Video: Federal Reserve Cannot Account for $9 Trillion

The Federal Reserve apparently can’t account for $9 trillion in off-balance sheet transactions.

When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed’s expanded balance sheet, the IG didn’t know.

Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.

“I am shocked to find out that nobody at the Federal Reserve is keeping track of anything,” Grayson says.

Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not.

“What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked.

“We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.”

Translation: Nobody at the Fed knows where the money went.

Do you know what who got the $1 trillion or more in the Fed’s expansion of its balance, Grayson pressed.

“I do not know. We have not looked at this specific area at the particular point on that specific review,” Coleman answer.

What about the trillions of off-balance transactions since last September, Grayson asked.

Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve.

Grayson pointed out that it was the inspector general’s job to audit such spending and asked again if the office had done any investigation at all.

Coleman’s answer: Not enough yet to even respond. “We are in not a position to say if there losses.”

Grayson concluded, “I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this.”

Meanwhile, Federal Reserve Chairman Ben Bernanke says the bank is working on ways to rein in the massive balance sheet commitments.

“A majority of the members who made these projections just recently took 2 percent as being an appropriate number” for inflation, Bernanke said Monday.

“Somewhere between 1-1/2 to 2 percent is basically the number that our committee has individually stated is the appropriate medium-term inflation rate.

“To achieve that we need to demonstrate that we will be able to exit from the balance sheet position that we currently have, and have been working on this intensively,” Bernanke said in response to questions after a speech to a conference organized by the Federal Reserve Bank of Atlanta, reported by Reuters.

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Kucinich: Federal Reserve No More “Federal” Than Federal Express!

FEDERAL RESERVE SETS STAGE FOR WEIMAR-STYLE HYPERINFLATION

The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010.

On November 7 Bloomberg filed suit under the US Freedom of Information Act (FOIA) requesting details about the terms of eleven new Federal Reserve lending programs created during the deepening financial crisis.

The Fed responded on December 8 claiming it’s allowed to withhold internal memos as well as information about ‘trade secrets’ and ‘commercial information.’ The central bank did confirm that a records search found 231 pages of documents pertaining to the requests.

The Bernanke Fed in recent weeks has stepped in to take a role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program (TARP). The difference between a Fed bailout of troubled financial institutions and a Treasury bailout is that central bank loans do not have the oversight safeguards that Congress imposed upon the TARP. Perhaps those are the ‘trade secrets the hapless Fed Chairman,Ben Bernanke, is so jealously guarding from the public.

Coming hyperinflation?

The total of such emergency Fed lending exceeded $2 trillion on Nov. 6. It had risen by an astonishing 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA. They did so knowing that on the following day a dramatic shock to the financial system would occur because they, in concert with the Bush Administration, had decided to let it occur.

Foreclosure Crisis: The Real Culprit is the Federal Reserve

The Federal Reserve holds the primary blame for the housing bubble – and the resulting explosion in foreclosures around the country.

Intervention in the economy by the Fed, through the manipulation of interest rates and the expansion of the money supply, caused an artificial boom in mortgage lending.

Since the early 1990’s, the Federal Reserve has increased the amount of US dollars and credit in circulation by nearly 300%. Because of this, borrowing money became cheap – and easy – which caused a massive increase in demand for homes, and thus – a dramatic rise in home prices. But, this kind of boom never lasts. Eventually the markets go through a “correction” which is nothing more than a collapse. The longer and greater the boom period, the harder and deeper the crash. Unfortunately, it doesn’t look like there’s going to be a quick turnaround.

In order to truly get out of this mess and prevent it from happening again in the future, we need to understand the cause of the problem. Spending time and energy on anything but the root of the problem will only ensure that we see this cycle repeated.

Thus, calls for legislation against lenders, while often driven by good intentions, are really missing the mark. Some lenders clearly made unethical or even fraudulent loans, and they must be held accountable, but attacking the entire industry is hardly the right answer.

It must be recognized that everyone really does play a part in this – the mortgage companies made bad loans to reckless applications, and people may not have been so eager to borrow (many times beyond their means), if the interest rates weren’t so low. And, the only reason they were low is because the Federal Reserve forced them to be that way.

The subprime lending madness we’ve seen is nothing more than a symptom of the housing bubble (caused by the policies of the Fed), and not the cause of it.

When the Federal Reserve makes credit artificially cheap, it drives lenders to loan more recklessly – often times to people who normally wouldn’t qualify. On top of this, people tend to borrow more with low interest rates, and they don’t expect rates to go back up anytime soon.

Why is the Fed to blame for the housing bubble? In short, because it is a bubble. That means the boom was false, and the wealth that people thought was being created through inflated home prices was really just an illusion. Who or what has the power to create illusory wealth? The Federal Reserve – through the artificial lowering of interest rates – which results in loads of credit and an increase of the money supply. (and rising prices, too)

The only way to ensure a stable economy for our future is to stop the Federal Reserve from artificially inflating the money supply and creating periods of false growth that can never be sustained. It’s time to end this “boom and bust” cycle that has plagued us for far too long.

Article URL : http://www.populistamerica.com/blog/view/46717/foreclosure_crisis__the_real_culprit_is_the_federal_reserve

America: Freedom to Fascism – Director’s Authorized Version – 111 min

This is a documentary about an honest search for the truth about the Federal Reserve Bank (a private bank) and the legality of the Internal Revenue System. Through extensive interviews with recognised experts and authority, the director shows an astonishing revelation of how the Federal Government and the Bankers have fooled the American public by taking thier wages and putting it in the pockets of the super-rich. The director goes so far as to interview one of the “master-minds” of the IRS Code, and you the viewer can draw your own conclusions as to how the system works. This is NOT a documentary filled with opinions, conjecture or editorial comment. It is a true documentary with a purpose, and that is to educate every wage earner about the Federal Reserve Bank, and the IRS, how they got started, and where the money goes. It is well done, and it will make you laugh, and it will make you ANGRY!

The abuses of the Federal Reserve System

Louis T. McFadden (1876-1936): An American Hero
by Richard C. Cook

Dr. Ron Paul, the Republican candidate for the 2008 presidential nomination, is not the first U.S. politician to point to the abuses of the Federal Reserve System and call for its abolishment. Similar pleas to get rid of the Fed were made by Reps. Wright Patman (1893-1976) and Henry Gonzales (1916-2000), both Democratic congressmen from Texas and chairmen of the House Banking Committee.

Few recall, however, how controversial the Fed was when it was first proposed and then maneuvered through a recessing Congress just before Christmas 1913. Rep. Charles Lindbergh, Sr., R-MN and father of the future aviator, called the Federal Reserve Act “the worst legislative crime of the ages.”

But the strongest opposition came later, during the Great Depression. The source was Rep. Louis T. McFadden, a Republican representative from Pennsylvania who, as a former bank cashier and president, knew the financial system intimately.

McFadden was born in Granville Center , Bradford County , Pennsylvania , on July 25, 1876, just three weeks after the nation celebrated its centennial at the Philadelphia Exposition. He graduated from Warner’s Commercial College in Elmira , New York , and went to work at the First National Bank of Canton , PA , in 1892.

McFadden was elected to Congress in 1920 and served until 1934. Though a Republican, he moved to impeach President Herbert Hoover in 1932 and introduced a resolution to bring conspiracy charges against the Board of Governors of the Federal Reserve.

He also made a 25-minute speech on the House floor accusing the Federal Reserve of deliberately causing the Depression. At the time, the chairman of the Federal Reserve Board was Eugene Meyer, who resigned after Frankin D. Roosevelt was inaugurated as president in 1933 and purchased the Washington Post at a bankruptcy auction.

Later in 1933, McFadden introduced House Resolution No. 158, Articles of Impeachment for the Secretary of the Treasury, two assistant Secretaries of the Treasury, the Board of Governors of the Federal Reserve, and the officers and directors of its twelve regional banks. This was McFadden’s political swan song. In the election of 1934, he lost his reelection bid to a Democrat by 561 votes.

Let’s fast forward to 2008. We are in the early stages of an economic collapse that Nouriel Roubini, professor of economics at the NYU Stern School of Business, calls “the worst financial crisis since the Great Depression.”

Once again the Federal Reserve is implicated, this time for having enabled the creation of gigantic investment bubbles in home mortgages, commercial real estate, equity funds, hedge funds, and derivatives that are now bursting. Mayhem is now starting to be sown within the producing economy of working men and women after having wreaked devastation on Wall Street and within the banking industry despite massive Federal Reserve bailouts over the past year.

The chief culprit would appear to be Alan Greenspan, chairman of the Federal Reserve from 1987 to 2006, who presided not only over the ongoing subprime mortgage fiasco, but previously over the dot.com bubble of the 1990s. This blew up when the stock market crashed in 2000-2001, obliterating $6 trillion of investor wealth.

The subprime conflagration of the 2000s was ignited by an orgy of application fraud that commenced just after George W. Bush became president. According to former New York Governor Eliot Spitzer, the investigation of this fraud by state attorneys-general was blocked by Bush’s Treasury Department. Perhaps Louis T. McFadden was onto something. After his premature death, his words faded into history as he was derided for being anti-Semitic when he said such things as, “ America has to choose between God and the money changers who have unlawfully taken our gold and lawful money into their possession.” Today he is dismissed, sneeringly, as “one of the heroes of the Federal Reserve conspiracy theorists.” (Edward Flaherty, PublicEye.org)

But maybe McFadden said some things that are still worth listening to. In his June 10, 1932, address on the House floor, he declared, as reported in the Congressional Record:

“Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States , has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.”