Uncle Ben is fighting like no tomorrow to kill the Fed bill in the court of public opinion using the same tactics that the banks used last fall. Basically he is saying if you audit us you risk the entire financial health of the US economy. This is the equivalent of putting a gun to your own head and saying; “if you don’t let me go I will pull the trigger!” You know what Ben, go for it because what you have done is far worse than the financial system imploding on itself all at once. Instead you opted to destroy our currency system so pull the trigger, you will not be missed.
It is beyond me how an audit 180 days AFTER an FOMC meeting would jeopardize the independence of the Fed in any way. I fail to see how the US taxpayer, the money the Fed is playing with, would be hurt by knowing what Ben is taking in as collateral at the discount window. I fail to see how asking for the Treasury Secretaries signature before issuing $500B in currency swaps would be a “bad thing.” However, Uncle Ben says otherwise and the end of his world is at hand, so I hope.
The likes of Mishkin, Steve Liesman and a host of other idiotic economic commentators say the Fed will lose its independence and it will be politicized. I am sorry, but $1T in QE in MBS, (and how much in treasury QE again?), later and you are already politicized. In fact, the mere appointment by the President of the United States pretty much makes the Chairmanship of the Fed a political position, kind of. The bottom line is that the Fed is a political machine, it has lobbyists for crying out loud.
What Uncle Ben does not want you to know is what he and his cronies have been doing for the past year and you know what? I am not sure even I want to know. What I do know is that since the secret creation of the Fed in 1913, (read The Creatures of Jekyll Island), and the late night passage of the Federal Reserve Act with some 3 affirmative votes on it, the US has had more crisis than at any point in our history and our dollar has lost 96% of its buying power. Those are facts the Fed denies, but they are true. What the Fed likes to point out are banking panics prior to its creation, but if we made the Treasury the lender of last resort, problem solved.
However, did we ever have a Great Depression before the Fed was created? Did we ever have these massive asset booms so close together (see junk bonds in the 1980s, internet stocks in the 1990s, mortgage crisis in the 2000s) before the Fed? Did we ever have stagflation (see the 1970s) before the Fed? Did we have our currency basically become worthless, except in times of war (see Revolutionary War Continental Notes, the Civil War Greenbacks) before the Fed? The answer to all those questions are NO.
I am not saying the Fed does not have a purpose, it is perfect for printing pieces of paper and wasting trillions of dollars per year, but I thought that was Congress’s job. The Federal Reserve system is old, antiquated and needs to be replaced now, not later. It operates in complete secrecy and is accountable to no one, think about that for a minute. It is more powerful and secretive than the CIA, but the CIA has oversight committees, but the Fed really does not. Yes, the Fed has superficial GAO audits now, but it is an operational audit - yes your operations work, that is the extent of the audit. Wow, I wish the IRS would be that lenient on me if I was audited. "Yeah, we see you made money and filed the proper paperwork, thanks!" However, in real life that is not how things work and the Fed needs to be accountable for its actions.
After all, I have yet to hear Greenspan or Bernanke officially take responsibility for blowing up the economy. In fact, I still hear those wonderful words, “the sub-prime crisis is contained” and everything is fine. Either Bernanke is a complete moron or he just relies on old economic models that clearly do not work, either way, the Fed deserves oversight. Considering this administration has taken it upon itself to declare itself the “transparent administration” and has also taken it upon itself to make most of the decisions for the American people or risk imprisonment, why should the Fed not be held to the same standards as the rest of us?
Clearly they are no smarter than the rest of us as they missed the greatest asset bubble in the history of man, which hit them head on. Not only that, but their response was to expand the same policy that created that enormous asset bubble for “an extended period of time” or forever. In other words, they missed one huge bubble only to create an even larger bubble via the USD carry trade or dollar devaluation, take you pick, and they deserve no oversight? To make matters worse, if you read the Lehman (OTC:LEHMQ) bankruptcy documents you begin to see an ugly picture of the Fed - they were taking stocks as collateral at the discount window. Stocks! That is against their charter and it is also no wonder why the market goes straight up if the Fed is taking stocks as collateral at the discount window.
This leads to a bigger question, what other junk is the Fed taking at the window? CDO’s, derivatives, options, junk bonds or what? We don’t know. Considering we, the US citizens, are backstopping their reckless behavior so JP Morgan (JPM) and Goldman (GS) can receive billions in bonuses, we deserve to know what is going on. After all, the American people are the ones suffering, not Wall Street or Uncle Ben, who are all gainfully employed and living off of our generosity via our annual tax bill. We are the ones who end up bearing the responsibility for all the executive decisions made in secret, or in public by our wonderful elected officials, so we deserve to know what is going on. You, Uncle Ben, have done your damage to us, so while we may not like what we see and while you may end up embarrassed at what we find, so what? You should have thought about that before you secretly bailed out all those insolvent banks and began destroying our dollar for fun.