By the guy that brought you Wordplay.

Looks good. I enjoy that some people are calling it ‘The Inconvenient Truth.’ Looks like Ron Paul supporters are generally in agreement that it’s worth seeing. From what I can gather it’s a bit on the simplistic side. Not in that it fails to go into economic theory but that it fails to show the whole picture and connect all the dots. Do they explain the Federal Reserve? Why it truly exists? How its used? How it led to what the movie’s about? I suppose it’s a start.

Update:

Looks like I was right. From Stephen Fairfax over at the LewRockwell.com blog:

I.O.U.S.A., I Want a Refund

The film was billed as inspired by Empire of Debt, but it is an extraordinarily poor and biased rendering of a very good book. While Bonner and Wiggins provided a thoughtful and entertaining exposition of the entire problem of excessive debt and credit, the movie focussed entirely on government debt.

…

The notion that government is the source of this problem and unlikely to be the solution was never raised. The book made this point clear, the movie carefully ignored it. The movie focussed exclusively on the problems of paying this government debt; the book explored other, more realistic options, such as repudiation and inflation. The book explored the enormous malinvestments, misallocation of resources, folly, and harm caused by the same policies that allow such a monstrous pyramid of debt and credit to be created in the first place. The movie studiously ignored any mention of the harm these policies have caused to civil society.

Via Philly.com

Two giant mortgage companies get into hot water over risky investments. The government steps in to throw them a lifeline should they need it.

Hundreds of thousands of Americans buy homes more expensive than they can afford. Congress approves a rescue package.

Troubles erupt at a Wall Street investment firm that made bad bets on mortgage investments. The Federal Reserve steps in and provides financial backing for the company’s takeover.

Meanwhile, tens of millions of people pay their mortgages on time, don’t max out their credit cards and put money into retirement funds. They may even save a little extra on the side.

In return, they get rates on their savings that don’t even keep up with inflation. They also are witnessing the horror of their nest eggs shrinking as the value of their homes plummets and the stock market tumbles.

Washington policymakers seem more focused on rescuing those who behave badly by putting at risk taxpayers who’ve played by the rules and shunned the get-rich-quick schemes of Wall Street croupiers.

If the government can toss a lifeline to troubled mortgage underwriters Fannie Mae and Freddie Mac, they why won’t they do something for Americans who save their money?

Continued after the jump…

Read More…

http://money.cnn.com/…

In another indication of growing inflation, wholesale prices increased in July to the highest annual rate in 27 years, according to a government report released Tuesday.

The annual Producer Price Index for finished goods rose 9.8% in the 12 months that ended in July.

The jump in wholesale prices is the fastest rate of increase since a 10.4% bump-up in June 1981, according to Joseph Kowal, economist at the Bureau of Labor Statistics.

The Labor Department also reported that PPI rose 1.2% in July, after increasing 1.8% in June. Analysts polled by Briefing.com had expected an increase of only 0.6%.

The surge in producer prices is in large part due to higher energy prices, said Doug Roberts, chief investment strategist for ChannelCapitalResearch.com.

Crude oil prices doubled in the 12 months through July, but have since fallen nearly 24% from their peak hit last month.

The latest PPI report doesn’t reflect the recent drop in crude prices, but Roberts expects future readings to ease.

“The topline is a bit behind the curve - that will fall in the future,” he said. “Right now, it has not really taken into account the recent decrease in energy prices.”

Core inflation: The so so-called core PPI number, which excludes food and energy prices, rose by 0.7% - more than the 0.2% increase analysts had expected.

The core inflation index is “the more long term rate” because it indicates how much inflation “is seeping into the economy” beyond the volatile energy prices, said Roberts.

The index for finished goods other than foods and energy has advanced by 3.5% in the past year, according to the report.

Food and energy: The indexes that measure producers’ food and energy prices increased in July, but at a more moderate pace than in the previous two months.

Energy prices rose by 3.1%, after a 6.0% jump in energy prices in June and a 4.9% jump in May. In the 12 months through July, prices for finished energy goods have surged 28%.

Food prices rose by only 0.3% in July, after increasing by 1.5% in June and 0.8% in May. In a year-over-year comparison, prices for finished consumer foods have increased by 8.7%, according to the report.

The much more moderate increase in food prices in July compared with June is the one bright spot in the otherwise glum inflation report, according to Roberts.

Even though energy prices in July were still on the rise last month, “if you are seeing the other big component of inflation go down a bit, that could indicate a positive for the future,” he said.

The government reported last week that the the Consumer Price Index jumped by 0.8% in July, which was twice the increase that economists had expected.

And don’t forget that consumer price inflation is at 5.6%. Highest in 17 years. Assuming you can trust the government’s numbers. Which you can’t. So maybe double that.

Fun isn’t it? Thank the Federal Reserve, Congress, Alan Greenspan and Ben Bernanke.

http://mises.org/…

1. Introduction: Money and Politics
2. The Genesis of Money
3. What is the Optimum Quantity of Money?
4. Monetary Inflation and Counterfeiting
5. Legalized Counterfeiting
6. Loan Banking
7. Deposit Banking
8. Problems for the Fractional-Reserve Banker: The Criminal Law
9. Problems for the Fractional-Reserve Banker: Insolvency
10. Booms and Busts
11. Types of Warehouse Receipts
12. Enter the Central Bank
13. Easing the Limits on Bank Credit Expansion
14. The Central Bank Buys Assets
15. Origins of the Federal Reserve: The Advent of the National Banking System
16. Origins of the Federal Reserve: Wall Street Discontent
17. Putting Cartelization Across: The Progressive Line
18. Putting a Central Bank Across: Manipulating a Movement, 1897-1902
19. The Central Bank Movement Revives, 1906-1910
20. Culmination at Jekyll Island
21. The Fed at Last: Morgan-Controlled Inflation
22. The New Deal and the Displacement of the Morgans
23. Deposit “Insurance”
24. How the Fed Rules and Inflates
25. What Can Be Done?

From Bloomberg.com (emphasis added):

July 31 (Bloomberg) — The Federal Reserve will be able to lend more easily to failed banks under government control because of a provision in legislation that bailed out Fannie Mae and Freddie Mac.

In the rescue signed into law by President George W. Bush yesterday, the Fed will no longer have to pay penalties on loans it makes to institutions taken over by the Federal Deposit Insurance Corp.

The measure may mean more use of the central bank’s balance sheet to prop up the U.S. financial system, after the Fed began lending to investment banks in March, analysts said. The FDIC has taken over seven banks this year, with 90 on a watch-list of troubled firms as lenders are hit by the surge in credit losses.

“We are pushing forward the line on what the government will backstop, and what the Federal Reserve will backstop,” said Vincent Reinhart, former director of the Fed’s Monetary Affairs Division who is now at the American Enterprise Institute in Washington…

The Federal Reserve Act’s Rule 10B penalizes the Fed for loans to undercapitalized institutions exceeding specific time periods. The original provision was aimed at preventing the central bank from keeping failing banks open.

FDIC Request

The exemption in the new law, which was requested by the FDIC without objection by the Fed’s Board of Governors, was aimed at making clear that once banks are taken over by the FDIC, capital rules no longer apply because they are effectively owned, operated and in liquidation by the government…

For some, the exemption opens up the Fed to more political pressure to lend to government agencies, instead of forcing Congress, the FDIC, or the Treasury to explain to taxpayers why they need more money.

“Once the Fed starts lending to a bridge bank, or indirectly to the FDIC, where is the incentive to ever stop?” said Walker Todd, a former Cleveland Fed attorney and visiting research fellow at the American Institute for Economic Research in Great Barrington, Vermont.

The FDIC had $52.8 billion in its deposit-insurance fund as of March 31. The FDIC could raise more money by tapping a $40 billion credit line it has with the U.S. Treasury, increasing assessments on its members, or turning to Congress…

‘Costly and Difficult’

“Why should they be doing it?” said Robert Eisenbeis, former Atlanta Fed research director and now chief monetary economist at hedge fund Cumberland Advisors LLC. “The whole idea” of the rules in the Federal Reserve Act is “to make it costly and difficult to support an insolvent institution.”

This month, the Fed board voted unanimously to allow direct lending to government-sponsored housing agencies Fannie Mae and Freddie Mac “should such lending prove necessary,” at the request of U.S. Treasury Secretary Henry Paulson.

The bailout continues… Why can’t the FDIC raise its fees according to the risk that each member bank holds? The more leveraged the bank, the higher it costs them to participate in the program? Send in the auditors!