Tag Archives: FRS

“…What we learned was that the Fed provided $16 trillion in secret, low-interest loans to every major American financial institution…”

From a great WaPo op-ed by indy Senator Bernie Sanders (it’s on Sanders’ site, too):

Trust in government is at an all-time low. That’s not because Washington is too heavy-handed with Wall Street. Quite the contrary! The American people are angry and disillusioned because they see our government act boldly to protect Wall Street CEOs but not ordinary Americans. When Wall Street needed a $700 billion bailout, the government was there for them. When working families need an end to excessive oil speculation and real relief at the gas pump, the government has failed to act.

The same Dodd-Frank bill that required commodity regulators to limit speculators included my amendment calling for an audit of the Federal Reserve from Dec. 1, 2007, to July 21, 2010, the period of the financial crisis. What we learned was that the Fed provided $16 trillion in secret, low-interest loans to every major American financial institution and to other central banks, large corporations and wealthy individuals. The audit provision was vigorously opposed by the Federal Reserve chairman. It was right, however, that the veil of secrecy at the Fed was lifted and the American people learned about its actions.

This sums it up. The USG effectively fails to oversee the Fed and giving out loans of $16 trillion seriously fucks with our economy.  Think about it: 16 trillion new dollars injected into our economy.  It’s a miracle the USD is worth anything at this point.  It’s like we’re injecting water into our bloodstream because we think the more liquid is in our veins and arteries the more blood we have.  So, when the USG doesn’t bother to audit the Fed like they’re supposed to and when the USG openly bails out big businesses and banks, it makes We, The People, wonder just what the hell government is there for.

“…for the people, by the people,” my ass.  More like “for banks and corporations, by the guys who used to run them.”

Read the rest of Sanders’ piece on his website and learn about how oil prices are being artificially hiked by excessive futures speculation.

Fed’s Bernanke `Doesn’t Understand’ Economics, Jim Rogers Says – Bloomberg

Fed’s Bernanke `Doesn’t Understand’ Economics, Jim Rogers Says – Bloomberg

Oh, man—this guy is saying exactly what I’ve been thinking ever since CoalSpeaker first pointed out the Fed’s latest action to “save” our economy (which they decided to do right while we were distracted with the election). Anyway, so here’s a cutting from an article at Bloomberg.com from today:

Federal Reserve Chairman Ben S. Bernanke’s decision to pump a further $600 billion into the economy shows his grasp of economics is weak, said investor Jim Rogers, chairman of Rogers Holdings.

“Dr. Bernanke unfortunately does not understand economics, he does not understand currencies, he does not understand finance,” Rogers, 68, said in a lecture at Oxford University’s Balliol College yesterday. “All he understands is printing money.”

“His whole intellectual career has been based on the study of printing money,” said Rogers, who predicted the start of the global commodities rally in 1999. “Give the guy a printing press, he’s going to run it as fast as he can.”

I’m continually surprised that most people who are aware of how the Fed works and yet aren’t upset by the fact that there’s a bunch of unelected white guys in suits someplace who can just print up more money while the rest of us have to work for it.

What’s really scary here is that Bernanke’s plan to print up a fresh wad of bills, totaling $600 billion, will devalue our currency even more (they did this before, back in September of 2008 while all eyes were on Congress while they debated how to save the economy, and gosh it really saved us?).  $600 billion is a huge amount of money. 

I’m not sure how else to describe this aside from mass devaluation. 

I think the idea is to encourage foreign investment and make it super cheap for domestic businesses to borrow money.  Since that money won’t buy much, what are businesses supposed to do with it?  Hire new employees and pay ‘em!

That’s the hope, I suppose.  In the meantime, our money buys less.  The other irony is that the inflation rate will go up and make your savings accounts useless or even costly to you.  Think about it.  The inflation rate this year has fluctuated between 1 and 2.6(ish)%.  What’s your savings account interest rate? If it’s not more than that window, you’ve already taken a hit.

Don’t have a savings account?  Good boy!  Shove that cash under the mattress or buy stuff with it.  You’re probably better off.

That’s just my ¥2, of course.

Go read the Bloomberg article for all the details.  Sure, Rogers has a book to sell, but his logic is sound, sadly.

UPDATE: And I just read this in another article on Bloomberg about Japan’s economy:

No matter how much yen the Bank of Japan pumps into the economy, deflation deepens. It’s all about confidence, of which there is virtually none. Companies don’t trust that growth will return and so they avoid investing and hiring and trim salaries. Households fret about the future.

Was puzzling about that article is that it talks about deflation being the cause of a race to the bottom for prices.  He cites Hooters as an example because they sell cheap food and cheap alcohol.  But does that mean deflation?  How many wings is the Yen actually buying?  Hm, maybe it’s that we’re switching positions with Japan.  We’ll all be making more money (if this plan works) but the money won’t buy as much so we’ll have to spend more to get the same stuff.

But injecting money into the economy in Japan hasn’t worked and has inspired price-drops across every sector because the money injection didn’t work.  So, maybe we’re seeing into our own futures?

Geh… why does money have to be so confusing?

Federal Reserve to print billions of dollars in massive shadow stimulus

Federal Reserve to print billions of dollars in massive shadow stimulus

The Federal Reserve’s policy-setting panel began a crucial two-day meeting Tuesday, poised to cast aside its long-held reluctance to micro-manage the economy in a bid to avoid a lost decade of growth.

The central bank’s open market committee (FOMC) is expected to approve massive stimulus spending not seen since the depths of the economic crisis.

At the conclusion of the meeting Wednesday, the Fed is expected to announce it will resume the large-scale purchase of long-term US bonds — essentially printing billions of dollars — in the hope of boosting a weak recovery.

I wonder if this actually happens if it’ll show up on the MSM.

Funny how the Fed has tried things very similar to this before and it hasn’t worked.  It didn’t work the time before that, either.  It’s so funny how these allegedly intelligent people keep doing the same thing, thinking it will yield different results. 

The BIG problem here is they’re essentially loaning money to themselves—at least, if I understand this whole thing correctly.  Usually, they loan money they create from nothing to banks.  Again, that’s assuming I understand this correctly. This means they’ll be able to loan more and profit more.

Whether we’re voting for political leaders who we pretend care for our interests or use money that we pretend has actual value, we are living in a virtual virtual reality.

Kinda scary when you realize this is the other side of the looking glass.

Forgot to say: found via: CoalSpeaker.com

Obama Admin Wants to Hike the USG’s Debt Ceiling

One of the things I used to bag on George W Bush a lot for was hiking the debt ceiling. Back in 2004 he talked Congress into bumping it up to $8 trillion (FYI: the National Debt is now approaching $12 trillion) and look how much that helped us! We got to wage more war. YAY!

So, here comes 2009 and Obama needs more cash.

SIGH.

The Wall Street Journal seems to think Congress may not want to let him up the limit the USG can borrow from the Fed. Seems there’s been a lot of hubub in DC about overspending.

SIGH.

Where were these idiots when Bush was overspending on imaginary threats?

Regardless, the USG is going to keep borrowing whether Congress wants to or not. How do I know this? Because they always do. If we stop WHO KNOWS WHAT COULD HAPPEN?!?!

Look, I’m sure the USG can stop borrowing WHEN EVER IT WANTS.

Hey, it quit in the Clinton years. Why couldn’t it quit again?

“Quit again!

You don’t quit “again” and if we ever hope to slow down, stop, or somehow achieve the impossible and actually lower the National Debt, we need to get this government a fricken intervention, because CLEARLY it is NEVER going to stop borrowing on its own.

That’s it, I’m calling the UK.

“Britain? Yeah, hey man, it’s ThePete. You invite France and Germany over to Canada’s apartment. I’ll tell America that we’re just going to hang out and play Playstation. It’s time for some serious tough love.”

SIGH.

If only it were that easy…

Hack the Economy


Ben Bernanke (right), on my Kindle 2, the real most powerful man on Earth (Photo Credit)

Finally a Solution to the Economic Mess I Can Get Behind…

Last month I came across an article on Arthurmag.com which presented a really great idea– hack the economy. What does this mean? It means rebuilding it on our own–DIY it, retrofit it, reverse engineer the way we provide and receive goods and services. Let me quote the article by Douglas Rushkoff:

The cyberpunk ethos was actually based in the very same DIY (do-it-yourself) ethos I’m espousing now. Cyberpunk was about reclaiming technology, making modifications oneself or with one’s friends, generating value from the bottom up, exchanging goods and services in an alternative economy. I’m not saying we get rid of money—only that we learn to make it ourselves, as communities. I’m not saying we get rid of banks—only that we stop outsourcing our banking to Wall Street firms that mean only to extract value from our communities.

I have always admired hackers—computer hackers and social hackers. I’m just trying to expand the range of technologies and institutions we feel ready and willing to hack. We should hack money. We should hack banking. We should hack business. This doesn’t necessarily mean hacking the dollar, which is just one kind of closed source currency. We should hack money by coding new kinds. Bank hacking has been around for a long time—it’s just that credit unions and other local or community-based bank models were driven down by the anti-competitive practice of banking conglomerates. It’s time for those institutions to be renewed, as well.

As a bohemian artist type, I’ve kinda been doing this off and on for years. Favors for friends repaid with favors in return, is usually what this looks like in the immediate here and now. Granted, I still need a job and I still need money, but it’s important to understand that there are and have always been alternatives to the almighty USD.

Speaking of the US Dollar, you should know it’s a product we are all forced to use and it represents the single most powerful monopoly that exists today. The Federal Reserve literally creates money and loans it to banks at interest. The chairman of the Fed recently said in a 60 Minutes interview (my emphasis added):

The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing.

So, why is it only the Fed that can print money? Because they are part of the government? No–because they’re not part of the government. How do I know? Simple–ask yourself which member of the Fed board do we elect?

None of them.

We get to vote for the guy who names the chairman every four years in November (the POTUS) and the senators and congressmen which supposedly have oversight over the Fed, but have only once heard of Congress actually performing said oversight on the Federal Reserve. The reality is that most presidents don’t get to name a chairman of the Fed because the chairmen of the Fed have terms of 14 years (yes, on paper the term is officially 4 years, but they’re almost always reappointed).

So, how do we hack the economy?

That’s a good question. I think the idea is to trade goods and services when ever you can. Stop going through the Dollar system for absolutely everything. Getting rid of a bookcase or couch? Don’t sell it–trade it with someone. Or give it away. There are loads of sites online that help with this process. Whether it’s Craigslist.org or, a site I use here in the Big Apple, NYCDailyDeals.com, there are alternatives to buying or selling everything. Another popular site is freecycle.org.

There are even people trying to get their own currency off the ground since owning gold and silver coins is still legal. LibertyDollar.org is a site that will tell you all about this new form of currency. It’s legal, but no one really takes it as cash, just yet. Now, I don’t approve of the Liberty Dollar because of a message engraved on each coin:

“Trust in God”

Yeah, so let’s replace one BS currency with another? I think the Liberty Dollar folks are missing the point. It’s not “liberty” until you’re really free (to not believe if you choose).

But I digress.

The point here is ultimately this: Humanity has existed in it’s current evolutionary state for something like 200,000 years. It’s done most of that existing without Chase Manhattan or Citigroup or the Federal Reserve System.

We humans came up with the concept of money–why can’t we come up with alternatives?

So, let’s start thinking about ways around relying on money for everything. I know it’s an uphill battle, but we’ve got to start somewhere.

Economic Armageddon Narrowly Averted According to Dem Rep

I think I found the original version of this clip via a Tweet from theeconomysucks but what it talks about is pretty damn newsworthy and I’m a little surprised that it didn’t merit some sort of mention in the American mainstream media when the event occurred. Essentially, Pennsylvania Democrat, House Representative Paul Kanjorski tells C-SPAN, on February 6, 2009, that, last September (2008) he and other reps were told by the Fed that the world was a single day away from a total and complete economic meltdown.

I’m not kidding.

The original video, which I found here: www.liveleak.com/view?i=ca2_1234032281 but can also be found on YouTube here: www.youtube.com/watch?v=_NMu1mFao3w , ends up being much longer than I think it needs to be to get the point across, so here is the important 1m37s where Kanjorski explains what happened.

In case there’s anything funky with that video player, you can also watch an mp4 version of it or download it here and the original clip, also converted to mp4, is here.

Let me nutshell it. According to Kanjorski:

1) The was an electronic run on money market accounts on the morning of September 18, 2008.

2) The Fed watched as $550 billion was pulled from these accounts.

3) The Treasury “opened up its window” and “pumped $105 billion in the system and quickly realized they could not stem the tide.”

(I’m not sure what point 3 literally means, but that’s what he said.)

4) They then closed down the accounts, stopping any more money to be removed and then upped the FDIC limit to $250,000. Yeah–this is why they did that. I saw it in the news back then and wondered why that was specifically done.

5) If they hadn’t acted as soon as they did, the Fed told the House reps that $5.5 trillion would have been removed from the US economy by 2pm that afternoon. The conclusion the Fed reached at that point was that the US economy would have faced a complete crash and would have taken the world economy with it within a day.

According to Kanjorksi, they felt that if that had happened it would have been “the end of our economic system and our political system as we know it.”

Missed it by THAT much!

Oh, I kid the end of the civilized world, but I love it!

Joking aside, it’s pretty damn scary that we came this close to economic apocalypse and no one seems to have reported on it in the news. Apparently, it’s all over the blogosphere now, but the only thing I found on it that was more than a WTF post (like mine is) was a post at BaltimoreChronicle.com which seems more concerned with corruption than the fact that the economy almost evaporated last year.

There’s also a transcript for the February 10, 2009 (yesterday) episode of Countdown that you can read which also talks about this story, but it doesn’t go into much depth. It just reassures us and blah-blah-blah. What it completely fails to do is really explain why this “electronic run on the banks” happened, how it could happen to the tune of $5.5 trillion and why the hell this wasn’t major goddamn news across the world. It also fails to give us a legitimate reason to trust that it won’t happen again.

Let me put it simply: if the US Treasury Department hadn’t upped the FDIC limit to $250,000, the economy wouldn’t be here today.

The really scary thing is that all the Treasury had to do was SAY something that sounded good to people. It doesn’t appear to me that anyone in government or at the Fed is doing anything differently due to the economy almost melting down.

There’s something seriously wrong with that.

UPDATE 4:34pm: found a post at fool.com about this from two days ago that calls the date of Kanjorski’s comments on C-SPAN to be January 28, 2009. That post is also an interesting read, though doesn’t tell us anything new at this point.

Banks Borrow $50 Billion this Year: A Bad Sign?


The above screencap comes from a February 18, 2008 article at FT.com (here: www.ft.com/…fd2ac.html ) and it reports on some seriously scary stuff–at least, in my uneducated opinion. All I’ve done to educate myself is read some stuff on the ‘net and swing by the Fed website a few years back to try to make sense of things. Their FAQ these days is a bit more thorough, but clear answers are still not easy to come by. So, us uneducated types have to pay special attention to what reporters say about the central bank of the United States.

From the quote in the last paragraph in the screencap above, to me, it looks like we’re having a replay of the sub-prime mortgage mess. Instead of people unable to pay their loans back we’ve got banks using "garbage collateral nobody else wants to take."

The FT article also gives us an interesting glimpse into how our money works: "The Fed announced the TAF tool on December 12 as part of a co-ordinated package of measures unveiled by leading western central banks to calm money markets.

The measure marks a distinct break from past US policy. Before its introduction, banks either had to raise money in the open market or use the so-called %u201Cdiscount window%u201D for emergencies. However, last year many banks refused to use the discount window, even though they found it hard to raise funds in the market, because it was associated with the stigma of bank failure."

Up until I did that wave of research a few years back, I had no clear idea where our money comes from. When I was a little kid I remember asking my dad about it. He told me it was printed. I asked him if that was all there was to it, how come we can’t just print more?

Then he explained to me how inflation works. The more money that exists, the less it’s all worth. A few years back I learned that the Fed, as a central bank, is the source of *all* of our money and that they loan money to all banks at interest. This is confirmed in the above quote from the article. Money is definitely borrowed on interest because there is a metaphorical window you can get money from at a discount price.

The thing is, to pay it back plus interest, don’t we have to have more money than we started with? Where does that money come from if *all* money is borrowed?

To me our economy already seems like a huge Uroborus (en.wikipedia.org/…/Ouroboros ) that will inevitably, eventually collapse in on itself.

It also seems to me that we may be seeing the collapse begin–though it might be a while before it finishes.

Am I overreacting? Possibly–we survived the Great Depression, after all.

Still, I’d rather say something and be wrong than be right and silent.
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Bush’s Keen Eyes Notice Economy Getting Worse


Source for the above screen cap: www.bloomberg.com/apps/news

I meant to post about this a couple days ago when I first saw it. It’s like Bush is paying attention to our failing economy in time-release caplet-form.

Seriously, everyone’s talking about it already–some of us have been talking about it for years.

I don’t think all the jobs in the world added will help when the US government borrows $1 trillion for wars. That kind of borrowing causes some major inflation–as in, it drives the value of the USD down. I don’t see how giving more people low-valued dollars will help things.

So, now, with talk of the Fed dropping interest rates by another half-percent, one wonders if they’re not just making it worse–especially since they’ve already dropped rates a startling 1.25% in the past couple weeks and that hasn’t helped.

I think it might be time for America to stop spending money abroad, both in the form of wars and other expenditures, as well (like foreign aid to countries, sadly).

I think our economy is spread way too thin to continue to support itself. If some new solutions are tried I see things getting worse before they get better.

Of course, I’m just a guy with a blog. What do I know?

I’m just glad we have the eagle-eyes of our beloved leader, George W. Bush, on the job!
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Fed Cuts Rates, Averts Some Bad


Yesterday I posted about how there was going to be a blood bath today when the US financial markets opened. Well, as you can see by the screencap of an AP.org article at Yahoo News (get it here: biz.yahoo.com/…rates.html ) there wasn’t quite the blood bath that I was expecting thanks to fast action by the Federal Reserve. They slashed interest rates dramatically–and I mean dramatically. Generally, they drop or raise in increments of a quarter or a half. Three-quarters is (in my observations) rare and, I would therefore assume, pretty serious.

The good news: lower interest rates means more loans taken so more money can be spent, in theory, strengthening the economy (buying shows confidence in the economy).

The bad news: more money in the system means the money that already exists is worth even less.

So, in the end, to this uneducated eye, it seems to be a short term fix to avert a major disaster. However, the over all weakness in the US economy is still there and, by my estimation, will become worse, though not as quickly as would have happened today without the Fed’s move.

In my (again, uneducated) opinion, the only thing that will really strengthen our economy in a good way (a way that makes our money worth more) is if we slow down all this globalism stuff. Stop outsourcing every job and stop the execs from making all that money. Redistribute the wealth a bit (just a bit!) so us poor folks can stop taking loans every time we need to buy a washing machine or a car or when we start a business (you know, to create jobs).

At least, that’s my theory. ^_^
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