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Congress Asks Bernanke For Full Risk Analysis On Fed's Soaring Balance Sheet

Tyler Durden's picture




 

Several days ago we wrote about what we defined as the Fed's "D-Rate" - the interest rate at which the cash outflows from payments by the Fed on its Excess Reserves will surpass that cash inflows from its asset holdings, a very troubling day because as we further explained, from that point on the Fed would be "printing money just to print money." In other words, with every passing day, the Fed is getting ever closer to the point where the inflation it so very much wishes to unleash will force it to essentially request a technical bailout from Congress (and certainly will halt all future interest remittances to the Treasury), and the longer this takes, the lower the breakeven interest rate becomes, until one day it is so low the tiniest rise in rates will immediately put the Fed into the red. It now appears that Congress itself, the ultimate beneficiary of the Fed's free money policy as nearly half of all US spending is funded by the Fed's monetization of the deficit at ultra low rates, is finally catching on to what is the ultimate rock and hard place for Ben Bernanke. In a letter penned by the Chairman of the House Oversight & Government Reform Committee, Jim Jordan, says that he is "troubled by the corresponding effect that the Federal Reserve's expanding portfolio could have on current and future economic growth" and has asked the Fed what its "future plans to unwind the [$3 trillion and rising at $885 billion per month] portfolio" are.

What is surprising that Jordan actually gets it:

I am especially concerned that the historically low interest rates brought on by the Federal Reserve's monetary policy have hampered economic growth by distorting traditional financial incentives.

It gets better:

Younger Americans who have been working to save their income have faced meager returns in bank accounts and larger balance requirements, slowing their overall accumulation of wealth.' Likewise, older Americans living off of interest-bearing accounts have been forced to move to riskier investments to maintain their standards of living.

And best:

Most strikingly, by maintaining low interest rates, the Federal Reserve has distorted the real cost of the national debt, effectively "incentiviz[ing] the U.S. government to borrow and overspend."

Jordan is not happy:

The Committee has previously written to you with concerns about monetary policy in the United States. In July 2011, after a meeting between Committee staff and Federal Reserve staff, the Committee requested that you provide all Federal Reserve studies used to determine the value of Federal Reserve assets and "what the potential losses would be based on different unwind scenarios regarding the Federal Reserve's portfolio..." The Committee also requested that you provide "all estimates and analysis of the potential costs of payment of interest on reserves" that would incentivize banks to maintain excess reserves. In response, you provided only publicly released studies, and you did not provide any precise estimates of the future cost of reserve interest rate payments

As a result...

I respectfully request the following information for the period November 25, 2008 — present:

  1. All public and non-public studies, estimates, analysis, and evaluations of the value of the Federal Reserve's assets and any potential losses associated with future unwind scenarios commissioned or undertaken by any employee, agent, or contractor of the Federal Reserve;
  2. All public and non-public studies, estimates, analysis, and evaluations of the potential costs of payments of interest on reserves sufficient to prevent inflation associated with future unwind scenarios commissioned or undertaken by any employee, agent, or contractor of the Federal Reserve;
  3. All documents and communications between or among employees, contractors, or agents of the Federal Reserve System and employees of the Treasury Department or the Executive Office of the President referring or relating to the value of the Federal Reserve's assets and any potential losses associated with future unwind scenarios;
  4. All documents and communications between or among employees, contractors, or agents of the Federal Reserve System and employees of the Treasury Department or the Executive Office of the President referring or relating to the Federal Reserve's cost of payment of interest on reserves

Well, better late than never. However, we are confident that Jordan will be unhappy with the response whose advance preview we provide below:

Dear Jim,

 

Please accept this first completely blank napkin as evidence of all the rigorous analysis the Fed has conducted on all the issues you bring up. Also, on the second completely blank napkin we would have written the date on which we expect to begin unwinding the Fed's balance sheet.

 

Peace out,

 

Chairsatan Ben

Full letter below.

 

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Thu, 02/21/2013 - 11:50 | 3263399 Shizzmoney
Shizzmoney's picture

I'm sure they'll get a FULL TRANSPARENT answer for their troubles from the Fed, who has been completely honest about everything since 1913.

My God, we're massively getting trolled on a daily basis!

Thu, 02/21/2013 - 11:53 | 3263420 TerminalDebt
TerminalDebt's picture

I'm sure the answer will be "Fuck off, and I hope you don't accidentally drown in an inch of bathtub water soon"

Thu, 02/21/2013 - 11:59 | 3263469 Xibalba
Xibalba's picture

Data dump on the next holiday weekend

Thu, 02/21/2013 - 12:07 | 3263495 Dr Paul Krugman
Dr Paul Krugman's picture

The Fed is doing what they are mandated by law from Congress to do, yet some of Congress wants to get their hands in the cookie jar so that their constituents - who are not economists - vote for them again.  It will be a horrible day when Congress, who do everything only for votes, begin to regulate the money supply, because if that ever happens it will be without an impartial bias.

Thu, 02/21/2013 - 12:08 | 3263508 francis_sawyer
francis_sawyer's picture

They must wanna know if their 'insider stock trading' positions are in any jeopardy... 

Thu, 02/21/2013 - 12:12 | 3263517 Manthong
Manthong's picture

I can save Ben and the Congress a lot of time and eliminate the confusion.

You have two choices:

1.    We continue to expand the counterfeit "reserves" and fund you so that you can keep your pathetic “leadership” jobs until the collapse.

2.    We stop expanding, you stop spending and you lose your pathetic “leadership” jobs before the collapse.

Because of your pathetic, myopic, self-serving  “leadership”, those are the only two choices left for you.

Thu, 02/21/2013 - 12:14 | 3263541 kralizec
kralizec's picture

They'll pick option #1 of course. 

Bullish for collapse, lopped off heads, etc!

Thu, 02/21/2013 - 12:20 | 3263577 Middle_Finger_Market
Middle_Finger_Market's picture

Unwind...they will unwind it witb bullets and brute force. 

Thu, 02/21/2013 - 13:38 | 3263880 sullymandias
sullymandias's picture

The solution is negative nominal interest rates. Then the US Treasury can keep on borrowing, and the US debt will eventually go to 0.

Thu, 02/21/2013 - 13:49 | 3263938 donsluck
donsluck's picture

And PMs are the ONLY investment vehicle left. I like it!

Thu, 02/21/2013 - 17:27 | 3264844 LawsofPhysics
LawsofPhysics's picture

Sweet, this means that the banks will pay you to take out a loan right?  Long all things physical then.

Thu, 02/21/2013 - 12:19 | 3263572 phalfa5
phalfa5's picture

looking good manthong

Thu, 02/21/2013 - 12:27 | 3263598 kridkrid
kridkrid's picture

those are the only 2 choices. Understanding that these are the only 2 choices does allow for things to make a little more sense. My only objection to your post... it wasn't their pathetic, myopic, self-serving "leadership" that created this predicament. Don't get me wrong... they are sociopathic criminals... but the this ball was set in motion long ago.

Thu, 02/21/2013 - 13:53 | 3263962 Manthong
Manthong's picture

The wheels were put in motion in 1913, but the brakes were removed the day Kennedy was shot and nitro-methane was injected into the combustion chambers when Brooksley Born was squelched which opened the door to Clinton's parting CFMA gift to the Squid et al. 

Everyone in leadership has had an opportunity to stand up against the destruction of the formerly sound US Dollar. but partly through ignorance, partly though misdirected good intent and always with self-interest did leadership pass on fiscal discipline and responsibility.

Leadership and responsibility are inextricably entwined. They made the promises, They assumed the responsibility. They took the money. They bankrupted the country.

Default is never declared. Failure for elites is obviated. Now, only lies and fraud maintain the system.

With only a very few exceptions, leadership owns this.

Thu, 02/21/2013 - 12:10 | 3263519 Hedgetard55
Hedgetard55's picture

Eggsellent point, MD... uh, I mean Professor.

Thu, 02/21/2013 - 12:11 | 3263525 Confundido
Confundido's picture

I see you are implying that the regulation of the money supply today, under Chairsatan Ben is actually unbiased....I am sorry...what assets do they buy to expand the supply? Bonds from Wal-Mart? from Ford? Or from the Treasury?...who do they buy these bonds from? Directly from the Treasury? Or from JPM or Goldman Sachs? Can I sell my stock of Treasuries to the Fed at a discount? Will I be able to bid directly for the Fed's assets the day they want to unwind?

Thu, 02/21/2013 - 12:20 | 3263575 Dr Paul Krugman
Dr Paul Krugman's picture

The Federal Reserve Board have been given a mandate to regulate the money supply by Congress and they are just doing their job.  Since we are in a depression and unemployment is still high economics dictates we need to increase exports to increase GDP.  The Fed is doing this by buying bonds and expanding their balance sheet so to add to demand and make sure that supply does not overwhelm the markets.  If they were not doing this then there would be another financial panic, and then unemployment would go higher.

This exactly what we don't need to happen, and if Congress was in charge instead of being focused on doing what the science of economics dictates, they would be doing whatever their constituents demanded, and their constituents are not economists.

Thu, 02/21/2013 - 12:24 | 3263588 EscapeKey
EscapeKey's picture

Yes, because beggar thy neighbour has always historically worked out so well (*)

 

 

 

(*) I might be fibbing here

Thu, 02/21/2013 - 13:09 | 3263775 SafelyGraze
SafelyGraze's picture

"The Federal Reserve Board have been given a mandate to regulate the money supply by Congress and they are just doing their job."

let's leave the legal interpretation to lawyers and lawmakers regarding what mandate(s) Congress may or may not have given the Fed. 

this is not a question for economists to address.

if Congress says the Fed must answer some questions, then the Fed, per force, must answer them. Or else be in contempt of the Congress that established it.

The Fed, of course, could appeal this issue to the courts. which would certainly clarify the matter to Congress.

If the courts decide that Congress doesn't have the authority to collect information from the Fed, then Congress can easily remedy that deficiency by adding a single sentence to the statutes, or by eliminating the Fed altogether.

 

Thu, 02/21/2013 - 14:06 | 3264016 clymer
clymer's picture

krug / mdb:

you complete me

Thu, 02/21/2013 - 14:44 | 3264139 SafelyGraze
SafelyGraze's picture

that was a beautiful thing to say

Thu, 02/21/2013 - 12:33 | 3263618 kridkrid
kridkrid's picture

The irony of your satire is that the absurdity is mostly true. The only lie is the assertion that this policy choice will "solve" anything. It won't. We still collapse... but we collapse at a slightly later date. Time to hit the reset button... but that won't happen.... so we'll get war.

Thu, 02/21/2013 - 13:13 | 3263796 Agstacker
Agstacker's picture

Economists got us into this mess, Dr. Paul.

Thu, 02/21/2013 - 13:19 | 3263817 Meat Hammer
Meat Hammer's picture

The Federal Reserve Board have been given a mandate to regulate the money supply by Congress and they are just doing their job.  Since we are in a depression and unemployment is still high...

Brilliant, you explain the cause and effect in two sentences.  The cool kids call it "the failure of central planning".  

Then you propose your solution as more of the same!  I'd like 5 minutes alone with you and a rubber hose.

How do I get one o' dem fancy phd's?

Thu, 02/21/2013 - 13:42 | 3263905 MillionDollarBoner_
MillionDollarBoner_'s picture

Hi Paul,

Article 1, Section 8:

"The Congress shall have power...

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;"

Ring any bells? As an "economist", how would you define QE? Specifically in the context of "counterfeiting the securities and current coin of the United States"?

Thu, 02/21/2013 - 13:45 | 3263923 slightlyskeptical
slightlyskeptical's picture

I agree the Fed needs to pump up the money supply. Unfortunately that pump is not getting the money where they need it. I think the next thing they should do is this:

I propose that the government buy every existing primary home mortgage in America. Refinance them at decent terms, even cutting some principal for those underwater. By the time they get paid off government will have recouped all their money plus about 25%-40% in profits. Use those profits to reduce our national debt.

Once you have everyone refinanced, then start a program where every new primary housing loan is issued by the government. Do it through social security, giving them a credible income stream and letting another government program finance what social security cannot. Profits the government makes goes toward paying off current debt, reducing the need for new debt.and will allow a lower tax rate. people thinking about stiffing the government better think again as any failure to pay your mortgage will reduce your social security benefits down the road.

Banks and investors? It will hurt them but they will get paid in full on their loans outstanding. They will still be able to make second property, personal and business loans but no more fleecing the people on mortgage loans. They would still be eligible to make money originating primary loans on behalf of the government and servicing them. Better yet - Fuck the banks!

I can think of no downsides and the upside is more disposable income for families, less taxes and investors being forced into more productive endeavors in order to get their profits. All good for the economy.

 

 

Thu, 02/21/2013 - 15:10 | 3264220 venturen
venturen's picture

I have a better idea. Dissolve Freddie and Fanne and the other 12 programs that absolve banks from worrying about losses. Pass a law that anyone can walk away from a mortgage.  TODAY! There are plenty of programs that directly help the poor to have housing.Break up all banks the big banksJP Morgan, Goldman, BOA. Limit the markets that banks can be in at the same time. Being a market maker and broker and trader and M&A and retail shouldn't be allowed. The Federal Government removes itself from the mortgage market and God Forbid let the Capital Market measure risk while taking on some. Instead we have Taxpayer taking the risk and some stupid "banker/trader" getting the profits. Increase the size of the FDIC by hitting the banks with bigger fee. What moron wants massive house prices that people can't afford? Won't people rather enjoy their money than being like some fooi Japanese buying a sq foot of property for $50000?

Sat, 02/23/2013 - 11:38 | 3269745 Guy Fawkes
Guy Fawkes's picture

Dr Krugman,

In order for Keynes formula to be viable the government must extract revenue from the labor/corporate class to replace the spending from the private sector.

I ask you then should this formula:

Y = C + I + G - (Net X)

be MORE acurate if it were written as

Y = C + I - (Net X) / G

 

Thu, 02/21/2013 - 12:55 | 3263696 God Bless The V...
God Bless The Virtuous's picture

Fuck you Krugman you peice of progressive shit!

Now you are out there with "we'll have to raise taxes on the middle class and instute death panels", you rat bastard!

My contempt for you and the communist in chief and his minions is without proper words!

Bill Clinton should be proud of the piece of shit he expelled from his progressive bowel at the democratic convention with the now out of control demigod who believes his own shit smells like roses!

Hey Barry, it's nice and hot in hell ,with the rest of your scumbag fellow liberal / communist / progressives who have a front row seat reserved just for you, yeah Teddy boy, Bobby Byrd and Jack-off Murtha are dying for your arrival.

You time will come one day and the Republic will rise again like the phoenix from this progressive onslaught led by charlatans like the biggest dick running the shit show today Paulie the prick Krugman!

Thank God for the first amendment!

God save the Republic and please forgive my gutter mouthed tirade, I just had to get this off my chest, forgive me Lord!

Thu, 02/21/2013 - 13:59 | 3263983 donsluck
donsluck's picture

Since Lord (whoever that is) is not available, I forgive you. However, don't forget Clinton gave us "surplus" and Bush raped us blind. Obama of course is continuing the rape. In other words, liberal and conservative have lost all meaning in this kleptocracy.

Thu, 02/21/2013 - 15:32 | 3264307 MarsInScorpio
MarsInScorpio's picture

Absolutely correct.

-30-

Thu, 02/21/2013 - 18:00 | 3264949 nightshiftsucks
nightshiftsucks's picture

Clinton gave us the tech bubble,the repeal of Glass-Stegal and the failed assasination attempt on Bin Laden.A lot of everything going on can be blamed on him.

Thu, 02/21/2013 - 13:04 | 3263752 nightshiftsucks
nightshiftsucks's picture

It will be a terrible day for you fat boy if I ever get my hands around you fat fucking neck

Thu, 02/21/2013 - 13:10 | 3263778 Meat Hammer
Meat Hammer's picture

The Fed is doing what they are mandated by law from Congress to do.

 

How about we talk about that there law from Jekyll Island and why there aren't people swinging from light poles?

Thu, 02/21/2013 - 13:12 | 3263792 Joe Sixpack
Joe Sixpack's picture

" It will be a horrible day when Congress...begin to regulate the money supply..."

 

So, basically you are saying, 'fuck the constitution'?

Thu, 02/21/2013 - 13:17 | 3263808 Blankenstein
Blankenstein's picture

Yes let's put the fate of our economy in the hands of a bunch of PhD economists.  It worked out so well for LTCM.  

 

And wasn't it Greenspan who started blowing the housing bubble when he kept the interest rate low for an extended period of time and now The Bernanke is continuing this failed policy?  

 

And let's see how well The Bernanke did at predicting and recognizing problems in the economy:

 

http://www.youtube.com/watch?v=INmqvibv4UU

Thu, 02/21/2013 - 13:33 | 3263853 MillionDollarBoner_
MillionDollarBoner_'s picture

Hi Paul,

I think you have hit the nail right on the head. Bravo to you, Sir!

"...so that their constituents - who are not economists - vote for them again."

Ya see, its like this. Ordinary folks have to vote for those who promise to improve their lot (whether that actually transpires or no). They have responsibilities and consequences. So what if they only get to choose between a Giant Douche and a Turd Sandwich?...when your kids are hungry, a Turd Sandwich is better than nothing. They gotta get by somehow.

Unlike the dickless cheese-brain so-called "economists", suckling at the always-overflowing gubbermint teat, who have never done an honest day's work in their lives...no shortage of food, hoes and blow there, my friend...

Thu, 02/21/2013 - 15:15 | 3264226 MarsInScorpio
MarsInScorpio's picture

I can't help but wonder . . . how many of the down arrows don't get the idea that this poster is a satirical writer?

 

So if you vote red, you are saying that the satire is objectionaable, and that you don't get it - while the truth is that if you do get it, then you'd be voting green as an applause for the quality of writing.

 

Why is that satire on ZH so often goes right over the heads of ZH readers . . . ?

-30-

Mon, 02/25/2013 - 02:55 | 3273317 papaclop
papaclop's picture

That sounds way too intelligent than anything Paul "aliens" Krugman could come up with.

Thu, 02/21/2013 - 12:05 | 3263494 101 years and c...
101 years and counting's picture

perhaps ZH should send the analysis over to Jim Jordan. This could be done in minutes vs decades it would take for the PhD's at the Fed to calculate.

Thu, 02/21/2013 - 13:28 | 3263526 socalbeach
socalbeach's picture

If they do they better double check their arithmetic, pretty sure it was off.  It would be a coup for the Fed and make ZH look bad if a Congressman were to quote a ZH article that the Bernank could find an obvious mistake in.

http://www.zerohedge.com/news/2013-02-19/feds-d-rate-45-dec-31-2013-and-...

Thu, 02/21/2013 - 13:40 | 3263892 resurger
resurger's picture

+1

Thu, 02/21/2013 - 13:04 | 3263750 Serfs Up
Serfs Up's picture

Yeah, the SUBcommittee on somethingsomethingsomething... I am sure the Fed is carefully considering all the ways to further convey the sound of chirping crickets to the Honorable members of that obscure, toothless SUBcommittee.

Thu, 02/21/2013 - 13:30 | 3263856 tarsubil
tarsubil's picture

From what I can see, the answer will be, "Okay, already, we'll give you the contract for needlessly upgrading tanks in your district." It is all a game.

Thu, 02/21/2013 - 11:56 | 3263452 A Man without Q...
A Man without Qualities's picture

Can you imagine the comedy if Bernanke had to explain VIX to Maxine Waters?

 

 

Thu, 02/21/2013 - 12:12 | 3263530 BoNeSxxx
BoNeSxxx's picture

Coffee laugh through the nose... not good but soooo worth it.

Thanks for that.

Thu, 02/21/2013 - 12:52 | 3263678 nope-1004
nope-1004's picture

Maxine Waters is a legend.  She is a true representative of her constituents:  Dumb.

 

Thu, 02/21/2013 - 14:20 | 3264067 Taffy Lewis
Taffy Lewis's picture

You're talking about Maxine "I marched because my mother couldn't have an abortion" Waters?

Thu, 02/21/2013 - 12:58 | 3263709 Professor Fate
Professor Fate's picture

Can't stop laughing.  The image is stuck in my mind. That would be another Hank Johnson "Guam Capsizing" moment.  I'm hoping to see a Jeff Dunham "Maxine Waters" puppet.

Fate the Magnificent

"Push the Button, Max"

Thu, 02/21/2013 - 12:05 | 3263491 NRGIsFree
NRGIsFree's picture

I think it is $88.5 Billion per month not $885 billion. Unless of course we are looking ahead a year or so.

Thu, 02/21/2013 - 13:50 | 3263944 Crime of the Century
Crime of the Century's picture

Thanks, beat me to it. Dude needs to slow down before he becomes Typo Durden.

Thu, 02/21/2013 - 12:15 | 3263548 ShankyS
ShankyS's picture

The Fed will comply but it will take them longer to get that info to CONgress than it will take the treasury to return German gold. Then it will taks a team of shitlords from the govergnment another 5 years to figure it all out, bottom line is 15 years later we get an answer and that will be a complete BS coverup. So what's the friggin point?

Thu, 02/21/2013 - 13:17 | 3263807 SWIFT 760
SWIFT 760's picture

Right on. 

Nice try Jordan, yer hearts in the right spot. However, the kike AIPAC cunts will thwart any effort to get traction and expose the zioshit cabal. 

Ben will say the federal reserve act indemnifies us (fellow jewshit) of any accountability and transparency. 

Next "terrorist" attack will sideline the sheep anyway. 

Thu, 02/21/2013 - 14:05 | 3264011 SkottFree
SkottFree's picture

Deviation from the Obama Happy Days Are Here Again platform will not be tolerated.

1.       All looks good all indicators are pointing UP! No mention as to UP what!

2.       We feel the downturn is because consumers are to blame for not spending enough money, the cheap bastards!

 

Thu, 02/21/2013 - 11:51 | 3263405 sampo
sampo's picture

There. Is. No. Risk.

- Ben

Thu, 02/21/2013 - 11:55 | 3263437 azzhatter
azzhatter's picture

I can stop inflation in 15 minutes

 

Ben

Thu, 02/21/2013 - 12:16 | 3263534 derek_vineyard
derek_vineyard's picture

lookit the 10 year  (sub 2.00) just on a little chatter

methinks ben wants to just make the all time highs...back off a little and flatline for another decade all the while keeping the 10 year below 2%

Thu, 02/21/2013 - 12:52 | 3263679 rufusbird
rufusbird's picture

blast from the past...at the 6 minute mark on this video of an old interview of Senator Prescott Bush in the early 1950's. He discusses interest rates and controlling inflation from much the same perspective of most ZH'ers...

http://www.youtube.com/watch?v=a9zawMsMk9g

The whole video is worth watching for it's historical value and is interesting for several other reasons.

Thu, 02/21/2013 - 11:51 | 3263407 IridiumRebel
IridiumRebel's picture

Balance sheet smalance sheet. The sun will take care of us....
http://www.weather.com/news/science/massive-sunspot-forms-20130220

Thu, 02/21/2013 - 11:52 | 3263410 SWRichmond
SWRichmond's picture

"...respectfully request..."

You work for me, bitch.  Give it to me or get fired, pick one.

Thu, 02/21/2013 - 12:56 | 3263699 pods
pods's picture

I think Ben will simply write back:

"Who runs Bartertown?!"

pods

Thu, 02/21/2013 - 13:23 | 3263831 helping_friendl...
helping_friendly_book's picture

2 men enter, one man leaves.

Thu, 02/21/2013 - 11:52 | 3263411 fonzannoon
fonzannoon's picture

" P.S - I have also enclosed a picture of my balls".

Thu, 02/21/2013 - 11:54 | 3263428 IridiumRebel
IridiumRebel's picture

Salty!

Thu, 02/21/2013 - 13:37 | 3263879 resurger
resurger's picture

phahahahahaha .... please let me have my coffee Fonz

Thu, 02/21/2013 - 11:52 | 3263412 Everybodys All ...
Everybodys All American's picture

No risk of that. None.

- Gone but not forgotten Timmay

Thu, 02/21/2013 - 11:53 | 3263415 Sudden Debt
Sudden Debt's picture

 

 

As the Dalai Lama would say:

WHEN RIDING A BOMB WHICH IS DROPPED FROM A BOMBER....

GRVITY ISN'T YOUR FRIEND!

Thu, 02/21/2013 - 12:15 | 3263543 unrulian
unrulian's picture

nor is the bomb...

Thu, 02/21/2013 - 13:14 | 3263801 Joe Sixpack
Joe Sixpack's picture

nor is the Dalai Lama...

Thu, 02/21/2013 - 11:53 | 3263417 Cdad
Cdad's picture

Ooooops.

Thu, 02/21/2013 - 11:56 | 3263422 slightlyskeptical
slightlyskeptical's picture

This is the answer for the FED and America.

I propose that the government buy every existing primary home mortgage in America. Refinance them at decent terms, even cutting some principal for those underwater. By the time they get paid off government will have recouped all their money plus about 25%-40% in profits. Use those profits to reduce our national debt.

Once you have everyone refinanced, then start a program where every new primary housing loan is issued by the government. Do it through social security, giving them a credible income stream and letting another government program finance what social security cannot. Profits the government makes goes toward paying off current debt, reducing the need for new debt.and will allow a lower tax rate. people thinking about stiffing the government better think again as any failure to pay your mortgage will reduce your social security benefits down the road.

Banks and investors? It will hurt them but they will get paid in full on their loans outstanding. They will still be able to make second property, personal and business loans but no more fleecing the people on mortgage loans. They would still be eligible to make money originating primary loans on behalf of the government and servicing them.

I can think of no downsides and the upside is more disposable income for families, less taxes and investors being forced into more productive endeavors in order to get their profits. All good for the economy.

Thu, 02/21/2013 - 11:57 | 3263455 EmmittFitzhume
EmmittFitzhume's picture

Only problem is the Fed is owned by the banks. 

Thu, 02/21/2013 - 12:01 | 3263474 LawsofPhysics
LawsofPhysics's picture

Point me to the underlying sources for your conclusion.  I have not seen any credible information on precisely who or what entities are the shareholders/owners of the Fed. 

 

Please, do tell, several people interested in such information.

Thu, 02/21/2013 - 13:10 | 3263781 SWIFT 760
SWIFT 760's picture

ITS THE FUCKING KIKENVERMIN...

Thu, 02/21/2013 - 13:21 | 3263826 helping_friendl...
helping_friendly_book's picture

I always wondered about that 6% dividend payment the FRBNY makes to shareholders, how many shares there are etc. They should be required to disclose this to the SEC.

Thu, 02/21/2013 - 14:36 | 3264120 Arkadaba
Arkadaba's picture

duplicate

Thu, 02/21/2013 - 15:19 | 3264251 EmmittFitzhume
EmmittFitzhume's picture

I'll get "Anonymous" right on that!

Thu, 02/21/2013 - 12:03 | 3263481 Confused
Confused's picture

Downside: Government invovlement.

 

 

Thu, 02/21/2013 - 12:05 | 3263497 g speed
g speed's picture

sounds like you got a few underwater properties you want to unload---

Thu, 02/21/2013 - 12:19 | 3263571 slightlyskeptical
slightlyskeptical's picture

I do have an underwater property but am thinking more in macro terms.

The government cannot do a worse job of running the housing markets than the bankers have done. Their failure is the only reason that the Fed owns all this paper in the first place.  Why not have the housing market benefit the country instead of private banks?

Everyone bitches about the ponzi that is social security. Let them make the mortgage loans with the trust fund balance, so that our future benefits aren't funded simply by us paying more taxes.All this is doing is getting rid of the ponzi's which everyone here seems to be in favor of as an ideal. But propose something that actually does it and no one wants to climb aboard.

Fuck ponzi's!

 

Thu, 02/21/2013 - 11:53 | 3263423 EmmittFitzhume
EmmittFitzhume's picture

The Honorable Ben Bernanke.  Fuck you!

Thu, 02/21/2013 - 11:53 | 3263425 The Gooch
The Gooch's picture

The response will be generated in some form of war.

Thu, 02/21/2013 - 11:54 | 3263433 MFLTucson
MFLTucson's picture

It took this congress this long to figure out something was wrong?  By the way, how is Fast and Furious going and how is Benghazi going, those investigations were started by Congress too and not one thing has come out of them, I suspect the same will come of this pointless letter to shift blame away from their inability to halt spending.

Thu, 02/21/2013 - 11:55 | 3263442 Quinvarius
Quinvarius's picture

This amuses me.  I guess this guy wants the Fed to stop loaning the government money so it can default on its debt.  I'm all for it.  Lets kick this thing in the dick already.

Thu, 02/21/2013 - 12:15 | 3263547 scatterbrains
scatterbrains's picture

the nerve.. nigga needs to get hot tubbed

Thu, 02/21/2013 - 11:55 | 3263443 buzzsaw99
buzzsaw99's picture

Seeing as how CONgress long ago abdicated their responsibilities and now rely wholly on the banksters for policy decisions and monetary largesse perhaps the Bearded Clam should send Jordan a letter back asking what his freaking plans are now that they are bankrupt.

Thu, 02/21/2013 - 11:55 | 3263444 fonzannoon
fonzannoon's picture

when the day ever comes does Bernanke invoke the Chewbacca defense or does he hire frozen cave man lawyer?

Thu, 02/21/2013 - 12:04 | 3263488 Greshams Law
Greshams Law's picture

That makes no sense.

Thu, 02/21/2013 - 12:06 | 3263500 SheepDog-One
SheepDog-One's picture

If you watch certain shows, it does.

Thu, 02/21/2013 - 12:12 | 3263512 Greshams Law
Greshams Law's picture

I should have said "That does not make sense."

I'm pulling this from memory so the quote wasn't quite right.

 

Thu, 02/21/2013 - 12:24 | 3263587 buzzsaw99
buzzsaw99's picture

I am just a caveman who was frozen in ice and later thawed out by some of your scientists. If Chewbacca lives on Endor, you must acquit.

Thu, 02/21/2013 - 11:55 | 3263448 tecno242
tecno242's picture

This is exactly why Ben intends on removing himself from the situation at the end of this year.

He took a huge shit on the floor and has no intention of explaining why he did it and especially not cleaning it up.

Thu, 02/21/2013 - 11:56 | 3263450 azzhatter
azzhatter's picture

I'm sure Maxine Waters can explain this, no need for Bernanke

Thu, 02/21/2013 - 11:58 | 3263453 ebworthen
ebworthen's picture

Risk?

CONgress?

FED?

Risk?

"We didn't see this coming."

"This time is different."

"Black tulips?"

"Risk?"

*cough*

Thu, 02/21/2013 - 11:57 | 3263454 caimen garou
caimen garou's picture

so now they are asking about risk, why bother the damage is already done! assholes!

Thu, 02/21/2013 - 11:58 | 3263460 LawsofPhysics
LawsofPhysics's picture

LMFAO!!!  The puppets are asking their masters about risk?!?!?!

Bah ha ha ha ha!  Go ahead Ben, "fix it in 15 minutes" and raise rates motherfucker.

Thu, 02/21/2013 - 11:59 | 3263468 Sudden Debt
Sudden Debt's picture

also... there was a notion that some countries didn't get all their gold back when requested....

FBI!! THIS IS A BUST!!! OPEN THAT SAFE!!! ANYBODY WHO LOOKS WEIRDS GETS ... BAM BITCHEZ!!!!

Thu, 02/21/2013 - 12:08 | 3263478 falak pema
falak pema's picture

Where Hilarity does NOT ensue : 

Two headlines hitting the European press on two major issues :

1° FED 

In line with this thread, the Euro market seems to dread the response of Ben to this enquiry, if the end result is to dry up the QE pump. Presumably, as ZH has pointed out that FED money will STOP flowing to Euro Banks! 

Yikes! 

Les marchés craignent l'arrêt des mesures de soutien de la Fed 

(Markets fear that FED QE comes to an end)

2° China and ME Oil access

Here is an interesting take whereby the Paki POrt of GWAdar, just off from Hormuz strait, could be a new oil port used to send pipelined oil to china (as could Burmese ports further along). Thus the old silk route would become the NEW oil pipe route via the Karakorum range! 

It would also alleviate the dangerous crossing in the Malacca straights near Indonesia...which Chine dreads for its tankers. 

Grâce au Pakistan, la Chine renforce sa présence à l'entrée du Golfe persique

THIS WOULD OPEN UP A WHOLE NEW BALL GAME IN  landlocked Asia and china seas. 

Thu, 02/21/2013 - 12:05 | 3263482 SheepDog-One
SheepDog-One's picture

The Clowngress sock-puppets wants their boss the FED balance sheet monstrosity 'risk analyzed'?

Who do they think they're fooling? OR....is this for 'ass-covering' because they know the whole Shitcastle is about to crumble?

Thu, 02/21/2013 - 12:11 | 3263523 g speed
g speed's picture

lets hope these are new guys who aren't sock puppets

Thu, 02/21/2013 - 12:17 | 3263561 vmromk
vmromk's picture

The Honorable Ben Bernanke.....an oxyMORON if there ever was one.

Thu, 02/21/2013 - 12:04 | 3263484 Watson
Watson's picture

Probably I'm too naive, but actually I think that letter spells the end of QE (unless some really catastrophic event takes place).

Too many people think interest rates are unreasonably low, and have been for some time.

Further, the argument that QE was some sort of one-time measure to rescue banks, etc., cannot apply after several years, particularly years in which much other aid from Government has been repaid.

Thu, 02/21/2013 - 12:05 | 3263492 insanelysane
insanelysane's picture

Inflation is going to be the end of QE.  It has arrived!

Thu, 02/21/2013 - 12:04 | 3263485 insanelysane
insanelysane's picture

Kevin is going to be working overtime.

Thu, 02/21/2013 - 12:04 | 3263490 Aunty Christ
Aunty Christ's picture

Could this mean that - gasp - our lawmakers actually have to start making decisions??

Thu, 02/21/2013 - 12:06 | 3263496 Random_Robert
Random_Robert's picture

Dear Sir:

In response to your recent letter, we must remind you that Congress created the Fed to be completely unaccountable to Congress, or to the GAO.

Providing the data you ask for would be tantamount to surrendering our totalitarian control over world markets, and since the result of that would mean the end of "catered lunch Thursdays"  at the Mariner Eccles buildings, we must politely decline your request at this time...

Best Wishes,

Ben

 

 

Thu, 02/21/2013 - 13:02 | 3263742 helping_friendl...
helping_friendly_book's picture

funny

Thu, 02/21/2013 - 12:06 | 3263501 A Lunatic
A Lunatic's picture

I'm sure Ben will put it on his things to do list, right next to 'grant permission audit the FED'...........

Thu, 02/21/2013 - 12:06 | 3263502 Doubleguns
Doubleguns's picture

Is Jim Jordan a pseudonym for Ron Paul?

Thu, 02/21/2013 - 12:09 | 3263509 moonstears
moonstears's picture

I'll be having smoke and a side of mirrors. That is all.

Thu, 02/21/2013 - 12:09 | 3263510 dwdollar
dwdollar's picture

Dear Jim,

Please send me a copy of your plan to peacefully unwind your military industrial complex and social welfare Ponzis and I will see what I can do.

Thanks bro,

Ben Shalom

Thu, 02/21/2013 - 12:49 | 3263669 LawsofPhysics
LawsofPhysics's picture

Bingo!  Turns out all welfare is bad after all (both corporate/private and social).

Thu, 02/21/2013 - 13:36 | 3263872 resurger
resurger's picture

lloll

Thu, 02/21/2013 - 12:09 | 3263514 khakuda
khakuda's picture

It's about time.  We just need guys like this, Seth Klarman, ZH to keep up the pressure before these idiots destroy us all.

Thu, 02/21/2013 - 12:14 | 3263539 madcows
madcows's picture

Too late.  Fait Accompli.  All that is left is for the collapse to happen.

Thu, 02/21/2013 - 12:10 | 3263515 vote_libertaria...
vote_libertarian_party's picture

Scene...Congressional hearing....Ben sits at a desk...

 

Congress person:  I WANT THE TRUTH!

 

Ben:  YOU CAN'T HANDLE THE TRUTH!!!!

Thu, 02/21/2013 - 12:14 | 3263520 Pseudo Anonym
Pseudo Anonym's picture

fed's trade secrets, for your eyes only:

 

... this first completely blank napkin as evidence of all the rigorous analysis the Fed has conducted ... Also, on the second completely blank napkin ...

Thu, 02/21/2013 - 12:10 | 3263522 walcott
walcott's picture

who the fuck are you congress? I'm the fed or a mafia. Me and Greenspan never have to answer any of your questions about jack shit. We'll nuke the entire world first. 

How's that bitchez??

Thu, 02/21/2013 - 12:11 | 3263524 madcows
madcows's picture

Posturing, nothing else.

Useless Senator: "Gee, Ben.  The People are talking about civil war.  We need to do something to show them we REALLY care."

Ben:  "Uh, there is no Fucking WAY you can audit our books.  The shits too complicated, and honestly, this fucking pyramid is coming down, AND, well, we're not really interested in helping America.  Realy, we're a group of foreign banks making a shit load off your interest payments.  Besides, We are Leveraged to the FUCKING hilt, like a billion to one.  If you saw our books you would crap yourself."

Uselss Senator: " uh, well, since you  and your buddies paid for my campaign, maybe we could come up with something else.  I mean my goodness, I can't lose this positition and it's perks?!  I don't have any REAL SKILLS.  How the hell am I supposed to fund the lifestyle I've grown accustomed too?"

Ben: "Look, here's what we'll do.  You'll ask me for "Risk Assessment".  I'll blow smoke up your ass.  you can tell everyone that you've looked into it and it's all good, nothing to see here.  Then, we'll buy some more of your shit treasuries while you keep going in to debt buying off the sheep's votes.  Good?  Good.  Now quit bothering me, I've got some Nation raping to do."

Thu, 02/21/2013 - 12:13 | 3263538 Sudden Debt
Sudden Debt's picture

response from the fed:

RISK? WE PRINT THE MONEY BITCHEZ!!!!

 

Thu, 02/21/2013 - 12:31 | 3263606 phalfa5
phalfa5's picture

whats the risk?  The two main risks are:

1)  We run out of ink

2)  We run out of paper

3)  we run out of believers ...

wait  there are 3 risks...   the three riskd  are...

Thu, 02/21/2013 - 12:41 | 3263549 kito
kito's picture

like the rest of the pathetic showmen in congress, JORDAN gets it...he gets the fact that bernanke has helped him and his comrades continue to function as a key part of a corporatocracy.......he gets the fact that he gets to continue sucking dry america one more day as bernanke extends the grip of congress on american citizens.....JORDAN IS FULL OF SHIT......FUCK HIM....................

Thu, 02/21/2013 - 12:52 | 3263682 busted by the b...
busted by the bailout's picture

Just curious; is there anyone in Congress you consider not a "pathetic showman", i.e., someone who genuinely is trying to do the right thing vis a vis the debt, deficit, and monetary situation?  And how can you know for sure?

Thu, 02/21/2013 - 13:03 | 3263748 kito
kito's picture

very few if any. id say justin amash is about the only one. perhaps a few others. 

jordan is another big government pretender. voted for the renewal of the patriot act, voted for ndaa, voted for fisa, endorsed nitwitmittromney,  etc.......do your homework........hes full of shit and enjoys big government centralized control...........

Thu, 02/21/2013 - 12:16 | 3263553 TumblingDice
TumblingDice's picture

It's a good thing this bloke wrote a letter. I was getting worried for a second.

Thu, 02/21/2013 - 12:18 | 3263558 vmromk
vmromk's picture

.

Thu, 02/21/2013 - 12:17 | 3263559 busted by the b...
busted by the bailout's picture

Fed's official response:

"Please Do Not Worry"

Thu, 02/21/2013 - 12:18 | 3263564 Dr. Engali
Dr. Engali's picture

How is it that all these criminals have the word "honorable" in front of their names? Honor must have a completely different definition to them than it does to us.

Thu, 02/21/2013 - 12:29 | 3263582 ziggy59
ziggy59's picture

Risk? That's the conquering game board this is monopoly and go for broke

Thu, 02/21/2013 - 12:27 | 3263599 busted by the b...
busted by the bailout's picture

Ben may have met his match:

"Jordan was born and raised in Champaign County, Ohio and attended Graham High School, graduating in 1982. While at Graham, he was a four-time state wrestling champion with a career record of 150-1."

He is conservative:  "In Congress, Jordan is among the most conservative Republicans, earning a perfect score from the American Conservative Union."

But not a Libertarian, apparently:

"Jordan has supported the continued production and upgrades of M1 Abrams tanks in his district over the direct objections of the Pentagon and criticism regarding the redundancy of further production. The Pentagon wants to put a hold on tank upgrades at a Lima plant until a new version is ready, possibly in 2017, in order to save $3 billion. The plant supports approximately 800 jobs in the district.

http://en.wikipedia.org/wiki/Jim_Jordan_(Ohio_politician)

Thu, 02/21/2013 - 12:29 | 3263609 yogibear
yogibear's picture

A some point the math and reality will suck.

Until then it's skittle pooping unicorns.

Thu, 02/21/2013 - 12:31 | 3263612 Dr. Engali
Dr. Engali's picture

Risk? There is no risk...we can always add another zero with a single keystroke.

Thu, 02/21/2013 - 12:32 | 3263616 Dre4dwolf
Dre4dwolf's picture

They probably wont even bother to answer honestly.

The only way these people even bother with govt is if they are threatened with jail time or death sentences. 

Thu, 02/21/2013 - 12:52 | 3263619 medium giraffe
medium giraffe's picture

Please, sit back and enjoy the show.

Thu, 02/21/2013 - 12:38 | 3263634 weyes1
weyes1's picture

Next comes the mysterious plane crash with Jim Jordan and the rest of the Committee the unfortunate passengers.

Thu, 02/21/2013 - 12:55 | 3263697 insanelysane
insanelysane's picture

and then when the end finally arrives, they can use the Barney Frank defense, "No one could have ever seen this coming."

Thu, 02/21/2013 - 12:40 | 3263644 Central Wanker
Central Wanker's picture

Now That's a report I want to see!

Thu, 02/21/2013 - 12:55 | 3263693 Paracelsus
Paracelsus's picture

Best photo ever...

I remember being nauseous when the Fed was buying all this stuff at 100% from the Banks. I was thinking "set an example,please,price discovery,moral hazard,etc".

Also,once hyper-inflation kicks in it truly will be "throwing Grannie under the bus". This reminds me of the old folks who were abandoned during Katrina. A rhetorical question: Is this the America we aspire to be.

Thu, 02/21/2013 - 12:59 | 3263717 NoWayJose
NoWayJose's picture

Jordan does 'get it', but his request is a shotgun - and that shotgun approach means that he will simply get a 6 foot high pile of paper with contradictory studies.  The only way to attack the Fed and win is to focus on narrowly targeted specific things that have paper trails outside of the Fed.  We saw a couple days ago where a thirty year CUSIP was auctioned on a Thursday and the same CUSIP was bought by the Fed the following week.  Nail Bernanke on monetizing the debt.  Follow the Fed money from the US to Europe through European banks in the US - ask for THAT paper trail.

Thu, 02/21/2013 - 13:00 | 3263728 tony bonn
tony bonn's picture

perhaps jim jordan is going through the motions of asking the fed about its unwind plans, but if not, he is a complete fucktard.....anyone who believes that bernanke has a plan to unwind anything is full retard....it is impossible, and absolutely under no circumstance will it happen....the fed's balance sheet is fully structural and will not shrink - it simply cannot sell its "assets".

the wall street bankster cabal under the aegis of the rockefeller axis of evil - charter member of the military industrial complex and abley served by the bush crime syndicate - has spread financial terrorism and fraudulent economics on the land....bernanke is the adolph hitler of banking....

Thu, 02/21/2013 - 13:03 | 3263747 Meat Hammer
Meat Hammer's picture

It's like they're playing Jenga and we're the pieces.

Thu, 02/21/2013 - 13:20 | 3263820 Clowns on Acid
Clowns on Acid's picture

Perhaps Jim Jordan could get Maxine Waters to sign onto his letter. Maxine is the Ranking Demnocrat member of the House Financial Services Committee.

Say what ?

Thu, 02/21/2013 - 13:28 | 3263847 dark pools of soros
dark pools of soros's picture

"Oversight & Government Reform Committee"

 

is that like the Deslithering and Defanging of Vipers Committee?

Thu, 02/21/2013 - 13:36 | 3263873 Smuckers
Smuckers's picture

Dear Jim,

Want to go for a ride in my helicopter?

Love
Ben

Thu, 02/21/2013 - 13:39 | 3263884 DiveGerl
DiveGerl's picture

Ahh scuz me folks, does this appear to have the aroma of "Holy Frakking shiite"? seriously, it seems to me some VERY influential folks are VERY nervous...or even scared!

Thu, 02/21/2013 - 14:18 | 3264061 Bastiat
Bastiat's picture

DHS buying 1.4 billion rounds of ammo is a good indication of just how scared they really are.

Thu, 02/21/2013 - 20:40 | 3264895 are we there yet
are we there yet's picture

Walk into any gun store and see how much ammo they have in their shelves. Nearly empty here in Houston with limits of only one box per customer per day.  Both the gov and private citizens have been arming and stockpiling to unimaginable levels for the last 5 years.  The economy and our politics are structually broken here and in Europe. One possible unwanted scinario is one that in 3 years there is civil unrest and obama declaires martial law and postpones elections.... no, that is too paranoid.

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