Friday, September 13, 2013

"Money for Nothing: Inside the Federal Reserve": forget the debt ceiling because the Fed prints too much money; the rest of the world could stop taking the dollar

Money for Nothing: Inside the Federal Reserve”, narrated by Liev Schreiber and directed by Jim Bruce, and distributed by Liberty Street Films, gives a thorough history of the Federal Reserve and of our monetary policy since the 1907 panic, when the “nation’s bank” was first proposed, although it was set up as a federation of regional partly private banks with central control. 

The background motivation was the stable history of the Bank of England, but after WWII the US, still on a gold standard, was set to become the nation’s leader. 
The nation’s finances seemed stable in the mid 1960’s, until the Vietnam War and new “Great Society” programs of LBJ had to be paid for.  All of this led to Nixon’s abandoning the gold standard, with the simple “trust me” faith in the Federal Reserve as the only backup to currency.  (“Dumb f__”.)  What would result was printing of money and the inflation of the 1970’s.  Volcker would get things calmed down, and then the Ayn Rand disciple Greenspan would be appointed to be chairman by President Reagan.  Greenspan would preside over the “Great Moderation” and boom of the 1990s, but after the dot-com bust and then 9/11 it became apparent that the only way the US economy could “grow” was a very low interest rate policy, increasing the value of financial and real estate assets while prices of some essential (but not all) commodities rose, affecting lower income people.  During that time, Ben Bernanke would be appointed new chairman (by Bush) and continue the same general approach. 

Disparity in wealth increased. The result was enormous increase of consumer debt to support an asset bubble, which collapsed when derivatives fell apart.  The film claims that the whole world financial system almost stopped functioning in mid September 2008, and there was no choice but to bail out AIG.
But now, the film says, the biggest threat is government debt.  This certainly points to the debt ceiling crisis, for which the quick aspirin is to print more "Weimar" paper money..  Something has to give, or there could be a new danger of collapse.  Could it be retiree entitlements?  Is this the place to talk about baby boomer behavior (not replacing itself and “demographic winter”)?  This is the place to talk about real wealth.  Maybe civilizations on other planets don't have money at all, like their worlds are just "intentional communities". . 
The film does not specifically mention the controversial views of Porter Stansberry (as explained in his video “The End of America”, reviewed on my “Films on Major Challenges to Freedom” blog, Sept. 1).  That is to say, financial collapse can occur if the rest of the world suddenly stops accepting the dollar as a “reserve currency”. The film does hint, though, that the Fed cannot print money forever and expect the rest of the world to accept, after interest rates have gone too low.

The site for the film is here.  The film has played in some smaller film festivals, including Vancouver and Lincoln Center (Walter Reade) in NYC.  I saw this before a fairly full auditorium at Landmark E Street in Washington DC tonight.
When I bought the ticket, I had a tongue slip and asked for “Money for Free”.  That is, “it’s free” (shout it several times.)  It seems Federal Reserve Policy could well motivate a “Reid-ing 04” film. 

You can’t get something for nothing, and sustain it.  If it sounds too good to be true, it always is.

Note: there are other films called "Money for Nothing".  Imdb has yet to show a film titled "Money for Free".  

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