Every bank needs to attract customers that are savers and/or borrowers.  Providing services surrounding banking are essential to acquire and retain customers.  The competitive nature of banks is the best and most important constraint of banks behaving badly or acting strictly on greed.  Regulations of banks are highly relevant, thus giving politicians and bureaucrats a monopoly on regulations is highly damaging.  ​

By Bill Haley 3/31/2016 updated 9-7-2019
​
For decades, liberal politicians, both Republicans and Democrats, have been eyeing the massive amount of money in personal retirement accounts.  Retirement Assets Total $29.1 Trillion in First Quarter 2019.  Most politicians and bureaucrats believe that all money belongs to the government and ponders how it is unwise to allow citizens to control so much money in private accounts. 
​
Political and economic realities inhibit politicians and bureaucrats from taxing your money above roughly 17% of GDP at the federal level.  At the same time, federal politicians and bureaucrats spend over 20% of GDP.  That 3% to 5% differential of GDP is the federal deficit.  The total debt stands at $22.5 trillion in September of 2019 on a GDP of $21.3 trillion.  That full $22.5 trillion and growing debt needs to be borrowed continuously.  

Basic economics state that the treasury department needs to set the interest rate on treasury bonds high enough to attract that $22.5 trillion.  1% higher interest rates cost taxpayers an additional $225 billion per year, inhibiting government spending.  Requiring by law, a percentage of pension and IRA funds to be invested in treasury bonds directly would relieve a portion of debt burden and keep interest rates lower; however, would receive tremendous righteous pushback.   

Over the last several years, the Department of Labor (DOL) has expanded the fiduciary rule.  A greater percentage of retirement funds will need to be managed by a person with Fiduciary Responsibility.  A fiduciary is increasingly under government control.  Politicians and bureaucrats feel empowered to attain additional control over the types of investments that they made tax-exempt. 

Some politicians have thought of an underhanded way to control and take your retirement or investment money.  Using fiduciary responsibility laws, bureaucrats could try to force more retirement funds into government bonds.  Quite simply, bureaucrats could assert the power to decide what is responsible or what is irresponsible retirement planning.  Misusing this power is corruption; however, corruption happens until someone stops it.

If the treasury department is having a hard time finding buyers of new or rolling federal debt, they will be under intense political pressure not to raise interest rates and consume a higher percentage of the federal budget.  The members of the DOL could just inform money managers and pension plans that are fiduciaries; that a certain percentage of the money they manage needs to be in federal government bonds.  If bureaucrats go down this path, to keep their certification or qualification as a fiduciary, money managers will need to push (nudge) their clients’ money in the direction of government debt.  

It does not need to be a good investment for the government to claim that it is.  Many people will wrongly conclude that reason, and common sense would rule out, and they could prove that they could have a responsible financial portfolio without federal government bonds.  Sorry, that is not how government bureaucrats work; they do not need to use common sense or prove their point.  They are the government; thus, in their eyes, smarter and wiser by definition.  
​
So, what is the big deal if more of someone’s money is in government bonds, is that not a good investment?  First, that is not liberty, and the people do not have to follow a government edict unless they can explain why they should not.  There are numbers, stats, and other data that people could show that US debt bonds are secure and a good investment; however, the opposite can be concluded and demonstrated as well.  This decision does not belong to politicians or bureaucrats.  This is a liberty issue.

Whenever the Federal Reserve (FED) creates new money from thin air, the value of those new dollars must come from somewhere.  The FED has created many trillions of dollars since the 2008 market crash.  The value for these trillions of new quantitative easing (QE) dollars comes from existing dollars and long-term contracts and investments.  The people holding these $22.5 trillion of government bonds pay a large share of this inflation tax.  

The government through the Federal Reserve is stealing massive amounts of wealth from the dollars in your pocket, in your investments, in your bonds, in your pensions, in your contracts, in your salary or anything delineated in dollars.  The inflation tax often takes years to be fully realized as there are many places for money to hide in the entire world.   The Fed’s Balance sheet of $3.761 trillion (9-4-2019) cannot be paid easily in a year.  Many relevant factors involved are hidden and complex; however, a 2% inflation rate demonstrates roughly $0.4 trillion of inflation taxes are paid every year.           

If the stock market crashes and people lose half of their retirement values, many politicians would be able to make a convincing, not good, but compelling case that it is not in a client's best interest for their retirement funds to be void of ‘secure’ government bonds.  A fiduciary must give advice and manage retirement accounts in the best interest of their clients.  In a very similar deliberation 14 years ago; unfortunately, liberal politicians won the debate regarding allowing a portion of Social Security funds into individually controlled accounts.  In a time of crisis where people see half of their wealth vanish before their eyes, the free market proponents will have a tough time in that debate.   

Government outlays increased from 18.8% to 24.3% of GDP after the 2007-2008 crash, thus taking scarce capital from capitalism in a time of crisis.  The Treasury Department will likely be scrapped for cash again if we go through another market crash, which many people are predicting will be much worse as a result of the heightened levels of government debt.   That debt increased from 61% of GDP to 106% of GDP (2006-2019). $8.5 trillion in 2006 to $22.5 trillion in September 2019.  The growth of the Fed’s Balance sheet is an additional deleterious condition as it grew from $0.87 trillion (2006) to $3.761 trillion  (9-4-2019). 

In conclusion, with interest rates already at historically low rates, the debt at the highest levels, and the Fed’s balance sheet at unprecedented heights, the politicians will be looking hard at the untapped $29.1 trillion of retirement funds to bail America’s government out of the next recession.  The Fiduciary responsibility laws are a door into this massive vault in which politicians and bureaucrats might try to enter.  This would be disastrous, although, the temptation would be overwhelming with the populist calls of “do something!”       

Laws suits fly and ultimately the courts rule the Federal Reserve violated the constitution by changing the value of the currency thus changing contracts.  The damage was done, and there are no remedies that can make people whole.  Employees demand inflation-adjusted salaries, however in the middle of a crash and all other expenses escalating, companies find it impossible to keep up. 
​

Massive layoffs, people quitting because their pay is not keeping up with inflation and businesses just going out of business, cause the cascade of house foreclosures, business loans defaults and others debt issues cause the banks to fall in an overwhelming financial avalanche.  The housing market plummets, trapping many people from moving to better employment opportunities.  Many people take advantage of a very misguided law that allows people to walk away from a house and their underwater mortgage.  Retirement funds that were based on the repayment of those mortgages lose double-digit percentages. 
​

 Those in the inner city and mostly on state assistance are no longer going to get the ‘needs’ with the same nominal level of benefits and increased prices.  Thus social unrest unfolds and calls and ‘demands’ of increased aid stress the now over-budgeted public sector that is also seeing more significant needs.  The higher expense for police is not in the budget, and the rule of law is in retreat. 
​

People on a fixed income have their buying power greatly diminished and frightened into bad decisions yielding great long-term harm.  Most people do not know how to handle hyperinflation. Thus many end up in awful circumstances.  Many people are starting to realize they have to live with a much lower standard of living. 
​

If the Fed allows the interest rate to go high enough, to get enough of the money to flow into savings, the interest on the federal debt will swallow the entire budget.  High debt levels really have a major effect.  It is regrettable that the effect of high debt is not seen continuously and realized by the people because when the effect is hidden for a decade in bad monetary policy, the built-up effect could be massive.  Ongoing adjustments, while still having harmful effects, is far better than a sudden realization that totally wipes people out financially. 
​

In conclusion, while much of these storylines, while started here and going in a negative direction, have an unknowable finish.  One would hope that good lessons (Haleynomics) and (Monetary policy) are learned so that free enterprise can reach down and pull this economy out from the profoundly adverse effects of government control.  
​

The people in government learned the completely wrong lessons after 2008, so the future lies in whether enough people can be educated correctly after wrongheaded lessons were learned in the vast majority of colleges.  Economics have so many factors that often, conclusions are forced into fundamentally misguided paradigms and errors are repeated and compounded.  This is indeed a battle of fundamental beliefs of free enterprise versus politician control.    
​

​A government that messed up our banking system will 'FIX' the problem with far greater control.  They did not learn the correct lessons from 2008 and just increased the 'Fix' that just took this economy to a more treacherous cliff with thinner trails along the edge.  All the rocks we are stepping on seem to be unstable, and our way back has already collapsed.  The FED needs to continually use every tool in the climbing bag to hang on, and the only path is up to more perilous places.
​

Capitalism and the free enterprise system are strong enough to rescue this economy if Congress allows the American people to grasp capitalism's hand for a rescue.  In 2016, America has a choice of Bernie Sander’s massive government control that leads to more dangerous cliffs and massive problems or a Ted Cruz free-enterprise approach that puts the U.S. on the firm ground of solid economic growth, personal liberty and self-government.
​

If one examines a small 100-person closed economy, it is easy to see the effects of counterfeiting.  Once a week, everyone brings the product of his or her labor to a central marketplace and then they do trades with currency.  Services are ordered at this time.  If there is counterfeiting, people will see the effect very quickly because that person is not bringing ‘things of worth’ to the marketplace.
​

We do not have just 100 people, rather over 300 million and 20 times that around the world.  Much of these dollars can be hidden within not just thousands, but millions of financial instruments.  Much of these financial instruments are hidden away and very difficult for anyone to have any understanding of how much worth is out there.  Something is only worth what someone is willing to pay for it, and people constantly change how much they value things.
​

The left and Keynesians will look at the extra work that needs to be done when people spend the extra money.  They will rejoice in the false notion that more jobs are created and the economy is growing.  They completely miss the theft of real worth coming from every dollar, either paper or digital.  The left misses that they are changing the value of employment contracts, mortgages, and retirement accounts.
​

The left misses the low-interest rates pushing up housing prices which harm the poor the most.  The left misses the fact that an economic crash which always comes from QE created bubbles hit the housing market heavy and drops housing prices, putting many middle to low-income houses underwater (meaning the loan is higher than the value of the house).
​

The left misses that the middle to low-income income demographic lose their jobs based on wild swings in housing prices due to jobs in that sector of the economy.  The left misses the fact that massive layoffs due to the wild swings, push up mortgage foreclosures, leading to more catch 22 effects when housing prices fall more significantly due to a glut of foreclosures and thus more layoffs in the housing sector, and there is spillover in many other sectors as well. 
​

Loans have real worth as demonstrated by banks willing to exchange money for them.  Banks often sell loans.  The value of loans is well established.  Lifetime share loans will need trial and error to learn the best methods; however, the worth will become self-evident.    
​

Under Haley2024 reforms, the government reduces control over education, yielding responsibilities and authorities to the free enterprise system.   A possible business model for higher education institutions would be to cover the college cost in exchange for 5%-20% of a student’s future income.  This business model could provide incentives for colleges to provide better education that yields better job skills.  Many varieties of contracts will emerge.
​

The Fed is keeping the fact that they are devaluing our money hidden. This devaluation will eventually reveal itself and will most likely happen very suddenly.
​
Let me give you an example that holds true for anything of value: currency, stocks, bonds, land, precious metals, businesses, etc.  While I use a termite damaged house in this example, each of these items of worth has similar issues that eat away at its value. For currency, it is lower than market interest rates and QE. 

If you knew that a house became devalued because you saw evidence of severe termite infestation but no one else believed you, and they continued to value the house as solid, then the house would continue to rise in value.  However, if it suddenly became very apparent that there was significant damage and an exterminator showed evidence of widespread structural damage, then the value of that house would suddenly experience a mass realization of lower value. ​

In reality, the real worth of the house was dropping every day, but since people kept buying and selling the house at a solid price, the value did not change until the realization of structural damage occurred.
​
There is often a time period where some people see the evidence of devaluation, but most do not.  The price can go up significantly, and then something happens that reveals the real worth and the price crashes rapidly.

The Fed is doing this with QE.  Every time the Fed introduces new money into the system without backing it up, the value must come from all the other dollars in existence.
Is There really Inflation?
QE=$772 Tax per Month per Family
​Quantitative Easing (QE) = Devalued Money
A New House as Capital for New Currency

Under Haley2024’s system of multiple competing currencies, every financial CRA would decide what items of real value back up their currency. 
​

The Haley2024 Monetary Policy relies on an understanding of Competitive Regulatory Agencies (CRA) and Financial CRA's.  During the construction of a house, a long-term durable good is being created and gaining worth.  A bank could recognize the value and create currency reflecting that value.  The house becomes part of the worth that backs up the currency.  The owners of the currency would have a real ownership interest in the house, exercised by the bank.
​

As a house is built, a long-term durable good is created and gaining worth.  A bank would recognize the value and create currency reflecting that value.  The house becomes part of the worth that backs up the currency.  The owners of the currency would have a real ownership interest in the house, exercised by the bank.​

Let’s recap: As the house is built, worth is established, and the bank creates currency based on that worth.  That currency pays the home builders, and the ownership of the house belongs to the bank as part of the overall worth of the currency.  At this time, all those that own currency from this CRA has ownership interests in this house.​

The bank creates a mortgage exchanging the worth of the house to a contract of future labor with interest as the worth backing up the currency.  Over time, the home buyer buys all the worth of the house reflected as equity.  Every month when the money goes to the bank from mortgage payments, the future contract is reduced in value because less is owed.
​

As every monthly payment is made, the ‘homeowner’ buys greater equity in the house.  The mortgage payments are subtracted from the value belonging to the currency thus the currency vanishes.  The worth is now in home-equity belonging to the homeowner.  Currencies can only have the number of units of currency that matches the worth of the portfolio. ​
​

First, they have to be backed up, which to say, they must have things of real value that all the currency derived from the inventory must be able to be exchanged for.  All currency should be able to be turned in, thus exchanged for the goods at a normal price and come out even.  There should be no left over currency or backed-up-inventory

Second, currency should be trusted.  Trust only comes from real investigations, in-depth research, audits and accountability.  Trust comes from real tests and openness.

Third, currency should have ease of transfer and acceptability. 

 Bit coins are missing the most important factor: they are not backed up by anything of real value.  Therefore it misses the second as well because there is nothing to audit.
They are working on the third and that will come with time and demonstration.