people who have a certain risk tolerance. And those tend to be upper-income people who can utilize the stock market.”

Noticing what appeared to be Carson’s anti-Federal Reserve rhetoric, Ryssdal asked him to comment specifically on the Federal Reserve and its chair Janet Yellen. Carson balked at the chance to criticize either directly and said, “Well, you know, I’ve known Janet Yellen for a long time. We’ve served on boards together, and she’s a very intelligent individual, very responsible, and obviously is trying to do what she thinks is right. But she’s caught between a rock and a hard place, and I understand that. And that’s why I would tend to really put the emphasis on driving down our debt, because that’s how we begin to correct the problem. You know, unless we correct the fundamental problems, all the other stuff we’re doing isn’t going to matter that much.”

Carson also said that early wealthy American industrialists built the foundation for America’s economic engine. “You know, the Europeans, they looked over here and they saw the Rockefellers, and the Vanderbilts, and the Fords, and the Kelloggs, and the Carnegies, and the Mellons, and they said you can’t run a country like that. You’ve gotta have an overarching government that receives all the funding and equity that redistributes it, so we actually inspired socialism.”

“But all of those people that I just mentioned,” Carson continued, “they didn’t just hoard money and pass it down from generation to generation, they built the infrastructure of our country. They build the transcontinental railroads and seaports and textile mills and factories that enabled the development of the most powerful and dynamic middle class the world has ever seen, which rapidly propelled us to the pinnacle,” he said.

Commenting on Carson’s questioning of America’s fiat currency system, Washington Post writer Matt O’Brien implied that the retired neurosurgeon is not a “candidate of serious policy,” criticized the concept of a gold dollar standard, and defended the Federal Reserve’s manipulation of interest rates.

Mises Institute’s Ryan McMaken then challenged O’Brien’s critique of Carson on the issue. “Without a hint of irony, O’Brien suggests that interest rates guided by the market simply lack the wisdom of our current PhD Standard,” said McMaken.

For more election coverage, click here.

Business, Economy, Politics

Citing Weak Economy, Feds Delay Interest Rate Hike

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WASHINGTON, September 17, 2015– Denoting a weak economy, the United States Federal Reserve, a private bank that controls the country’s monetary policy, decided to hold off on hiking interest rates. Federal Reserve Chairman Janet Yellen made the announcement at a press conference following the Federal Open Market Committee meeting on Thursday. The announcement sent the stock market soaring.

In January, President Obama told Americans during his State of the Union address that the economic crisis was over. “Tonight, we turn the page,” Obama said. “The shadow of crisis has passed, and the State of the Union is strong.” However, Yellen’s refusal to hike rates tells another story of the state of the American and global economies.

According to policymakers, the economy is expected to grow, but forecasts for gross domestic product growth have been downgraded for the next two years. When coupled with China’s sinking economy, dovish Fed members discouraged a rate-hike.

Currently, rates are at rock-bottom levels, and haven’t been hiked in almost a decade. A hike would cause short-term pain in the economy, which is why the feds have continuously pushed against raising rates. The weak economy simply cannot handle the hike without taking a hit.

Regardless, the Fed is still considering a hike. They will take up the issue again during their policy meetings in October and December.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, was the only Fed official to vote in favor of raising rates.

Low interest rates are good for investors, as it means money is cheaper to borrow. However, low rates create morale hazard in the markets, which leads to uncontrolled risk. The same low rates created the moral hazard that first sank the economy before President Obama was elected. Low rates are also bad for those with retirement funds and savings accounts because their return is often based off of the fed’s rate.

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Economy, International

World Bank Warns Developing Nations On Federal Reserve Interest Rates

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The World Bank has issued a new report warning developing nations to prepare for possible financial calamity when the U.S. Federal Reserve raises interest rates. The raise in the interest rates could come by Thursday after the Fed wraps up a policy meeting.

Although the World Bank states that risk is minor for developing countries, the report warns that the risk for negative financial impact could be much worse. The Bank says that if there is significant disruption to capital flow into developing countries, there could be slow economic growth and financial instability.

The BBC writes:

“The new World Bank report gives a number of reasons why developing nations should be able to cope without a great deal of fallout. Notably, the rate rise has been anticipated for a long time and it is likely to be a gradual process. Rates will not be raised rapidly.”

Still, the report warns of a “perfect storm” leading to negative economic impacts for developing countries. The World Bank states:

“Financial conditions are on the cusp of becoming more challenging for merging and frontier market economies as the Fed will soon embark on its first tightening cycle in almost a decade. This will take place in a difficult global context for emerging and frontier market economies: global growth remains subdued, world trade is weak, and commodity prices remain low. Moreover, many emerging and frontier market economies are struggling with weakening growth prospects and lingering vulnerabilities that constrain their policy options.”

The World Bank concludes their report with a stark warning to developing economies, stating that they “may hope for the best during the upcoming tightening
cycle,” but “given the substantial risks involved, they need to prepare for the worst.”

What are your thoughts on the Federal Reserve? Should the Fed raise interest rates?

Economy

Peter Schiff: Wall Street Questions The Federal Reserve Narrative

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On Monday, the Dow was under some pressure, down 170 points at the time of recording. That’s on the back of breakdown in European talks with Greece over the weekend. This is the lowest I’ve seen the Dow since early May. We’re at 17,730-is. We were above 18,000 not too long ago. We’re just about flat. We’re down maybe close to 100 points on the year. But there is a lot of room for the market to decline as long as Federal Reserve rate hikes are on the table.

The Fed is going to be meeting. It’s Open Market meeting begins Tuesday. It ends on Wednesday. Remember, for a long time everybody thought that June was when the Fed was going to announce their first rate hike. Although, when the year began, I think people were divided between they would hike in March or in June. Of course, I said that they wouldn’t hike at all. Now even most of the June camp as thrown in the towel. I think that the consensus is that the Fed is going to hike rates in September. But I think, as we get through July and August, and the weak economic data continues to roll in, we are going to continue to push back those rate hike estimates maybe to December.

But, of course, if they don’t raise rates in December, why are they going to raise them in 2016? I think 2016 could be a weaker economic year than 2015, which sequentially will be down from 2014. And it will also be an election year. So if they couldn’t raise rates in 2015, why would they do it in 2016 when you have all of that political backdrop that is clouding decision making. Of course, the Fed doesn’t want to be seen as trying to influence the elections, or help or hinder any particular party. So they may decide to be neutral.

Of course, there are a lot of other reasons why the Fed is not going to be raising rates. In fact, I think they’re going to be launching the fourth iteration of its quantitative easing program. In fact, I’m not the only person thinking that. Wall Street questions the Federal Reserve narrative.

Tune in to the full podcast episode above and listen to more episodes of Peter Schiff Radio here at Truth In Media.

Economy, Editor’s Pick, Featured, Politics, US

Texas to Repatriate $1 Billion in Gold from Federal Reserve to New State Depository

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Last Friday, Texas Republican Governor Greg Abbott signed House Bill 483 into law, which will create a new state-level bullion depository. According to KVUE-TV, representatives from Governor Abbott’s office said that, under the new law, Texas will repatriate $1 billion in gold from the New York branch of the Federal Reserve to its new state gold depository, which has been unofficially nicknamed Texas’ “Fort Knox.”

“Today I signed HB 483 to provide a secure facility for the State of Texas, state agencies and Texas citizens to store gold bullion and other precious metals. With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state,” said Governor Abbott, according to a press release.

The Houston Chronicle notes that the legislation was originally introduced by Southlake Republican Representative Giovanni Capriglione back in 2013, but that it only recently gained momentum in the Texas legislature.

Tenth Amendment Center founder and executive director Michael Boldin wrote that the bill “creates a means for transactions to occur” in gold. “In short, a person will be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money. Doing so has the potential to open the market to sound money in day-to-day transactions,” said Boldin.

According to The Epoch Times, Victor Sperandeo of the financial firm EAM Partners said, “In this case it’s going to be a depository, the gold is going to be there, they are not going to be able to lend it out and it won’t serve as collateral for other transactions of the bank.” Funds held in the depository will be protected by the State of Texas from any attempts at seizure, even by the federal government.

Constitutional lawyer Edwin Viera told The Epoch Times, “People can legally [use gold as money] with gold contracts. The difficulty is the implementation. Now Texas has set up a mechanism with the depository. We have accounts in that institution and can easily transfer back and forth certain amounts. So we can run our money system on a gold or silver basis if we were so inclined.” He continued, “If someone from the Department of Justice comes along you are going to see legal and political fireworks. The state is going to say ‘we need to have a mechanism to make gold and silver money. This is pursuant to the constitutional provision we have. You can’t touch this. Our state power on the constitutional level is more powerful than any statute you may pass’.”

The bill’s sponsor, Representative Giovanni Capriglione, said to the Star-Telegram, “When I first announced this, I got so many emails and phone calls from people literally all over the world who said they want to store their gold … in a Texas depository. People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold.”

Under the law, the Officer of the Comptroller will serve as the custodian and administrator of Texas’ new precious metals depository.