Finance – How the Great GDP Hoax is Stealing Your Wealth
Are you unintentionally limiting the amount of money you are making in your business every day? You are the one who invested your life, income, reputation, money, house in your business. Imagine telling your family every morning as you leave for work,"Bye everyone, I'm going in today to do 20% of the things I can be doing?"
The FACT is that if you are not learning… if you are not constantly implementing new strategies in your business, you are doing exactly that. Making just a fraction of the progress, money and success that you could be making.
The cartelized oligopolistic structure limited competition, guaranteed franchise value and reduced likelihood of failure. This was partly due to international stability achieved by the Bretton Woods arrangements. This reduced the need for financial supervision. So over the years banking supervision did not play the central role in the central bank's activities, due to the structure that reduced the need for regulation and allowed self-regulation. In the United States the Federal Reserve became the major player in regulation and supervision only after enactment of Bank Holding Company act in 1956 that assigned central bank supervisory function over BHCs.
Oligopolistic structure reduced competition, efficiency and innovation. The protected and regulated financial system was abolished under the conditions of increased international competition, technological innovation, drive for efficient, improved services for customers and return of liberal, market based ideology. Instability and failures became frequent and led to greater involvement of central banks in supervisory activities. Moreover, this also led to the blurring of the previously clear boundaries between different types of financial intermediation. Universal banking became more popular and commonplace. Banking mixed with insurance, bank assurance, and undertook fund management. Eventually, this meant that the attempt to supervise separately by function would end up with multiple supervisors involved with the same institution.
Unfortunately, many business owners like him are faced with obstacles towards realizing this kind of success: Either they have no time to plan for the future; or if they do, they are not plugged in to the right ideas, techniques and systems out there. Or, more importantly, many of them are afraid to think big… afraid to act like a leader… and are afraid of change.
It's a pity, because with the same time, effort and money it is possible for them to design a plan for their business to LEAP FORWARD ahead of the competition to make double, triple what they are making now.
So how does this affect your wealth? In short, it steals it. You are told the economy is doing well because the GDP is improving, and it is used to justify more borrowing. Some advocate that the debt is okay as long as it is growing in proportion to the GDP. When the numbers are disproportionate and wildly out of balance the growth is due to a "bubble" that will soon burst. In the end, the value of the dollar is hurt and that means the dollars you have and that you earn each paycheck will buy less. This is a process that has been going on since 1913, when the Federal Reserve Act established the Federal Reserve. It was further facilitated in 1971 when Nixon took us off the gold standard and allowed the Federal Reserve and the Federal Government to print money without accountability. Now inflation is a hidden tax that is eating away at your wealth. It is a problem that is accelerating with the passage of time. The Federal debt in 2008 has begun to explode beyond our imaginations. This could be a precursor to failure of the dollar as a currency.
One important point is dividing tasks according to micro and macro approaches. Customer protection issues are generally associated with micro level decision-making, while systemic stability deals mostly with macro, however to some extent with micro-level as well. It has been argued that keeping macro part of systemic stability issues with the central bank and micro part with an independent agency would restore clarity and responsibility.
It is worth discussing how this problem applies to developing countries. The financial structure in developing and transitional countries is quite distinct from developed economies. They tend to be simpler, more dependent on standard commercial banking and degree of blurring boundaries in these countries is low. In developed countries the complexity of financial sector and blurring boundaries force central bankers to extend their activities further away from traditional limits. It also creates multiplicity of supervisors or unified supervisory body outside the central bank. This is not the case in developing countries. The banking system, insurance companies and stock exchange can co-exist without much friction or overlap.
Thus, the strength of argument concerning the changing structure of financial system and whether the central bank should regulate non-bank financial institutions as well largely depends on the degree of blurring boundaries between various types of financial intermediaries and readiness of the central bank to tackle with the responsibilities that lie outside its historical sphere of expertise. Practically observed trend towards separation of regulatory function from the central bank can be explained by the development of the financial markets in different countries that tends to make this argument decisive
Resource Author Francisco Rodriguez Higueras
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Tags: Finance