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The Fed Must Be Audited: The Fraudulent Practices of the Federal Reserve
In March 2004, when Alan Greenspan was Fed chairman, he suppressed the opinions of those Fed officials who knew that there was a housing bubble.
Congressman Alan Grayson points out that - because the Fed unilaterally decided to hand out half a trillion to foreigners without any Congressional oversight, and that Bernanke testified that he didn't know who got the loot - the Fed must be subject to an audit.
Yves Smith and Tom Adams - in analyzing the Fed's lack of full disclosures regarding its extraordinary rescue operations - conclude:
Even a cursory inspection of the Fed’s disclosures of its extraordinary rescue operations shows them to have been made only under duress, and then to be incomplete and deliberately unhelpful.
The reason this matters, is that, contrary to the Fed’s claims of independence, it has been operating as an extra-legal off balance sheet entity of the Treasury, circumventing normal Constitutionally-stipulated budget processes. And rather than make adjustments in its practices to reflect its enlarged and now overtly political role, the Fed has instead been engaging in cynical, blatant misrepresentation, giving lip service to the idea of greater transparency in public, while fighting disclosure tooth and nail.
Since the Fed has entered into an openly political stance (and this dates back to Greenspan) and cannot be relied upon to make truthful and complete disclosures, the only recourse is to put it on a much shorter leash, which includes greater scrutiny, including third party validation. The Fed has brought on the audit demands via the unabashed and repeated abuse of its privileged role.
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The Fed seems awfully keen to steer clear of the fate that befell Lehman. Lehman was grossly and verifiably misvaluing some investments, namely Archstone and SunCal, that confirmed doubts about the veracity of its accounting. If you can’t check any particular valuations, it’s a lot harder to ask difficult questions. And unlike Lehman, the Fed can continue to account to no one.
The Fed is engaging in same practices that caused the crisis: failure to make timely disclosures, obfuscation, use of off balance sheet vehicles to distance itself from losses. This posture alone should disqualify the central bank from assuming a greater regulatory role.
The Fed and Treasury’s three card monte operation is anti-democratic and possibly illegal, and to add insult to injury, voters are treated as if they have no right to know when they are ultimately footing the bill. The Fed’s persistent stonewalling and deep seated hostility toward the public provide ample proof of the need for an audit.
The Fed argues that an audit would interfere with its monetary policy decisions. That is incorrect for at least two reasons.
Initially, the bills to audit the Fed specifically provide that no outside agency will interfere with the Fed's monetary policy decisions.
More importantly, decisions about what toxic assets should be accepted by the Fed as collateral, how such assets should be valued, and who bailout funds should be given to are wholly separate from the Fed's core monetary policy decision: raising or lowering interest rates.
Adjustment of interest rates has been the primary lever the Fed has applied to the economy since it's formation in 1913.
The Fed has also recently started using a radical new tool: replacing the money multiplier with interest payments for excess reserves deposited with the Fed. Personally, I strongly disagree with this as a policy tool because I believe that - in the name of preventing inflation - the Fed is guaranteeing prolonged deflation and the lack of a sustainable recovery. However, this is arguably an exercise of core monetary policy by the Fed.
But funneling hundreds of billions to foreign nations and foreign banks, accepting worthless junk from the too big to fails and marking it at unrealistic valuations, and doing the other things which the Fed has been doing recently are not core monetary functions. Congress never authorized these actions when they passed the Federal Reserve Act.
Therefore, the Fed's actions must be made transparent and subject to the light of day.
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End the Fed.
The movement grows.
Edit the Fed!
Then end the Fed.
amen
Wouldn't it be interesting if the FED themselves owned Credit Default Swaps betting against the Mortgage Market.
I was wondering if the FED allowed the Banks to pay back their TARP with 0 percent money from the Discount Window.
Maybe that is why they do not want to be audited.
The banks have no need for the discount window when the same fed is maintaining a zero percent rate in the repo market.
Great story however... everyone seems to forget congress,senate and pres. signed legal agreement that 1) they get the money 2) they donot have to say who gets it and how much 3) all legal prosecution/liability for those involved are pardoned and cannot be accused or legally/civily be charged... that was my main problem with bailout more so than the money !! And all those quaks signed off on it , we got what we deserved for signing such a crazy agreement...0
Yeah, these are extra ordinary circumstances however..BP signed a 75 million cap on liability for the oil spill, do any of us think they will not raise that barring anything,anybody signed?
Maybe Obama can give back what BP has given him..more $ than all other members in the past 20yrs..............
Now, WHY is that?.
I happen to FAVOR an audit of the FED. However....let me pose the following hypothetical scenario:
You and I know a lot about solvency v. liquidity. You and I understand stuff like 'mark-to-market' accounting and 'off-balance sheet assets' and the like. We understand that, from a productive capital standpoint, bankruptcy is the standard, not the exception, for many of the world's financial institutions and banks and nations, etc.
But a lot of folks do not understand these things. They listen to CNBC and Cramer (yuck) and White House statements and BLS statistics, and they feel like, "hey, even though it's still tough out there, we're at least moving in the right direction". These folks---who make up the vast majority of citizens---retain a belief in the country and in the dollar.
An audit of the FED would shatter this illusion. We would find out things about swap accounts and QE operations, etc. that would lay-bare all of the lies being proffered by those who want to keep the nation from hitting the big-time skids. An audit of the FED would expose actions by our government that controverted decades of half-truths and untruths that we have been force-fed, all in an effort to keep us from losing any last confidence in the dollar to which we might cling.
Once that trust and confidence are gone, increasing numbers of people come to believe that they no longer NEED dollars to remit tax payments to their government. At THAT moment, the dollar collapses and global economic collapse accelerates.
Is THIS what we want to happen?
Right you are.
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.
Henry Ford
Firm ..YES
If your gonna live a lie, might as well end it now because all lies lead to an eventual bad end.
In other words, we are passing the problem off to our kids while we keep on being liars, ignorant and patently suicidal as a species.
In essence...we are killing the future.
I would rather suffer now, die if needed to right this on OUR watch.
I may not be as smart as you, or as educated (8th) or well off, but i intend to keep what integrety i have.
BTW i thought the upper middle class ,students , lawyers and small bankers would have taken action by now. All i see is more condoning of crime in progress.
My conclusion is that we are already at the point of "every man for himself".
We will have to find it within us to see the bigger picture and damn soon.
Miramanee,
I see your point, BUT...........
No pain, no gain.
This bitch has to be outed, and then we can GET the Ebloa Virus laden banksters, and the Pols Removed.
It's the LAST chance we ever would have to start over, like the Republic we were meant to be.
Damn them all......................
Ron Paul, is likely one of maybe a dozen, honest partriots in the entire Congress.He is the KEY to getting this done............
How many of those bastards would be left in power( or one piece), if the Joe Six Pack club KNEW the real facts?.
There has not been ONE American not screwed royally since 1900.........by this machine.
Time to sink this bitch.
Lol...
I'm not sure I DISAGREE with you. In order to get back into balance, our economy would need a 20-30% correction in GDP, which would be massively DE-flationary and would usher in the next big leg down in this ongoing disaster. I simply want to engage in the discussion that acknowledges why we might NOT want to go that route.
And again from you, nothing but more disingenuous pro-Fed, pro-establishment support.
"The sky will FALL if the truth is revealed!" LOL!
NOW who is the "doom and gloomer"?
Yes, if the Fed is audited, the sky WILL fall --- on the criminals and sociopaths who run it, and who benefit from its machinations. I strongly suspect that the world will NOT, however, implode into a black hole as a result. To suggest otherwise is to imply that the financial elites currently in control actually are, in fact and not just in their minds, Masters of the Universe.
increasing numbers of people come to believe that they no longer NEED dollars to remit tax payments to their government. At THAT moment, the dollar collapses and global economic collapse accelerates.
I am just a post-doc biomed head trying to learn economics. Can you please elaborate on this a little more? What form of payment would these alleged people be thinking they needed to remit their payments? Or is the point that they would not be remitting at all? If so I do not see this as a catastrophic evil but an incalculable good. The U.S was happy and without inflation for 150 years before the income tax. As a wage earner NOT working for the corrupt government I just cannot understand how to make this inflation equation work for ME. Unless I live long and run up lots of debts. Please help me see , won't you?
Can't really tell if you're asking a serious question or not...anyway...
The fiat dollar retains its value SOLELY because Americans believe that they NEED to accumulate these dollars in order to service their tax bills. Once Americans cease to believe that the NEED fiat dollars to pay said taxes, the fiat dollar collapse.
An audit of the FED---which I FAVOR, by the way---creates the possibility that trust in the dollar may take a beating. If more and more folks say "phuque it!", and stop trying to get dollars---maybe move more toward barter or gold or whatever---than the second leg down on this depression arrives....big time.
I would gather that the revealing of truths-- no matter how ugly they may be-- will result in eventual dollar strength vs. dollar weakness. This is especially true if such efforts are supported by correcting the blemishes through real financial reform. In a nutshell, that's what one would expect if audit irregularities are found -- a plan of action to correct the problem.
On the other hand, I would hazard a guess that an ugly byproduct of a Fed audit may be deflation, as a likely plan of action may result in allowing the worst of the banks to default rather than using QE 4.x for an extended bailout.
But that's just me.
please forgive my lack of pedigree and financial acumen as i am just a hair above trailer trash.
Us average folks confidence matters. LOL
When the big boys realize theres no more gain to be made on the dollar or our country that it folds.
What difference does faith in the friggen dollar make when you aint got none.
I am not paying taxes from here on out. Arrest me, i could care less. The mood i am in is shared by many. The hundred monkey rule applies and we have reached that rubicon thanks to zerohedge, denninger, william black, George Washington, Reggie Middleton and many more on the web , facebook and utube.
Fail already. looking forward to rebuilding an honest forward thinking society.
Merehuman
Just by your statements you are far above trailer trash.
@ merehuman
I'm speaking purely from an operational standpoint. I'm not making a political statement. Yes, your sentiment is shared by many. My point is ONLY this: fiat currencies are only viable if the citizens of the state believe that they NEED to get those 'dollars' to pay their taxes.
Let's say more and more people shared your view. More barter, more use of alternative and local currencies, maybe gold, etc. As more people ceased trying to 'get' dollars to pay taxes, the dollar would become worthless. The ONLY THING that gives the dollar value is that 200+ million American adults (etc, of course) think that they NEED to have dollars in order to service their tax obligations to the man.
And the sooner we end that illusion of those 200+ million Americans, the better off everyone will be in the end.
Any system based on faith in lies is hardly worth supporting.
@ akak...
You may be right! Maybe we need the correction, need to go through the depression NOW, rather than continue on in lala land.
We can have depression now, or 5X depression later on by procrastinating and kicking the can of financial sanity even further down the road.
I don't know how others were raised, but I was always taught it is better to deal with a problem head-on, rather than postpone doing so and magnifying it in the process. Reality cannot be avoided indefinitely.
@ akak,
I AGREE. I have been agreeing with this view and writing about this view for years. There is no way to cure this ill, save to clear the debt from the system.
HOWEVER......All I am doing is pointing out some operational realities under a fiat system AND venturing into a discussion about what might happen if we STOP kicking the can---if we audit the FED, for example.
It is intellectually dishonest to avoid such discussions Akak!
Fail already. looking forward to rebuilding an honest forward thinking society.
Where? On Mars?
No, no....PLEASE don't tell the truth as I can't handle it. Rather leave me here on my couch munching Pretzels watching TV. I am too dum, ignorant and I accept you, O Dear Leader, to guide me through these difficult times. Rather keep me ignorant and I trust you blindly. Just take my house, family and money and do what you want to do, but do not tell me the truth.
@ Troy...
I expected stupid comments like yours. Of course, in your weak-ass attempt at sarcasm and humor, you refuse to address my question.
Since you're having trouble understanding his comment, let me rephrase it:
"yes."
Your "question" was intellectually insulting and morally contemptible, and I think he addressed it with all appropriate respect.
Anyone who believes, as you imply you do, that the truth is EVER the enemy, or needs to be suppressed, needs to seriously review their assumptions and preconceptions.
I would expect such an "argument" only from amoral sociopaths, such as those in the top leadership positions in our government and financial elite.
@ akak
Nice job. You're a brilliant one.
I made it clear that I FAVOR an audit. I posed the question as a hypothetical. Is, in fact, the truth always the best thing? Can we debate that? Or are you more comfortable being an asshole.
If you truly favor a Fed audit, then why even pose such a morally and intellectually reprehensible question? And you made it sound rather more than "hypothetical", with your implicit support for continued official lying and corruption as the only alternative to your crazy "financial doomsday" fearmongering.
Should we possibly discuss the "hypothetical" value in child molestation or genocide as well?
@ akak
You're lost dude.
It is fair to argue that, in some circumstances, the truth is better with-held. I'm not sure I concur with such a position, but an argument can be made. The folks who want to keep the FED's info on ice want to do so for many reasons---NONE OF WHICH I happen to subscribe to. I FAVOR AN AUDIT.
However, to make a jump in reasoning that you make further elucidates that you are just another one of those intellectually vacant souls who peruse these blogs and contaminate the dialog.
See ya.
And you can go fuck yourself, you disingenuous asswipe.
It is clear where your sympathies lie, all your professed support for a real Fed audit to the contrary.
LOL! You're a loon.
.
And you are a pro-establishment troll working this site, as any reading of your prior posts will make clear. While making feeble and rote support for reform, you continually take a pro-establishment tone in every one of your posts, and implicitly and explicitly support the status-quo at every turn --- particularly in your doomsday fearmongering that the entire world will collapse into chaos if the crimes and lies of the financial and political elites are exposed to the light of day.
Quislings like you disgust me.
LOL!!!!!!!! A loon, and a paranoid loon for good measure. The disgusting view is yours. You are an extremist who refuses to acknowledge the possibility of truths other than those in which you believe and to which you adhere. You are dogma incarnate. YOU are the dangerous one, not I.
This Miramanee guy is correct. There will be revolt if their shenanigans see daylight. I can't believe the level of secrecy on the part of any bank or govt employee, who are privy this conspiracy. Which it is, in effect. When the whistleblowers get jailed, Bradley Birkenfeld, and the perps are still occupying their residences, how would anybody take the risk?
.
If standing up for THE truth (there are no multiple versions of "the truth", except in the twisted minds of amoral sociopaths) brands me as "dogma incarnate", then I wear the label proudly.
Go find another forum to troll --- your disingenuous misinformation and doomsday fearmongering will win you no friends in this one.
Well, you're nothing if not entertaining...have a good day, Kim Jong Il.
I can't handle the truth.
The illusion must be maintained. And they have the power to do it. Colonel Jessup said it a long time ago.
Most here know that the entire global financial system is built on faith, as much of a religion as Islam, Christianity. And the great unwashed who do not focus their attention on the financial system even when they are unemployed, for more than 5 seconds will persist in ingoring it.
Without the 'faith' of the faithful, where would any organized religion be?
The chances of one, any and all the secrets being exposed are nil, niller, and nillest.
I don't necessarily disagree with that... though market forces will impose some very material 'sacrifices' to keep the illusion going. But it doesn't mean that secrets can't be kept, though.
The reality is... people are already beginning to lose faith in the global finanical system. It's just happening in varying degrees. In Europe, the basic 'full faith and credit" mechanism is the Euro. Currency collapses are grand exercises in losing one's faith. It happens all the time-- and Europe is getting close to that Danger Zone.
For the U.S. and the dollar, the Euro crisis provides a nice little diversion for the shell game that continues. But that doesn't mean the U.S. financial system is in the free and clear. If credit (money) printing as a means of solving all ills continues remains a core construct of our financial system, faith will erode away. And we will see the USD go right down the drain with it.
Yet, I still get the sense that when we get near that inflection point, the Fed will sacrifice its favorite customers (you know who they are) and keep the integrity of the dollar intact. As someone mentioned earlier today, the very last thing the U.S. needs is to pay for oil by barter.
Without the 'faith' of the faithful, where would any organized religion be?
Now I know why they print "In God We Trust" on FRNs.
I personally don't think 'the great unwashed' are much of a threat. They will do what they are told--they always have, and they always will.
On the other hand, there are people who do think for themselves, or have the ability to recognise wisdom in other people's words. These people are likely to find out the truth. Someday.
Seems ridiculous
Congress passed the Fed aCt and created it.
Now the created Fed says Who the F..k is Congress to ask us!!!
Fed is still the best. Cant get with people who made typos like ircumventing or pubic.
Who would wish more transparency in pubic?
Okay, that was before the body scanners...
What makes you think they were typos and not some bureacrat having some malapropistic 'fun'?
Good Story ... This audit needs to start this month.. some senators
want to push the start date 6 years out.. Every 400 oz. gold bar
in Fort Knox needs to be test drilled before it can be counted
as one 400 oz. gold bar.. The Silver Stockpile must be counted too.
Black Operations at the CIA must stop too. Is the CIA buying
and selling drugs for money ? This must stop....
The HAARP weapon must be shut down ...
Chem trails and lies must also STOP