Huffington Post | The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.
"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."
One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.
The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."
The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.
Despite all this, Bernanke has been nominated for a second term by President Obama.
In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.
Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."
AP | Federal Reserve Chairman Ben Bernanke ran into skepticism Tuesday from lawmakers wary of expanding the Fed's duties to police big financial companies. They argued that the Fed failed to spot problems that led to the financial crisis in the first place.
"The Fed has made some big mistakes," said Rep. Spencer Bachus, R-Ala., ranking member of the House Financial Services Committee.
An Obama administration proposal to make the Fed the supercop of globally interconnected financial companies would be "just inviting a false sense of security that inevitably will be shattered at the expense of the taxpayer," Bachus warned.
Bernanke countered that the administration's proposal would be a "modest reorientation" of the Fed's powers, not a great expansion of them.
The Fed boss sought to assure investors and Congress that the central bank will be able to reel in its extraordinary economic stimulus and prevent a flare up of inflation once a recovery is firmly rooted. Still, any such steps will be far off in the future. The central bank's focus remains "fostering economic recovery," he said.
Bernanke also worked to beat back an administration proposal to create a new consumer protection regulator for financial services and strip some of those duties from the central bank. The House panel delayed a committee vote on that legislation until September.
Consumer groups and lawmakers have blamed the Fed for failing to crack down early on dubious mortgages practices that fed the housing boom and figured into its collapse. Later this week, the Fed will issue a proposal to boost disclosures on mortgages and home equity lines of credit. It also will include new rules governing the compensation of mortgage originators.
Bernanke also argued against congressional proposals to let the Government Accountability Office, Congress' investigative arm, audit the central bank. He feared that audits that delve into the Fed's interest-rate decisions could compromise its independence in setting interest-rate policies.
"A perceived loss of monetary policy independence could raise fears about future inflation," he warned.
Rep. Ron Paul, R-Texas, a frequent Fed critic, rejected that argument and said the Fed already makes political calculations.
"Just the fact that (the Fed) can issue a lot of loans and special privileges to banks and corporations," Paul said. "That's political."
Rep. Bill Posey, R-Fla., who wants the Fed to be more open, argued that some people rightly say "you can find out more about the operations of the CIA, than the Fed. The public has the right to know."
Bernanke's term expires early next year, and President Barack Obama will have to decide whether to reappoint him. The Fed chief's innovative policies have been credited with pulling the economy from the edge of the abyss last year.
But those actions also have touched off criticism about putting taxpayers at risk and whether the government should be cleaning up Wall Street messes.
Bernanke again pledged to keep its key bank lending rate at a record low near zero for an "extended period." Economists predict rates will stay at record lows through the rest of this year.
Laying out a plan now to unwind the Fed's stimulus could give Bernanke more leeway to hold rates at record lows to brace the economy. It could ease investors' fears that the Fed's aggressive steps to end the longest recession since World War II could spur inflation later on.
"It is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation," Bernanke said. "We are confident that we have the necessary tools to implement that strategy when appropriate."
But House committee chairman Barney Frank, D-Mass., said it is important that the Fed not take those actions "prematurely" and snuff out a recovery.
Nigel Gault, economist at IHS Global Insight, said Bernanke wanted to send Congress a clear message: "Our monetary exit strategy is ready. Don't try to interfere with it."
On Wall Street, bond investors took comfort in Bernanke's remarks, pushing up Treasury prices for a second straight day. The Dow Jones industrial average gained nearly 68 points to 8,915.94, the seventh straight advance for the blue chips. Broader indices also finished higher.
To revive the economy, the Fed has plowed trillions into the financial system in an effort to drive down rates on mortgages and other consumer debt. It also has created programs to bust through credit clogs, a key ingredient in turning the economy around.
Eventually, the Fed will need to soak up that money.
Besides raising its key bank lending rate, the Fed can raise the rate it pays banks on reserve balances held at the central bank, Bernanke said. That would give banks an incentive to keep their money parked there, rather having it flow back into the economy, where it can stoke inflationary pressures.
The Fed also can drain money from the financial system by selling securities from its portfolio with an agreement to buy them back at a later date. Or it can sell securities outright.
Steering the economy from recession to recovery will be a delicate move for Bernanke — economically and politically.
Bernanke repeated the Fed's forecast that the economy should start growing again in the second half of this year. But he warned that growth would be slight, leading to higher unemployment.
The nation's unemployment rate climbed to a 26-year high of 9.5 percent in June. The Fed says it could rise as high as 10.1 percent this year and stay elevated into 2011. The post-World War II high was 10.8 percent at the end of 1982.
"We have a very long haul" back to full economic health, Bernanke told lawmakers.
YouTube | Current chairman of the private Federal Reserve Ben Bernanke made a visit to Chicago on June 10th. He was unexpectedly confronted by patriots and members of We Are Change Chicago regarding his treasonous attendance at Bilderberg in 2008.
Infowars | As HR 1207 gains momentum and co-sponsors in the House of Representatives, the Federal Reserve is planning to fight the tide calling for an audit of its books by hiring a veteran lobbyist to “manage its relations with Congress,” according to Reuters.
The Fed plans to hire Linda Robertson, who previously worked for now-defunct energy company Enron, as well as the Clinton administration. She is currently head of government, community and public relations at The Johns Hopkins University in Baltimore. Robertson “spent eight years in senior positions at the Treasury Department, working for three secretaries: Lloyd Bentsen, Robert Rubin and Lawrence Summers,” a bio posted on The John Hopkins University website states.
Robert Rubin, as secretary of the Treasury, recommended that Congress pass legislation to reform or repeal the Glass-Steagall Act of 1933, while Lawrence Summers in the same capacity organized the looting of Russia, stripping one trillion dollars from Russia’s struggling economy in the name of the bankers.
“Members of Congress have chafed at the Fed’s bold use of its emergency powers and in particular its multibillion-dollar bailouts of investment bank Bear Stearns and insurer American International Group,” Reuters continues. “Critics also bristle at the Fed’s practice of maintaining the confidentiality of the companies that borrow directly from the central bank on the grounds that divulging their names would risk runs on those institutions.”
One such critic is senator Bernie Sanders of Vermont. In March, Sanders put it squarely to Fed boss Bernanke when he said “My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke, of course, refused to divulge a single name and instead said the loans in question are “over-collateralized” and thus come with a heavy stigma for the unknown borrowers.
As reported by Bloomberg, the Fed has entered into trillions of dollars in off-balance sheet transactions since last September. More specifically, the Fed extended $9 trillion in credit, which is $30,000 for every single men, women, and child in this country.
Early last month, Elizabeth Coleman, Inspector General for the Federal Reserve, told Rep. Alan Grayson of the United States House Committee on Financial Services that she does “not have jurisdiction to directly go out and audit Reserve Bank activities specifically.” See a video of Grayson questioning Coleman.
“We’re getting instructions from on high saying, ‘Don’t dwell on the past,’” Grayson was told before a hearing scheduled to investigate the Fannie and Freddie swindle.
HR 1207 would put an end to this sort of hide-and-seek nonsense. It would “amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.”
Rep. Ron Paul notes that only the Fed can inflate the currency and create new money out of thin air in secrecy without oversight or supervision. “Debasing a currency is counterfeiting,” Paul told Congress in February, 2008, “it steals value from every dollar earned or saved. “It robs the people and makes them poorer… it is the enemy of the working person. Inflation is the most vicious and regressive of all forms of taxation. It transfers wealth from the middle class to the privileged rich.
HR 1207 would cast a laser light on this criminal process. “By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve,” Paul explained earlier this year.
An audit would set the stage for the end of the Federal Reserve and a return of honest money and fiscal policies. The banksters behind the Fed understand this very well and that is why they have not only hired a PR wizard but also why they have attempted to subvert the End the Fed movement.
It is hardly a mistake that the MIAC report characterized the End the Fed movement as extremist. It is also no mistake the United States Army Reserve Command issued “mitigation measures” in response to End the Fed demonstrations around the country last year. The Army “established relationships” with local law enforcement and the FBI and encouraged them to “update alert rosters,” according to a Force Protection Advisory leaked to the media. On November 22, 2008, Alex Jones led a rally at the Federal Reserve Bank in Dallas Texas. The Dallas protest is specifically mentioned in the official Army document.
As HR 1207 picks up sponsors and gains critical mass, we can expect the international bankers to devise ways to protect their Federal Reserve racket. Obviously, it will take more than a former Enron and Treasury Department hack to stem the growing tide of people demanding the Fed be investigated and eventually dismantled.
Campaign for Liberty | I have been very pleased with the progress of my legislation, HR 1207, which calls for a complete audit of the Federal Reserve and removes many significant barriers towards transparency of our monetary system. This bill now has nearly 170 cosponsors, with support from both Republicans and Democrats. Senator Bernie Sanders has introduced a companion bill in the Senate S 604, which will hopefully begin to gain momentum as well. I am very encouraged to see so many of my colleagues in Congress stand with me for greater transparency in government.
Some have begun to push back against this bill, and I am very happy to address their concerns.
The main argument seems to be that Congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money — the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.
Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930’s. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve.
Detractors have also argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions. On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.
As far as the foolishness of placing complex monetary policy decisions in the hands of politicians — I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.
To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.
However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money. As the branch of government with the power of the purse, we really have no other reasonable choice when the economy is in the shape it is in.
Written and narrated by G. Edward Griffin (1960's).
This is an adaptation of a documentary filmstrip tracing the history of a small group of people who control the money systems of the world. It shows how this group is protected by governments and how its wealth is derived by creating money out of nothing. We see how this group wields power through government, foundations, education, and the mass media. It has aided such regimes as Russia and China, not because it is pro-Communist, but because a visible enemy and the threat of war have been useful in persuading the masses to embrace the group's ultimate goal: a world government which they expect to control from behind the scenes. They are now working to replace fear of nuclear war with fear of global pollution as the motivation for world government. It is clear that the plan revealed in this program continues to unfold.
Monopoly is not an outgrowth of capitalism. Monopolists lobby for laws that give them advantages in the market place. Monopoly is not based on free-enterprise competition, but the escape from it. It is not the product of capitalism but the bedfellow of socialism.
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"The powers of financial capitalism had a far-reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...Their secret is that they have annexed from governments, monarchies, and republics the power to create the world's money..."
Financial Times | The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.
In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.
”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”
Mr Greenspan’s comments capped a frenetic day in which policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.
“We should be focusing on what works,” Lindsey Graham, a Republican senator from South Carolina, told the FT. “We cannot keep pouring good money after bad.” He added, “If nationalisation is what works, then we should do it.”
Speaking to the FT ahead of a speech to the Economic Club of New York on Tuesday, Mr Greenspan said that “in some cases, the least bad solution is for the government to take temporary control” of troubled banks either through the Federal Deposit Insurance Corporation or some other mechanism.
The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”
But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.
”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said. “This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt.”
Before the US House of Representatives, February 4, 2009, introducing the The Federal Reserve Board Abolition Act, H.R. 833.
By Ron Paul
Lew Rockwell | Madame Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.
With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America’s exports or the low rate of savings should be enthusiastic supporters of this legislation.
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of special interests and their own appetite for big government.
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.
In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.
In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
Global Research | On June 15, 2007, Ron Paul introduced HR 2755: Federal Reserve Abolition Act. There were no co-sponsors, no further action was taken, and the legislation was referred to the House Committee on Financial Services and effectively pigeonholed and ignored.
It’s a bold and needed measure to “abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes.”
The bill provides for management of employees, assets and liabilities of the Board during a dissolution period, and more as follows:
– it designates the Director of the Office of Management and Budget to liquidate Fed assets in an orderly and expeditious manner;
– transfer them to the General Fund of the Treasury after satisfying all claims against the Board and any Federal reserve bank;
– assume all outstanding Board and member bank liabilities and transfer them to the Secretary of the Treasury; and
– after an 18-month period, submit a report to Congress “containing a detailed description of the actions taken to implement this Act and any actions or issues relating to such implementation that remain uncompleted or unresolved as of the date of the report.”
– end a private banking cartel’s illegal monopoly control over the nation’s money supply and price;
– return that power to the US Treasury as the Constitution mandates;
– end a fiat currency system backed by the waning full faith and credit of the government; and
– return the country to a sound, hard currency monetary system.
“End the Fed! Sound Money for America!” is their slogan, and writer and US policy critic Webster Tarpley puts it well:
“….the privately owned central bank….has been looting and wrecking the US economy for almost a hundred years. We must end a system where unelected, unaccountable cliques of bankers and financiers loyal to names like Morgan, Rockefeller, and Mellon set interest rates and money supply behind closed doors, leading to de-industrialization, mass impoverishment, and a world economic and financial depression of incalculable severity.”
In theory, the Fed was established to stabilize the economy, smooth out the business cycle, manage a healthy, sustainable growth rate, and maintain stable prices. In fact, it failed dismally. It contributed to 19 US recessions (including the Great Depression) and significantly to the following equity market declines that accompanied them as measured by the Dow or S & P 500 average - the S &P’s inception was 1923; it became the S & P 500 in 1957:
– 40.1% (Dow) from 1916 - 1917;
– 46.6% (Dow) from 1919 - 1921;
– the 1929 (Dow) crash in two stages - 47.9% in 1929 followed by a strong, temporary rebound; then - 86%; an 89% peak to trough total from October 1929 to July 1932;
– 49.1% (Dow) from 1937 - 1938;
– 40.4% (Dow) from 1939 - 1942;
– 25.3% (S & P) from 1946 - 1947;
– 19.8% (S & P) in 1957;
– 26.8% (S & P) from 1961 - 1962;
– 19.3% (S & P) in 1966;
– 32.7% (S & P) from 1968 - 1970;
– 45.1% (S & P) from 1973 - 1974;
– 20.2% (S & P) from 1980 - 1982;
– 32.9% (S & P) in 1987;
– 19.2% (S & P) in 1990;
– 18.8% (S & P) in 1998;
– 49.1% (S & P) from 2000 - 2002; and
– about 50% (S & P) and counting (excluding a bear market rebound) from October 2007.
Creating the Federal Reserve System to let bankers and not the government control the price and amount of fiat money debased the currency and is the root cause of today’s financial problems.
The Fed is also directly responsible for monetary inflation and the decline in the US standard of living since its year end 1913 inception and especially since the 1970s. From the late 18th century to 1913, virtually no inflation existed under the gold standard except during times of war. Using government data, it now takes over $2000 to equal $100 of pre-Fed purchasing power. In other words, a 1913 dollar is worth about a nickel today.
At that time, a dollar was defined as 1/20 of an ounce of gold or about an ounce of silver. The Fed then changed the standard away from precious metals to the full faith and credit of the government. Ever since (except for periods such as the 1930s) inflation eroded the currency’s value and (more than ever) continues to do it today.
It’s why one analyst calls the dollar “nothing more than a popular symbol for the tangible substances it once represented - gold and silver.” Its true value represents the world’s waning confidence in America’s ability to honor its debt obligations, and with good reason.
Under the Federal Reserve System (besides inflation), we’ve had rising consumer debt; record budget and trade deficits; a soaring national debt; a high level of personal and business bankruptcies; today, millions of home foreclosures; high unemployment; the loss of the nation’s manufacturing base; growing millions in poverty; an unprecedented wealth gap between the rich and all others; and a hugely unstable economy now lurching into crisis mode.
In a November 24 Wall Street Journal op-ed, Hong Kong-based author and equity strategist Christopher Wood believes “The Fed Is Out of Ammunition.” With trillions in personal wealth erased, “there is little doubt that we are witnessing a classic debt-deflation bust at work, characterized by falling prices, frozen credit markets and plummeting asset values.”
He notes how “over-investment and over-speculation” on borrowed money got us here. Today, the Fed can control the supply of money but not its velocity or the rate it turns over. The current collapse set it in reverse with no signs of an impending turnaround.
Wood believes monetary and fiscal measures won’t work. There are no easy solutions - “not as long as politicians and central bankers (won’t) let financial institutions fail,” and let market forces wash out excesses over time.
The Fed and Treasury will spend trillions of dollars to correct things, “but will merely compound (the problem) by adding debt to debt.” The current crisis will end up “discrediting mechanical monetarism - and with it the fiat paper-money system….The catalyst will be foreign creditors fleeing the dollar for gold. That will in turn lead to global recognition of the need for a vastly more disciplined global financial system” with gold very likely playing a part.
Absent a hard money currency has led to the kind of monetary madness that Nouriel Roubini calls “crazy” policy actions - an explosion of quantitative easing in the trillions with no end of it in sight.
Roubini: “The Fed Funds rate has been abandoned…as we are already effectively at (zero interest rates) that signal a liquidity trap….Even (a sharp) fall in mortgage rates….will be of small comfort to debt burdened households as only those (that) qualify for refinancing will be able to” net out a “modest” monthly mortgage saving of about $150.
The Fed’s “desperate policy actions….will eventually lead to much higher real interest rates on the public debt and weaken the US dollar (the result of a) tsunami of implicit and explicit public liabilities and monetary debt.” It will get foreign investors to “ponder the long-term sustainability of the US domestic and external liabilities,” and why not. They keep growing exponentially, and with nothing restraining a runaway Fed, dollar debasing may continue to the point where no one will want to hold them. It’s gotten some analysts to recommend moving a portion of savings out of them into gold - the ultimate safe haven in times of crisis.
Abolish the Fed and Return the Nation’s Money Creation Power to Congress Where It Belongs
Ron Paul has been in the vanguard of the Abolish the Fed movement, and on September 10, 2002 on the House floor said:
“Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people….”
“It is time for the Congress to put the interests of the American people ahead of the special interests. Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy.”
“Abolishing the Federal Reserve and returning to a constitutional system (as mandated) will enable America to return to the type of monetary system envisioned by our nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold….I urge my colleagues (to co-sponsor) my legislation to abolish the Federal Reserve.”
Paul introduced his legislation in the 106th, 107th, 108th, and 110th Congresses. Each time, it died in committee. On November 22, he attended the End the Fed rally in Houston and addressed the crowd.
He called the current economic crisis as bad or worse than in the 1930s and said: “we know who caused it. It was the Federal Reserve that gave us all this trouble.” He explained that we had a “free ride for decades because we’ve had a system that was devised where the dollar could act as if it were gold.”
Not after August 1971 when Nixon closed the gold window, ended the 1944 Bretton Woods Agreement, and no longer let dollars be backed by gold or converted into it in international markets. A “new economic system” was created. It let us “spend beyond our means, live beyond our means, print money beyond our means,” and it caused our current dilemma.
We created “an appearance of great wealth. But it was doomed to fail,” and it became apparent in the past year: “the failure of the dollar reserve standard that was set up in August of 1971. It has ended. The only question” is what will replace it?
There’s all kinds of talk, including setting up a new international fiat currency “with the loss of US sovereignty in total. We have to stop this move towards one world government and a one world currency.” Otherwise our freedom and Constitution will be lost. When it was written, it contained prohibitions.
Article I, Section 8 gives Congress alone the right to coin (create) money and regulate the value thereof. The founders also wanted gold and silver to be legal tender, not fiat money, nor should there be a central bank. In 1935, the Supreme Court ruled that Congress cannot constitutionally delegate this power to another body. By creating the Federal Reserve System in 1913, Congress violated the Constitution it was sworn to uphold and defrauded the American public. Today’s crisis is the fruit of its action, but watch out.
“The writing is on the wall, and the end of this system” approaches. “They cannot patch it up, they can’t up it back together again. They know it and we know it. The only argument is what is it going to be replaced with?”
For now, “Central banks in the West especially have been dumping gold to artificially lower (its price) to pretend the dollar is of great value. They’re still doing it, but they’re running out of time (and) out of gold.” It’s shifting to stronger economic powers, ones who’ve been saving money, loaning it back to us, “and are ready to buy up America if we continue to do this. So it is a contest (between fiat) money and hard money, and that is such an important issue.” It reflects what Daniel Webster once said:
“There can be no legal tender in this country….but gold and silver. This is a constitutional principle….of the very highest importance.” Gold, however, wasn’t the original monetary system standard. Silver was, the silver dollar, and only a constitutional amendment can change it.
Paper currency as well, whether backed by gold or not, wasn’t the hard money authorized by the Constitution. Honest money is honest weights and measures of silver and gold. Federal Reserve Notes are paper fiat debt obligations. Fiat currency of any kind is a mechanism of wealth transference from the public to a privileged elite - through inflation and loss of purchasing power. It creates debt for the many and wealth for the few, especially when a private banking cartel controls it.
Our existing monetary system combines money, credit and debt into a dishonest system of empty promises in exchange for future ones. There is no eventual payment, only unfulfillable assurances to new generations that will be forced to pay for the debt now accumulated. It’s a moneychangers dream - ever-expanding debt and a continuing interest rate stream, masquerading as wealth creation for the people. It’s in fact a system of bondage and indebtedness benefitting the few at the expense of the many, a modern-day feudalism. It’s how an elite 1% got to own 70% of the nation’s wealth.
In the 1920s, Josiah Stamp, Bank of England president said:
“Banking was conceived in iniquity and was born in sin. Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with a flick of the pen (today a computer keyboard) they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits.”
Creating the Federal Reserve System to let bankers and not the government control the price and amount of fiat money debased the currency and is the root cause of today’s financial problems. A return to honest gold and silver weights and measures is needed. The Constitution states that nothing but these metals are money and that paper bills of credit (like Federal Reserve notes) aren’t allowed. Even ones backed by gold as the Constitution doesn’t grant Congress the power to be bankers. It may only coin (create) and borrow money, not loan it out or give it away - and certainly not to bankers at the expense of the public interest.
Further, the Constitution contains no provision allowing Congress to enact legal tender laws. Article I, Section 10 forbids the individual states from making “anything but gold and silver coin a legal tender in payment of debts.” However, US Code, 31 USC 5103, establishes US coins and currency, including Federal Reserve notes, as legal tender and has been used to debase the currency ever since - the way Gresham’s Law works: bad (or debased) money drives out good (the kind with little difference between its nominal and commodity values).
For example, until 1964, US coins (except pennies and nickels) contained 90% silver. Starting in 1965, dimes and quarters were converted to their current nickel - copper composition. Half-dollars (now produced in limited quantities) had 90% silver. It then dropped to 40% in 1965 and by 1971 all US coins (except pennies and commemorative mintings) contained nickel and copper and no silver - a good example of debasing. As for paper currency, it’s just paper.
Under a private banking cartel’s control, it’s been misused, stolen, and corrupted the way New York Times columnist Floyd Norris suggests in his November 24 article headlined: “Another Crisis, Another Guarantee.” First the banks, then the auto companies, and who knows who’s next in line for theirs. “As the nation’s obligations rise into the trillions, at some point investors (and the public) may begin to question whether a government running huge deficits can also credibly promise that the dollar will not lose its value.” How can there be any faith and credit left when it’s vanishing and the Fed and Treasury operate like giant hedge funds.
It got UK-based Eclectica Asset Management chief investment officer, Hugh Hendry, concerned enough to say: “All (US) financials will be owned by the government in a year. I bet you. It’s not good,” but it’s coming. US taxpayers will be “paying for this for a long time,” and it’s deeply concerning considering the amount of money creation - with no end in sight as problems keep mounting and limitless amounts keep being thrown at them.
On November 25 the Financial Times associate editor, Wolfgang Munchau, also worries about the Fed’s “weapon of mass desperation” (so-called quantitative easing); focusing only on deflation and risking a currency crisis. He calls it a flawed, dangerous and shocking oversight - the possibility of “a mass flight out of dollar assets (at some point) and a large rise in US market interest rates, followed by a huge recession.”
A Bloomberg.com November 24 headline highlights the problem: “US Pledges Top $7.7 trillion to Ease Frozen Credit,” and it might as well have said there’s plenty more where that came from if needed. With another $800 committed to two new loan programs the total reached $8.5 trillion, according to Bloomberg or nearly 60% of US 2007 GDP of $14 trillion, and the numbers keep rising exponentially because the problems continue to mount.
Bloomberg puts it in perspective saying “the (current) commitment dwarfs (TARP and puts) Federal Reserve lending last week (at) 1900 times the weekly average for the three years before the crisis,” and with the added $800 billion it’s about 2100 times pre-crisis levels.
In addition, the Fed refuses to identify recipients of about $2 trillion of emergency handouts or what troubled assets (if any) it’s accepting as collateral. Call it lending or spending. They’re public tax dollars being spread around like confetti and debasing it all as a result.
The Free Lakota Bank
On November 21, this writer discussed how Lakotahs are treated in an article titled “Fate of Lakotahs Highlights America’s Failed Native American Policies.” On November 24, the following press release and follow-up information announced:
“People of Lakota Launch Private Bank for Only Silver and Gold Currencies.” All deposits are “liquid, meaning they can be withdrawn at any time in minted rounds. Some may confuse our economic system with isolationism….which it is not. Since we currently produce much more than we consume, we have the right to decide what medium of exchange to accept for our effort. And so we accept only value for value. Across our great land, over thousands of tribes and merchants participate in our system of trade. We invite others to trade with us and bring value back into our transactions.”
This is the world’s first non-reserve, non-fractional bank that accepts only silver and gold currencies for deposit. The Lakotas “invite people of any creed, faith or heritage to unite in an effort to reclaim control of wealth. It is our hope that other tribal nations and American citizens recognize the importance of silver and gold as currency and decide to mirror our system of honest trade.”
The bank states that it issues, circulates and accepts for deposit “only AOCS - Approved silver and gold currencies.” It calls paper not real money but “merely a promise to pay - a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes.” When corruption is rewarded and “honesty becom(es) self-sacrifice….you may know that your society is doomed.” Even as victims of adversity, Lakotas are working to prevent it.
End the Fed
Privatized money control is the single greatest threat to democratic freedom. As former lawyer, economist, academic, and Canadian prime minister (from 1935 - 1948) William Lyon Mackenzie King once said:
“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile….Once a nation parts with control of its credit, it matters not who makes (its) laws….Usury once in control will wreck any nation,” and indeed it has, far more now than ever.
It worried Thomas Jefferson enough to call banking institutions “more dangerous to our liberties than standing armies” at a much simpler time in our history. The right to create and control money belongs to the people through their elected representatives. For the past 95 years, powerful bankers accountable to no one have had it. They effectively run the country (and own it), and unless We the People change things, we’ll continue to be victimized by economic tyranny and the eventual political kind that’s coming.
"In a crisis, discount and discount heavily."Walter Bagehot (1826-1877), British economist
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." Thomas Jefferson (1743-1826), 3rd U.S. President.
"By this means [printing money] government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft." John Maynard Keynes (1883-1946), British economist
Suspending the normal functioning of private credit
By Prof. Rodrigue Tremblay Global Research | On December 16 (2008), the Bernanke Fed took the most unusual step of lowering the overnight inter-bank lending rate, the federal funds rate, to a level never reached before, i.e. zero percent with an upside limit of 0.25 percent. It also announced that it will buy “large quantities of” mortgage-backed securities and is considering doing the same thing with Treasury bonds of longer maturities, in order to lower the entire yield curve. What it did not say explicitly is that the Fed is ready to debase the U.S. dollar to artificially low levels in order to reflate the U.S. economy. What the Fed wants is to trigger monetary inflation and change deflation expectations at all costs through large-scale debt monetisation and thus floating excess debts in a sea of newly created money.
Overall, what the Fed has done, in effect, is to announce that it is suspending the normal functioning of private credit and capital markets, according to supply and demand, and has decided to micro-manage such failing markets for the foreseeable future, that is to say as long as deflationary pressures, in its own view, persist in the U.S. economy. The Fed is also taking big chunks of ownership in large private U.S. banks in order to recapitalize them and to let them deleverage themselves in an orderly way.
People may want to know why the Fed went to that “socialist” extreme and what will be the financial and economic intended and unintended consequences?
First of all, let's keep in mind that the Fed is the only central bank in the world that is partly public-owned and partly private-owned. Bankers sitting on the Fed board can make decisions to lend new money to themselves at whatever rate they choose. The entire American financial and fiscal system is run by bankers, either at the Fed or at the Treasury. Indeed, beginning on January 20 (2009), the Obama administration's Treasury Secretary will be the current president of the New York Fed, Mr. Timothy Geithner, who will be replacing Secretary Henry Paulson, himself a former CEO of the Wall Street investment bank Goldman Sachs.
Although the U.S. President initiates and Congress approves the nominations of the seven members (currently only five in exercise) of the Federal Reserve Board of Governors (for a 14-year term), the de facto managing of the Fed is left to bankers. This is done through the Federal Open Market Committee (FOMC) which implements monetary policy through open market operations and other discounting policies and discount loans. It is comprised of the seven members of the Board of Governors and five presidents of the twelve Federal Reserve District Banks. The Chairman of the Fed Board is also the Chairman of the FOMC. The President of the New York Fed is always on the FOMC and acts as its Vice Chairman. [The remaining 4 fed member slots are shared and rotated among the remaining 11 District Banks. In fact, the presidents of all twelve Federal Reserve District Banks are present at the FOMC meetings, but only five are enabled to vote at any given time. But, since members of the Fed board often originate from the regional Fed banks or from private banks, bankers are often in the majority in deciding American monetary policy.]
Secondly, by taking over private financial markets, the Fed is, in effect, covering its own mistakes (and those of the SEC and of the U.S. Treasury) for having allowed the building up of a shaky pyramid of asset-backed securities (ABS), not the least being the toxic mortgage-backed securities, and the gambling-prone credit default swaps (CDS), that has been crumbling to the ground.
It is my feeling that the Fed, by creating a bond bubble, at this time is only postponing the day of reckoning and is buying time. When the bond bubble bursts, and believe me, it will burst, as all bubbles do, this will push the U.S. economy further down. For instance, when this happens, many capitalized pension funds could fail and many retirees could be then pushed toward poverty. Future spikes in interest rates will hurt investments and damage the economy even more.
Meanwhile, a bout of competing currency devaluations has been launched, since other governments and other central banks will have to try to debase their own currencies if they want to avoid importing the worst of the U.S. economic downturn. This will be reminiscent of what happened during the 1930s economic depression. Not a pretty perspective for the future of fiat currencies.
It seems that the Fed has an uncanny talent for creating financial and economic bubbles. In the late 1990s, after the Asian financial crisis and after the near failure of the hedge fund Long-Term Capital Management (LTCM), in September 1998, the Greenspan Fed flooded the U.S. economy with liquidity and created the 2000 tech bubble. The same Greenspan Fed aggressively lowered the Federal Funds rate from 6.5 percent to 1 percent in 2004, thus paving the way to the worst housing bubble in American history. Now, the Bernanke Fed is at it again, and, by lowering the federal funds rate to close to zero and by announcing that it stands ready to monetize U.S. Treasury debt, it is actively blowing into what has the appearance of one of the worst bond bubbles ever.
Of course, the Fed has bestowed so much money on banks in exchange for their bad debts while the banks themselves are unwilling to lend, that U.S. banks' excess reserves at the Fed have exploded to more than half a trillion (November '08), which is ten times what is required. This is a sign that the U.S. economy is currently in a liquidity trap.
There is a lot of money in the system, but it is not circulating. The velocity of money is down. In such a situation of excess liquidity, when the Fed creates more liquidity, it is like pushing on a string. Therefore, by lowering short-term interest rates to close to zero, the Fed is helping itself before helping others, since it will be paying less interest on Banks' excess reserves, most of which came from the Fed anyhow. Some of the excess liquidity can spill into the stock market and lift all boats for a while. However, the true test of the Fed's recent desperate move will be if banks increase their lending. We shall know in due course.
Rodrigue Tremblay is professor emeritus of economics at the University of Montreal and can be reached at: rodrigue.tremblay@ yahoo.com.
He is the author of the book 'The New American Empire'.
Bloomberg | The Federal Reserve cut the main U.S. interest rate to “a target range” of between zero and 0.25 percent and said it will do whatever is needed to end the longest recession in a quarter-century and revive credit.
The Fed “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Federal Open Market Committee said today in a statement in Washington. “Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”
Treasury notes rallied in anticipation the Fed will buy the securities to force borrowing costs for consumers and companies lower. Nine rate cuts in the prior 14 months and $1.4 trillion in emergency lending have failed to reverse the economic downturn.
“The focus of the committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level,” the FOMC said.
The statement noted that the Fed has already announced it will purchase agency debt and mortgage-backed securities, and said the Fed is ready to expand the program. The central bank said it continues to weigh the potential benefits of buying longer-term Treasury securities.
Printing Money
“The Fed is sending a message that it will print money to an unlimited extent until it starts to see the economy expanding,” William Poole, former president of the St. Louis Fed and now a senior fellow at the Cato Institute in Washington, said in an interview with Bloomberg Television. Poole is also a contributor to Bloomberg News.
The deepening economic slump pushed unemployment to 6.7 percent last month, the highest level since 1993, while builders broke ground on the fewest new homes since record-keeping began in 1947. Deflation is also emerging as a risk: consumer prices fell the most on record in November, the Labor Department said earlier today.
The vote was unanimous. In a related move, the Fed lowered the rate on direct loans to banks and securities dealers to 0.5 percent.
The Fed twice pared the federal funds rate, or overnight lending rate, to 1 percent since adopting it as the main tool of monetary policy in the late 1980s. The 1 percent rate held from June 2003 to June 2004. The Fed staged a half-point reduction to 1 percent on Oct. 29.
AFP | The US Federal Reserve said Monday it had authorized China Construction Bank, a leading Chinese state bank, to operate in the United States.
The proposed New York City branch of CCB "would engage in wholesale deposit-taking, lending, trade finance, and other banking services," the Fed said in a statement.
The US central bank recalled that China Construction Bank Corporation (CCB) is 57.0 percent owned by the Chinese state, 19.7 percent by US banking group Bank of America and 5.7 percent by Temasek Holdings, a sovereign wealth fund owned by the government of Singapore. The remainder of the capital is publicly traded.
CCB is the second-largest bank in China, with total assets of approximately 1.1 trillion dollars, it noted.
The Fed said it had determined that CCB had adequate anti-money laundering safeguards and had committed to respect US laws on money laundering.
CCB's own funds exceed the minimum set by the 1998 Basel Capital Accord and "is considered equivalent to capital that would be required of a US banking organization," the US central bank said.
CCB would be the fourth mainland Chinese bank -- excluding banks in Hong Kong -- to open operations in the US, after the Agricultural Bank of China, the Bank of China and the Bank of Communications.
The Industrial and Commercial Bank of China (ICBC), China's top bank, also has asked the Fed for authorization to open a branch in New York.
The depth of the current economic crisis is leading many people to favour a form of governance that would place economic and political life under the trusteeship of international organisations. Barack Obama’s new cabinet, which is made up of those responsible for the crisis, will ensure the ascendancy of financial interests. In the meantime no one is calling for the people to have power in the monetary sphere. The result is that democracy is being killed by financial power.
By Maurizio d’Orlando
Asia News | A new world order has been in the making for quite some time and is now becoming “inevitable”. Many a politician and economist are quick to say that great sacrifices are called for, and that any “reasonable” person will see that suffering and hardship are “necessary.”
The crisis that is currently affecting our lives is behind this global shift. The slow fire has moved from real estate, to banking and finances, and is now reaching industry, agriculture and the whole economy. From the heartland in the United States it is reverberating outward touching the entire world.
The fear of a domino effect and its potential for economic, political and social upheavals and the fear of widespread anarchy will provide the necessary tools to install this new order, which for most people will appear as the only possible outcome. The act of governing will change as a world body will be in charge the financial, economic and tax systems. Police, prisons and private relations inside and outside the family will come under its purview, so will national sovereignty of the peoples and the right to express opinions that are different from those of the single thought of relativism, which will be seen as the only solution that is available and desirable.
The G20 and the New World Order
Until a few decades ago such a new world order would have been anathema, a nightmare, a first step towards a worldwide dictatorship. Now world leaders will be praised when they show concern for the well-being of the earth’s peoples and social groups at a time of difficulties. Of course, this is what we will hear, and very soon too, in terms more unambiguous that we might think now. This said, new rules, a new Bretton Woods, are not anything new; discussions have been going on for some time. Perhaps the next G20 summit on 15 November will be a time when the “miracle” cure is found, one that will entail a world central bank that regulates a single currency of account and its relationship to local currencies.
After a short lesson and a quick diagnosis of the current problems, during which G20 participants will hear that “it was all the fault of Bush’s brainless laissez-faire advocates,” the same people responsible for the current crisis will supply the treatment for putting things right.
All we have to do is see who funded the most expensive presidential campaign in the former US superpower (more than a billion dollars at a time of great recession). As always some have bet on both horses just to be on the safe side. As we know Barack Obama pulled it off, money-wise too, almost twice as much as the Republican candidate. In addition to traditional sectors like show business, media, academe, education, information technology and the Internet, hedge funds, law firms (closely linked to the world of creative financial mediation) and private equity funds have bankrolled the new president’s campaign.”1
In order to change nothing, the appearance of everything has to change. In fact, only the surface had to change a bit; the new president’s darker skin. For everything else, it was business as usual. Indeed the cabinet of the new president is made up of the same, reckless people. Let’s see! We have Larry Summers, Tim Geithner and Robert Rubin who have been short-listed for the Treasury Department; all of whom are extreme laissez-faire advocates who believe in an unfettered financial system, enemies of the Glass-Steagall Act.2 They are same people who swapped jobs at the International Monetary Fund, World Bank, Clinton Administration; played sidekicks for Alan Greenspan and Ben Shalom Bernanke, or at the headquarters of Federal Reserve Bank of New York (Geithner); that is the same people who masterminded events before and after the current crisis.
Old faces in Obama’s new government
Obama picked Rahm Emanuel to be his chief of staff, a man whose career straddled politics and Wall Street’s great financial groups. But there is more to his case. Not only his father was a member of the Irgun3 but he holds Israeli citizenship, has fought for Israel and represents that country’s armed forces. He also endorsed Obama before the leadership of the AIPAC,4 a US Zionist organisation that is also funded by the State of Israel and which has recently been involved in espionage cases. In Israel many view Rahm as “our man in the White House.”
Based on this perhaps the choice between the two candidates was not really equal. See-sawing in the polls for quite a while after an apparent jump, buoyed by the war in Georgia, the Republican camp saw its fortunes nosedive after President Bush refused in late August to provide Israel’s air force refuelling aircrafts for a long range mission5, in effect vetoing an attack against Iran. Starting with oil, the prices of primary commodities began dropping a few days later, negatively affecting investment banks, which had bet on high prices to compensate for losses in the home mortgage market, thus throwing the world’s stock markets into a tailspin in early September.6
Democracy and money
From all of the above it is clear that an Obama presidency will not change how the financial crisis will be handled. On the contrary, it will strengthen the trend to protect large institutions and industries at the expense of small enterprises and the man and woman of the street who voted for him. It is quite obvious that the G20 summit in Washington will not affect the central issue of the present financial and economic crisis (and the many preceding crises of modernity and post-modernity), i.e. sovereignty and system legitimacy.
In today’s world the only political regime that is considered fully legitimate in political and economic terms is democracy. Many wars have been fought to spread democracy and in democracy, by definition, the people are sovereign. However, if a highly developed and complex democracy like that of the United States can be guided (in the sense that voters are left with the illusion that they can choose when in fact their choices like in a supermarket are shaped by marketing, political marketing that is) by those with deep pockets, the legitimacy of the system no longer lies in the consent of the people since the latter goes to the highest bidder. Hence money becomes the basis of consent and power in a democracy.
There is nothing new in all this but the crucial point is that printing money is a sovereign act and is governed by laws. A creditor cannot refuse payment in money that has legal tender and demand instead payment according to his or her wish (gold, silver or what not) if he or she has not negotiated it beforehand. Those who control the money supply through ad hoc rules can favour some over others.7
Thus the paradox of modern democracy is that a sovereign people (through its supposed representatives, parliaments, heads of state and government) have de facto no power or right over the US Federal reserve (or the European Central Bank) with regards to such an important sovereign act.
In order to protect the public and avoid political interference printing money has been privatised and placed beyond public control. Through its representatives the sovereign cannot be trusted and thus is not sovereign. Few know that the US Federal Reserve was established under private law; the same is true for the Bank of Italy and many other central banks. It has been so since the dawn of parliamentary government, right after the Glorious revolution if 1688.8
1. See for example “Hedge Funds: Long-Term Contribution Trends,” in OpenSecrets [vedi: http://www.opensecrets.org/industries/indus.php?ind=F2700], retrieved on 13 November 2008; “Lawyers / Law Firms: Long-Term Contribution Trends,” in OpenSecrets [http://www.opensecrets.org/industries/indus.php?ind=K01], retrieved on 13 November 2008; and RENICK Mayer, Lindsay, “Obama's Pick for Chief of Staff Tops Recipients of Wall Street Money,” 5 November 2008, in OpenSecrets, [http://www.opensecrets.org/news/2008/11/obamas-pick-for-chief-of-staff.html], retrieved on 13 November 2008.
2. The Glass-Steagall Act split deposit banking from investment banking. The law was adopted in 1933 to prevent a repeat of the stock market crash of 1929 which caused the Great depression of the Thirties. The law was repealed in 1999 by the Clinton Administration. Creative financing, which is the root cause of the current crisis, was thus the brainchild of a Democratic, not a Republican administration.
3. Zionist organisation that carried out a violent campaign against the British in order to end Britain’s mandate over Palestine and set up the State of Israel. The mandate iself was established by the League of Nations, the predecessor of the United Nations.
4. Jose, Katharine, “Obama's AIPAC Speech, Rahm's Endorsement,” in The New York Observer, 4 June 2008 [http://www.observer.com/2008/emanuel-endorses-obama-after-aipac-speech], retrieved on 13 November 2008.
5. “ZOA Critical Of Bush Administration Decision To Deny Refueling Aircraft To Israel,” 22 August 2008, in Zionist Organization of America, [http://www.zoa.org/sitedocuments/pressrelease_view.asp?pressreleaseID=1419], retrieved on 13 November 2008; KEINON, Herb and Hilary Leila KRIEGER, “Barak: US clearly opposes military action against Iran now,” 14 August 2008, in The Jerusalem Post, [http://www.jpost.com/servlet/Satellite?cid=1218446196991&pagename=JPost%2FJPArticle%2FShowFull], retrieved on 13 November 2008.
6. “Futures chart - Oil price chart,” Live Charts, [http://www.livecharts.co.uk/LongTerm/oil_price_chart.php], retrieved on 13 November, 2008.
7. For example, only firms listed in the Primary Dealers list (historically no more than 20, those that have recently topped the financial pages) can take part in the transactions and auctions by the Federal Reserve for billion dollar securities. See “Primary Dealer List,” in Federal Reserve Bank of New York, [http://www.newyorkfed.org/markets/pridealers_current.html], retrieved on 13 November 2008.
8. Ties between finances and politics exist in modern parliamentary systems. Recent “orange revolutions” in Eastern Europe, backed by financier George Soros, were inspired by the historical precedent of the Glorious Revolution. Parliamentary rule prevailed in England at the time of the Glorious Revolution when James II (a Catholic) was ousted from power. But we should not confuse parliamentary government with constitutionalism. James II was the legitimate and constitutional sovereign because he had acknowledged the legislative powers of parliament. William of Orange, backed by an army of Dutch and German mercenaries and financed by Amsterdam bankers, invaded England and removed James II. In order to pay off his debts William, also known as the bankers’ king, granted private interests a monopoly over printing money with legal tender. He chartered the Bank of England and the Bank of Scotland. With capital worth two million pound sterling the Bank of England began loaning an equal amount for interest as well as issuing Gold certificates (paper money) for the same amount, thus doubling its capital. The Orangist army did not have to fight because William of Orange was backed by influential people who, instead of fighting the invader on the field, came to terms with him betraying their legitimate sovereign. The main character in the story founded the Churchill line.
Associated Press | For all the fury over Treasury Secretary Henry Paulson’s $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government’s response to the credit crisis.
According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.
The estimate includes many of the various solutions cooked up by Paulson and his counterparts Ben Bernanke at the Federal Reserve and Sheila Bair at the Federal Deposit Insurance Corp., as the credit crisis continues to plague banks and the broader markets.
The Fed has taken on much of that total, including lending a cumulative $1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window and making a cumulative $1.8 trillion available through its term auction facility, a series of short-term transactions it began making available twice a month in January. It should be noted that a portion of the funds lent in these programs has been repaid and that the totals represent what has been made available.
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Huffington Post | The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
Financial Times | The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.
Bloomberg | The Federal Reserve cut the main U.S. interest rate to “a target range” of between zero and 0.25 percent and said it will do whatever is needed to end the longest recession in a quarter-century and revive credit.
Associated Press | For all the fury over Treasury Secretary Henry Paulson’s $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government’s response to the credit crisis.
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