Building a world without FED Vol. I
Many hackers would hate this idea of having bankers and elites control our lives. The purpose of this article is to review some of the policies conducted by ex-FED officials.
The modern financial system is a sand tower made of credit and debts. A balanced debt growth could be beneficial to the world economy. Having too much debt could result in great catastrophe in modern society.
The most frightening fact is that they not only rule over us, but they also own us. With QE releasing endless liquidity from the FED, this liquidity further inflates all assets prices.
Consequently, our currency has devalued ever since. Less currency value means less purchase power from the cash on your hands. If you only have hard cash on your hand or save it.
You are essentially lending free money to these financial institutions.
Now they can lawfully make more money by lending it to real estate developers, bankers, or traders buying more stocks and virtual assets.
With the free money from the banks, the real estate developers can build more houses. On the other hand, the government can limit land supply to boost land & housing prices.
Most of the investors have higher interests in land and house compared with crypto assets. Lands and properties are always direct and easy to understand. It is not hard to know that these lands are expensive.
These are tangible assets. We are always interested in getting bigger and more comfortable houses. That is why all these QE-free money printed goes directly to the stock market, crypto assets, and property market, and these housing prices are becoming less and less affordable.
Youngsters in modern times have fewer opportunities compared to their older generation. They can not afford the rent plus the living fee. Extremely high housing prices are killing most industries since they all need an office or a shop to operate.
The ex-chairman: Alan Greenspan decided to ignore all the economic bubble and heating signs to give Wallstreet’s hedge funds and financial titans more power and capital to do whatever they want.
He then eases the market and encourages the deregulation of financial institutions, which is the opposite of what the FED chairman Paul Volcker has stood for.
Paul Volcker has successfully controlled the US economic system from overheating and having a hyperinflation crisis by aggressively raising interest rates and discouraging Wallstreet to take more risks.
He put a collar on the banker’s neck. Volcker Rule set up higher standards and put more restrictions on banks’ speculations. Modern banking speculations often involve very risky financial derivatives and complicated financial instruments. Such leverage level could quickly scale up the market volatility.
Alan Greenspan opens Hellgate by allowing banks and financial institutions to apply more risks and financial leverages. Low interest rates allow hard cash to go to the housing market with fewer restrictions therefore more people can buy houses with cheaper rates and loans.
This quickly becomes one of the largest bubbles in human history- the subprime mortgage crisis.
What Fed has done wrong has created a post-apocalypse type of society. US government now accumulates high levels of debt. US government requires to borrow more funds to maintain its daily operations(DEMO and Republic should reach the consensus of raising the debt ceiling).
This is the reason why bitcoin is created.
To avoid a total collapse of the financial system.
Dollar nearly reaches its end after the Bretton Woods. The dollar was once viewed as gold-back currency. If the government decides to issue more currency then it must comply with the amount of Gold reserved in the system. If the government intends to issue more currency to further inflate the asset bubble, the government should have more gold reserves to back the value of its currency.
Such a mechanism ensures that the power of money printing is carefully balanced and subject to gold reserves. This mechanism could also prevent bankers from abusing their power such as taking advantage of free money and simply buying long-term US treasuries to make easy money.
