The Federal Reserve is monetizing US Treasury debt and is doing so openly, both through its $300 billion commitment to buy Treasuries and by engaging in a sleight of hand maneuver that would make a street hustler from Brooklyn blush.
There are three major tripwires strung across our landscape, any of which could rather suddenly change the game, if triggered. One is a sudden rush into material goods and commodities, that might occur if (or when) the truly wealthy ever catch on that paper wealth is a doomed concept. A second would occur if (or when) the largest and most dangerous bubble of them all, government debt, finally bursts. And the third concerns the dollar itself.
On the surface, the above chart hints at a potential disaster for a country that is embarking on the largest-ever federal debt binge in history.
After all, if US assets are being shunned by foreigners, how will we find enough buyers? And what will happen to the dollar?
The answers are: "We won
The Federal Reserve must make public reports about recipients of
emergency loans from U.S. taxpayers under programs created to address
the financial crisis, a federal judge ruled.
This is in relation to a lawsuit filed by Bloomberg LP against the
Federal Reserve on November 7, 2008, in Southern District of New York
(08-09595), in which Bloomberg sought material loan and collateral data
in relation to emergency loans released by the Fed, and which were
previously claimed to be non-FOIAble.
This is a large blow against the Fed and specifically against
organizations using FOIA loopholes from providing critical information,
specifically in cases involving trillions of taxpayer dollars bailing
out huge, systematically and politically embedded financial
organizations.
The conclusion from the order just issued by District Judge Loretta Preska is as follows:
The Board's Motion for Summary Judgment is DENIED, and Bloomberg's Motion for Sum
“Paper money eventually returns to its intrinsic value – zero.” ~ Voltaire
“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” ~ Representative from Texas Ron Paul questioning Federal Reserve Chairman Ben Bernanke
I’
Market Watch...
Guess what? The Federal Reserve has not only stopped depositing copious amounts of liquidity into the economy -- it now appears to be in the process of making a sizable withdrawal.
A close look at quantitative measures of monetary policy reveals a sudden change in trend. After growing at unprecedented rates for well over a year, these aggregates stopped rising several months ago and have since declined, according to data provided by the Federal Reserve Bank of St. Louis.
What could this mean for YOU?
Get Ready for Interest Rate Shocks
One of the important messages coming out of the central banker’s annual retreat in Jackson Hole, Wyoming is that once the crisis is over the Federal Reserve’s (Fed) tightening of monetary policy may be abrupt. If so, increases in short term interest rates will not be gradual but jarring. The reasoning behind this approach, as I understand it, is that (1) since there could be political pressures to monetize the government d
The Federal Reserve must for the
first time identify the companies in its emergency lending
programs after losing a Freedom of Information Act lawsuit.
Have you heard? Washington Post is reporting...
President Obama plans to nominate Federal Reserve Chairman Ben S. Bernanke to another term Tuesday morning, White House officials confirmed Monday night, ending speculation about the fate of the nation's top banker.
Bernanke was chosen by former president George W. Bush to succeed Alan Greenspan and has headed the central bank since early 2006. As the Fed chairman, he has helped guide the nation through the worst economic crisis since the Great Depression.
As president, Obama has largely followed Bernanke's response to the crisis, fashioning a bank bailout and stimulus plan that extended the efforts of Bernanke and the Bush administration.
Aug. 24 (Bloomberg) -- The Federal Reserve must make public reports about recipients of emergency loans from U.S. taxpayers under programs created to address the financial crisis, a federal judge ruled.
This is in relation to a lawsuit filed by Bloomberg LP against the Federal
When the state’s role of governance in this greatest nation on the planet is reduced to zero, and the Government has just become a night watchman in our darkest night, it’s time to pray!
The bankruptcy of Colonial Bank (CNB) was the largest bank-bankruptcy in the U.S. since several large, U.S. financial institutions collapsed last year – with the most recent being Washington Mutual, last fall. However, there is one huge difference between the mega-bankruptcies of last year and the collapse of Colonial Bank a week ago.
During the large bank-failures of 2008, the acquiring institutions wrote-down the “assets” on the books of these banks by an average of 18% - according to a Bloomberg article. However, when BB&T Corp purchased Colonial, it immediately wrote-down Colonial's assets by 37%, double the amount of discounting done last year.
What has changed between now and then? The legitimizing of fraudulent accounting, when the supposed “watch-dog” of U.S. accounting, the Financial Accountability Standards Board brought in new “mark-to-fantasy” accounting rules in the U.S. this spring ( see “FASB strong-armed into mark-to-fantasy accounting”).
As the Bloomberg a
Well it's not a ACORN, but pretty damn close, the Obama influence is clear with this choice.
A top labor union leader, Denis Hughes, has become the chairman of the Federal Reserve Bank of New York’s Board of Directors. The New York Fed’s board comprises nine members, and is set up to reflect banking and community interests. Hughes has been on the board since 2003, but a union leader as New York Fed Chairman?
Hughes is president of the 2.5 million member New York State AFL-CIO.
According to the New York state AFL-CIO site:
As President of the New York State AFL-CIO, Mr. Hughes has made creating a more mobile, active and aggressive statewide labor movement a top priority. He has set a tone for organizing new members into the movement and has led the way in developing proactive legislative and political statewide strategy.
Hughes clearly doesn't understand basic supply and demand economics, since he "has been successful in helping to pass historic legislation that
WSJ features a page 2 column today that has this doozy of a point in it:
For the administration, the answer is clear: Err on the side of continued expansionary policies...For fiscal conservatives, the answer is equally clear: Start cutting the federal deficit and slowing the growth in the money supply now...
Earth to WSJ, the money supply (m2 nsa) is not expanding.
The money supply peaked in February when it hit 8244.9 billion. Preliminary July data now shows money supply at 8326.7 billion. The stock market and economy are about to crash again because of this.
There is currently a proposal that would require Congress to audit the Federal Reserve. The bill has 282 co-sponsors, which means it would easily pass the House. Yet someone in the House has buried the bill. The Fed, of course, does not want audited.
Although the Fed gave hundreds-of-billions of money directly to Wall Street, the Fed has actually transfered trillions (nine trillion, by conservative estimates) through many subterfuges. Here is a recent example:
You see, the Federal Reserve can simply allow the auditing of what everyone has access to already, and claim they are audited consistently, and so checks and balances are in place. They’ve even released a 52-page report this year on how many times they’ve been audited in the year, and their supporters cite this as proof that everything is ok, and the lack of auditing is a myth created by Federal Reserve detractors.
The truth is that the Federal Reserve loves these faux audits for the very reason they can cite them in making their case they’re being audited, without looking like they’re not being honest and secret about it. I say faux audits, again, because they audit what everyone already knows, while not having access to the data that really matters to the American people.
What I’m saying is the alleged transparency is being picked and chosen by the Fed itself, and it legally has no need to reveal the really important data; and it doesn’t. So in the name of being audited and tr
Last post we talked about Congress being granted the power by the Constitution to “coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”
So Congress obviously has the authority to do that, and by extension, to audit the Federal Reserve. I have went into some length on that because it’s one of the tools being used to prevent the audit from becoming a reality by Ben Bernanke and his allies.
Now whether or not the Federal Reserve should even exist is a different question, and I won’t cloud the proposed audit of them with that. But because it does exist, and the Constitution places responsibility on Congress for monetary policy, they not only have the right, but the obligation to know and understand what is going on there, and communicating it to the American people.
Don’t get me wrong, Congress has delegated authority to the Federal Reserve to operate, but with that delegation must come accountability, along with an ongoing an
There has been a self-conscious effort to confuse the proposed audit of the Federal Reserve, initiated by Ron Paul, in order to fight off what would be unveiled and revealed by that very audit.
So before we get into what an audit of the Federal Reserve would entail, let’s look at part of the basic argument Ben Bernanke has brought forth concerning the issue.
Here’s what Bernanke has said concerning an audit:
“Because GAO reviews may be initiated at the request of members of Congress, reviews or the threat of reviews in these areas could be seen as efforts to try to influence monetary policy decisions.”
The GAO refers to the General Accounting Office, which at this time is not allowed to audit the Fed, and which the legislation put forth by Ron Paul wants to change.
Ben Bernanke evidently doesn’t read the Constitution of the United States, as if he did, he wouldn’t have made the statement above which contradicts it.
For example, in Section 1 of the Constitution it says
The toll of failed banks is mounting, with 80 institutions closed by regulators so far this year - the most since 1992 at the height of the savings-and-loan crisis.
The latest came Friday with the seizures of two small banks in Georgia and one in Alabama: ebank, located in Atlanta, with $143 million in assets and $130 million in deposits; First Coweta, based in Newnan, Ga., with $167 million in assets and $155 million in deposits; and CapitalSouth Bank, based in Birmingham, Ala., with $617 million in assets and $546 million in deposits.
The Federal Deposit Insurance Corp. was appointed receiver of the failed banks, and approved the sale of some or all of their assets and deposits to other institutions.
In contrast to the big bank failures early in the financial crisis, many of the recently shuttered banks were undone not by exotic mortgage products but by garden-variety loans.
At the same time, a knot of big, complex banks collapsing in recent months is sapping billions fro
In case you haven't heard helicopter ben gave a speech in Jackson Hole and claimed he saved the world. This response is from Denninger...
Some snippets...
And ignore your role in creating it. Don't worry, I'll take care of that for you.
That's because you were willfully ignoring the facts that were staring you in the face - not surprising, given that you were one of the chief architects of the policies that led to the mess.
You have actually entirely ignored the limits of your legal authority, including most specifically your taking of equity in securities that do not have the formal full faith and credit of the US Federal Government.
Nobody in Congress seems to care, but I do. The fact that there is no "or else" in the Federal Reserve Act (as amended) is likely the cause, as the worst punishment that can be meted out to you would be impeachment (and even that's open to question) or refusal to reappoint you.
In contrast, in the case of t
Sometimes the message is great, no matter what you think of the messenger.
Larry Flynt - yes, that Larry Flynt - wrote today on Huffington Post:
The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich ... Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters"...
*U.S. TREASURY TO AUCTION $27 BILLION IN 52-WEEK BILLS
*U.S. TREASURY TO AUCTION $42 BILLION IN TWO-YEAR NOTES
*U.S. TREASURY TO AUCTION $31 BILLION IN THREE-MONTH BILLS
*U.S. TREASURY TO AUCTION $28 BILLION IN SEVEN-YEAR NOTES
*U.S. TREASURY TO AUCTION $30 BILLION IN SIX-MONTH BILLS
*U.S. TREASURY TO AUCTION $39 BILLION IN FIVE-YEAR NOTES
This is the price of supporting the grift and fraud in our banking system.
I count $207 billion, coming two weeks after a $250 billion dollar week.
Let's annualize - that would be about $5 trillion a year in annualized issuance. My-oh-my how long can this continue?
Who knows. What I do know is that this is absolutely unsustainable, it is approaching 40% of GDP annually, and yet this is what is required to keep all the balls and plates in the air as a direct consequence of our government's decision to sponsor and permit massive financial system fraud to continue.
The world's tolerance for this will eventually end and
In a world where once-rock-solid assumptions quickly turn to dust,
investors should keep an eye on the dollar since changing perceptions
are chipping away at its cherished status as currency to the world.
Much of the debate so far this year has centered on creating an
alternative to the U.S. dollar, championed by China and Russia as a way
to wean the world off its dependence on the U.S. as well as buffer
individual nations against the missteps of those in developed world.
Most recognize creating a new currency will take years and the chances
of an existing currency, like the yuan, usurping the dollar anytime
soon are remote.
Ron Paul has been fighting an uphill battle to enlist the aid of his fellow lawmakers to remove the secrecy and hidden actions of the Federal Reserve, which is moving far too autonomously for the public good; confirmed by the outrageous resistance to the audit by Federal Reserve Chairman Ben Bernanke.
What’s great about the process is Americans are getting their first real look at the Federal Reserve and how its actions can impact their lives; they don’t like what they see, and they, at over a 75 percent rate, want to see the Federal Reserve audited and their actions revealed in order to unveil what it is they’re doing with the money under their care.
And why not? So far the outrageous bailouts and guarantees are estimated on the conservative side to be at around $9 trillion. Yes, that’s with a “t.” That works out to be close to 60 percent of the entire U.S. economy. Nobody should have that type of power and influence without close scrutiny by the American people and their repres
Banco Bilbao Vizcaya Argentaria, Spain's second-largest bank, is
expected to win a government-run auction of troubled Texas lender
Guaranty Financial Group. The Federal Deposit Insurance Corp (FDIC), which was managing Guaranty's sale, had set a bid deadline of Tuesday for Guaranty,
And the new gold agreement reduces the annual sales limit to 400 tons in order to accommodate IMF gold sales. China and India have indicated that not only would they like to buy the 403 tons the IMF wants to sell, but that they would like to buy all 3200 tons of IMF gold.
We know that Germany, Switzerland and a few other European countries have indicated that they are done selling gold. Austria issued a statement this week that it was done selling gold until 2014. Italy is working on a tax agreement that would enable them to raise revenues without selling any more gold to raise revenues. So which countries are left as sellers? Likely candidates are France and Spain and maybe some smaller ECB countries which need to raise some cash.
With world gold production declining every month now, and with global gold supply being quickly scooped up by several Asian and Arab Central Banks, where will the U.S. Government find more gold to keep its gold price suppression scheme alive? At the en
China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg.
Inflation fear
In recent months the US government's budget deficit has widened thanks in part to the Obama administration's costly stimulus plan.
Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.
This would then erode the value of the debt China holds in the US currency.
In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%.
'Dollar alternative'
The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country's government debt is safe.
In 2008, the Chinese increased their holdings in US debt by 52% over 12 months.
"China has said it would like to establish an alternative to the US dollar as
..comes off as just a mother telling the neighborhood kids how to behave, in this clip from MSNBC's Morning Joe Show. It seems that Arnold Kling and Paul Kedrosky have already fallen in love with this Mommie Dearest
She seems anti-bailout and anti-big bank, i.e. anti-Goldman Sachs et al, because she is completely anti anything not completely run by the government. Notice in the clip when the question is put to her about waiting for commission results before making any regulatory changes, she jumps right in and says that action needs to be taken now. That's the totalitarian like regulator in Warren speaking.
She is really just a major Obama front, for government control of the entire financial system. As I have previously reported:
...Elizabeth Warren. Warren is a Harvard Law School professor and has collaborated with Americans for Fairness in Lending.(AFFIL)
AFFIL is "a non-profit organization designed to draw national attention to the unregulated lending indus
New data on international capital flows into U.S. financial assets were released Monday indicating that in June China was a net seller of $25.1 billion of U.S. Treasuries. Many will put the sale in the context of China’s $38 billion buying splurge in May, but the better metric is put the net purchases for May and June in the context of its $122 billion accumulation of international reserves during the two months. In other words, China invested very little of its new money in Treasuries in May and June—just over 10%, a sharp contrast to the 60% to 70% figures seen in recent years.
China’s investment in Treasuries in recent months looks even smaller when data for April are included. In April, China accumulated over $55 billion of international reserves, yet it was a net seller of $4.4 billion of Treasuries.
I will get right to the point here read this from Chris Martenson and then make sure to check your bank to see if it is on the problem list and make sure to have funds on hand! I told you about this in Will Monday bring a run on the banks now I am telling you perhaps YOU better make a run on your bank you can check it out below. Here are the most important parts you need to know!
All together, that adds up to $3.67 billion dollars in new costs to the Deposit Insurance Fund. The problem is that this turns out to be $3 billion more than currently exists in the Deposit Insurance Fund:
et's add up the estimated costs to the Deposit Insurance Fund (DIF), which is the FDIC pool of money toward which banks pay a premium and out of which all bank failure costs are covered.
Union Bank: The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $61 million. (Source)
Community Bank of AZ: The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $25.5 million. (Source)
Community Bank of NV: The cost to the FDIC's Deposit Insurance Fund is estimated to be $781.5 million. (Source)
Colonial Bank: The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $2.8 billion. (Source)
All together, that adds up to $3.67 billion dollars in new costs to the Deposit Insurance Fund. The problem is that this turns out to be $3 billion more than currently exists in the Deposit Insurance Fund:
Nassim Nicholas Taleb wrote an open letter today to British Conservative leader David Cameron saying:
I despair of the Obama administration's ability to fix this financial crisis and prevent future ones. I am appalled by the dangers it has been creating and its takeover by the same economic establishment responsible for this crisis...
Be careful, too, of the so-called science of economics. Economists have been no better in their predictions than cab drivers. We have an "expert" problem, in which the expert provides you with misplaced confidence, but no information. Because we think, correctly, that the dermatologist, the baker, the chemist are true experts (they know more about their respective subjects than the rest of us), we swallow the canard that the economists at the International Monetary Fund, the World Bank, the Bank of England and the US Federal Reserve are also experts, without checking their record. This reliance on faux experts is, for the most part, what g
As I have pointed out, and as I now think Ron Paul is aware, Paul better be very careful on his audit the Fed legislation as it is very vulnerable to being hijacked by the radical left. This needs to be shifted to an End the Fed program real fast.
Crossed out by hand. The final presentation of this to The American People was missing this key disclosure.
The FDIC has repeatedly stressed that "nobody has ever lost a penny of insured deposits", to wit:
Finally, Mr. Evans' suggestion that the "government" could ever be "on the hook for uninsured deposits" demonstrates a misunderstanding of FDIC insurance. To protect taxpayers, we are required to follow the "least cost" resolution, which means that uninsured depositors are paid in full only if this is the least costly option for the FDIC. This usually occurs when a bidder for the failed bank is willing to pay a higher price for the entire deposit franchise. We are authorized to deviate from the "least cost" resolution only where a so-called "systemic risk" exception is made. This is an extraordinary procedure which we have never invoked. And again, any money we borrow from the Treasury Department must be repaid through
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