Who Is Lying: The Federal Reserve Or... The Federal Reserve? And Why Stalin "Lost"

Tyler Durden's picture

When one thinks of the early 1950's, things that often come to mind are fries and milkshake, muscle cars, Little Richard, and greased hair. Things that rarely come to mind are that the US and China were openly at war over a little piece of land called Korea, that the Treasury market did not exist, that short and long end rates were "fixed" by the Fed at 0.125% and 2.5% respectively, even as inflation was at the highest it has ever been in the post war period at over 20%. What absolutely never comes to mind, is that on March 3, 1951, the world as we know it changed forever, after a little noted event known as the Fed-Treasury Accord of March 3, 1951 took place, and mutated the role of the Federal Reserve, which set off on a path that would ultimately lead to the disastrous economic state the world finds itself in today.

Oh and another thing that never comes to mind, is that while the current iteration of the Fed, various recent voodoo economic theories, and assorted blogs, all claim that excess bank reserves are never an inflationary threat, it is precisely two Federal Reserve chairmen's heretic claims that reserves will light an inflationary conflagration, that forced then president Truman to eliminate not one but two Fed Chairmen, and nearly result in the "independent" Federal Reserve being subsumed by the Treasury to do its monetization and market manipulation/intervention bidding. Which then begs the question: who is telling the truth about the linkage of reserve accumulation to inflation - the Fed of 1951, or every other Fed since, now firmly under the control of the Treasury-banker syndicate. Because they can not both be right.

Why is March 3, 1951 such an important date? Because, more than anything, the confluence of events that led to the "Accord" signed on this day have extensive parallels to our current situation, as the attached paper by the Federal Reserve of Richmond shows in exquisite detail, yet 100% in reverse.

In a nutshell what happened in the late 1940s and early 1950s was that in the aftermath of WWII, and the outbreak of the Korean war, America found itself in a very odd situation... one never really encountered until today. The country had soaring inflation - as in real inflation, not just core inflation measured by hedonic adjustments and excluding all those thing that actually do go up in price. More importantly, it had the 1950's version of ZIRP - only then it was called a peg, in this case of 0.375%, and subsequently 0.125% on short end Treasurys, and 2.5% on long-dated paper. In other words, the monetary situation in 1951 was one where both the short and long end of the curve were artificially boosted (think ZIRP and Twist), just so holders of Treasury paper (at that time only insurance companies as banks were not allowed to invest in TSYs) did not experience losses and get further "demoralized" in addition to the war that Truman was currently waging.

In fact, the following quote from none other than Truman is as idiotic, yet as valid today, as it was 61 years ago:

[T]he Federal Reserve Board should make it perfectly plain. . . to the New York Bankers that the peg is stabilized....I hope the Board will...not allow the bottom to drop from under our securities. If that happens that is exactly what Mr. Stalin wants. (FOMC Minutes, 1/31/51, p. 9)

And this:

The FOMC met with President Truman late in the afternoon of Wednes- day, January 31.17    Truman began by stating that “the present emergency is  greatest this country has ever faced, including the two World Wars and all the preceding wars.. . . [W]e must combat Communist influence on many fronts.. . . [I]f the people lose confidence in government securities all we hope to gain from our military mobilization, and war if need be, might be jeopardized.”

This is arguably the earliest recorded iteration in modern history of a "the world will come to an end unless you don't do what I tell you" type of threat uttered by a member of the administration (ahem Hank Paulson) to a governing body. We will skip commenting on the supreme irony that according to Truman, Stalin would win if the US did not engage in the same central planning that ultimately brought the Soviet empire down. 

Yet what is so very different about this date in history, is that while it was the Treasury pushing tooth and nail for endless bond pegging by the Fed (apparently nobody had thought of QE back then yet, because it would have been all the rage), the body warning about the potential threat of runaway inflation from a surge in reserves, as well as the dangers associated with central planning was... The Federal Reserve.

Huh !!??

The same Fed that can not withhold its exuberance in encouraging ZIRP, Twist, LSAP, selling of Treasury Puts, and every other form of market intervention known to man, warning the president these very same actions would lead to ruin? And not only that but Truman being forced to get rid of not just Fed veteran Marriner Eccles (after whom the building in which centrally planned schemes are hatched every single day in yet another supreme irony), but also his successor Thomas McCabe who also refused to follow the precepts of central planning... who in turn was replaced by a Treasury muppet, or someone who will gladly monetize US debt whenever needed, at which point the scene for the final outcome was set.

That is impossible you say. Oh, not only is it impossible but it gets much better.

Because not only did the two veteran Fed chairmen warn against the state's incursion into central planning, but they explicitly said something which the Fed, or at least its modern versions, have rejected over and over, especially during congressional committees: that a build of bank reserves is the surest way to spark hyperinflation.

But....but....but.... this is what fringe tin-foil hat blogs allege.... not Fed chairmen who between them have over 20 years of tenure.

Well, here are the facts:

“We have marched up the hill several times and then marched down again. This time I think we should act on the basis of our unwillingness to continue to supply reserves to the market by supporting the existing rate structure and should advise the Treasury that this is what we intend to do—not seek instructions” (FOMC Minutes, 8/18/50, p. 137).


[Fed member] Sproul would state the idea that a central bank controls inflation through the monetary control made possible by allowing market determination of the interest rate: "[T]he Committee did not in its operations drive securities to any price or yield....[M]arket forces had been the determining factor, and that only in resisting the creation of reserves had the committee been a party to an increase in interest rates. That...was the result of market forces, and not the action of the Committee. (FOMC Minutes, 3/1/51, pp. 125–26)"

In response to Truman's ceaseless demands for pegging interest rates even as inflation was spiking over 20%, NY Fed president Sproul said that...

...this “would make the Federal Reserve System a bureau of the Treasury and, in light of the responsibilities placed in the System by the Congress, would be both impossible and improper” (FOMC Minutes, 1/31/51, p. 23).

In other words, pegging (i.e., ZIRP, Twist, LSAP)... is "impossible and improper"... is unconstitutional another word for it?

In retrospect perhaps we were a little too rought on Mr. Martin, who despite being a Treasury puppet, had these words to say:

In his speech accepting an appointment to the Board of Governors, Martin (1951, p. 377) said:


"Unless inflation is controlled, it could prove to be an even more serious threat to the vitality of our country than the more spectacular aggressions of enemies outside our borders. I pledge myself to support all reasonable measures to preserve the purchasing power of the dollar."

There are those who claim the Fed has become the bankers' puppet. It was not always so. In fact, the bankers loathed the Fed... Until the "Accord"

The banking community contributed to the Fed’s isolation by refusing to support its position. On February 2, the Board had met with the Federal Advisory Council, which represents the views of large banks. At that meeting, Eccles accused bankers of a lack of “courage and realistic leadership” (Board Minutes, 2/20/51, p. 389).


The Executive Committee refused to withdraw the FOMC’s letter to the President. Furthermore, it wrote a defiant letter to Senator O’Mahoney. The initial substantive paragraph began with the famous quote from John Maynard Keynes: “[T]hat the best way to destroy the Capitalist System was to debauch the currency” (FOMC Minutes, 2/14/51, p. 87).

It just gets better, as Marriner Eccles puts it into overdrive:

"We favor the lowest rate of interest on government securities that will cause true investors to buy and hold these securities. Today’s inflation. ... is due to mounting civilian expenditures largely financed directly or indirectly by sale of Government securities to the Federal Reserve.. . . The inevitable result is more and more money and cheaper and cheaper dollars." (FOMC Minutes, 2/7/51, p. 60)

Yet punchline #1:

[We are making] it possible for the public to convert Government securities into money to expand the money supply....We are almost solely responsible for this inflation. It is not deficit financing that is responsible because there has been surplus in the Treasury right along; the whole question of having rationing and price controls is due to the fact that we have this monetary inflation, and this committee is the only agency in existence that can curb and stop the growth of money.. . . [W]e should tell the Treasury, the President, and the Congress these facts, and do something about it....We have not only the power but the responsibility....If Congress does not like what we are doing, then they can change the rules. (FOMC Minutes, 2/6/51, pp. 50–51)

And #2 and final:

Governor Eccles and Representative Wright Patman, who was a populist congressman from Texarkana, Texas, went head-to-head:


Patman: Don’t you think there is some obligation of the Federal Reserve System to protect the public against excessive interest rates? 


Eccles: I think there is a greater obligation to the American public to protect them against the deterioration of the dollar. 


Patman: Who is master, the Federal Reserve or the Treasury? You know, the Treasury came here first. 


Eccles: How do you reconcile the Treasury’s position of saying they want the interest rate low, with the Federal Reserve standing ready to peg the market, and at the same time expect to stop inflation? 


Patman: Will the Federal Reserve System support the Secretary of the Treasury in that effort [to retain the 2 1/2 percent rate] or will it    refuse?. . . You    are    sabotaging    the    Treasury.    I    think    it    ought    to    be stopped. 


Eccles: [E]ither the Federal Reserve should be recognized as having some independent status, or it should be considered as simply an agency or a bureau of the Treasury. (U.S. Congress 1951, pp. 172–76)

And there you have it folks, clear as daylight, every aspect of the tension of the "independent" Fed brought to the surface. Because the few men who dared to stand up against Truman,  the doctrine of central planning, "pegging" Treasury prices,  and the banking cartel whose sole prerogative has always and only been cheap and easy money, all got their just deserts:

Fed president #1:

Eccles also reported in his memoirs that shortly before this event he had completed a letter of resignation to the President. He then decided to postpone his resignation. Eccles had been Chairman of the FOMC from its creation in 1935 until 1948. He did not intend to leave Washington with the Federal Reserve under the control of the Treasury. According to a Truman staff member, Truman had failed to reappoint Eccles as Board Chairman in 1948 to show him “who’s boss” (Donovan 1982, p. 331).

And Fed president #2...

While in the hospital, Snyder conveyed to Truman the message that he felt he could no longer work with McCabe. Without a working relationship with the Treasury, McCabe could not function as Chairman of the Board of Governors. McCabe sent in a bitter letter of resignation, but resubmitted a bland version when asked to do so by the White House. McCabe, however, conditioned his resignation on the requirement that his successor be acceptable to the Fed.

As a reminder Snyder was the Secretary of the Treasury.

And whom did Truman replace McCabe with?

On March 15, the President appointed William McChesney Martin to replace McCabe.

Martin was undersecretary of the Treasury: the same institution that wanted all objectors to central planning scrapped. His position? Quote the Fed:

Truman and Snyder were populists who believed that banks, not the market forces of supply and demand, set interest rates. Truman felt that government had a moral obligation to protect the market value of the war bonds purchased by patriotic citizens. He talked about how in World War I he had purchased Liberty Bonds, only to see their value fall after the war.

Yet by keeping bonds pegged at ridiculously low prices during the late 1940s, and early 1950s, inflation exploded.

And that is what marked the beginning of the end, as while the Fed may have gained its independence, the US presidency, acting on behalf of the banks and populism (to keep capital losses to a minimum) made it all too clear anyone who steps out of line would be fired.

Call it a Stalinist putsch.

Actually hold on, did we say Stalin lost? Perhaps we may need to revise that. And while we got closure on that, we are still confused: is the real seed of inflation in reserves?

"Forced by the rate peg issue to make a stand on the role
of a central bank in creating inflation, Eccles expressed the nature of a
central bank in a fiat money regime. It was not private
speculation or government deficits that caused inflation, but rather
reserves and money creation by the central bank."
[The Treasury-Fed Accord: A New Narrative Account, Richmond Fed, Robert L. Hetzel and Ralph F. Leach]

Ok, now we get it.

And should we listen to the Fed or the... Fed?

Read the full absolutely must read Rchmond Fed narrative of the 1951 accord here. We can only hope someone in Congress can ask Bernanke for his take on the allegations made by the man responsible for the name of the current Fed headquarters.


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ISEEIT's picture

If the sheeple only knew. Were you to present this information to the 99%, 98% of them would refuse to consider it and the remaining 1% would already be ZH fans.

slewie the-pi-rat's picture

This will go down as one of the great if not greatest Z|h treatises

Oh regional Indian's picture

Try sucking a little harder Slewie, you might get some Brownie points.

The whole thing is a sham/scam, was from the first, why waste time nit-picking.

The FED is "barely legal", go Snoop Dog.

The IRS, it's collection arm is damn near illegal.

The IMF/UN shadow looms large over the US and thus the world. The truth is probably so fantastic that instant CogDiss will ensue.

The FED is privately owned, by mostly NON_US banks at that and non-US personages.

McFadden/Lindhberg et. al. said it enough, often enough and with great fury and clarity. THe FED is a cancer on America/World, but no one listened.

Since the FED: two great World Wars, multiple BOOMS and BUSTS, a globally broken monetary system, thieves at the till, shills on the pill, rye and dill.

Go back to sleep everyone. There is no point flickering about at the edges.



spiral_eyes's picture

The question of whether excess reserves are inflationary can be answered only one way: it depends.

And, under the current system, it depends on just one thing: whether the primary dealers want to bite the hand that feeds them. 

They could start lending, wildly, in theory, which would of course have a wild inflationary impact. But that would come with a pretty fierce rebuke from the Fed/ the Treasury and all Bernanke lackeys who believe Bernanke is an alchemist who has invented a method of non-inflationary monetisation.

When I look at inflationary threats, I actually think there are larger ones. What about the 5+ trillion sitting in Asia that could come home to roost? What about the dangers of oil shocks or a breakdown in global trade? Those kind of events, I think, are much more likely than primary dealers shafting their lord and master Bernanke. 

On a long enough timeline, I think it would happen. But in reality, there are weaker links.

Oh regional Indian's picture

AzNom, I think you are giving the "system" too much credibility. It's a finely crafted set, excellent, carefully chosen actors and a playbook.

In a normal world, we could discuss event probabilities, but in this sham?

Of course there are consequences, but in this game, I don't think there are any unintended ones, at least not one's that lie outside of their "model".

But then again, my tin-foiler is always on. Just hark back to th epeople calling it when it was hapening. All those excellent links on this :



spiral_eyes's picture

Central planning always has uncontrollable deleterious side-effects, Ori.

I think the strongest thing I can say about the excess reserves is that they are a bed of inflationary dynamite that could very easily be lit. But I am not going to do a Peter Schiff and predict "hyperinflation in 2010".

Oh regional Indian's picture

True. So, what will happen (what has always happened) everytime Banks hoarded reserves (ie. stopped lending out)?

That damned 3 letter word, War. And everything is lining up again.

War, the great reserve burner, monetary and human.


spiral_eyes's picture

Excess reserves is a symptom of excess monetisation, which is a symptom of excess debt.

And war is just another term for when a creditor wants to collect on a debt...

economics9698's picture

Excess reserve pile up when the spread between the inflation rate, 2.9% (the real inflation rate is about 8.6%), and the interest rate, 4%, is not big enough.  The spread should be 2% to 4% to give the banks more incentive to lend, assuming the economy is “normal” which of course it is not.

Oh regional Indian's picture

All true e96, as are your points below, well taken.

The BIG Q, in my mind is this:

Who was this system set up to Benefit?

Cui Bono people?

It's all useless laboUr till you hack at and extract the root cause/root. And it's obvious. A little labaynthine, but still, for a big picture viewer, obvious. 


economics9698's picture

"Who was this system set up to Benefit?"

The elites.  We all know that.  Codified and glorifies legal plunder of the peasants in America. 

johnu1978's picture

It's all downhill from here. Expect a lot more poverty and pain in the near future.

I strongly encourage everyone to brush up on their primitive skills while they have the opportunity to.

You'll be glad you did!


Primitive Skills Classes - Edible Plant Tours

TruthInSunshine's picture

While kick the can & extend and pretend have been underway for a long time now, the foundation has already been stress-cracked, and the structure is ripe for implosion.

This happened the moment that real wages in the U.S. failed to keep pace with the real rate of inflation for more than a 'transitory' period of time, which necessitated women entering the workforce (creating the dual income household that was necessary to maintain anything close to the real living standards of the 1960s).

As long as purchasing power maintains stability, whether inflation is 1% or 10% (meaning that wages rise in accordance or roughly thereabout), the sheeple don't care, and why should they? But regardless as to what the BLS or Fed claim about inflation now, average people know they're being misled.

But those who do control the fractional reserve banking system ran out options to harvest assets within 'economic systems' whereby wages rose in lockstep with prices; hence the global, "free trade" pacts and systems (WTO, NAFTA, Chinese MFN trade status, Eurozone, etc.) were born. Now, those insiders who controlled the volume of money didn't have to rely on so few nations for harvest to take place, and they could control the rate by which the water simmered the frogs in a more subtle matter (even though one's wages are declining relative to purchasing power, if better slaves work for far less, those products can be exported to soften the blow of the harvest that's now happening on a far more global scale, as fractional reserve debt Ponzi scheme gets a head of steam and globalized lease on life).

Now that coordinated currency manipulation by the main fractional reserve central banks is the process by which they are seeking to keep the Ponzi rolling, there's no chance that they can maintain the confidence of the citizenry of the developed and BRIC nations for much longer (I'd argue that real confidence has already been lost by far more people than is surmised, and that even network and cable news watching sheeple have begun to awaken to how their lives are being manipulated by things such as currency valuation/debasement, interest rate policy, and a plethora of other policy clearly set to favor financial entities versus 'average citizens,' and that they actually realize their elected leaders don't care about their interests).

The questions that remains to be seen are how bad things will have to get, economically (and subsequently, socially), before people arise, and what course of action will take place when (or if) people do arise.

derek_vineyard's picture

inflation is the method of choice to lower USA standard of living and allow current system to 'last' several years longer and extend the pain over longer time horizon (rather than resolution by crisis)

TruthInSunshine's picture

And inflation is a key tool in 'persuading' people who were formerly free to become de factor debt slaves.

After all, the efficiency in Kleptocratic Crony Anti-Capitalism, enabled by the fractional reserve banking syndicate, is in how fast the debt slaves can be harvested (i.e. separated from any real assets that they may have formerly owned/held).

Chupacabra-322's picture

@ TruthInSunshine, "what course of action will take place when (or if) people do arise."

The course of action by The Powers That Be have been incrementally put in place already.  Right before our eyes and hidden in plain view.

The Patriot Act, Military Comm Act, John Warner Defense Act.

N.D.A.A. - Assasination of US Citizens - Rendition - Torture

DHS - Oder of 450 million rounds of .40cal hollow point bullets.



NSA - Utah facility - Illegal wire tapping.


Yes, the Fascist have been busy little bees.

TruthInSunshine's picture

But they're telling us they're doing these things (what they're forced to admit or selectively leak) because they're protecting you and I.

I really want to believe that's the case, yet I have nagging, persisting doubts.

Let's hope they would never lie to us. I really wanted to buy into the theory that the particle board/laminate desk - attached to plastic chair - that I had in Kindergarten would provide sufficient cover to keep me safe in the event of full tilt nuclear war with the Soviets. Duck and cover.

Chupacabra-322's picture

@ TruthInSunshine, you're one, if not, the most intelligent and articulate poster on the ZH boards so I'll assume you're being sarcastic in your response.  However, I'll leave with you a summary of what I think.

The highly educated intelligent & wealthy owners of the world banking, media, military & major corporations are in control of the world political & economic policies, so morally it doesn't really matter. They deceive, wage wars, killing and impoverish millions of the other 99% human populations, for the New World Order to satisfy their greed & arrogance, all in the name of democracy, freedom & war on terrorism. Does it sound delusional? Not if you are the so called? "God" chosen white western elephants.

Total Complete Full Spectrum World Domination.  Via The City of London. The financial location of The Banksters, which Wall Street is just an extension. They own the Military, Media and have put forth hundreds of years worth of planning to complete their goals of the aforementioned.

It began with The Fascist Patriot Act which morphed into The Military Commissions Act, John Warner Defense Act, NDAA, PD51, Torture, Illegal Wire Tapping etc..etc... You get the picture? We're dealing with pure Evil, which cannot be reasoned or negotiated with. Their goal was to break the sovereignty of The United States along with our good men and women of the Military while simultaneously ushering in their NWO protective force of Their Global Military/Police Force to protect their Corrupt system/Crimes Against Humanity. Divide and Conquer. That's the Elite's game. We're just their Debt Slaves. Divided and Conquered.


TruthInSunshine's picture

1) Totally sarcastic.

2) I absolutely agree with you, and not just because you complimented me (and there are far more intelligent people posting here than I; I would list them all but wouldn't want to inevitably leave many out, inadvertently).

vato poco's picture

So does this mean we can finally put the "Truman was a great Prez!" horseshit to rest? And start recognizing him for the smarmy little Democrat-Machine-controlled little cocksucker he really was? Harry was a Great President just like Boss Tweed was a Great "Supervisor".

Mr. Lucky's picture

Thomas Joseph Pendergast was Harry's "friend".

mess nonster's picture

War is how people who cannot repay, and people who cannot collect, collaborate in the write-off process.

Doña K's picture

Every day that goes by makes me think that the hippie movement was way ahead of its time. Why work and have the gov take 50%? They were happy with a piece of land in Oregon someplace, growing their own food and chemical paradise.

If a large % of us did that, plus barter and stored excess wealth (if any) in gold and silver. We will not worry about a thing.

How about it?

derek_vineyard's picture

Pirates will then pop up and take your gold and silver and barbaric human nature will surface.  The larger group has to learn from birth how to function in society.  If the system were to collapse today............i'd choose guns and ammo as means to financial security


A Nanny Moose's picture

Pirates will then pop up and take your gold and silver and barbaric human nature will surface.

So what you are saying is, government would pop up..again. If the worst possible outcome is that we return to the starting point, when do we get started?

The only way to learn to fly is to leap from the next.

vato poco's picture

If the system collapses, and 'barbaric human nature resufaces', you're going to be looking at the age-old human solution, tribalism. If you're wanting financial security in such a situation, you'd better hustle yourself up some cousins/tribesmen. You and 100 guns + unlimited ammo vs. 20 guys with 6 guns and 30 rounds between them = you lose.

derek_vineyard's picture

i was going to add that to my post.....you need a loyal and large clan

but on day one i know exactly which of my neighbors i can pillage

Umh's picture

It will only work if you don't tell everybody; ssssssssssssssh!

Harbanger's picture

The commune theme has never worked.  In small numbers it's tribal and tribes always compete for resources.  It's regressive.  btw- Hippies were living in an affluent time and partying with their parents money,  then they borrowed theirs kids $. 

Cathartes Aura's picture

I know you don't care, but you couldn't be more wrong - you're just parroting something you once heard, someone else's opinions, based on nothing.

believe it or not, there are many examples of people co-operating, sharing and exchanging resources and information, living in supportive agreement, albeit with "less" than the average amrkn thinks they need to be "seen" as worth "something" in the world.

just this ONE link springs to mind:


but know that there are MANY others, and many not even known but by word of mouth. . . and not everyone calls their community "hippy" btw.

FeralSerf's picture

The federal alphabet soup crew is not about to allow that to happen.  They prefer death and dismemberment.   Why do you think DEA was formed?

fnordfnordfnord's picture

inb4 "Environmental terr'ism group's remote compound raided by federal agents... multi-day stand-off... ends with a big fire." In the end it turns out you guys financed your hippy utopia by selling drugs, unpasteurized milk to children, giving them autism. At least, that's what the official press release will say.

OpenThePodBayDoorHAL's picture

Dona will you marry me? (I can't figure out how to get a cedilla on your name...)

I used to have a bumper sticker that said "Hippies Were Right About Everything: Clean Food - Green Energy - World Peace - Free Love"

Doña K's picture

I am married to a Greek god. But....sometimes I call him a god damn Greek. Great guy BTW.

We had Que-sedillas for lunch yesterday.

economics9698's picture


You people need to do more research.  The Fed owned treasury instruments have increased 251% since Obummer entered office.  This is pure inflation, money printing.  This is the Fed picking up the slack in the marketplace and keeping the demand for T-bills at the insane level it is.

The excess reserves are the banks looking at the 2.9% inflation rate and 3.9% loan rate and saying “Fuck You Ben” to the spread.  They would prefer to wait another day and collect 0.25% interest than get booked up on 4% shit paper that will put them out of business when the inflation rate goes to 5%, which indecently is exactly what the TBTF banks would like to see.  The eight firm concentration ratio is over 50% now for those keeping track.

When there is a investment opportunity the excess reserves will disappear like school kids around a dog that just took a dump in the school yard.  Hyperinflation.  When the excess reserves are lent out it will add $15 trillion to the money supply.  You do the math.

For now the inflation is coming from the Fed monetizing the debt, up 251% since the affirmative action hack entered office.


mess nonster's picture

It's that "investment opportunity" that is proving to be so damned elusive.

War is another word for a sustained lack of investment opprtunities.

mess nonster's picture

Yes, if excess reserves are held... in reserve by the TBTF banks, as a soggy toilet-paper covering of their obscene derivatives exposure, and if those same banks refuse to loan out money, despite ZIRP, because they NEED those reserves for, yes, their obscene derivatives exposure, and they cannot create more stress on their already overstretched reserve ratios by loaning money to consumers, and IF ZIRP serves only to backstop zombie banks that, were their suply of fresh human brains- er, Fed-created money- to stop, they would instantly vaporize, IF this were the case, if massive global systemic indebtedness were not the pervasive reality, where everyone, including domestic animals, was financially over extended, and in real terms cannot pay back the money they owe...

IF this were the case, then the "reserves" of imaginary money created by the Fed, and held as reserves by the banks in some phantasmagoric circle jerk of collective psychosis,  these same reserves would not be inflationary, but would mertely serve as a deck-chair re-arrangement on a deflationary Titanic.

There you have it.

exartizo's picture

ineresting comment.

But I think it bears some scrutiny.

That is, what kind of naturally occuring market forces or environmental events might force the banks to do the postulated unthinkabkle?

moroots's picture

Let's call it for what it is: government, Wall Street and the central banks are the largest mafia on the planet.

ekm's picture

Pointing out  the obvious has become quite difficult nowadays with sucking media likes of WSJ, Bloomberg and CNBC taking the top seat.

Zerohedge's capability of repeating over and over what the obvious is, is quite an enormous task. Most of people have lost the sence of the obvious and real.

Imagine: Zerohedge vs All the Rest.  Not easy...

Chupacabra-322's picture

@ Oh regional Indial,

"The FED is privately owned, by mostly NON_US banks at that and non-US personages."

Federal Reserve Banking System

Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? Peter Kershaw provides the answer in “Economic Solutions” where he lists the ten primary shareholders in the Federal Reserve banking system.

1) The Rothschild Family – London

2) The Rothschild Family – Berlin

3) The Lazard Brothers – Paris

4) Israel Seiff – Italy

5) Kuhn-Loeb Company – Germany

6) The Warburgs – Amsterdam

7) The Warburgs – Hamburg

8 ) Lehman Brothers – New York

9) Goldman & Sachs – New York

10) The Rockefeller Family – New York


mess nonster's picture

And to think, none of these people ever send me a Christmas card!

FeralSerf's picture

They don't celebrate Christmas.

francis_sawyer's picture

don't EVEN get me started on that...

Perpetual Burn's picture

LOL the fed is not a private corporation. It is independent with in the federal government. FED employees are federal government employes.





TheVirginian-HGWT's picture

So it's not private but it's independent from the federal government?

Here is Alan Greenspan telling you how it really works, Comrade.


From the horse's mouth: "... there is no other agency of government which can overrule actions that we take."

All Risk No Reward's picture


Ownership if the Fed is purposely obfuscated.  It is also a red herring. 

Here are the relevant facts:

1. No government agency can over ride the decisions of the Fed.

2. The government doesn't CONTROL the Fed.

3. The Federal Reserve Directors CONTROL the Fed - http://www.federalreserve.gov/generalinfo/listdirectors/default.cfm

4. Review the list...  The Class A Directors are almost exclusively bankers, Jamie Dimon being at the top of the list.

5. The corporate people who make up the Class A Directors of the Federal Reserve System are ultimately controlled by the OWNERS of said corporations who gave their trusted stewards POWER in the first place.

Got that?  The Federal Reserve Board's policies are directed by corporate executives that, ultimately, report to the OWNERS of said corporations that employ them.

The Federal Reserve System is the expression of this quote...

The secret to success is to own nothing, but control everything.
Nelson Rockefeller

We have to stop dwelling in the false veneer of propaganda that overlays reality.

Because you probably believe the false narrative that the banksters didn't commit any crimes...

2010-11-09 Greenspan Admission.mp4




Kipper und Wipperzeit's picture

Farrakhan???? Really??? The rest of the blog looks like grade 'A' lunacy, too.


Edited to add-


I'm actually listening to the beginning of Farrakhan's talk linked and it actually sounds OK so far-if mostly cribbed from None Dare Call It Conspiracy---but still, Farrakhan? Really?

Dr. Engali's picture

You grew an extra hyphen Slewie , and you're 1 week and two days old. Happy belated 1 week birthday.