THE FATAL FLAWS IN WALL STREET'S ECONOMIC THEORY | WHAT REALLY HAPPENED


THE FATAL FLAWS IN WALL STREET'S ECONOMIC THEORY

Back in 2008, in testimony before Congress in the wake of the crash of Wall Street's mortgage-backed securities scam, former Federal Reserve Chairman Allan Greenspan made the admission that his "ideology" had a flaw.

Greenspan and the members of Congress relied heavily on euphemisms like "ideology" and spoke in vague terms to obfuscate from the American people that there are fundamental flaws in the way the US Financial system works.

The first and largest flaw in the system is the Federal Reserve itself. Not actually a part of the government (the Federal Reserve is no more "Federal" than Federal Express), the Federal Reserve is a privately owned central bank which has been given the authority by the US Congress to create money, something which under any other circumstances would be called counterfeiting. Created by act of Congress in 1913 and signed into law by President Woodrow Wilson, the Federal Reserve now exercises the power to create money originally granted to the government itself under the Constitution. It might be argued that such a dramatic reassignment of constitutional powers should have required a Constitutional Amendment, but that is a discussion for another article. What is germane is that the Federal Reserve system is unstable because by design it creates more debt than it creates money with which to pay that debt.

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