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Adrian Douglas Demonstrates How The Fed Cooks Its Books (With PwC's Complicity)

Tyler Durden's picture




 

It turns out that public and private US corporations aren't the only ones cooking their books, and that PricewaterhouseCoopers' consent can be easily purchased. Here is an excerpt from the Fed's 1999 minutes confirming that the books at America's central bank have been "fudged" on at least one occasion: "The Board’s staff and our accounting function at the New York Fed have worked out an accounting treatment to correct for both the $5 million and the $26.6 million errors. That involves reducing the accrued interest asset account by the entire $31.6 million, with an offsetting reduction in interest income on foreign currency investments. We will make that adjustment before the end of the year and spread it among all the Reserve Banks. Of course, for all of us with responsibilities for SOMA this is an embarrassing, indeed humbling, event. As a technical matter, though, I understand that PricewaterhouseCoopers is comfortable with the conclusion of both our accounting and audit function and the Board staff that this is not a material event for purposes of disclosure for any Reserve Bank." Perhaps PwC can come out, unsolicited for now, and disclose just how many other such borderline disclosable events it may have encountered while helping the Fed cooks it books in the past several decades?

From Adrian Douglas Of Market Force Analysis

Deception and Cover-up at the FED?

The title of this article is borrowed and modified from the book “Deception and Abuse at the Fed” by Robert C. Auerbach.

The minutes of each Federal Open Market Committee (FOMC) meeting are released within weeks of the meeting having occurred. The full transcript is available only five years later. I recently started reading in depth the transcripts of the FOMC meetings and discovered some shocking information. Let’s consider the December 21, 1999 meeting. The minutes can be found here while the full transcript is here.

In the minutes the Board unanimously accepted the accounts of the System Open Market Account:

The Report of Examination of the System Open Market Account, conducted by the Board's Division of Reserve Bank Operations and Payment Systems as of the close of business on September 10, 1999, was accepted.

One would think that there was nothing of interest to see here; just mundane approval of accounting. If we look at the transcript we get an entirely different picture that shows that the FED contemplated that there could have been fraudulent diversion of funds or errors in accounting in the famous Exchange Stabilization Fund (ESF) that has received so much attention from GATA as one mechanism for manipulation of the gold market:

CHAIRMAN GREENSPAN. Without objection. Peter Fisher, you wanted to discuss the report of examination, I understand?

MR. FISHER. Yes. I wanted to elaborate a little on Louise Roseman’s memo to Don Kohn about the unresolved difference between the internal accounting records of the Markets Group Accounting and Control Unit and those reflected in the Integrated Accounting System regarding the System’s net interest accruals on foreign currency investments. I thought it would be helpful if I gave a couple minutes of background, if you will bear with me.

Last spring, as members of the Committee will recall, we entered into a series of transactions with the ESF to re-balance our euro and yen holdings so we could come to a better split both in terms of total holdings and the currency mix. This involved a number of transfers of ownership of a series of investments and resulted in quite a significant amount of accounting activity. In the course of reviewing that, our own accounting staff identified an error that had been introduced in the prior year in our treatment of the premium on bonds held in the accrual account, overstating the accrual account by about $5 million. In the course of confirming that, they identified an additional $26.6 million overstatement in the accrual account for interest on foreign currency investments. We have had a number of staff members working full time trying to trace the source of that $26.6 million overstatement. They have worked back through the records to December 1994, before which detailed records at the transaction level just no longer exist due to the routine and appropriate destruction of documents.

The Board examiners were at our Bank to conduct an examination of the System Open Market Account in September and PricewaterhouseCoopers also has looked over our methodology to try to trace this overstatement back through time and find its source. PricewaterhouseCoopers is confident that we have traced it back as far as we can. They have tested our work papers and agree with our conclusion that we simply can’t go back any further.

There are two possible causes of this overstatement that we have to confront. One is the diversion of funds and the other is error. Now, we cannot rule out the possibility of a diversion of funds. But people from our own audit function and from Pricewaterhouse-Coopers have reviewed the control procedures we’ve had in place for the last decade and are very comfortable with the conclusion that these control procedures are sufficiently robust that the likelihood of diversion is remote. It cannot be ruled out, but for diversion to have occurred it would have had to involve the collusion of many people--just an extraordinary number of people--on several different staffs. If anything, our control procedures run a little to the “belt and suspenders” direction in regard to control of the flow. So, there is reasonable confidence that no diversion of funds occurred. The much more likely cause is a simple accounting error. The failure to credit the accrual account when cash was received would have left this account overstated. But we have worked the accounting back as far as we can take it and cannot find the erroneous entry or entries.

Dave Sheehy, the New York Fed’s General Auditor, and I are both looking into a fundamental reappraisal of our control procedures. We have introduced an additional mechanical check to maintain detailed records of the accrual stream by instrument, so that when a final principal payment is received we can trace the record all the way back on each instrument and double check the accounting.

More fundamentally and more importantly, what troubles us is how we could have gone for so many years without scrubbing this account more vigorously. That is something we are looking into and we are going to be revising our control procedures--both the audit procedures and those in our own Markets Group. The Board’s staff and our accounting function at the New York Fed have worked out an accounting treatment to correct for both the $5 million and the $26.6 million errors. That involves reducing the accrued interest asset account by the entire $31.6 million, with an offsetting reduction in interest income on foreign currency investments. We will make that adjustment before the end of the year and spread it among all the Reserve Banks. Of course, for all of us with responsibilities for SOMA this is an embarrassing, indeed humbling, event. As a technical matter, though, I understand that PricewaterhouseCoopers is comfortable with the conclusion of both our accounting and audit function and the Board staff that this is not a material event for purposes of disclosure for any Reserve Bank. I would be happy to try to answer any questions.

CHAIRMAN GREENSPAN. Is there any evidence of a surprising rise in standards of living of key people involved?

MR. FISHER. No, there is not.

CHAIRMAN GREENSPAN. Has somebody looked?

MR. FISHER. Yes, we have looked into that. Many of the staff people are still at the Bank, though others are not. But we have found nothing of that nature.

CHAIRMAN GREENSPAN. Were it an embezzlement, prior to what period would it have occurred?

MR. FISHER. We only know that the difference existed prior to December 1994.

CHAIRMAN GREENSPAN. It could have been any time prior to that? Is there a beginning point, other than 1914?

MR. FISHER. The details certainly don’t exist for pre-December1994 records, so I don’t know how we could determine the beginning point--in 1973 or 1963 or where. Prior to 1994, the only interest income we were receiving in that account was coming from the BIS, the Bundesbank, and the Bank of Japan. So the source of the income was official institutions. It was really a very simple accounting process to bring that income in at that point; the complexities have been introduced since that time. So, as I say, Pricewaterhouse-Coopers and our audit function are confident in looking over the control procedures we have had in place that it’s implausible that a diversion could have occurred. But we cannot rule it out.

What is the solution to this accounting problem? Just fudge the accounts! They reduced reported income to make the 31.6 million dollar problem go away. Here is a repeat of the relevant section:

The Board’s staff and our accounting function at the New York Fed have worked out an accounting treatment to correct for both the $5 million and the $26.6 million errors. That involves reducing the accrued interest asset account by the entire $31.6 million, with an offsetting reduction in interest income on foreign currency investments. We will make that adjustment before the end of the year and spread it among all the Reserve Banks. Of course, for all of us with responsibilities for SOMA this is an embarrassing, indeed humbling, event. As a technical matter, though, I understand that PricewaterhouseCoopers is comfortable with the conclusion of both our accounting and audit function and the Board staff that this is not a material event for purposes of disclosure for any Reserve Bank.

It is shocking that PriceWaterhouseCoopers should be “comfortable” that this is not a “material event” for the purposes of disclosure! Clearly the system is set up to deliberately deceive the public and avoid any transparency. Full transcripts of the FOMC meetings are only available after five years…and what is the time limit before they destroy detailed records?...you guessed it: five years!

But there is more deception revealed in the transcript on an entirely different topic: Greenspan claimed that the Fed can not recognize a bubble until after it has burst. That is a lie as shown by another section of the transcript:

MR. PRELL: All of this may well be stretching the point statistically, but I think it’s worth sounding a note of caution that strong productivity gains and intense competition--even accelerating productivity and intensifying competition--do not by themselves ensure that there can be no step-up in inflation. Unless supply is completely elastic, which seems unlikely in the short run, demand can become excessive.

That, we fear, is the current situation, with the rising stock market overriding the effects of monetary tightening. Once again in recent weeks, the market has defied our notions of valuation gravity by posting an appreciable further advance. Moreover, it has done so in a way that seems to highlight the risk that it will continue doing so. I refer to the incredible run-up in “tech” and e-commerce stocks, some of which have entered the big-cap realm without ever earning a buck.

To illustrate the speculative character of the market, let me cite an excerpt from a recent IPO prospectus: “We incurred losses of $14.5 million in fiscal 1999 primarily due to expansion of our operations, and we had an accumulated deficit of $15.0 million as of July 31, 1999. We expect to continue to incur significant...expenses, particularly as a result of expanding our direct sales force…. We do not expect to generate sufficient revenues to achieve profitability and, therefore, we expect to continue to incur net losses for at least the foreseeable future. If we do achieve profitability, we may not be able to sustain it.” Based on these prospects, the VA Linux IPO recorded a first-day price gain of about 700 percent and has a market cap of roughly $9 billion. Not bad for a company that some analysts say has no hold on any significant technology.

The warning language I’ve just read is at least an improvement in disclosure compared to the classic prospectus of the South Sea Bubble era, in which someone offered shares in “A company for carrying on an undertaking of great advantage, but nobody to know what it is.” But, I wonder whether the spirit of the times isn’t becoming similar to that of the earlier period. Among other things, it may be noteworthy that the tech stocks have done so well of late in the face of rising interest rates. Earlier this year, those stocks supposedly were damaged when rates rose, because, people said, quite logically, that the present values of their distant earnings were greatly affected by the rising discount factor. At this point, those same people are abandoning all efforts at fundamental analysis and talking about momentum as the only thing that matters.

If this speculation were occurring on a scale that wasn’t lifting the overall market, it might be of concern only for the distortions in resource allocation it might be causing. But it has in fact been giving rise to significant gains in household wealth and thereby contributing to the rapid growth of consumer demand--something reflected in the internal and external saving imbalances that are much discussed in some circles. Whether our assumed 75 basis point increase in the fed funds rate would be a sufficient shock to halt this financial locomotive is open to question.

The FED clearly recognized the tech bubble and even made reference to the infamous and most speculative “South Sea Bubble”. But they did not want to do anything because it was making the whole economy expand due to the wealth effect:

If this speculation were occurring on a scale that wasn’t lifting the overall market, it might be of concern only for the distortions in resource allocation it might be causing. But it has in fact been giving rise to significant gains in household wealth and thereby contributing to the rapid growth of consumer demand.

Greenspan lied that they could not recognize a bubble in advance. They did recognize it and even compared it to the South Sea Bubble and they purposefully let it continue because it was adding to household demand, a large part of that being driven by housing demand, and it was all founded on companies that had no or little fundamentals that were commanding ridicules valuations that were bound to crash bring the entire economy with it. And that is what happened.

This transcript shows that the FED can not even manage the multi-billion dollar ESF fund, how can they be trusted to run a multi-trillion dollar bail-out operation as was instigated in 2008? The answer is we can’t; the recently released list of banks and institutions who received TARP funds and how much due to an FOIA request of Bloomberg reveals that yet again the FED deceived the congress and the public by requesting the TARP funds to bail-out America but much of the funding went to foreign institutions! The transcript shows that when it discovers an accounting problem it fudges the accounts and decides that this is not a material event that needs to be disclosed in the Annual Reports of the Federal Reserve Banks! The Federal Reserve acts as the supervisor and regulator of the banking system. Clearly such breaches in fiduciary duties and accounting standards explains why the banks they supervise can thumb their noses at any banking regulations and run fast and loose with off-balance sheet transactions, report falsely inflated and often record profits coming out of the biggest recession and banking crisis in 80 years and pay their executives obscene bonuses.

The FOMC transcripts only give us a small glimpse of what is really happening in secret at the FED but from just scratching the surface one can be justified in extrapolating that it is hiding a web of corruption, lies and deceit. This band of liars and cheats are responsible for the only global reserve currency, the US dollar. If you own and hold bullion instead of US dollars there are no counterparties, let alone counterparties who lie every time they move their lips, and operate under a shroud of secrecy which is only partially lifted after five years, which is coincident with the destruction of all detailed records.

 

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Mon, 04/04/2011 - 21:19 | 1135246 Exposer of Inte...
Exposer of Internet Shills's picture

Silver *bitches*

Mon, 04/04/2011 - 21:26 | 1135265 farragut
farragut's picture

Tyler, you were scooped--yesterday, this same story appeared on this website:

www.theythinktheycancontroltheuniversebuttheyreallycannotandtheirunbridl...

Mon, 04/04/2011 - 21:30 | 1135287 Tyler Durden
Tyler Durden's picture

Fairly confident it also appeared on the original website on April 1.

Mon, 04/04/2011 - 21:40 | 1135327 velobabe
velobabe's picture

tyler, testing 12345

Mon, 04/04/2011 - 21:27 | 1135270 Top_Kill
Top_Kill's picture

There are too many cracks in the foundation now. The escalation into a major war is imminent. All they need now is an event to have the masses wave flags as we fly our silver tipped missles into the huts of "terrorist" who happen to live on top of oil fields. It is 1984 as we are both openly arming and fighting al qaeda.

Mon, 04/04/2011 - 22:16 | 1135368 Incubus
Incubus's picture

Of course they need a propagation method of terrorism.  Think how much of a boon for the MIC "terrorism" has been.  The MIC has created more "terrorists" than anything else.

What,  build schools, hold hands, everyone sing kumbayah (sp?) and let the missile-wielding maniacs retire to something...more..."peaceful?"

They aren't wired that way: it's moreso an attempt at forcing meaning into their lives, and it's more of a fight with themselves than it a fight against any "true" evil: it's existential.  Without war--without a manufactured evil to build "honor" and "virtue" constructs around,  what do they do?  That is their meaning, it's to create a war in which they can find value in.  Peace isn't the objective, since "peace" is only meaningful when you set it off as some distant goal to glorify, and to use as a motivator. 

The funny thing about people is that they're resilient,  you just toss them into a conflict and they'll dig deep enough to find purpose, to find something to fight for, to keep going.  And that's an incredibly useful trait to build an industry around, and war is business.

It's just disheartening to see that so many people just take up their roles, and fulfill what has been intended for them.  I wish we could truly advance as a species, but there's nothing more for us:  we'll die exploiting one another in this military-industrial scheme. 

I'm assuming that I'm too much of a romantic.  I get lost in imagining what we could be, but I always have to come back to reality and see that we're willing to settle for so much less.

Mon, 04/04/2011 - 22:47 | 1135478 samsara
samsara's picture

I wish we could truly advance as a species, but there's nothing more for us."

It's an invalid premise.  The growth is in each individual,  Some are 'arrested' at various stages of development.  A truly mature individual is more the qualities I think you mean and then extend it to a whole culture, people, species...

Read some Ken Wilbur 'Integral psychology'

But, Each Individual must go thru it.  The whole is just the average.   

But since each individual has to 'Grow Up',  if you dumb them down for twenty years,  whole traits can be erased.  

 

 

Mon, 04/04/2011 - 21:42 | 1135298 Zero Govt
Zero Govt's picture

every 'safety' system ever introduced by law has been corrupted. Auditing, supposedly to protect shareholders and keep the Directors honest regards their financial information, is just another 'safety' system (eg. regulators, passports, Police, Health & Safety, Drugs Administration etc etc) to add to the long list of statutory failures

what should have been learned from Enron was that those paid by the piper (Directors) become crones. If they could and should have done anything after Enron, it was to change the auditors paymasters from the Board to the shareholders (ie. shareholder appointed auditors, not Board appointed). No serious attempt was made to rectify the crystal clear and simply obvious errors apparent in the Enron scandal or any other (many) accountancy scandals before or since 

Accountancy like the entire Legal profession is a sick joke on society. It's about time the whole pompous useless profession was shuttered for the sham that it is

Mon, 04/04/2011 - 21:47 | 1135340 disabledvet
disabledvet's picture

the CEO must sign now.  i know "that ain't shit mofo."  just saying--and..... "it was quiet that earnings reporting season.   Too quiet.  I was chillin' with my villains--when suddenly!

Mon, 04/04/2011 - 22:17 | 1135422 samsara
samsara's picture

"what should have been learned from Enron"

 

Oh, but they did learn from it.  They learned how to control things better when one goes down.  Everybody remembers Ken Lay,  But NOBODY remembers anyone from those that went down 2007-2008ish. 

They learned how to disappear.  Showing up on some other board, With corner office,   Preplanned in advance. 

Corporations are the Gloves, The hands are the board members.  Companies go under,  directors just get new jobs. Do a cross match on peoples names and boardships same people on numerous ones.  There was a website that showed it nicely  as a web.

 

Mon, 04/04/2011 - 21:35 | 1135301 99er
99er's picture

USDJPY and Nikkei Futures

http://www.zerohedge.com/forum/99er-charts-0

 

Mon, 04/04/2011 - 21:35 | 1135303 Dr. Porkchop
Dr. Porkchop's picture

Welcome to the keeping up appearances economy.

Mon, 04/04/2011 - 21:50 | 1135357 rlouis
rlouis's picture

To say "If anything, our control procedures run a little to the “belt and suspenders”... is as inaccurate and disingenuous as "this is an embarrassing, indeed humbling, event".  To be truly humbled would necessarily imply a forthright acknowledgement of the problem and coming clean.  Instead, they engage in a conspiracy to cover it up.

One can only wonder, however, whether they felt so comfortable with this 'little' deceipt because the secret and treasonous actions and agreements with the BIS, China, et. al. made this wholly insignificant in comparison.   

Greenspan; an insightful analyst, an amoral banker, a master prevaricator by way of obfuscation.  A man who has compromised any intellectual honesty he ever demonstrated in his early years. Pretty sad ending - as pitiful and tragic as the unmasking of Clark Clifford's  grubby, greedy character before his death.   

 

Mon, 04/04/2011 - 22:13 | 1135408 samsara
samsara's picture

Greenspan; an insightful analyst, an amoral banker, a master prevaricator by way of obfuscation. 

Wouldn't ya love to see a non-biased indepth news interview with him by someone of integrity, seasoned in 'Getting the Story" . 

Andrea Mitchell perhaps? 

 

Mon, 04/04/2011 - 22:45 | 1135482 rlouis
rlouis's picture

Yeah... (lol) but could she keep to the subject of economics or would the inevitable spousal bickering interfere?  "Alan, some years ago you wrote about gold as an important means by which individuals could protect wealth from confiscation by government's monetary debasement through the printing of paper, and by the way, why didn't you put a new roll of fiat in the bathroom this morning?"

Remember all the shit he used to lay on congress and they were so enthralled... the maestro, no one could understand his answers but he sounded so sure of himself.   

 

Mon, 04/04/2011 - 21:56 | 1135366 knukles
knukles's picture

Maybe I'm just reading this wrongly, which is not unheard of for me at all, but.....

 

"They have worked back through the records to December 1994, before which detailed records at the transaction level just no longer exist due to the routine and appropriate destruction of documents."

"Prior to 1994, the only interest income we were receiving in that account was coming from the BIS, the Bundesbank, and the Bank of Japan. So the source of the income was official institutions. It was really a very simple accounting process to bring that income in at that point; the complexities have been introduced since that time."

The complexities of the accounting were introduced since 1994.  The records prior to 1994 were destroyed.  OK, so?  Then they have the records to perform the full, comprehensive and final audit, n'est-ce pas?

And I understand materiality.  OK, so it's not a boatload of money by FRB standards, but it is, theoretically, taxpayer funds.

Mon, 04/04/2011 - 21:55 | 1135371 b_thunder
b_thunder's picture

How insignificant these numbers ($5mil, $36mil) seem today....  Noone would even dare bring $5 million issue to the Chairman Bernank.  He's busy operating trillions!

 

Mon, 04/04/2011 - 22:01 | 1135388 max2205
max2205's picture

SHOCKED! ;D

Mon, 04/04/2011 - 22:05 | 1135398 samsara
samsara's picture

Watch this very funny testimony of Alan Grayson interviewing

Inspector General over the FED.  Deer in Headlights.  Listen to the artful backpeddling at it's finest.

Have you found any conclusion for the FED expanding it's balance by a $1 trillion?  Have you found who the receipent were...... FUNNY

Alan Grayson: Is Anyone Minding the Store at the Federal Reserve?

         

http://www.youtube.com/watch?v=PXlxBeAvsB8

Mon, 04/04/2011 - 22:11 | 1135406 Misean
Misean's picture

It's just shit that spits out of the printers, WTF difference does it make?

Mon, 04/04/2011 - 22:17 | 1135418 Atomizer
Atomizer's picture

Tyler, well done as always. I just hope you'll begin to report the documented solutions. It was refreshing to read the comments on your IMF reporting. Desensitised blokes like myself enjoy reading cock shocked replies.

The truth is an integral part in societies future success of advancing cultural development.

-Me aka Atomizer 4/4 2011

Tue, 04/05/2011 - 01:02 | 1135421 bob_dabolina
bob_dabolina's picture

I am shocked.

I thought the Federal Reserve was powered by the same energy source that drives angels. I was under the impression that the Mariner Eccles building was a rainbow factory.

To think that an institution that has a monopoly over money and credit via the worlds reserve currency could ever engage in questionable behavior...fradulent/criminal...is mind numbing. I mean when you have a private group of men operating in complete secrecy with no oversight I guess it would be imprompt to assume this kind of shit happening right?

What is truly astounding is that the Fed has made congress an impotent and flaccid stooge by usurping their most powerful strength which is the creation and regulation of the nations money supply. Ever get that feeling like congress is useless? No one consults them on money, going to war (we're engaged in 3 wars with no official declaration by congress), or pretty much anything important. Everything is now done by special interests and lobbying arms all behind the scenes by the biggest and most powerful corporations in the world.

America really is dead. The name still exists but the ideals of which it was founded are completely over and only a frail sarcophagus is proof that it ever existed to begin with.

Mon, 04/04/2011 - 22:36 | 1135457 glenlloyd
glenlloyd's picture

What's troubling to me is that only after 5 years detailed transaction data is destroyed, effectively ending any further discovery by a potential full audit.

So here we are now going on 3 years after the beginning of the crisis, we'd better get to work on a full audit before the incinerators start running in about 2 years.

Mon, 04/04/2011 - 22:44 | 1135471 OldPhart
OldPhart's picture

In 1996 I took over as a Division Controller after a company bought another about a year earlier. 

The prior company books were carried over with work in process, and some adjustment to good will and were maintained by the corporate office until growth suggested the need for a division controller...namely me. 

I noticed, relatively soon, that the WIP inventory didn't automatically reverse for monthly recalculation.  A total of $3.2 million was left in the account after my transactions cleared.  Tracing back, this balance had carried over from the time of purchase.  The only corrective action was to allow it to hit revenue as it should have originally (only I classed it as "other revenue" to distinguish from on-going operations) and note the adjustment.  It's not "cooking the books", it's correcting an error from (a) prior period(s).  In terms of scope, for the corporation as a whole, this was a blip.  For our Division, however, it was a one time hit. 

Correction made, financials carried forward as they should.

Mon, 04/04/2011 - 23:19 | 1135553 Cursive
Cursive's picture

I can assure you that PwC's opinion is bought.  I did SOX work at a company that was a PwC client.  We had several disclosable events, none of which saw the light of day.  Of course, there were numerous meetings and a law firm from Washington D.C. got involved, but the public was none the wiser.  But who cares, right?  Laws are for the little people, not Masters of the Universe.

Mon, 04/04/2011 - 23:23 | 1135561 SparkyvonBellagio
SparkyvonBellagio's picture

Are you F'n Serious?

They're CROOKED like the tooth on an Alabama DMV worker.

 

 

Mon, 04/04/2011 - 23:36 | 1135590 Fish Gone Bad
Fish Gone Bad's picture

Eventually the shit will hit the literal fan.  Everyone will look back to today (or so), and say, "I knew I should have been getting ready ..."

For shits and giggles, lets just say that Obama gets re-elected and the Bernankster stays on for an additional four years.  In 2016, there absolutely will be a new president, and if history is any teacher, it is that the leaving administration will create a scorched earth for the incoming president.  As I do not think that Obama will be able to pull off a victory in 2012, the proverbial "game over" is rapidly approaching.  The slogan "Hope and Change" will hang from Obama's neck like an albatross, just like Pelosi's famous, "We have to vote for it (the healthcare bill), to see what is in it"

Eventually extend and pretend will end.  Now is time to figure out what will and will not be important in the future.

Tue, 04/05/2011 - 00:59 | 1135744 honestann
honestann's picture

Of course "extend and pretend" will not end because the predators decide to abandon it.  Rather, "extend and pretend" will simply stop working, probably because the currency collapses.

Tue, 04/05/2011 - 00:20 | 1135680 BT310
BT310's picture

Another look inside the doomsday machine. This entire meeting is about the rise in housing prices and argue whether there is a bubble. They knew a drop in housing prices would wipe out interest only borrowers and that ARM resets could flood the system with foreclosed homes.  They even mention banks holding mezzanine tranches of these loans could be hit. BS they didn't know about CDOs.

www.federalreserve.gov/monetarypolicy/files/FOMC20050630meeting.pdf

Tue, 04/05/2011 - 00:57 | 1135740 honestann
honestann's picture

I can't believe anyone even discusses whether the fed is 100% pure predatory elitism or not.  The facts have been so obvious for so long that any question by knowledgeable people is purely disingenuous.

How simple does the solution need to be for people to "get with the program" and "save themselves"?  Convert all forms of paper into real, physical silver, gold or other commodities and physically productive assets (like farmland, equipment, supplies).

The federal reserve is 100% pure unadulterated predatory crooks.

Tue, 04/05/2011 - 01:43 | 1135803 RoRoTrader
RoRoTrader's picture

Greenspan is one gifted bullshitter.

Tue, 04/05/2011 - 02:54 | 1135856 doomandbloom
doomandbloom's picture

even if Ron Paul manages to pass 'Audit the Fed' bill...who will audit them? PwC or the big 4 ?? they are all in it together...

Tue, 04/05/2011 - 06:45 | 1135964 defn8Dog
defn8Dog's picture

C'mon... they did use an offsetting entry.

Tue, 04/05/2011 - 07:48 | 1136035 Dr. Impossible
Dr. Impossible's picture

So i spoke with mt treasuries counsul about a FED audit some time ago, i asked why it hasnt been, his claim was simple, and i was able to understand it completely.

auditing the fed would assume a group could trace every note, now picture the size that said group would need to be, we just wouldnt have enough people to audit them.

seems an awefully valid point.

Tue, 04/05/2011 - 08:26 | 1136139 surfsup
surfsup's picture

fisher price water hose

Sat, 04/09/2011 - 21:51 | 1154226 thames222
thames222's picture

I wouldn't trust the Fed's books as far as I could throw them.  It's so obvious they're manipulating the facts here to show us a different reality, this whole avoiding a shutdown is just another cover up for the fact that we're all f*ed and the dollar is going to die. 

 

www.forecastfortomorrow.com

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