Why The Federal Reserve Should Be Audited

Tyler Durden's picture

Submitted by John Crudele via NYPost.com,

It is time for a comprehensive audit of Janet Yellen ’s Federal Reserve - and not just for the reasons presidential candidate Rand Paul and others have given.

The Fed needs to be audited to see if its ruling body has broken the law by manipulating financial markets that are outside its jurisdiction. A thorough investigation of the Fed will show once and for all if its former chief Ben Bernanke and current Chairwoman Yellen should go to jail.

I know, that’s a bold statement coming as it does on Sept. 1, 2015, with Wall Street still in half-bloom. But it won’t be so preposterous some day in the future if the stock market suffers a full-blown economy-busting collapse and Congress and everyone else are looking for scalps.

The Fed should be audited as a brokerage firm would be — its financial holdings, its transactions, market orders, emails and phone calls. Special attention should be given to what is called the “trade blotter” at the Federal Reserve Bank of New York, which handles all market transactions for the Fed.

The Fed’s dealing with foreign central banks — especially at times of market stress — should be given special attention. Trades in the wee hours of the morning should be in the spotlight.

Not surprisingly, the Fed is strongly opposed to an audit and sees it as an intrusion into its autonomy. Washington shouldn’t be intimidated.

Autonomy? Hah! That ended when the central bank started playing footsie with Wall Street.

Let’s look at what happened to the stock market last week, and it’ll explain what I think those who audit the Fed need to look for.

As you probably remember, stocks were headed for oblivion on Monday, Aug. 24. The Dow Jones industrial average was down 1,089 points early in the day before the index rallied for a close that was “only” 588 points lower.

China’s problems. Weak US economic growth. Greece. The possibility of an interest-rate hike. Those and other issues were the root causes of last Monday’s woe.

But Wall Street’s real problem is that there is a bubble in stock prices created by years of risky monetary policy by the Fed. Quantitative easing, or QE — the experiment in money printing that has kept interest rates super-low — hasn’t helped the economy (and even the Federal Reserve Bank of St. Louis concluded that). But QE did force savers into the stock market whether they wanted to take the risk or not.

None of that is illegal.

But the Fed now finds itself in the awkward position of having to protect the stock market bubble it created. So Yellen and her board of governors must have been pretty nervous when the Dow and other market indexes fell by an unprecedented amount on Aug. 24.

Then, overnight, there was massive buying of Standard & Poor’s 500 Index futures contracts. This was the remedy proposed by a guy named Robert Heller back in 1989 just after he left the Fed board. The Fed, Heller proposed, should rig the stock market in times of collapse.

Were those contracts being bought overnight by some Wall Street cowboy for whom potential losses in the disastrous market were of no concern? Or was it the Fed propping up the market?

Stock prices initially reacted well to the mysterious overnight buying on Tuesday, and the Dow was up 442 points — until it wasn’t anymore. The blue-chip index finished Tuesday, Aug. 25, with a loss of more than 200 points.

Then the same magical buying of S&P futures contracts happened Tuesday night and early Wednesday morning. Stocks again went up at the opening on Wednesday, but this time the gain held.

Credit was given to William Dudley, the head of the NY Fed I mentioned above, who offered his soothing opinion that interest rates probably wouldn’t be raised by the Fed at its September meeting.

“Once again, the Federal Reserve helped save the day for investors,” the New York Times wrote in a front-page article that cited Dudley’s speech.

But that wasn’t true — not unless Dudley’s speech leaked ahead of time. Stocks were up before Dudley’s talk and actually fell when he began speaking. That was probably due to the fact that Dudley pooh-poohed the idea of another dose of QE.

Wall Street got lucky the rest of the week ahead of this past weekend’s St. Louis Fed annual conference in Jackson Hole, Wyo. Plus, the month of August was coming to an end — usually a time when traders pretty up their books.

Money managers don’t want stocks to go down right before their performance is locked in and reported to clients.

The Fed has certain mandated responsibilities. It is supposed to keep inflation within a certain range. It is also charged with protecting the US dollar. Plus — and this is a modern-day responsibility — the Fed is supposed to help the economy and keep unemployment low.

Even if you agree with Heller that the market sometimes needs help, there is an enormous risk in doing this too often.

First, traders come to think that there is no risk in the stock market — a belief that has been proven wrong time and again.

 

Second, investors have no way of telling what the real value of stocks is.

 

And third, certain well-placed people on Wall Street will always know what the Fed is doing and benefit from it. And when the financial elite benefit, regular folks suffer.

It’s time to find out what the Fed has been up to. In this case, ignorance isn’t bliss — it’s costly.

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offwirenews's picture

more like shut down and everyone involved inprisoned and have their wealth they stole from the world given back

macholatte's picture

 

 

Why The Federal Reserve Should Be Audited

 

My guess is that ZH already knows. But it's news to the NY Post.

Better late than never.

 

 

J S Bach's picture

"Why The Federal Reserve Should Be Audited"

 

Pardon my colorful metaphor... but, what the F**k is wrong with people?!

The Federal Reserve does NOT need to be audited... we KNOW what an honest audit will produce.

No... the Federal Reserve needs to be ELIMINATED and all of its debt-based monetary nonsense with it!!!

Please don't be deflected by this obfuscating time-wasting run-around ploy.  The Fed needs to go away - forever - that's all we need to advocate and scream from the rooftops.

 

 

MarketAnarchist's picture

Agree.  Law is just an abstract concept.  There are only people and their actions, and the people who associate with the Fed are leeches to be abolished.

knukles's picture

Hold on just a moment before you do that so Treasury can issue the Fed, via Goldman, a couple or three Trillion Dollar Coins with Krugster's picture on 'em.

Richard Chesler's picture

John Crudele should stay away from bathtubs, and theaters, and nailguns, and high rise buildings, and yatchs, and...

 

Manthong's picture

“Washington shouldn’t be intimidated.”

LOL.. The author makes it seem like Washington, all the politicians and regulators are not  OWNED by the Fed, it's shareholder banks and other un-named but biblically wealthy psycho’s.

TongueStun's picture
TongueStun (not verified) Manthong Sep 2, 2015 7:15 PM

This artcle is anti-semitic

realmoney2015's picture

If only there was a candidate that has been anti-fed and even has auditing the Fed as one of his main issues? 

You know, someone who understands that the Fed is our biggest problem and will actually stand up to them. 

That would be someone everyone here at ZH would get behind and support right? Since we all know this is the biggest issue of the last 100+ years.

lincolnsteffens's picture

Sorry, one candidate, one newly elected Pres. can not touch it. End of Story. If you don't understand  what is wrong is immensely bigger than a US Pres. you understand little. Besides, anyone that could do any good will be eliminated.

Don't feed the trolls. Revoke you voter registration and stop contributing to the system any way possible.

BuddyEffed's picture

It would be more fun if the Fed was "audited" by the Scientology Rapid Evaluation And Correction Team (REACT)

realmoney2015's picture

Straight from his website: 

"The Federal Reserve was created by Congress and is supposed to be overseen by Congress. The Fed is now in every nook and cranny of banking with unprecedented regulatory powers and no Congressional oversight. I believe the Fed should be auditedand the regulatory power should be placed back under the control of Congress.

complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington. For too long, the Fed has been operating under a cloak of secrecy. The American people have a right to know what the Federal Reserve is doing with our nation's money supply.

I will continue my fight to audit the Fed and restore transparency and fiscal sanity to our nation’s checkbook."

https://www.randpaul.com/issue/audit-the-fed

Of course after what the audit uncovers, even the average Americans will want to end it. 

Arnold's picture

GAO audit, at least establish a baseline.

Then we can go from there with the rest of the fucked up numbers that are being coal shoveled out.

newnormaleconomics's picture

If J_ws were truly self-interested, huckestering, money-god worshipers as Herr Marx wrote in 1843, they would also be anti-Semitic. 

Wait! WRT Palestinians and most Semites in the region of "The State of Israel", they are anti-Semitic!!! 

Curious, that. 

Yen Cross's picture

   I agree whole-heartedly with your comment.

 Unfortunately the vast majority of people need the truth shoved up their anal canals before they'll put down the remote.

 I'm so fucking sick and tired of being "second guessed" by friends and family, when I try to offer a little friendly advice.

 The first thing they do is run to the CFP, broker, or other assclowns managing their investments and ask if I'm correct.

  Then the 2/20 or other commision based assholes tell them to just keep BTFD and hold for the long term.

 Lately I've been getting a lot more phone calls, as volatility has picked up, and I'm not returning them. They were warned, and I'm not getting paid for the advice, so they can ride the sinking ship into Mr. Yellens deep sea abyss.

knukles's picture

I've even been asked if I'll speak to individual get togethers with friends and relatives of folks.
I'm out of that business.  Same's you.  Already said my piece. 
I tell people anymore how to manage risk:  Do only what will let you sleep well at night.
                          Obviously some folks didn't listen.  And are now looking for affirmation, not information

Yen Cross's picture

  lol; Knuks, it's like the guy that goes to the doctor with a mole on his finger, and the doctor says he has melanoma.

 The guy goes home and puts Windex or whatever on it for several months thinking it will just go~away.

 A year goes by and the guy gets wheeled into the emergency room, where his doctor is standing by with x-rays showing him with stage-5 cancer and weeks to live.

 The problem with people, is that they let symptoms become problems. ;-)

Manthong's picture

Like the vast majority of Americans, they won’t allow the illusion to be shattered because it takes focused effort to pierce the veil and pay attention to underlying conditions.

Most are too busy texting, Facebooking, clubbing, watching DTWS or otherwise engaging in distractions to pay attention the issues that are shaping the future.

Hankster's picture

End the Fed. Central banks, whether law abiding or not, contain within them the seeds of economic destruction. As does elastic fiat currency. As does all forms of central planning. End the Fed.

Arnold's picture

C'mon .Banana Republic.

Nationalize the Fed.

mc225's picture

also, an audit would never be honest. rather, it would be like a warren commission or ntsb 911 report.

DirkDiggler11's picture

Agreed. Every Son-of-a-Bitch that works for the Fed needs to be hanging from a lamp post on the nearest corner. I don't give a shit if it's a janitor that mops find floors in the Fed Bank of Philadelphia, Hang' em all for high treason ! You associate with organized crime, in this case the Fed, prepare to suffer the consequences.

For Janet and the board of governors, let's start with a blowtorch and a pair of plyers ....

jcdenton's picture

S.D.G.

The federal reserve CORPORATION is not by any stretch of the imagination or mere reality -- godly ..

 

JRobby's picture

Because recognition of all of the off balance sheet transactions would at least quadruple the size of the balance sheet?

Just a guess.

Remember that line in there on an unqualified opinion: "Fairly Stated" (laugh track deafening)

OpTwoMistic's picture

Audit it then what?  Does anyone believe any legal body is going to do........what?  Kennedy had one solution and was murdered.

It would take an act of CONgress, unvetoed to have any effect and they are bought.

rubiconsolutions's picture

"more like shut down and everyone involved inprisoned and have their wealth they stole from the world given back"

 

Hey I'd like shut down the fed myself but here's the rub: there is no wealth to confiscate and give back. All wealth created through central banks and fractional reserve banking practices is an illusion. There is no there there. Since 1913 every single asset denominated in dollars that have been created out of thin air are illusory.

lordylord2's picture
lordylord2 (not verified) rubiconsolutions Sep 2, 2015 6:42 PM

"there is no wealth to confiscate and give back."

Wrong.  Very real and tangible assets were purchased (stolen) with those dollars. 

Chuck Knoblauch's picture

And if they find criminal activity, what do you expect next?

Hilda is still free.

knukles's picture

'Zat the same German au-pair Hilda that I knew in England back in the 60's?  One I knew always wore a leather zoom-zoom and high heels.
Twisted little (well, she was a very large German blonde ... almost scary large person, but after a few drinks, who cared...) critter she was.
Oh, my bad.  You're talkin' 'bout the Canks.        Sorry.               Got carried away....

Bunghole's picture

Who hasn't had a critter in their days?

logicalman's picture

Doesn't need to be audited to prove it's corrupt.

Just look at how it came into being and you'll know it's a criminal cartel.

Saves a lot of time and bullshit.

ersatz007's picture

Yeah. I'm sure the audit will happen any day now.

happel's picture

Never going to happen. But we can continue to dream, can't we?

#FreeCorzine4Ever

Salah's picture

Audit my ass...not enough.  Must re-compete the Federal Reserve.  It is after all a private subcontractor to the US Treasury...been in the NY banks' hands way too long.

Pass Kevin Brady's bill:  http://on.wsj.com/1hV27Tm


fauxhammer's picture

Are we dangerous here?

TheZeitgeist's picture

Audit the Fed?

Imagine Dorothy pulling back the Wizard's curtain, and finding some confused old farts standing around a very-busy Xerox, stupidly blinking at the strange phenomena called 'sunlight' suddenly streaming in.

Boom! Fed audited.

B2u's picture

First an audit....then PRISON for the people who broke the law. 

F0ster's picture

The Fed is too strategic for 0.0001%. Only a revolution will work.

Fahque Imuhnutjahb's picture

This doesn't have any thing to do with this post.

 

I was just reading about some relatively new synthetic, bath salts type designer drug called "Flakka".

Evidently this stuff makes folks bat shit crazy.  I'm not gonna link any videos, but do a google search

and you'll see the loony tunes.  Anyway, I read that this shit is being funneled into the States via

China.  The article said the fall out from this shit is wreaking havoc on police budgets in effected areas.

Then I got to thinking this would be the sort of thing that could cause a chemical depot to go boom

in order to stop the flow.  Probably not the case, but I wonder what was stored in China where the

explosions occurred. 

Fahque Imuhnutjahb's picture

Thanks for the grammar catch, I'll strive to do better in the future.  Is that you Mrs. Pettigrew?

goosee's picture

we should be able to see who the Majority stock holder are.

Sudden Debt's picture

Right

And their entire action list.

And if it's lost, throw them in jail until, foound.

 

 

Sudden Debt's picture

It is a private company

Run

By Private people

With

Personal interests

he have already killed thousands of people

Presidents and common folk

They own us

They are superior

The play us out against each other

 

 

Chupacabra-322's picture

Audited? How about Criminally Prosecuted. Tried, Convicted & Executed.

silverer's picture

Executed?  Sounds harsh.  How about "terminally inconvenienced"?

Usurious's picture
Usurious (not verified) silverer Sep 2, 2015 6:37 PM

all jews should be forced to move and live in israel........that way they can just steal from themselves instead of stealing from humanity.......

Bunghole's picture

Horseface just promised billions of dollars to Israel and Saudia Arabi for military gear.

Enjoy the F-35's you chosen ones.

http://freebeacon.com/national-security/kerry-promises-israel-saudis-mon...

lincolnsteffens's picture

Sounds good but first you have to revive the American Constitution backed up by police and court power. The corporate government passed their own pretend laws allowing manipulation of all the markets. This violates the law of the land but not the US corporate law. which is regulations/Admiralty Law. In short, might makes right and is in fact fully implemented throughout the world. They make it up and say "It is the law and you shall obey."

silverer's picture

Boy oh boy!  Them's fightin' words!  Don't mess with the Fed and its money!  We'll have domestic nuclear war!