Fed Up with the Fed

I’ve often noted to myself and close friends that this financial crises will be over when the Government takes this opportunity to enact a new system of sorts with more controls, regulations, and ways to generate revenues. Now, whether we’re talking about a new branch of Government, new currency, or some other system that I can’t even fathom is up for debate, but have no doubt that something is coming.

That “something” could be giving the Fed new regulatory powers over the financial industry as to avert another potential crises. They’ve already gone on record by saying that they “don’t want this crises to go to waste”.

Now, I’m not genius, but I feel like I have a lot of common sense and I can’t figure out how giving more powers to what I and many others believe was one of the major causes of this financial crisis is going to be a good thing. The Federal Reserve isn’t even part of the Government so why should they be given more authority over corporations. They can’t even grasp the concept of when to lower or raise interest rates so I’m pretty sure they won’t be any better at avoiding the next crisis that’s bound to come sooner or later.

Gerald Celente has forecasted some pretty dark clouds over the horizon, but I for one would rather listen to somebody who tells it like it is rather as opposed to those (mainstream media) who dream up such concepts as “green shoots” and expect us to believe that everything is going to be all right. Just don’t look at the 500 lb gorilla of unemployment squashing everybody in the room.

Comments

[Moon Kil Woong:]

I wish more people would recognize that the Fed is not part of the government so it is improper to give it governmental powers. Why not give Federal Express the right to regulate all mail while they are at it? Furthermore asking it to regulate the banks who it is composed of it outright moronic.

As for the Fed's policies. Jeff Pierce is 100% right on that the Fed played the pivitol role in making the current crisis. Without the Fed's poor low rate monetary policy the housing bubble would not have gotten as bad as it did even with the trillions of CDO and CDS derivatives supporting it.

Pretty soon we will see what monster they have wrought with their zirp low rate policy. Most likely it will be Frankenflation. What will be the solution to that. Give the Fed the power to prevent people from withdrawing money from the bank?

Jun 19 07:10 AM

[doubleguns:]

Return power to the states instead of concentrating it in Washington.
It is apparent that we the people have absolutely no say over what goes on in Washington. Washington seems to think they have a mandate if they have the majority. It is out of control and creating more controls is the exact opposite of what we need from Wash.

Wash oversight of this country got us in this mess. Look at freddie and fannie. What a wonderful job they did there.

Our country is stuck in the mud and Wash just floors the accelerator.

Jun 19 07:22 AM

[Paul in Texas:]

I've said this before and I'll probably say it again, if you want to start fixing the problems, change the people in government. Actually look at the way your Congressmen have voted. If they voted contrary to your wishes/values, vote for someone else in the next election. I will do my part. I will vote against every politician I can who voted for the TARP and stimulus bills. I will try to find those with more understanding of the economy and who have a committment to the Constitution as written and as the Founding Fathers interpreted it and vote for them.

Jun 19 09:19 AM

[swaps:]

You saw how the angry nation opposed the bank bailouts and how Paulson bullied Congress into doing it anyway.
And then the angry nation turned back to the NFL season.
Years ago Paul Volcker bragged that "we" control both political parties.
It will take a third majority party outside their control to make a change. And any uprising that hints of success will be met with physical violence - from them.
A docile nation is, like a herd of sheep, going to be shorn over and over again, and then sold off to market.

Jun 19 09:57 AM

[crawlars:]

Well, of course. Inflate, crash, buy, over and over. Creative and Innovative banking. Fractional reserve banking.

Google "The Money Masters"

Jun 19 10:08 AM

[OldFordTruck:]

If this is not a case to run to precious metals nothing is!

Jun 19 10:36 AM

[Ferdinand E...:]

Well Jeff, one of the ways to prove that you are not genius is to continue a harangue of this type against the Fed. Allan Greenspan - one of the most conservative men in the country - made a few mistakes, but so what. It won't be the last time that a Fed Chairman forgets Econ 101.

Jun 19 10:52 AM

[Longinvestor:]

The Federal Reserve is the central bank of the United States. Its unique structure includes

* a federal government agency, the Board of Governors, in Washington, D.C., and
* 12 regional Reserve Banks.
See: federalreserveonline.org/

"The seven members of the Board of Governors are appointed by the President and confirmed by the Senate to serve 14-year terms of office. Members may serve only one full term, but a member who has been appointed to complete an unexpired term may be reappointed to a full term. The President designates, and the Senate confirms, two members of the Board to be Chairman and Vice Chairman, for four-year terms."

"On December 23, 1913, the Federal Reserve System, which serves as the nation's central bank, was created by an act of Congress. The System consists of a seven member Board of Governors with headquarters in Washington, D.C., and twelve Reserve Banks located in major cities throughout the United States."


On Jun 19 07:10 AM Moon Kil Woong wrote:

> I wish more people would recognize that the Fed is not part of the
> government so it is improper to give it governmental powers. Why
> not give Federal Express the right to regulate all mail while they
> are at it? Furthermore asking it to regulate the banks who it is
> composed of it outright moronic.
>
> As for the Fed's policies. Jeff Pierce is 100% right on that the
> Fed played the pivitol role in making the current crisis. Without
> the Fed's poor low rate monetary policy the housing bubble would
> not have gotten as bad as it did even with the trillions of CDO and
> CDS derivatives supporting it.
>
> Pretty soon we will see what monster they have wrought with their
> zirp low rate policy. Most likely it will be Frankenflation. What
> will be the solution to that. Give the Fed the power to prevent people
> from withdrawing money from the bank?

Jun 19 11:02 AM

[Glen L.:]

The Fed is indeed a Frankenstein's monster, part government agency and part banking cartel, an impossibility in a genuine free market. This cartel of favored banks is in bed with government and does the bidding of the President more often than not. It's part of the unelected shadow government that really runs things. Central banks have been part and parcel of every despotic government the world has known since the Bank of England was formed in the 17th Century. They are the greatest economic scourge known to humanity save socialism/communism. Without a central bank controlling the money supply, the Hitlers and Obamas of the world would be powerless in economic terms, and much less dangerous as war makers. And the biggest, most corrupt of the crony capitalist companies such as Goldman Sachs would go belly up. What a wonderful world that would be!

Regulation is a con game that benefits the largest businesses at the expense of smaller companies and entrepreneurs that can't afford the regulatory costs, or the entry fees called licensure . In turn, the big companies make sure that the politicians who make the laws and the bureaucrats who write the regulations are very richly rewarded. The circle of deceit is completed by the central bank, which has as its number one mission the protection of its member banks and their allies in related industries (forget about the propaganda on the Fed website, by the way).

The Fed already has tremendous regulatory powers, and yet it failed to even see the current crisis coming, let alone prevent abuses through its regulations. In part this is due to the fact that the Fed is populated with economists who worship the false gods of Keynes and Friedman and Fisher and all the failed economic schools; they thought they were saving the economy, not destroying it, and still do. And they will never embrace the one true economics, the Austrian school, for the very reason that it calls for the abolition of central banks and government interference in the economy - in short, the end of their con game.

So give the Fed even more power; what difference will it make, except to hasten our demise? For who will regulate the regulators?

Jun 19 01:24 PM

[dybydx:]

i love this regulation stuff. back to the good old days of 3-6-3 banking.

tiger wood is gonna get alotta fans in the next few yrs!

Jun 19 09:14 PM

[Moon Kil Woong:]

Longinvestor: From your Fed Facts which are worded strongly to give you the perception it is controlled by the people which it's not designed to be.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute.

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. ...and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

The intent of Congress in shaping the Federal Reserve Act was to keep politics out of monetary policy. The System is independent of other branches and agencies of government. It is self-financed and therefore is not subject to the congressional budgetary process.

Board's Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks.

Thanks for encoraging people to read about the Fed. Regarding Congressional oversight and control over the Fed, Congress pretty much has delegated this to the OIG. If you ever watched a Congressional meeting with the OIG it is rather sad. Besides giving Congress the run around and not knowing anything including trillions in Fed Programs, Congress has not the means, power or will to monitor an entity that indirectly controls over 20% of all US assets. The OIG is essentially a arm of the Fed which does its job failing to audit it. Otherwise they would be screaming that they are overleveraged and their extended off balance sheet liabilities look strikingly similar to AIG.

As for the Fed being an extension of Congress, just because its board members are appointed by Congress doesn't mean they aren't independent. Furthermore, they 100% comprise bank members and banking interests. Just because they aren't traded on the NYSE and don't report who owns them doesn't make them part of the government. They are as private as private can be, as in they are owned by someone, that ownership can be traded, and it their primary interest principaly extends to their stockholders not everyone else as they claim. We are their interests only because we are their willing or unwilling paying customers.

You do have a point that the Fed is non-profit. A non-profit company doesn't mean they can't make money. Costco operated for a long time as a non-profit and made their management filthy rich when they ceased merely to follow their directive "to provide their members with low cost goods."

As for the Fed, with over $2 Trillion in assets plus $8 trillion involvement in other securities and complete backing by the government, as a private interest I would say that their investors haven't done too shabbily in 80 years. All together they directly control about 5% of the US wealth, indirectly control $20%, and control 100% through setting interest rates and auctioning Treasuries (which is their main bread and butter).

The Fed, 400% loan growth in bad times. I'm still waiting for the the IPO.

Jun 20 10:04 PM

[Noah's ark:]

If you had read the book "the Creature form Jekyll Island" you might draw a different conclusion.


On Jun 19 11:02 AM Longinvestor wrote:

> The Federal Reserve is the central bank of the United States. Its
> unique structure includes
>
> * a federal government agency, the Board of Governors, in Washington,
> D.C., and
> * 12 regional Reserve Banks.
> See: federalreserveonline.org/
>
> "The seven members of the Board of Governors are appointed by the
> President and confirmed by the Senate to serve 14-year terms of office.
> Members may serve only one full term, but a member who has been appointed
> to complete an unexpired term may be reappointed to a full term.
> The President designates, and the Senate confirms, two members of
> the Board to be Chairman and Vice Chairman, for four-year terms."
>
>
> "On December 23, 1913, the Federal Reserve System, which serves as
> the nation's central bank, was created by an act of Congress. The
> System consists of a seven member Board of Governors with headquarters
> in Washington, D.C., and twelve Reserve Banks located in major cities
> throughout the United States."

Jun 21 12:08 AM