Let us be clear that we are in no way advocating the material presented at this policy forum. However, there are interesting bits of information that can be gleaned. We will begin with the forum description:
The Philadelphia Fed Policy Forum
Fiscal Imbalance: Problems, Solutions, and Implications
December 2, 2005
The fifth annual Philadelphia Fed Policy Forum, "Fiscal Imbalance: Problems, Solutions, and Implications," was held on Friday, December 2, 2005, at the Federal Reserve Bank of Philadelphia.
The Policy Forum, organized by the Federal Reserve Bank of Philadelphia's Research Department, brought together a group of highly respected academics, policymakers, and market economists, for a discussion of important macroeconomic and monetary policy issues that the Federal Reserve will need to grapple with in the coming year. The Policy Forum was not intended to be a traditional academic conference on monetary policy, nor a discussion of issues relevant to the next FOMC meeting. Rather, the annual Policy Forum has taken a longer term perspective and has attempted to engage the right people in a discussion of current macroeconomic research and its implications for monetary policy.
Richard Fisher is President of the Federal Reserve Bank of Dallas. He gave a talk which was summarized by Loretta J. Mester, a representative of the Federal Reserve Bank of Philadelphia. Mester reports that:
Fisher pointed out that monetary policymakers cannot be indifferent to the thrust of fiscal policy because poor fiscal policies create pressure for poor monetary policies, e.g., monetizing the debt and fueling inflation. But he emphasized that the solution to the fiscal imbalance rests with fiscal policymakers and not the central bank.
First we see in these comments that when the government spends money it doesn't have, new money is printed, which is inflation. The process of inflation, as illustrated in the Five Guys Analogy, is designed to cause a hidden wealth transfer and, as Lenin noted, is effective in destroying the social fabric of a nation.
Most importantly, as I observed in Fundamentals and Accountability, the bankers, media and government assure us it is never the central banker's fault.
Kent Smetters gave a talk at the forum. I found one slide regarding our $63 trillion dollar fiscal imbalance particularly interesting.
“Fiscal and Generational Imbalances: An Update”
Kent A. Smetters, The Wharton School, University of Pennsylvania
Fiscal and Generational Imbalances: An Update
The PPT notes add the following clarification: [Confiscate all capital assets including] All stocks, bonds, companies, building, homes, cars, and even consumer durables such as your dishwasher
Therefore, we are expected to believe that the Federal Reserve Bank, who actually issues the currency, is in no way at fault for creating the disaster we are watching unfold in our economy.
We are also supposed to have confidence in a system that, according to the experts, the government could not pay for even if it confiscated everything we own.
Think about what is being said. The government would not be able to pay the citizens of the United States what it has promised to pay, even if it took everything we owned to make the payment. The government is making promises that government leaders know cannot be kept, to pay bills with your property and your labor.
And most absurd of all, what exactly is the government offering US citizens if it has to confiscate all that we have in order to meet its obligations to those same citizens?
Always remember, the government has no money or property except what it takes from the producers. Government produces nothing. Government wastes more than any private enterprise ever could. We have a monopoly government which promises to use force in order to pay us with our own money and labor.