Gary A's  Instablog

Brad Delong wonders what is going on as we rail against the excesses of the Fed. I posted a response and am reposting it here:

I know what is going on. The Federal Reserve allowed off balance sheet banking that was cooked up at Basel 2. I go into this at dontpaycreditcards.com...

The Fed allowed this massive bubble and then they profit off the resulting deflationary spiral. Government debt increases. Look at Japan. We are headed in the same direction debt wise.

This is accompanied by the raiding of the treasury by folks associated with the Fed, like Geithner and the Goldman Sachs moles in government.

This massive fraud would all be criminal, from the ponzi housing to the usury of credit cards to the raiding of the taxpayer to the falling dollar if the government weren't allowing it. That is why all these guys in government will lose their jobs.

In order for them not to lose their jobs they need to reign in the private Federal Reserve Bank, who owes allegience to the Bank of International Settlements and not to the US government or citizens.

That our sovereign nation did not have the power to put the bank corporate bondholders first in line for losses rather than the taxpayer is criminal.

We will be paying for years and this fraud will go unpunished. That is why these politicians are toast unless they do something. I am posting this on my instablog because I can't understand why educated individuals cannot see the massive theft by these powerful but common criminals taking place!

In my Instablog I attacked the Mercantilism of Wall Street and Trish Regan's defense of this system.

I wrote this in reply to an article critical of Chinese mercantilism:

"What makes you all think that a change would help the US consumer? My assumption is the US consumer is the only serious consumer in the world. Therefore, my view is that it is sour grapes to complain about the Chinese currency.

If the Yuan appreciates, it will be more expensive for American consumers who are laboring under a massively high cost of living still, with gasoline and other commodities and products artificially high.

If my assumption is correct, that the only consumer who matters is the US consumer, then it is necessary for the US to allow the dollar to rise. Interest rates must go up and the dollar must strengthen. We need to have less debt if we are going to be Japan.

The author talks about Chinese mercantilism. But who is more of a mercantilist than Wall Street, Goldman Sachs, JPM, etc. They think the US can bail herself out with exports to China. I doubt it. The Chinese save massively and over 1/2 of GDP is saved.

So, we need to quit this hot money carry trade which will make this asset bubble the world over all the more impossible for consumers everywhere.

Cavuto and Schumer want one thing, for the Chinese to be up to their eyeballs in credit debt just like us! At least Chinese mercantilism produces things!"


My point is that the administration truly believes that China's consumer is the hope of the US recovery and that our export of credit debt to China will become the way Wall Street makes money like the go go days.

I don't believe it. So I  think that a lot of this talk about the US consumer and recovery is not the key issue anyway. The key issue is that Wall Street has a lot of hot money that flowed into China recently, hoping for big bucks quickly. This didn't pan out as Obama didn't help ole Cavuto and Schumer's Wall Street pals out much as the Chinese didn't budge regarding their currency peg to the dollar.  

While Wall Street politicians like Schumer and Wall Street commentators, like Cavuto claim a populist position versus the Chinese, it is all a diversion. They are likely just mad that the hot money will up and leave China with Wall Street investors disappointed like it left in early 2009!

My point in this article is a big shame on you to these guys like Schumer who don't care about US consumers, Chinese consumers, or anybody but their Wall Street buddies. We would be better off as a nation if we just burned the hot money, stopped the casino on Wall Street, and try to rebalance the cost of living so that main street has a chance. 

Main street is not happy with Wall Street, and only corrupt people would attempt to divert this anger to China. If the Chinese had real white hot consumers like the US did, then perhaps this would be a legitimate argument by Cavuto and Schumer, to blame China for our woes. But since I don't believe that they have a consumer driven society at all (with consumption merely 30 percent of GDP), I think this argument against the Chinese is just a bunch of propaganda.    

And the winner is: The Republicans! Oh, it isn't like the Dems have been that responsible either. But the true party of greed and avarice is the Republican Party.

You know which party is the biggest party of greed, the party of that stalwart economic prognosticator, Rush Limbaugh no less! Limbaugh once said that the housing bubble was the figment of the imagination of the drive by liberal media!

So accepting the fact that both parties are in the pockets of Wall Street, liar loans, hot money, derivative swaps, and pure greed, the greediest party is without question the Republican Party.

The exception are the peripheral members of the party, like Ron Paul, who I support in his desire to audit the Fed. Of course I think that should be the nicest thing that happens to the Fed....

But when the Republicans blocked an effort to stop banks from raising interest rates before the reform law takes effect is such a blatant theft of the consumer that I advocate walking away from credit cards in protest.

Oh isn't she sweet, pregnant and all. She is a lovely flower who as an anchor at CNBC seems to have it all figured out. Boy does she have it figured out. She is literally kissing the darkside of Alexander Hamilton. No doubt Alex baby would have been president of the new mercantile favorite, Goldman Sachs. Independence of the Fed is not the issue. Stealing from America by the government favorite, Wall Street, is the issue.

Americans need to wake up. If you are an average Joe you will get reamed in your investing by the mercantilists favored by the government. Both Bush and Obama are Hamiltonians with regard to bank policy. This is not good for America, and it is not good for the ultimate health of the country. 

It is one thing to be a Federalist, as we pretty much all are now. But ultra Federalism espoused by Hamilton is accompanied by a consolidation of wealth, a growing gap between the wealthy and everyone else, and ultimately the destabilization of the American Way.

I would suggest that investors be very aware that we are not playing on a level playing field. The effort by Nancy Pelosi to have a world tax on investments is actually an attempt to level that playing field and curb the favorite of our hell bent government. While this money should be used to keep additional debt off the backs of the American taxpayers,

Pelosi's proposal will only work if that in fact happens. My support will depend on the outcome of the bill and of course how it is used. She is a big spender. If a dime of this tax goes to help Wall Street it will be a massive failure. But taxpayers continuing to go into debt to bail out the Wall Street darlings is an activity that must stop.

Bloomberg reports that China is considering controls on hot money coming in from the west. This money threatens to drive up assets and ruin the Chinese recovery. I am so happy to see the  Wall Street casino slapped down for being the blood sucker that it is. 

In February of 2004 Greenspan advocated the purchase of adjustable mortgages. The Fed actively promoted ponzi loans and looked the other way in regulating the underwriting.

Geithner was president of the most powerful Fed, the NY Fed. He was part of the look-the-other-way team. Now he is treasury secretary and he bailed out AIG and gave full compensation to the guys on the other side of the AIG trade, Goldman Sachs.

Goldman Sachs is the most hated company in the history of the world. Geithner didn't  even  get a cut for the taxpayers in bailing them. The treasury was raided in bailing out failed CIT. Taxpayers lost billions there. Banks are bailed out while seniors can't live on the bond returns they worked decades to expect.

There is moral hazard in putting a blood sucking Fed official, of the private Fed bank, into the position of guarding the taxpayer treasury. A Fox in a hen house is moral hazard. And the guy had so little respect for the treasury of the United States that he cheated on his taxes.

This moral hazard is not a Republican versus Democrat issue. It is a banker cartel versus mainstreet issue. 

This cabal is robbing you by low interest rate returns, and is robbing you by artificially high assets brought on by a deliberate decline of the dollar. This cabal wants China to bail us out by selling credit cards from Wall Street to the Chinese. But the proven consumer, the US consumer is left to drift in the wind.

Geithner should be fired. Obama needs Geithner and Larry Summers to go and he should appoint a clawback team to clawback every dime that is possible to clawback.

Obama needs to wage war against the Fed or he will be a one term president. The guy to start with is Geithner.