The Fed Backed Itself into a Corner

Over the years, I have warned a seemingly countless number of undergraduates that Fed's hold on monetary independence was tenuous at best. Independence is not guaranteed by the Constitution. Congress made the Fed, and Congress can unmake the Fed. The Fed could only maintain the privilege of independence if policymakers pursued policy paths that fostered maximum, sustainable growth. Deviating from such paths would have consequences.

The Fed is quickly learning the extent of those consequences, as Congress launches an assault on the Fed's independence.

Some find the loss of support for the Fed puzzling. Brad DeLong, for example, notes that Bernanke & Co. are doing exactly what they should have done:

First of all, from the day after the collapse of Lehman Brothers, the policies followed by the U.S. Treasury and the U.S. Federal Reserve and the U.S. administrations have been very helpful. They have been good ones. The alternative--standing back and watching the markets deal with the situation--would have gotten us a much higher unemployment rate than we have now. Credit easing by the Fed and support of the banking system by the Fed and the Treasury have significantly helped the economy: have kept things from getting much worse.

The Fed earns accolades from academics for its handling of the crisis, in particular since the Lehman failure. Fair enough; I have few quibbles with policy since last fall. But what about the years before Lehman, when the crisis was building? Where was the Fed then? Did they abdicate regulatory responsibility? How did banks develop such incredible exposure to off-balance sheet SIV's? How could the Fed ignore increasingly predatory lending in the mortgage market? What exactly was Timothy Geithner, then president of the all important New York Fed, regulating and supervising? Clearly not Citibank (C).

To be sure, there were plenty of other regulatory failures along the way, but the Fed - an independent Fed - should have been in a much better position to raise regulatory and supervisory roadblocks during the debt build-up compared to other, more politically susceptible agencies. The Fed's independence should have allowed it to be a leader, not a follower. Ideological objections to regulation, apparently, prevented the Fed from looking for problems in their own backyard. Rapid debt creation was justified as a response to asset appreciation, with little concern that the connection might just be a bit more self-reinforcing.

The resulting crisis left the Fed struggling to keep the ship afloat - and in that struggle the Fed stepped too deep into the realm of fiscal policy in an effort to keep the trains running on time. But that mission creep was simply incompatible with the Fed's desire for secrecy. This was all too predictable: Like it or not, you cannot commit literally billions of dollars of taxpayer money and in the process secretly funnel money through AIG to the investment banking community without expecting just a little blowback. The last I checked, this was still a democracy.

Worse now for the Fed is the impression that monetary authorities work first and foremost for Wall Street. Of course, Fed officials see this a bit differently - they see supporting Wall Street as their mechanism for supporting Main Street. Ultimately, without the former, the latter is locked out of capital markets, and economic chaos follows. The purpose of Wall Street is supposed to be to channel investment funds into Main Street. But most Americans no longer view Wall Street as ultimately working in their best interests - maybe correctly. This is the same Wall Street that aggressively pushed garbage loans onto the American people as policymakers praised the wonders of financial innovation. When did the purpose of finance evolve into simply a mechanism to enrich the relative few at the expense of many? And when did policymakers embrace this view? As Paul Krugman has noted, the Fed cannot envision a world not dominated by the magic of structured finance. Yet this is a world that failed us completely.

Ultimately, can you really blame Americans if they have lost their faith in the supposedly omnipotent Federal Reserve?

Now the Fed's relationship with the public is a mess. And I suspect it is going to get much worse. Free Exchange succinctly identifies the new challenge:

An independent central bank is crucial. Political control of monetary policy must inevitably lead to accelerating inflation and long-run economic instability. But at the moment, the American economy could use an increase in expected inflation. And a real threat to Fed independence would almost certainly deliver it, either because markets would anticipate increased political influence on monetary policy ever after, or because the Fed would seek to fend off pressure from Congress by easing further, which amounts to the same thing. But we don't actually want there to be a real threat to Fed independence, because that way uncontrolled inflation lies.

The Fed has made it clear that unemployment is expected to remain unacceptably high in the medium run while disinflationary pressures persist. Yet policymakers have also made it clear that they believe they have done all they can, or are willing, to do to combat unemployment. They equate credibility with maintaining a 1.7-2% inflation target. Couldn't credibility be consistent with a 4% inflation target? And wouldn't such a target be more appropriate in a zero interest rate world? But alas, challenging the Fed now with their independence at stake will only convince policymakers to dig in their heels more aggressively.

What if the only way to get the Fed to do the right thing is to strip them of their independence? It is a real possibility, although disastrous in the long-run. Yet look at the dithering from the Bank of Japan, still faced with a deflationary environment years and years after they pushed to zero rates:

It was no coincidence that the new government of Yukio Hatoyama chose the day when the Bank of Japan (BoJ) was holding a rate-setting meeting to make a lot of noise on the issue. Both the deputy prime minister and finance minister made concerned comments. Their unspoken message to the BoJ was clear: remove monetary-stimulus measures at your peril. At the end of its two-day meeting, the BoJ left its policy rate unchanged at 0.1%, and continued to use other measures, such as buying government bonds, that it believes make monetary policy “extremely accommodative.”

But the BoJ does not give the impression it is particularly concerned about prices. It believes there are not yet clear signals of a deflationary mindset in corporations or the public at large, and that a recovery in private demand will eventually pull the economy out of its slump.

Good Lord, we have been talking about pulling Japan out of its slump for TWO DECADES! Fear of inflation combined with a perception that acquiescing to a higher inflation target would be akin to losing monetary independence has kept BoJ policy constrained for years, ensuring the citizens of Japan ongoing pain. Is the Fed headed to the same place? Maybe.

I don't think the Fed can regain the trust of the public while at the same time protecting the secrecy of their actions to save Wall Street (moreover, it is not clear that such secrecy is now needed in any event).

The relationship between policymakers and financiers is now seen as far too cozy from the perspective of the public.

I think the Fed needs to make clear that they work for the people, not for Wall Street.

A strong statement by Federal Reserve Chairman Ben Bernanke that a firm that is too big too fail is simply too big - that we should no longer tolerate the expansion of financial firms to the point that they pose systemic risk - would be a good start.

Simply put, Bernanke's choice set is dwindling - either risk losing independence, or step up to the regulatory and policy plate like you intend to hit one out of the park.

If Wall Street is no longer working for Main Street, it is time to side with Main Street.

Comments

[thopaine]

The party's over and the hangover is enormous.
Why would anyone give their money to these thieves on wall street?
And it is at least ironic that the cradle of american liberty-Harvard U.- is a big part of the problem, churning out voracious blood suckers on an unarmed public, so as to increase the business school endowments and professor's pensions.
I cry for my country.The children of the greatest generation were not up to the job.

2009 Nov 22 06:41 AM

[socrateaz]

I do not blame the fed for the current situation. I blame policies. Legislative, Judicial, and Executive! The legislative put policies into place that could not be sustained but was decided as fair and reasonable. The Judicial has become overwhelmed by control and redistribute idiots who think many of the worlds problems are from the greed of the producers but not the greed of lawyers and the have nots. The suckout and protect your wealth club is alive and well. The Executive leadership often worried more about their popularity than doing what needs to be done. The reasoning is those type actions worked before! Denial may exist until so much wealth is destroyed, one hundred years may be required to recover.

2009 Nov 22 07:43 AM

[Nick36]

The problem is that the Fed can't help the Main Street directly. The Fed can only bail out the big banks and give them lots of money on very favorable terms.

But it's up to the banks to decide what to do with the money. And if they want to gamble in financial markets instead of helping the Main Street. Then there is nothing the Fed can do about it.

Another problem with the Fed preventing the economy from getting much worse with easy money policy and ever bigger accumulation of consumer and government debts is that the Fed is also preventing the economy from getting much better. Because the debts are a burden on the economy. And big debts limit the prospects of further economic growth.

The policies of the Fed attempting to produce never-ending economic growth have led to never-ending accumulation of debts. And now the debts are so big that they impede further economic growth.

The Fed is at the end of its rope. There isn't much more the Fed can do. And if the Fed looses it's independence. Then in the end that might be the way out of the current predicament of too much debt. The country needs to get rid of its debts one way or another in order to go forward. And there is no way to do it as long as the Fed is in control.

2009 Nov 22 08:26 AM

[Old Trader]

"A strong statement by Federal Reserve Chairman Ben Bernanke that a firm that is too big too fail is simply too big - that we should no longer tolerate the expansion of financial firms to the point that they pose systemic risk - would be a good start."

On the face of it, this may be true, but given the propensity of TPTB to speak loudly, while actually doing very little, I wonder exactly how much good a "strong statement" would do, unless accompanied by action. "Jawboning" has been developed into an art form.

2009 Nov 22 09:25 AM

[Ferdinand E. Banks]

Nice takeoff, author. I also told countless international finance students about the stupidity of making the central bank independent. Among other things I mentioned that the German central bank was independent when they launched the big inflation in their country. Of course, if it has to be independent, I prefer its boss to be Big Ben instead of some crank.

2009 Nov 22 09:36 AM

[Chris Cook]

@Nick36

Good post.

"The problem is that the Fed can't help the Main Street directly."

Correct. But the Treasury can.

It seems to me that one possible approach -very much in line with the dis-intermediating effects of the Internet - is for the Treasury to issue credit interest-free as necessary (it costs nothing to create) and for Service-Providers (formerly known as banks) to manage creation and allocation of Treasury credit.

A charge/provision would be made for the use of a Treasury guarantee, and for service provision. A new generation of banking service providers would receive performance related remuneration, and their capital requirement would therefore only be that necessary to cover operating costs.

A US Monetary Authority (formerly known as the Fed) would set the parameters within which the system would operate. Hong Kong - which has no Central Bank - is not a million miles away from such a system.

2009 Nov 22 09:49 AM

[thotdoc]

Wall Street is self defeating. It is only interested in making more money for itself. The Fed supports that approach. The Fed lives within the boundaries of the Wall Street system, so it can only define problems and how to resolve problems from within that system.

Being only interested in making money for itself will eventually create the situation where you do not attend to all the relevant contingencies, everyone else involved in the money system. That will create the situation where Wall Street loses money. We have neen in that part of the process since early 2000 or the late 90's when the bubble making began and took over Wall Street.

More concretely, unbridled self interest creates problems, and we are in the beginning of the problems. That's not a moral statement. It is a statement based on the application of the science defined by General Systems Theory. General Systems Theory is the well accepted describer of the dybamics and components of all simple and complex systems. Try to run a complex system without understanding how systems work and applying that information to the system you are running, will cause problems.

The Fed and Wall Street are supposed to be the best and the brightest. They believe they are entitled because of that. That means they will defeat themselves and main street in the long run. Te long run may take years or decades, but absent change the outcome is predictable.

If the powers that run Wall Street were the slightest bit bright, instead of defining themselves as bright because they understand how to manipulate the system, they would understand the nature of things...that is everything within a system is interconnected and that any behavior that overly favors one part of what is interconnected will eventually create chaos and change that rebalances the system of interconnected parts.

Do you remember Bush's incredibly naive statement when referring to the banks and the monetary system? He said with wonderment, "Who would have thought they were all connected." That lesson is having a leader that does not understand connectedness will create a problem.

So, any behavior that is not in the interests of everyone involved will set up repercussions that will eventually cause that behavior to be self defeating.

So, any behavior that does not take into account all relevant contingencies will be self defeating.

The Fed does NOT take into account all relevant contingencies. But, there is a bigger problem. Congress running the Fed. Congress absolutely does not take into account al relevant contingencies. Congress is hog tied by people who areonly interested in their constituents, who are not interested in doing what is best for everyone.

So, what will happen? Our system will continue to flounder. Base your investment decisions on that.

2009 Nov 22 10:05 AM

[Simply Put]

Its not federal and it has no reserves, never has. The Fed is based on nothing and backed by a building with Federal Reserve sign on it and inside is a check book. backed by nothing. Its basically a check floating scheme .Talk about kidding ourselves, its the foundation of this Plutocracy They tell Washington what to do and we have no say in it.

Watch this:
video.google.com/video...
Or listen to this when you get an hour free:
video.google.com/video...
Or go to Youtube: Creature of Jekyll Island

2009 Nov 22 11:14 AM

[ain't no fortunate son]

I believe it is time for the FED to side with the American people now, voluntarily, or it may be forced to, at great pain for the nation, involuntarily.

I agree with the tone of the author's discussion; however, I disagree with one statement he made:

"The last I checked, this was still a democracy."

I'm afraid not, Tim. We were, once upon a time, but our government has been hijacked by the financial elite, the oligarchic big business leaders, their lobbyists who bribe both sides of the congressional aisle to do their bidding, the regulators (SEC, etal) and the "independent FED" (tell that to Jamie Dimon or Lloyd Blankfein and watch them fall over laughing).

99% of the American public are serfs Tim, nothing more. Serfs who are finally waking up to their status and the big LIE that they have been fed by their government for far too long, namely that America is a land of equal opportunity, equal rights, equal hope. In truth, America is a charade.

People will endure great hardship, as has been proven during the times of our "righteous" wars such as WW1 and WW2, if they have hope for better days ahead for themselves, and more especially for their children.

But take away a person's job, their home, their credit sources, their financial anchor to their community, reduce them to a life of constant fear and loss and financial terror, and you take away their hope. And without hope, I would submit that the normal constraints by which civilized societies maintain their "equilibrium" are no longer operable.

Mr. Bernanke, the banksters, the "regulators", the politicians and their keepers seem not to understand this message. YET.

I hope for every American's sake that the oligarchs open up their eyes and ears soon, for there is change in the wind, and "revolution in the air".

2009 Nov 22 11:29 AM

[Alphameister]

I could not possibly give you a thumbs down for singing so movingly "The Sun Will Come Up Tomorrow," Chris, and I hope the philosophical revolution implied by your comment does come out of nowhere to save us from ourselves. But I'm more inclined to agree with the commenter who feels we've squandered the wealth and opportunity handed down to us by "the greatest generation." We have a miseducated youth steeped not in the tradition of hard work as the path to success but rather in government entitlements. I see a lot of hand-wringing about the burdens we are imposing on our grandchildren, but I suggest we all start thinking about the very real possibility that they will (rightfully) decline to accept them.


On Nov 22 11:10 AM chris coonan wrote:

> What I do know is that America herself, is not backed into a corner.
> The fighting spirit, the innovation, the compassion of the immigrant
> nation is alive and well. I am very aware of the economic realities
> we are facing, I am in an industry experiencieng a micro depression
> right now. Half of my good friends are unemployed, with no exaggeration.
> I have not lost my fighting spirit, and I know that my friends have
> not either. If we can make it, so can the nation.
>
> If the economy were to collapse tomorrow, yet again, America will
> be up again. It will take resourcefulness, innovation, determination,
> compassion, and team work, but America has too much to lose, not
> to make prosperity again.
>
> I am a person who has been down about as low as you can go this year.
> That is why, I know that while we may be floundering right now, there
> is always a sunny day in our future.

2009 Nov 22 11:43 AM

[swaps]

I blame the Federal Reserve and Allan Greenspan and all the other inbred chief central bankers for this mess.
Their exploded laboratory should be abolished. Period.

2009 Nov 22 11:44 AM

[Jason Rines (iThinkBig)]

Correct, the responsibility to clean up the mess and be good mules is Generation X. The most difficulty will be to have Generation X be more engaged politically.

My generation does not trust the political class as far as we can throw them but we are good problem solvers, especially getting large groups together on the Internet to begin solving problems.

We need to approach government and assist with the problem solving and we also need good mentors from the Greatest Generation. We can code on the Internet technology platforms that can identify underutilized value, labor and recover far faster from this depression than the 1930's. But continuing the exact same playbook then in the information age now is just stupid.

Central Banking model needs to evolve and include representation to all market participants. The main problem (lack of representation) built into the foundation of the model means entire banking system's management always comes down to the moralilty of an emporer and a central banking chairman. A country cannot divide the economy and the political system. They are one and the same. The flaw of lack of representation at the foundation of CB model accelerates the fatality sequence of a Democracy which is roughly 200 years. With representation, the evolved CB model combined with an Open Society political model (everything transparent and votable by all people on earth) would likely work for several hundred years. Perhaps enough time for our species to evolve physically and have further need to measure widgits or labor in the same manner. One could frame that point also as the debate between Abundance and Scarcity perspectives raging around the world as we speak.


On Nov 22 06:41 AM thopaine wrote:

> The party's over and the hangover is enormous.
> Why would anyone give their money to these thieves on wall street?
>
> And it is at least ironic that the cradle of american liberty-Harvard
> U.- is a big part of the problem, churning out voracious blood suckers
> on an unarmed public, so as to increase the business school endowments
> and professor's pensions.
> I cry for my country.The children of the greatest generation were
> not up to the job.

2009 Nov 22 11:53 AM

[Jan Paul]

The only way (unlikely to happen though) to have an independent and yet totally transparent central bank is to return to our constitutional roots.

We need an amendment to the Constitution defining the role and limits of the central bank and how it will be constantly audited by Congress (the only entity in the Constitution given monetary power).

Because the amendment, not Congress can change central bank policy, the only thing Congress could do is to make sure the amendment is being followed and replace any appointee to the central bank not following the Constitution's requirements for monetary policy. That removes the politicization aspect but, not the ability to audit and remove people who put their own agenda first.

Also, we would no longer need to pay interest on the money the central bank creates nor would we see "member banks" like the too big to fail banks, wagging the dog (Federal Reserve) who are required to hold 3% of their assets in Federal Reserve stock for which they get a 6% dividend.

Hey, who knows, we might even be able to appoint somebody to the central bank and Treasury that isn't from Goldman Sachs.

2009 Nov 22 12:16 PM

[derryl]

I think Nick36 is right, "The policies of the Fed attempting to produce never-ending economic growth have led to never-ending accumulation of debts. And now the debts are so big that they impede further economic growth. ";

and Chris Cook is looking in the right direction for the solution,

""The problem is that the Fed can't help the Main Street directly."
Correct. But the Treasury can. It seems to me that one possible approach -very much in line with the dis-intermediating effects of the Internet - is for the Treasury to issue credit interest-free as necessary (it costs nothing to create) and for Service-Providers (formerly known as banks) to manage creation and allocation of Treasury credit."

The simplest, quickest, least disruptive way for Treasury to issue free credit-money to Main St would be a version of QE that could be administered through mechanisms that are already in place. With current QE Treasury 'sells' a bond to the Fed and the Fed 'pays' by writing a credit in Treasury's account. Presto! Money creation. Treasury can then spend that money into the economy. As part of its monetary policy the Fed manipulates the interest rate Treasury must pay on its bond-debt.

To issue this kind of QE credit-money interest free, The Fed and Treasury simply cooperate. Treasury sells the Fed zero interest bonds of very long maturity, say 100 years, with an automatic rollover clause. That is, Treasury never has to pay the money back, though Treasury would retain that option with no prepayment penalty of any kind. This is a coordination of fiscal and monetary policy to address a monetary and economic problem.

The Fed credits Treasury's account and now Treasury has "free" money to distribute to Main St. It could be distributed by using it to pay for SS and Medicare for e.g. Or for a broader effect Treasury could send out 'stimulus checks' to every American. I have advocated monthly stimulus checks of $1000 to every American with a SS number, with the program to run initially for 1 year and be renewable thereafter if it's producing good effects.

Tim asks why a 4% inflation target is not credible, and he may be right. Treasury's "free money" program could be tuned to generate any % inflation that is deemed desirable. You're not going to like this next measure, which is the design of a "braking mechanism" to control inflation. This would be a national value added tax. If inflation gets too hot, then raise the VAT rate to suck money out of the economy. Treasury could use the VAT revenue to redeem its free money bonds from the Fed, or to redeem its interest bearing bonds from the Fed.

This program should probably be firewalled off the normal Treasuries market so as not to disrupt the capital markets. So Treasury could not QE itself trillions of new free dollars to payout existing Treasury debt, as that would simply devalue all the Treasuries that people used their hard earned money to buy. But this program could be used to freeze open market Treasury debt a current levels. If Treasury can now create free money to fund its fiscal policy and operations, why borrow more of people's savings and pay them interest at the taxpayer's expense?

There are two kinds of things money buys, and 2 kinds of inflation (there are 3 things if bank capital is considered as a separate class of savings). Asset inflation happens when some people have too much savings, which also means other people have too much debt because our money originates as bank loans. When a lot of people have too much debt their ability to consume is reduced, which reduces the quantity of profitable productive investments available in the economy, so 'excess' savings is competing for too few investments, and this excess demand inflates the price of investment assets.

CPI inflation happens when consumers have too much spending money and there are not enough consumable goods for sale to absorb all the money, so the price of consumables rises to capture the available money. Normally this state of affairs would result in producers investing in expansion of their ability to produce goods, and once the new production comes online the amount of available goods would equal the amount of spending money and prices would come back down. But GDP would have increased to the higher level of producing and consuming. You get "economic growth".

The US is in an environment of asset inflation and CPI deflation. Consumers have less money to spend so producers' top line is falling: they are selling less so they are downsizing and producing less. But almost all the bank-credit money that was created as mortgages and car and other loans is still in the system. Some money is being removed slowly as borrowers pay down their bank loans, and as bank capital is being extinguished to cover loan losses. But much of that money is held by people as savings where it is contributing to very low interest rates and excessive demand for all kinds of investable assets.

To the extent that emerging markets have decoupled from the US there are profitable places to invest money in Asia and elsewhere, but with a diminished US consumer there are not a lot of profitable investments in the US outside of sectors paid for by government like pharmaceuticals and health related industries. So we see asset inflation, as too much savings chases too few profitable investments.

A program of free Treasury money would have 3 effects, distinguished by whose hands the money came into. When it comes into the hands of stressed borrowers the money would be used to pay down mortgages and other bank loans, and that money would be extinguished along with the bank debt so it would deflate debt levels and not contribute to any kind of inflation. Stimulus money that flows to savers would contribute to an increase in excess savings and asset inflation and low interest rates. Stimulus money that flows to spenders would contribute to CPI inflation where it would stimulate business profits and production and employment in the real economy.

A 4th effect could be achieved by giving money to States, who could use it to buy back their outstanding debt and at least remove the annual interest expense from their budgets. States with no debt could use the money to fund budgetary expenditures and reduce taxes. Free money should be given to States on a per capita basis. Winners would be rewarded by this measure and losers would be bailed out, which is the same thing that happens when you give stimulus checks to everyone. That's the idea. It's a "fair" method of bailing out the USA.

These effects are permanent, unlike normal Treasury borrowing and spending where stimulus today is countered by higher taxes tomorrow. If the government wants to deflate overinflated asset prices it could do so via a targeted asset tax to suck investment money out of the system. And as mentioned, CPI inflation can be readily controlled via an adjustable rate VAT. Eventually, once American private sector and State debt is down to safe levels and the economy is functioning at a stable level, the free money program could be ended. This is all simple arithmetic. It really is this simple to generate these effects.

Besides the money that flows to savers and exacerbates the excess savings problem that is keeping returns on investment so low, the free money stimulus check program would reduce total debt and contribute to the real economy. You have to give the money to everybody or else it becomes just another pork scheme where most of the benefit is absorbed by bureaucrats and politically favored interest groups. To get a truly economy wide benefit you have to give the checks to everyone.

2009 Nov 22 12:47 PM

[ussmls7]

After reading the many posts about the Fed, I found the "Remarks by Robert K. Landis" at goldensextant.com/ very sobering. His insight on politics & monetary policy has the hard truth that our Nation is about to have to contend with in the near future & it will not be pretty sight to see. The events of last fall was a bloodless coup,taking use from freedom to fascism. The progressives are a sickness, the cure is our Constitution.

2009 Nov 22 01:52 PM

[Buckoux]

The best critical remark about the subject and our situation without resorting to the profanity that is needed to describe our profane, as a verb, circumstances as conjured by the Federal Reserve and Congress.


On Nov 22 06:41 AM thopaine wrote:

> The party's over and the hangover is enormous.
> Why would anyone give their money to these thieves on wall street?
>
> And it is at least ironic that the cradle of american liberty-Harvard
> U.- is a big part of the problem, churning out voracious blood suckers
> on an unarmed public, so as to increase the business school endowments
> and professor's pensions.
> I cry for my country.The children of the greatest generation were
> not up to the job.

2009 Nov 22 02:04 PM

[professorpinch]

Um, I hate to break this to you, but there's a huge, glaring problem with getting the Treasury to do something as Chris Cook suggested in helping Main Street.

Treasury would need Congressional approval to do that, and since they are part of the Executive branch, that amounts to taking budgetary authority/power away from Congress & giving it to the President.

Anyone want to bet on the odds of that happening?

I put up a post that I think puts some pictures and context around what Dr. Duy was getting at here: professorpinch.wordpre.../
and some charts over here:
www.scribd.com/doc/223...

In short, I don't think the Fed can regain control of the overnight rate once they start winding down their MBS purchases and God only knows what would happen if they tried to get rid of Maiden Lanes I-III.

2009 Nov 22 02:22 PM

[Tai Robinson]

Wow! first off, the U.S. Federal Reserve is a miss leading as the Fed is a private banking cartel, a hybrid of sorts with protections like it is a govt. agency, but it is not! Second, this continual use of the word "independence" needs to be understood that it really means "secrecy". In secret is where all the decisions are made. In secret are where all the money goes that they make up out of thin air. This is true inflation, they are creating more money which devalues all the other money out there and hurts the masses. It is amazing to me that you can say you like the Feds policy of lately. The Fed is the one who created this problem in the first place! IT was done on purpose to consolidate money and power. They created the problem, so they could come in and fix it up to benefit them and theirs. It is really time to return to a constitutionally abiding federal govt. It is time to end the fed.

Read the Constitution!
End the Fed!
Restore the Republic!

2009 Nov 22 02:45 PM

[Donald Ingram]

There is nothing "Federal" about the federal bank. Period. It is a private entity, with private interests for it's owners, and the main interest is profit.
Bird's of a feather flock together. They are a private bank - who do you think they are going to favour? Certainly not Main Street. They will do what they did - look after their pals on Wall Street first and foremost. After all, they have a vested interest in making sure these entities do not fail.
Time to audit the FRB, prosecute the malfeasance found to the full extent of the law, then dismantle the pile of dung that it is and gather the function under the auspices of the Treasury Department. Move from there to Wall Street with an army of DAs and prosecutors. Only then can honest, transparent recovery take place, following the principles and spirit of the Constitution.

2009 Nov 22 04:29 PM

[Esol Esek]

ITs doubtful anyone would have been up to it. You get a nation and population with the kind of military and economic power that the US emerged with after WWII, and people are gonne blow it, just like a spoiled child blows it. It took almost no time to blow our military power in Vietnam, but our economic strength allowed us to blow it again for real in Iraq. IT's taken fifty years for us to blow our economic power, but we have, although we're a developed nation so we still have options. BUt the rot in leadership is unfortunately par for the course with empires, and with rotten leadership and a large class of mass-hysterical right-wingers, and elitist lefties, we're pretty much done. It would have been better for us to come crashing down with the debt, but of course the power structure couldn't allow the demise of itself, so now we're really done.


On Nov 22 06:41 AM thopaine wrote:

> The party's over and the hangover is enormous.
> Why would anyone give their money to these thieves on wall street?
>
> And it is at least ironic that the cradle of american liberty-Harvard
> U.- is a big part of the problem, churning out voracious blood suckers
> on an unarmed public, so as to increase the business school endowments
> and professor's pensions.
> I cry for my country.The children of the greatest generation were
> not up to the job.

2009 Nov 22 04:37 PM