September 15, 2011 · 9:51 am

Fun Facts About the U.S. Federal Reserve
- The Federal Reserve holds a monopoly on the issuance of currency in the USA. In essence, this is the power to borrow an infinite amount of money at 0%. The dollar bill in your pocket is a 0% loan to the Federal Reserve. The Federal Reserve then uses these 0% loans to purchase income-producing assets. Before 2008, the assets purchased were primarily Treasury debt, which is backed by the taxation power of the US Government. In other words, we are exchanging the property rights to our valuable assets (land, labor, entrepreneurship) for little slips of green paper to buy trinkets with. The government can then tax these valuable assets to pay for our excess. The more we spend, the more the Fed owns.
If all money created is debt and counts as principal, where does the money come from to pay interest on this debt? It comes from the money that gets printed in the future. This is why inflation is a natural result of our current monetary system.
- Prior the the Emergency Economic Stabilization Act/TARP Act of September 2008, commercial banks were required to hold 10% of deposits as reserves. This placed a limit on the potential amount of money creation at around 9x the original deposit. An obscure clause in the TARP Act changed the reserve requirement to 0%, immediately making the potential money supply infinite.
- The reason for the credit spread blowups of October/November 2008 was because in the same TARP Act the Fed was allowed to pay interest on deposits without publicly stating the interest rate. Before the TARP Act, there was around $20 billion deposited by commercial banks at the Fed. After the TARP Act, deposits immediately jumped 50x to $1 TRILLION. This resulted in a disappearance of demand for risky assets, which led to blowouts in credit spreads.
As a result of various acts of Congress in 2008, the Federal Reserve now has the authority to buy all sorts of assets (commercial paper, corporate bonds, mortgage loans, etc.). A cynical person would say this essentially allows the Fed to seize all valuable assets in this country directly by exchanging fancy bits of green paper for them without having to go through the intermediate step of coercing the US Government into spending more money and taking on more debt.
- Much of the Fed’s activity is not made public because of the use of off-balance sheet vehicles.
- There is debate over the constitutionality of the Fed’s various awesome powers.
What does this all mean? This economic crisis will not become a depression. By employing the new tools of monetary policy that the Fed has created for itself (interest on reserves and direct asset purchases), the money supply can be jerked around as if on a string. Initially, this means we will soon experience another period of easy credit and unsustainable economic growth.
However, the end result of current policies is that the Fed will be powerless to stop the next economic crisis. Assuming no outside shocks (another big war, nuclear attack, etc.), the dollar will over time lose its status as the reserve currency, and we will experience a currency crisis followed by rampant inflation at some point down the road.
Special thanks to www.seekingalpha.com
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September 13, 2011 · 10:45 am

The Pearl Harbor Memorial rests atop the sunken USS. Arizona
Facts About the Attack on Pearl Harbor
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- Franklin Delano Roosevelt
President Franklin D. Roosevelt said, “December 7, 1941, a date which will live in infamy,” in reference to the attack.
- Three prime targets escaped damage, the U.S. Pacific Fleet aircraft carriers, the Lexington, Enterprise and Saratoga. They were not in the port when the attack took place.
- Another target, the base fuel tanks also escaped damage.
- Casualties included 2,335 servicemen and 68 civilians.
- 1178 people were wounded.
- The day after the attack the U.S. and Britain declared war on Japan.
- Pearl Harbor is the Naval Base for the U.S. Pacific Fleet.
- Pearl Harbor is the headquarters of the U.S. Pacific Fleet.
- Pearl Harbor has 10 square miles of navigable water.
- The harbour is on the southern coast of Oahu.

- The Japanese were interested in the Hawaiian islands since the islands were annexed by the U.S. in 1898.
- An admiral said, “leaving aside the unspeakable treachery of it, the Japanese did a fine job.”
- Japanese suffered just small losses.
- The attack crippled the United States fleet.
- The Japanese deceived the U.S. by saying false statements and expressed interest in continued peace.
- Americans think of the attack as very dishonorable.
- The attack was planned weeks in advance.
- The main reason for the attack was over economic issues.

- Because of the unpreparedness of the U.S. military, Admiral Husband Kimmel and General Walter Short were relieved of duty.
- The attack severely crippled the U.S. naval and air strength in the Pacific.
- Of the eight battleships, all but the Arizona and Oklahoma were eventually repaired and returned to service.
- On December 8, 1941, Congress declared war on Japan with only one vote against it. The vote against it was of Represenative Jeannette Rankin of Montana, who had also voted against U.S. entry into World War I.
- Once the fleet was out of action, Japan would be able to conquest a great area.
- A U.S. Army private who noticed the large flight of planes on his radar screen was told to ignore them because a flight of B-17s from the continental U.S. was expected at the time.
- More than 180 U.S. aircraft were destroyed.
Special thanks to www.bigsiteofamazingfacts.com and www.absoluteastronomy.com
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