The Fed Conjurs Up $600 Billion

In an effort to support sagging interest in US Treasuries, the Federal Reserve has resorted to what they call "quantitative easing" which is a fancy way of saying creating new money out of thin air.

What they are effectively doing is monetizing the losses by both the banking sector and the federal government, by which I mean stealing wealth from every person who holds US dollars to pay for boneheaded mistakes at the highest levels of power.

The Fed has couched this new money magic in a false effort to, well, I don't know what bullshit they're spinning this time. Increase demand, increase lending, reduce interest rates, support the stock market, stimulate the economy. Whatever, don't believe them. This is yet more trickery to hide the fact that America is in a deep, deep hole.

It's as if the Chilean miners were given massive doses of hallucinogenic drugs to help them forget that they were buried thousands of feet below ground. Unfortunately, the drugs eventually wear off, and you're still 2,300 feet underground.

On the news of fresh, new money, stocks jumped, as did gold and silver. The new money shocked the stock market up sharply, and the loss of faith in the dollar pushed more investors into already inflated gold and silver.

Those in the know can see right through the Fed's trickery and are making out like bandits. Everybody else is getting royally screwed, but probably don't even know it.

The Fed is playing roulette with the wealth of an entire nation. The fact that so few people are outraged is proof that Americans are woefully uninformed about their own monetary system.

Or, as Henry Ford once said, "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Ben Bernanke is the Most Powerful Man in the World.

Bernanke's actions at the Federal Reserve ripple throughout the globe, especially into emerging markets.

A surge of capital is flowing into emerging markets as money flees the U.S., Europe, and Japan in the hope of higher returns.

The perception is that emerging markets offer stronger profit growth for their stocks, higher interest rates for their deposits, and the potential for currency appreciation.

Yet it's not all roses for the emerging economies involved.

That's because the surge of money seeking emerging markets is an example of how easy monetary policy in the developed world spills over into the developing one. Emerging markets nations try to tighten monetary policy... but are then beset by waves of foreign capital entering their countries. This negates the domestic tightening effort since foreign money is sloshing around their economies, and it's how Ben Bernanke is actually the entire world's central banker.

Inflating our dollar's value away so that we are forced to bubble-ize emerging markets doesn't seem like great policy to me, but I'm not a central banker, so what do I know.

Bernanke Talking, is Anyone Listening?

Fed Chairman Ben Bernanke has joined the chorus of people warning Americans of our government's unsustainable debt load.

[I]n the United States, governments at all levels are grappling not only with the near-term effects of economic weakness, but also with the longer-run pressures that will be generated by the need to provide health care and retirement security to an aging population. There is no way around it--meeting these challenges will require policymakers and the public to make some very difficult decisions and to accept some sacrifices. But history makes clear that countries that continually spend beyond their means suffer slower growth in incomes and living standards and are prone to greater economic and financial instability.

Everyone outside of Congress and the Obama administration is saying the same thing: We must balance the federal budget. Unfortunately, the only people with the power to do this are in Congress and the Obama administration.

Bernanke Admits Fed Caused Great Depression

In case anyone still had any doubts that the Federal Reserve helped create the Great Depression:

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
-Ben Bernanke, November 8, 2002

It only took the Fed 70-odd years to admit to devastating the American economy. I wonder how long we'll have to wait to hear them admit it they did it again.

[via Glas]

Audit the Fed? Bernanke Says No

Ben Bernanke came out against pending legislation that would allow Congress greater oversight of the Federal Reserve.

"Such amendments, if enacted, would seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation," Mr. Bernanke wrote to Mr. Dodd.

By some reasoning that I do not understand, Mr. Bernanke believes the American people have no business knowing what goes on inside the institution that controls all of their money.

If I were Ben Bernanke, I wouldn't want people knowing what I was doing with their wealth either. Because once people found out that the Federal Reserve has been helping banks steal their wealth for the last century, they might get a little upset. Like, Greece upset.

Bernanke Prods Reform in Medicare, Social Security

Fed chief Ben Bernanke finally says what I've been saying for years: Medicare and Social Security are going to bankrupt this country if we don't do something soon.

Mr. Bernanke noted that the economy was still fragile, and he made it clear that he did not expect the federal government to raise taxes or cut spending anytime soon. But he spoke about the budget pressures posed by Social Security and Medicare with greater urgency than he has in the past.

“The arithmetic is, unfortunately, quite clear,” Mr. Bernanke said. “To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above. These choices are difficult, and it always seems easier to put them off — until the day they cannot be put off any more.”

Democrats don't want to cut benefits, and Republicans don't want to raise taxes, but something must be done before it is too late.

Bernanke also commented on the Fed's response to the financial crisis, and added his two cents on financial reform.

“To end ‘too big to fail,’ the new regime should permit regulators to close a failing firm and impose losses on shareholders and creditors,” he said. “Indeed, I would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses.”

He's talking a good talk, but thus far it's only talk. We'll see if he practices what he preaches.

Public Enemy Number One: The Federal Reserve

If we were in 1792, we would be calling for Ben Bernanke's head.

Ben S. Bernanke doesn't know how lucky he is. Tongue-lashings from Bernie Sanders, the populist senator from Vermont, are one thing. The hangman's noose is another. Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money.

The article goes pretty deep into the history and machinations of our monetary system.

It's time to audit the Fed. Why is this even up for discussion? It is Congress's duty to coin money, but that job has been passed to the Fed, and our money supply is essentially controlled by a presidential appointment and his banker cronies.

Even Woodrow Wilson, who signed the 1913 Federal Reserve Act into law, later regretted his decision:

I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.

The real tragedy is that so many Cassandras have tried to warn us, but have been ignored. Now we're paying the price for the hubris of 1913.

Congress Rips Bernanke a New One

Ben Bernanke, Fed Chief, is up for confirmation again. Most believe he will be reconfirmed, but members of Congress are taking this opportunity to verbally tear him apart before they give him a pass.

Members of the Senate Banking Committee signaled at a hearing that Fed Chairman Ben Bernanke is likely to be confirmed for a second term as head of the central bank. But that may come at a steep cost -- lawmakers said the Fed had "failed" or done a "horrible job" as a regulator and suggested they would push ahead with a proposal that would strip much of its regulatory authority.

...

Mr. Dodd's Republican counterpart, Sen. Richard Shelby of Alabama, said he has traditionally held the Fed in "very high regard" but that the central bank's actions over the last year has eroded his view.

"I fear now, however, that our trust and confidence were misplaced," Mr. Shelby said.

...

"You are the definition of a moral hazard," said Sen. Jim Bunning (R, Ky.), a long-time Fed critic. "I will do everything I can to stop your nomination and drag out this process as long as I can."

Under Bernanke's watch we have not only seen the collapse of our entire banking and financial markets, taking us to the brink of full economic depression, but we have also seen the coffers of America pillaged to save greedy bankers from their own mistakes. And he is likely to keep his job.

I'm wondering exactly what it takes to get fired over at the Fed.