Ron Paul’s Legacy: A Complete Audit Of The Secretive Banking Cartel?

Wolf Richter's picture

Wolf Richter

They only bubble up rarely, these scandals at the Federal Reserve System, but when they do, they're doozies, involving huge amounts of money, massive conflicts of interest, all-out manipulation, collusion, favoritism, dizzying cronyism.... And yet, over the 100 years that the Fed has existed, it has done an excellent job in one of its other primary functions, maintaining the dollar, which has lost only 96% of its value—instead of 100%.

The latest scandal is the Libor fiasco that is spawning worldwide investigations of the largest banks, going back years. The New York Fed under its President Timothy Geithner knew of the manipulations as early as 2007, and knew it involved banks of which it was one of the regulators. There were some hush-hush contacts with British regulators, and that was it. Nothing changed. Status quo maintained.

Just about then, the financial crisis began to expose the house of cards that financial institutions had become. Bear Stearns was saved. During the ensuing bailout mania of 2007 – 2009, the New York Fed, under the same management, handed trillions of freshly printed dollars to the same banks that it knew were manipulating Libor. It was done in secret, and the public wouldn’t have known who got what, how the decisions were made, why Lehman wasn’t bailed out though Goldman was, had it not been for the audit by the Government Accountability Office (GAO) as authorized by the Dodd-Frank financial reform act [for some gory details, read... The GAO Audit of the Fed Doesn’t Call It ‘Corruption’ but it should].

During the peak of the financial crisis, Bloomberg sued the Fed to gain access to information relating to the trillions being passed out in secret and in all haste. It won! Finally, November 2011, the Fed dumped 29,000 pages of documents that revealed how many trillions its cronies had received.

The audit results and the revelations from the Fed’s data dump came way late. Popular anger had subsided into a low simmer. Other priorities had edged to the top. And once again, nothing changed at the otherwise hermetically sealed fortress of the Fed. Status quo was successfully maintained.

It remains a secretive banking cartel with unchecked powers. Bankers, top industrialists, and some economists get together with total impunity to engage in market manipulation and price fixing with impact across the globe, including interest rates that savers receive when they hand over their money to these banks—which is zero or just about zero (and negative after inflation).

Hence the need for regular audits—assuming that the country even needs a central bank of this type, though not everyone, including Congressman Ron Paul, thinks so. This audit would be different than the bloated “financial” audits done annually by Deloitte (2011 audit). It would be a complete audit by the GAO of the Federal Reserve System, including the FMOC.

Fed Chairman Bed Bernanke called it a “nightmare scenario” that would create “political influence” and have a “chilling effect.” Indeed, a nightmare for the banking cartel, with a chilling effect on the shenanigans being perpetrated.

Now, the Republicans have an opportunity. Ron Paul is retiring from Congress after 24 plus years of going after the Fed [read.... Ron Paul Slugs At The Fed One More Time]. But during his primary campaign, he gained a lot of supporters, and now it appears that there might be critical mass to push a complete Fed audit into the dynamics of the Republican National Convention on August 27—and elevate it to a plank in the platform.

“It’s good economics and it’s good legislation,” Paul said, “but it’s also good politics, because 80% of the American people agree with it.” But it will be an uphill battle against powerful interests:

Congress. It’s dependent on the Fed. The deficit will be around $1.3 trillion this year, a vote-buying scheme without peer. In a few weeks, gross national debt will exceed $16 trillion. This ballooning debt needs to be funded and rolled over at near zero cost, and the Fed has promised to make that happens—regardless of what it may do to the real economy. So Congress can’t afford to upset the status quo. And it doesn’t want a Fed audit.

Then there is the financial industry, including the TBTF banks, their stakeholders, and large corporations. Many of them were direct recipient of the Fed’s largesse. They want QE and status quo. They want to get bailed out next time. None of them want a Fed audit.

Mitt Romney has been dodging the issue, but given his private equity background, he is unlikely to be gung ho about a Fed audit. Resistance is bipartisan, however, and the White House certainly doesn’t want one.

But it brings together interesting bedfellows: the Tea Party, Ron Paul supporters, independents of all stripes, moderate democrats, liberal democrats, all the way out to the left wing. Senator Bernie Sanders of Vermont, who calls himself a socialist, is a vocal supporter of Fed audits. It’s a mirror of America. And so, if Republicans want to garner support where it would normally be difficult to find, a strong audit-the-Fed plank in their platform might do wonders.

Here is an insanely awesome and hilarious cartoon by Ben Garrison on how Ron Paul is shedding light on the horrid creatures “underneath” the Fed.

And here I am in a conversation with Max Keiser on the Keiser Report, discussing bubbles, central banks, NIRP, and “stupidity arbitrage” (video).

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SmittyinLA's picture

Paul and the libertarian party are just another sect of "them", this is why the libertarian party always dies on open borders and no public schools, this is why libertarians never make sovereignty and property rights an issue, Paul is just another actor top make sure Americans don't have any other options. 

bankruptcylawyer's picture

wolf you are FULLY naive. the republicans only want to audit the fed 'now' because it would help make obama look bad prior to the election. they also would be happy if the market crashed prior to the election to get romney in office. 


the republicans are JUST as bought off by the banks as the democrats and will not actually push for an audit of the fed if they think the audit will be succesful when their own candidate is in office. this was a mere gesture to make the democrats look 'bad'. they knew the audit would not pass the senate and that even if it did it would devastate obama's re-election bid. 

wake up. 


Darth Mul's picture

...Wake me when we can have an honest and open discussion about why 7 of 12 Fed bank presidents, the Chair and most members of the Fed Reserve Board and FOMC, the chairs of the SEC, FDIC, and CFTC, and CBO ... as well as  the heads of the Council of Economic Advisors and Office of Budget and Management and National Economic Council... essentially every position of economic responsibility/leadership in the Fed or Executive are Jewish - a group comprising 2.5% of the population.

Please, please...please spare me the "anti-semitic" nonsense - that's not going to fly on this one.  The over-representation of Jews in these positions begins to look like a conscious and deliberate effort to comport with the very "conspiracies" we are all Pavlovian trained to immediately reject as absurd.

It's absurd to not acknowledge that Jews seem to be effectively running the Fed and economic regulation thereof.

I'm not even suggesting this is necessarily bad...  I'm suggesting that the inability to discuss the plainly obvious is.

Boxed Merlot's picture

position of...responsibility/leadership...are Jewish - a group comprising 2.5% of the population...I'm not even suggesting this is necessarily bad...

I understand your dilemma.  As a resident of CA, I too have wondered how our only (2) US senators are not only 2.5% of the population, but jewess as well.  I’m left with the resolution that jewesses are evidently / obviously the best equipped to represent the people currently voting in the state of CA. 


optimator's picture

If you can't talk about someone, they own you.

Money 4 Nothing's picture

Because if American citizens ever found out the truth, they would be in the streets with Pistols and pitchforks. Did you know the Treasury Department is the IMF and Goldman Sachs is the manager now?

Were officially spending non Sovereign money backed by no assets of the USA besides future earnings of it's citizenry.

In my *opinion* it's a matter of National Security that the truth never becomes discovered.

There can be Ton's and Ton's of Gold in Ft. Knox and the NY Fed, we just don't own it anymore.


Go Team Merica!!

Sigep0612's picture

So what if an audit is completed?   The audit shows major league discrepancies.  Then what?   The decline of America accelerates?  China demands repayment of their US Treasury investments...the world goes bonkers?  A do nothing President yawns?  Congress shows off its bravado by holding congressional hearings?  The fact is the USA is incapable of righting the ship. 

The negligible slow drop into hot bubbling acid is much more acceptable to Amercians than a rapid deceleration into oblivion.   Pain is a cure but no politician has the guts to suggest a plan to inflict any pain on anyone.....Americans want to elect politicans that will tell them what they want to hear so that they can continue living their current lifestyle.  Hence, the slow drip.   Look at the Roman Empire it took 100 years of debasing their currency before they fell into the ocean.  Germany after same deal.  USA started debasing with the creation of the Fed in 1913.  It accelerated with FDR and really took off after Nixon took us off the gold standard.  Since then, Congress has overpromised because are not accountable to any benchmark. US debt in 1980 wass $ $16Trillion.

"If something can not go on forever, it will stop."   _Herbert Stein, Economist.       

NidStyles's picture

You can't fix the problem until the problem is obvious and apparent to even the most uneducated and illerate monkey on the branch. 

LULZBank's picture

Even then... You did'nt fix that...

Money 4 Nothing's picture

Just for the record.. "You didn't build that" is totally true. Your being issued your own debt out of your WHFIT accounts.


Obama was trying to tell you 2 things with that statement.

1) If your spending non Sovereign cash (FRN's) on non Sovereign soil, YOU DIDN'T BUILD THAT.

2) He was trying to tell you in his own twisted way, YOUR SLAVES TO AN OFFSHORE BANKING CABAL. 


America, get over yourself and face the fact's, were not entitled, were not privlaged, were not special. Due dilligence to your Founding Fathers demands written in the *Original Constitution of the USA or live on your knees. Last and final warning.




NotApplicable's picture

Don't say that too loudly. Mitten's people will turn it into a hilarious anti-Obummer commercial.

And honestly, I'd prefer that neither score any points, but rather, look stupid and hollow.


MrBoompi's picture

Congress has the right to coin our money and regulate the value thereof.  Our founding fathers wanted the monetary system to be politicized, which is the only fucking way the people have any control at all over the douchebag banking cartel.  However much we might hate true monetary control back in the hands of the two political parties, the alternative is letting these fucking central banks keep it. 

irie1029's picture

In my fantasy world the banksters including the FED and banks would be banished and liquidated and the assets returned to the current taxpayers based on taxes paid.  

NidStyles's picture

Meh, Stefan needs to get over himself. He's just as intolerant as those that he decries. 

monad's picture

Aren't you the tolerant one. Why do you debunkery without substance, is it what you were told to do to dilute and confuse? Know this: the ignoramouses aren't reading this, we can see what you're doing.

Believe it if you need it, if you don't, just pass it on.


tip e. canoe's picture

perhaps, but he does outline very clearly how a more sophisticated form of enslavement is hidden within the vilification of the current form, once that current form outlives its usefulness.

johnQpublic's picture

if i can correctly judge trends in america....

i would guess that even if the fed was audited and found to be eating dough covered babys at the finest restaurants while commiting gross fraud and burning trillions while sodomizing the collective grandmothers of earth, that they would be found to indeed be doing gods work, and rather than being punished ,issued piles of fiat for personal consumption and collectively thanked at the government level for saving the planet oh so many times

madcows's picture

Good luck with that.  Don't you know that they have purcahsed enough Corrupticians to ensure their safety.  Yes, All but one republican voted for the audit, but only half of the Dums did.  It will never see light in the Senate.  Dirty Harry will see to that.

LawsofPhysics's picture

Investigation of GS being dropped, fuck me, big suprise I know.

Papasmurf's picture

They are doing God's work.  What's to investigate?

NotApplicable's picture

Well, someone has to verify the miracles, so Bankfiend can achieve sainthood.

disabledvet's picture
A paper mache mountain pleased no one? I'm SHOCKED! How about this variant:
there...that's better.

Money 4 Nothing's picture

One French rifle for sale: Never shot and in great condition besides being dropped once, best offer.

DeadFred's picture

The audit will become one of Mitt's promises the way closing Gitmo was one of Obama's. Bet's on whether he follows through?

monad's picture

Not a chance. The election is fixed anyway, Obamaland ftnwo

LawsofPhysics's picture

I agree, and no, he will not follow through.  Good thing sheep have a short memory.

Moe Howard's picture

It was revealed not long ago that the FedRes passed trillions to Eurobanks during the financial crisis.

Where is the rebellion, the outrage, the condemnation in public, the calls to rein in the FedRes?


This audit will do nothing and go nowhere, even if allowed to go forward. That is reality. I support in anyway on principle, but I recognize the truth.

The only answer for us proles is to become our own central banks. Each person a central bank. Convert your FRNs to silver and gold in whatever form you like, convert back if needed. No more digital assets that can be seized by an out of control FedGov or stolen by the stock market casino or inflated away by the FedRes. Didn't Allan Greenspan say it all, the FedRes can support social security at any level, but it cannot promise to preserve the purchasing power. Zimbabwe bitchez.

bigwavedave's picture

The Fed is OWNED by the banks. Why then is this supposed to be suprising?

HardAssets's picture

The Fed is OWNED by the banks. Why then is this supposed to be suprising?

Yes, its primary functions are to manipulate the money supply so that the cartel owner banks can make money, and to provide cover for those banks (lender of last resort) when the system crashes.

That criminal cartel has gotten away with this for 100 years. Its amazing how ignorant people are in light of the obvious destruction of the purchasing power of the dollar over that time period. One of Ron Paul's greatest legacies is that he's been informing people on these matters for decades. Its taken that long for more people to begin to listen.

CH1's picture

Bear in mind that they do have a plan for "going broke," very publicly.

It's the perfect exit... and a cover as they move into the next big scam.

tip e. canoe's picture

yup, be careful what you wish for

Philo Beddo's picture

+1   I have to believe auditing the fed is a foregone conclusion and my guess is they will be found to be really else are they going to provide a "solution" of one world central bank???  It's just a function of WHEN they want the Fed to be audited.  If the Fed was really doing what is right for the sheeple, why would there be a need for a global solution? 

engineertheeconomy's picture

The Criminals are not in Jail

The Criminals are not behind bars

The Criminals are not in Prison

The Criminals are not serving time

The Criminals have not been caught

The Criminals have not been sentenced

The Criminals have not ben apprehended

The Criminals are not under surveilance

The Criminals are stealing everything from America in plain sight

The Criminals are running the entire Government

Anusocracy's picture

Such is the nature of government.

Such is the nature of the majority not to figure that out.

ebworthen's picture

Manipulation and price fixing via corrupt central banks and banksters won't end until their heads roll as their bodies spout blood out of their necks.

Not sure I'll see it in my lifetime, but it would be gratifying.

falak pema's picture

Nobody audits the Queen of England or of Holland; so why should they audit the FED or Carlyle?

In the land of the Oligarchs, the rule of the oligarchs holds sway.

engineertheeconomy's picture

Yeah, that Bitch will be in the cross hairs of somebodys scope too. The fire has been lit, the pot's brewing

AnAnonymous's picture

Just a confidence trick.

FED audit will give nothing. FED is clean.

But by letting believed that the FED can be riddled with malfunctions, US citizens are going to bank on renewed confidence.

-Point at an healthy element that is meant to be the weak point, the root of all ills
-belay the audit to increase credibility of said root as the cause of it all
-audit reports healthiness
-renewed confidence

Trouble is when it comes to renewal of propaganda, US citizens are failing to show the creativity they are used to celebrating themselves for.

Kayman's picture

Take another English Composition class. Your writing is unreadable. Ask your Chicom handlers for a vacation.

To the article, the Fed is a Chicom dream, all powerful while unaccountable.

LULZBank's picture

Just a confidence trick.


EXACTLY. You've hit the nail on the head. US Citizens will keep dissing the "others for being sheeps" while falling for the same tricks themselves.

Sheep calling others, sheep.

In other news. After successfully landing on the moon 4+ decades ago, Americans are still experimenting (unsuccessfully) with "moon landers."

1Inthebeginning's picture

Anonymous keep posting.  I don't like what you write.  But confirmation bias is an easy rut to fall into.  Thanks.

tip e. canoe's picture

agreed.   just watched this doc on western propaganda supposedly coming out of N.Korea:

rather than arguing the ironies of its content & source, it might be more healthy to accept the truths contained therein and see it as ultimately subversive to the ideology of its disseminators, much like many of us learned about the inner workings of western propaganda through watching docs on propaganda with a soviet and nazi flavor.

to ananon, in lak'ech

HardAssets's picture

I welcome a counter-argument if the other party is offering something valuable that may point out a mistake in my thinking or a blind spot. But all Anon posts is anti-US rubbish, and the idea that stupidity & corruption is unique to Americans.  Well, unfortunately these have been failings of human beings around the world and throughout history. We're all being screwed over by TPTB.

In addition, though asked repeatedly, he never gives his country of origin (which must be an 'enlightened Paradise'). I suspect its China - - but don't know for sure.


Anusocracy's picture

He probably works for the USGov to gin up blind patriotic support.

Is it working?

tip e. canoe's picture

count the up/down votes...better believe someone is.

LULZBank's picture

In addition, though asked repeatedly, he never gives his country of origin (which must be an 'enlightened Paradise').


He's an algo. He picks up on certain words in the posts or the article and does his submissions, as hes programmed. :)

His posts, though seemingly repititive, are insightful and often quite deep and thought provoking. Try to look beyond "anti-US" rubbish.

If you cant do that, then deal with it as does the rest of the world, with constant pro-US or anti-(insert evil regime or group of people) rubbish being churned day in and day out by the US outlets and parotted by Americans for decades.

BeetleBailey's picture

Yo....Anonymous asshole...fuck off.