What the future needs!

Via Ron Paul: Perhaps most sinister are the revelations in Robert Auerbach’s book “Deception and Abuse at the Fed” that $5.5 billion was sent to Saddam Hussein in the 80’s - money that allowed Iraq to build up its military machine to fight Iran prior to the first Gulf War, the very machine turned against our brave men and women within just a few years!   I agree with Bernanke’s characterization of this – it is indeed “bizarre” to think that Americans at the Federal Reserve could engage in this type of behavior, which a some have called “criminal”.   However, Professor Auerbach served as a banking committee investigator, and as an economist at the Treasury Department and at the Federal Reserve.   His claims are hardly without merit.   In fact, they are solidly backed by court rulings and other evidence.  

Via Ron Paul: I asked Chairman Bernanke about Federal Reserve agreements with foreign central banks and if he had had any conversations about bailing out Greece, which he flatly denied.   However, he recently announced that the Federal Reserve will be looking into Goldman Sachs’ derivative agreements with Greece.   Goldman Sachs, as we know, has “too big to fail” status with the Fed, so it is conceivable that any Greece-related catastrophic losses at Goldman Sachs will once again be passed on to taxpayers.

Bernanke warns Congress it won't happen. That would be encouraging except that money is fungible, and the Fed has already absorbed a lot of debt from the economy as a whole. Surely this process has made funds available to buy Treasuries that wouldn't have otherwise been available.

Richard Timberlake explains in two short paragraphs : What the Federal Reserve does have is a powerful moneymaking machine that operates through the offices of its New York bank. In activating this machine to raise rates, the Fed’s decision-making board, the Federal Reserve Open-Market Committee (FOMC), issues a directive to the bank’s account manager to sell more or buy fewer government securities in New York’s financial market. This time the directive was to buy fewer. Since the Fed is a major player in the government securities market, when it buys fewer securities it causes the price to fall and their interest rate to increase. Unlike anyone else who buys something in markets, a Federal Reserve purchase is not made with old money but with brand-new money. The Fed creates the means of payment. If the seller of the securities wants cash, the Fed uses its authority to print new Federal Reserve notes. If the seller wants a check, the Fed account manager has the authority to issue o...

I used DownsizeDC.org's Educate the Powerful System to send a letter to my House Rep, Gabrielle Giffords, about the Free Competition in Currency Act. Here's how she responded . . . February 19, 2010 Dear Mr. Willis, Thank you for contacting me about the Free Competition in Currency Act of 2009 (H.R. 4248).  I appreciate hearing from you. As you may know, H.R. 4248 would repeal the section of the United States legal code that makes U.S. coins and currency "legal tender for all debts public and private."  The bill would also eliminate any taxes on the exchange of precious metals and currency. H.R. 4248 would legalize the creation of currency that competes with ordinary American coins and bills.  Currently, transactions involving precious metals and special coins are taxed as investments.  If this bill passes, state and local governments, along with private citizens, would be permitted to create their own currencies. H.R. 4248 was introduced on December 9, 2009...

Federal government may print money to "pay" debt "While accelerating the printing presses could do irreversible damage to the dollar's international reputation and the U.S. economy, history suggests that this is the way Washington will go to avoid the political pain of having to raise taxes and cut spending on popular programs such as Social Security, defense and Medicare." The Fed's most strident inflation fighter, Thomas Hoenig, president of the Fed's Kansas City reserve bank, warned on Tuesday that "short-term political pressures" are prompting Congress to take a risky gamble by continuing to borrow at unsustainable rates rather than address the deficit problem and he expects political leaders to be "knocking at the Fed's door" to demand that it print money to pay for the debt.   With regard to the World War II Debt . . . The country never really paid off the war debt. Rather, it was able to reduce the debt burden within a ...