Plan to audit Fed steamrolls ahead

Guess how many co-sponsors 
Ron Paul has in House now? 

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Posted: May 25, 2009
8:08 pm Eastern

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WorldNetDaily

U.S. Rep. Ron Paul, R-Texas

U.S. Rep. Ron Paul, R-Texas, long has opposed the power held by the Federal Reserve and its ability to manipulate the nation's economy and over the years has launched proposals to get rid of the quasi-governmental agency, without significant support.

But his current plan, H.R. 1207, the Federal Reserve Transparency Act of 2009 to demand an audit of the organization, is quickly gaining steam.

As of today, the proposal had collected a bipartisan coalition of 179 members of Congress who have signed on as co-sponsors.

Not that Paul's ultimate goals have changed significantly.

"To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have," he wrote in a new Straight Talk commentary. "They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability."

He's even said Congress should "reassert its constitutional authority over monetary policy."

Besides the support in the U.S. House, a companion bill, S. 604, also now has been introduced in the U.S. Senate by Sen. Bernard Sanders of Vermont. It has been referred to the Senate Committee on Banking, Housing and Urban Affairs.

Paul said that should help the effort "begin to gain momentum."

A spokeswoman in Paul's congressional office also told WND that Rep. Barney Frank, the chief of the financial services committee in the House, already has expressed a willingness to hold hearings on the issue.

When Paul introduced his latest proposal to audit the organization there were 11 co-sponsors, which grew quickly to 124 just a few weeks ago.

The bill calls for the comptroller general of the United States to audit the private Federal Reserve and report to Congress before the end of 2010.

The Constitution, Paul said, gives Congress, not the private Federal Reserve, "the authority to coin money and regulate the value of the currency."

Stunning Fed fraud DVD just $4.95! 'The Money Masters: How Banks Create the World's Money'

Paul explained his advocacy for the H.R. 1207 audit in the U.S. House:

"Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar," the Texas Republican said. "Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve's loose monetary policy.

"How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation," he said.

Paul called oversight of the Fed "long overdue."

Federal Reserve

You've never needed to understand money like you need to understand it now! "Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free" unravels the deception of the Federal Reserve and presents a crystal clear picture of the financial abyss towards which we are heading.

"Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations," he continued.

"The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government – established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight?"

Paul's bill would also make the Federal Reserve's funding facilities, including the Primary Dealer Credit Facility, Term Securities Lending Facility, and Term Asset-Backed Securities Lending Facility subject to congressional oversight.

His new commentary was titled, "Audit the Fed, Then End It!"

It cited some "pushback" from individuals in Congress.

"The main argument seems to be that Congressional oversight over the Fed is government interference in the free market," he wrote. "This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time.

"The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money – the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters," he said.

What has actually happened is the U.S. is that Congress "has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it," he wrote.

Paul said it took "less than two decades for the Federal Reserve to bring on the Great Depression of the 1930s."

He also said some have been worried about bringing the Fed into the "political process."

"The Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way," he said.

Note: Concerned individuals may contact members of the House Committee of Financial Services in reference to H.R. 1207 and the Senate Banking, Housing, and Urban Affairs committee in reference to its companion bill, S. 604. They may also contact their respective representatives and senators.

Fed to Buy $1 Trillion in Securities to Aid Economy

By EDMUND L. ANDREWS
WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the Fed said, adding that it would “employ all available tools to promote economic recovery and to preserve price stability.”

As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.

Indeed, the immediate effect on the bond markets was striking, with prices rising and yields dropping sharply on the news. The yield on the 30-year Treasury bond, about 3.75 percent before the announcement, fell quickly to 3.4 percent and remained volatile.

The action also gave a boost to stocks. The Dow Jones industrial average was down about 50 points before the 2:15 p.m. announcement, but within a half-hour it was up 80 points for the day.

The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.

All of the Fed’s measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. Since last September, the central bank has roughly doubled the size of its balance sheet from $900 billion to nearly $2 trillion — even before Wednesday’s action — mainly because of its efforts to rescue credit markets.

Despite a trickle of encouraging economic data in the last few weeks, Fed officials were clearly unimpressed and in no mood to cut back on their emergency efforts.

Fed policy makers sharply reduced their economic forecasts in December, predicting that the economy would continue to experience steep contractions for the first half of 2009, that unemployment that could approach 9 percent by the end of the year and that there was at least a small risk of an across-the-board drop in consumer prices akin to what Japan experienced for nearly a decade.

Hours before the Fed announced its decision on Wednesday, the Labor Department reported that consumer prices climbed 0.4 percent in January, the second consecutive monthly increase. The news provided some relief from deflation worries, but most analysts still expect prices to remain nearly flat for the foreseeable future. In their most recent forecast, Fed policy makers predicted that consumer prices would rise 0.3 to 1 percent this year — well below the central bank’s unofficial inflation target of nearly 2 percent.

The Federal Reserve slashed its benchmark interest rate to virtually zero in December, declaring that it would keep the rate at that level for “some time” and focusing its additional efforts to revive the economy on a wide range of new lending programs.

In a sign that it is even more worried than at its last meeting in January, the Fed said on Wednesday that it would keep its benchmark rate, the federal funds rate, at virtually zero for “an extended period.” While the central bank had said for some time that it was considering the possibility of buying longer-term Treasury bonds, Fed officials had played down that idea in the past month as they focused their attention instead on more targeted intervention in the credit markets.

In their statement on Wednesday, however, the Fed policy makers offered little explanation for the decision to go ahead with the Treasury purchases after all, saying only that the move was intended to “improve conditions in private credit markets.”

Since last September, new lending programs — including money for bailouts of individual companies like Citigroup, American International Group and Bank of America — have caused the Fed to print new money at the fastest pace in history. But much of that money has remained dormant, because the economic downturn has made banks reluctant to lend and businesses and consumers either reluctant or unable to borrow.

The Fed and the Treasury are in the process this week of starting a joint venture called the Consumer and Business Lending Initiative in their latest effort to revive the still-frozen credit markets. The program will start out by offering $200 billion worth of financing for consumer loans, small business loans and some corporate purposes like equipment leasing.

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.

Treasurys Are 'Disaster Waiting to Happen':

CNBC.com
| 17 Mar 2009 | 05:49 AM ET
The Federal Reserve has no option but to start buying Treasurys as the government's needs for financing are huge, but the government bond market is a disaster in the making, Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC.

Federal Reserve policymakers start a two-day meeting on Tuesday, weighing options on how to spur lending to help cash-strapped consumers kickstart the economy.

Economists expect them to leave rates at zero and look to other ways of boosting liquidity, such as buying government bonds – a measure which has already been taken by the Bank of England.

"Well I think other central banks have done it already around the world but basically what it amounts to is money printing and in fact I don't think that it will help the bond market at all in the long run," Faber told CNBC's Martin Soong.

The yield on the 30-year Treasurys touched a low of 2.51 percent last year in December but now it is back up at 3.77 percent, he said.

"Yields have already backed up pretty substantially and I tell you, I think the US government bond market is a disaster waiting to happen for the simple reason that the requirements of the government to cover its fiscal deficit will be very, very high," Faber said.

"The Federal Reserve will have to buy Treasurys, otherwise yields will go up substantially," he said, adding that as their reserves were dwindling, foreign investors were likely to scale down their purchases.

But there will be a time when the Federal Reserve will have to increase interest rates to fight inflation, and it will be reluctant to do so because the cost of servicing government debt will rise substantially.

"So we'll go into high inflation rates one day," Faber said.

The stock market is likely to continue its bounce at least for a while, but the outlook is bleak, he added.

"I think we may still have a rally (in the S&P) until about the end of April and probably then a total collapse in the second half of the year sometimes, when it becomes clear that the economy is a total disaster," Faber said.

29 congressman vs. Federal Reserve – Who will win?

28 lawmakers join call to examine nation's money controllers
Posted: March 16, 2009
9:49 pm Eastern

By Drew Zahn
WorldNetDaily


U.S. Rep. Ron Paul, R-Texa
A bill calling for the comptroller general of the United States to audit the private Federal Reserve is gaining momentum in Washington, D.C., as more and more representatives add their names to its bipartisan support.

As WND reported, U.S. Rep. Ron Paul, R-Texas, introduced last month H.R. 1207, the Federal Reserve Transparency Act of 2009, a bill requiring that an audit of both the Fed's Board of Governors and the Federal Reserve Banks be completed and reported to Congress before the end of 2010.

Paul was joined at the time of introduction by 11 other Republican and Democratic co-sponsors.

Since its introduction, 17 additional U.S. representatives have added their names as co-sponsors, bringing the total to 29 legislators seeking the audit.

Rep. Paul has been a harsh critic of the Federal Reserve, even seeking to abolish the private money-control system, arguing that Congress should "reassert its constitutional authority over monetary policy."

The Constitution, Paul said, gives Congress, not the private Federal Reserve, "the authority to coin money and regulate the value of the currency."

Paul explained his advocacy for the H.R. 1207 audit in the U.S. House:

"Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar," the Texas Republican said. "Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve's loose monetary policy.

"How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation," he said.

Paul called oversight of the Fed "long overdue."

You've never needed to understand money like you need to understand it now! "Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free" unravels the deception of the Federal Reserve and presents a crystal clear picture of the financial abyss towards which we are heading.

"Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations," he continued.

"The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government – established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight?"

Paul said H.R. 1207, which has been referred to the House Committee of Financial Services, would "achieve much-needed transparency of the Federal Reserve."

Paul talked at the recent Conservative Political Action Conference, or CPAC, in Washington about his concerns regarding the Fed. A video is embedded here:



In his weekly online column, Paul also said the Founding Fathers intended "only gold and silver to be used as currency," but that long since has been abandoned in favor of a monetary system essentially orchestrated in secret.

"People are demanding answers and explanations for our economic malaise, and we should settle for nothing less than the whole truth on monetary policy," he said.

WND reported last month on Paul's continuing effort to abolish the institution.

Paul said every problem in the economy, "from the Great Depression, to the stagflation of the '70s, to the current economic crisis caused by the housing bubble," can be traced to Federal Reserve policy.

Paul's abolition plan calls for the director of the Office of Management and Budget to "liquidate" Fed assets "in an orderly manner so as to achieve as expeditious a liquidation as may be practical while maximizing the return to the Treasury."

Columnist and commentator Chuck Baldwin believes it's about time.

"'We've seen money go out the back door of this government unlike any time in the history of our country,' Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor. 'Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?'" Baldwin wrote.

"Senator Dorgan is exactly right. No one oversees the Fed. The Fed is held accountable to absolutely nobody," Baldwin continued. "But Senator Dorgan (as with everyone else in Congress) has no one to blame but himself. Ever since the Marxist, E. Mandell House, convinced President Woodrow Wilson to create the Federal Reserve in 1913, the Congress of the United States has had virtually nothing to do with the way our fiscal policies are managed. The Fed (which is not even a government agency, but rather a private corporation consisting of mostly foreign bankers) dictates America's financial policies."

Baldwin cites the U.S. Constitution itself. In Article I, Section 8, Paragraph 5, it states Congress has the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."

Columnist Jacob Hornberger last year noted that while Paul's abolition plan is considered "wacky" by some, at least two Nobel Prize-winning economists had the same idea.

Economists Milton Friedman and Friedrich Hayek called for the abolition of the Fed during their careers, Hornberger notes.

"While Friedman spent much of his life advocating externally imposed constraints on the Fed's power to expand the money supply, his first wish was to have the Fed abolished, as he pointed out in a 1995 Reason magazine interview. In his book, 'Denationalization of Money: An Analysis of the Theory and Practice of Concurrent Currencies,' Hayek advocated a free-market monetary system of competing currencies," said Hornberger.

"Most Americans probably still believe that the Great Depression was caused by 'the failure of the free-enterprise system.' It is a false belief. The truth is that the worst economic disaster in American history was caused by the Federal Reserve. Give current Fed Chairman Ben Bernanke credit for publicly acknowledging that fact in a speech delivered in 2002 commemorating Friedman's 90th birthday," Hornberger said.

Grand Illusion – Secrets of the Federal Reserve

James Quinn March 16th 2009
Cutting Edge Economic Crisis Analyst


The whole world is in a state of complete confusion. Americans are coming to the realization that their lives have been a grand illusion. You thought your neighbor had it made. They were driving a Mercedes, spent $40,000 on a new kitchen with granite countertops and stainless steel appliances, sent their kids to private school, had a second home at the shore, and took exotic vacations all over the world. Now their house is in foreclosure and you are paying to bail them out. The anger and outrage in the country is at the highest level since the Vietnam War.
The American public is being misled by government officials, politicians, and the Federal Reserve regarding the causes of this crisis and the solutions needed to solve our economic tribulations.
The average American does not know much about the Federal Reserve. The government and the Federal Reserve prefer to operate in the shadows. If the American public understood what their policies have done to their lives, they would be rioting in the streets. Most Americans believe that the Federal Reserve is part of the government. They are wrong. It is a privately held corporation owned by stockholders. The Federal Reserve System is owned by the largest banks in the United States. There are Class A,B, and C shareholders. The owner banks and their shares in the Federal Reserve are a secret. Why is this a secret? It is likely that the biggest banks in the country are the major shareholders. Does this explain why Citicorp, Bank of America and JP Morgan, despite being insolvent, are being propped up by Ben Bernanke and Timothy Geithner?
The history of National Banks in the United States has been controversial since the Founding Fathers signed the Declaration of Independence. The Constitution of the United States unequivocally states that only Congress has the authority to coin money, not an independent bank owned by unknown bankers.
The Congress shall have Power to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures
Article 1, Section 8 – US Constitution
Our most recent horrifying experience with an all powerful central bank has led to the current worldwide financial crisis. In less than one century the Federal Reserve Bank of the United States has destroyed our currency and has allowed bankers to gain unwarranted power over the country. They had the ability and opportunity to bring down the worldwide financial system. When the average American is told that the dollar has lost 95 percent of its purchasing power since the inception of the Federal Reserve in 1913, they look at you with a blank stare and start wondering whether American Idol is on TV tonight. The systematic inflation purposely created by the Federal Reserve silently robs the average American of their standard of living. The government began keeping official track of inflation in 1913, the year the Federal Reserve was created. The consumer price index (CPI) on January 1, 1914 was 10.0. The CPI on January 1, 2009 was 211.1. This means that a man’s suit that cost $10 in 1913 would cost $211 today, a 2,111 percent increase in 96 years. This is a 95 percent loss in purchasing power of the dollar.
In the years following the creation of the Federal Reserve, inflation ran at double digit rates to finance Woodrow Wilson’s foreign intervention into World War I. The other notable period was in the years following President Nixon’s closing of the gold window in 1971. This led to rampant inflation that wasn’t tamed until the early 1980’s by Paul Volcker, the only independent courageous Federal Reserve Chairman in its history. The figures so far in the twenty-first Century seem modest. This is due partly to the methodical downward manipulation of the calculation by government bureaucrats. The period from 2010 to 2020 will show a dramatic jump caused by all of the money printing and reckless spending that is occurring today.
The average American might just conclude that prices always go up, so what’s the big deal about inflation. This is where the Federal Reserve and politicians have pulled the wool over your eyes. The CPI was 30.9 in 1964. Today, it is 211.1. This means that prices have risen 683 percent since 1964. The only problem is that your wages have not risen at the same rate, even using the government manipulated CPI. Using a true CPI figure, average weekly earnings are 64 percent below what they were in 1964. This explains why a family of five could live well with one parent working in 1964, but even with both parents working and using debt in prodigious amounts, the average family does not live as well today.

The dates February 3, 1913 and December 24, 1913 framed a year which placed our country on a downward fiscal spiral. The United States had tinkered with an income tax during the Civil War and the 1890’s, but the Supreme Court declared it unconstitutional. Until 1913, the U.S. government was restrained from overspending because it was completely reliant on tariffs and duties to generate revenue.
The Sixteenth Amendment changed the game forever. “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
When you give a Congressman a dollar, he’ll take a hundred billion. The initial tax rates of 1 percent to 7 percent were rather modest. That did not last long. The top tax rate reached 92 percent during the 1950s and today rates are still 500 percent to 1,000 percent higher than they were in 1913. The government is addicted to tax revenue. In 2007, they absconded $1.2 trillion in taxes from American individuals. Does anyone think that the bloated government bureaucracy spent these funds more efficiently or for a more beneficial purpose than its citizens could have? Without $1.2 trillion in individual tax revenue, Congressmen would not be able to add 9,200 earmarks to the current $400 billion Federal spending bill every year.
According to the Federal Reserve’s own website, their duties fall into four general areas:
1. Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
2. Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
3. Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
4. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
The American public was told that the Federal Reserve would eliminate any future bank panics. From 1913 through 1920, inflation increased at more than 10 percent per year as Wilson spent vast sums during World War I and its aftermath. From the early 1920s to 1929, the monetary supply expanded at a rapid pace and the nation experienced tremendous economic growth. By the end of the 1920s, speculation and loose money had propelled asset and equity prices to unsustainable levels. The stock market crashed in 1929, and as the banks struggled with liquidity problems, the Federal Reserve cut the money supply. This was the greatest financial panic and economic collapse in American history so far - and it never could have happened without the Fed's intervention. The Fed caused the bubble with loose monetary policy. The Depression did not become Great until the Smoot Hawley Act in 1930 destroyed world trade and the raising of the top income tax rates from 25 percent to 63 percent in 1932 destroyed the incentive to earn money. Over 9,000 banks failed and a few of the old robber barons' banks managed to swoop in and grab up thousands of competitors for pennies on the dollar.
The Federal Reserve’s primary mandates were maximum employment, stable prices and moderate long-term interest rates. Their other chief function was to supervise and regulate banks to ensure the banking system is safe. Let us assess their success regarding their mandates:
• Unemployment reached 25 percent during the Great Depression; attained levels above 10 percent in 1982; and will breach 10 percent in the next year. Grade: Failure
• Since the Federal Reserve’s inception, the dollar has lost 95 percent of its purchasing power. Grade: Failure
• Interest rates have been anything but moderate since the inception of the Federal Reserve. They have consistently caused booms and busts by setting rates too low or too high. Grade: Failure
• The Federal Reserve was supposed to supervise the activities of banks. Instead, under Alan Greenspan, they stepped aside and let banks take preposterous risks while giving an unspoken assurance that the Fed would clean up any messes that they caused. This total dereliction of duty gross negligence has led the greatest financial collapse in history. Grade: Failure
Anyone who is not mad as hell at this point is not paying attention. Your tax-and-spend political leaders and your banker-controlled Federal Reserve have borrowed and spent your tax dollars, your children’s tax dollars, and their children’s tax dollars desperately attempting to prop up this bankrupt system. The unleashing of a never-ending tsunami of printed dollars by the Federal Reserve makes every dollar worth less. They have systematically created inflation that has slowly but surely reduced your standard of living. Politicians in the pocket of lobbyists, corporate interests, and bankers have used their power to tax in order to spend trillions on worthless projects in their districts to insure re-election. The combination of taxing and printing has led to a National Debt of $11 trillion.
Bankers love debt. The more debt, the more interest they collect. Issuing credit cards and collecting 21 percent interest and billions in late fees seemed like a "can’t miss" proposition. It was, until people couldn’t pay the debt back. Now the unwinding of the greatest debt bubble in history has created a Second Great Depression. Instead of learning from the past, the Federal Reserve has chosen to do exactly what led to the crisis. They have lowered rates to 0 percent and have printed money at prodigious rates. The Fed has doubled their balance sheet in the last 12 months.

They have loaned billions to the bankrupt banks that inhabit our financial system while accepting worthless pieces of paper as collateral. They will not reveal to the public the banks they have loaned money to or the collateral that backs up those loans. The arrogance of Ben Bernanke proves that the Federal Reserve answers to bankers, and not to the American public. The books and records of the Federal Reserve are not open to scrutiny by the General Accounting Office. Ron Paul has introduced the Federal Reserve Transparency Act which would open their books to the public. No organization with as much power as the Federal Reserve should be permitted to operate in the shadows.
The future is cloudy but the direction is clear. Government will spend trillions of dollars. Congress will increase taxes on the rich and secretly raise taxes on the masses by calling them cap and trade fees. The Federal Reserve will pull out all stops to create inflation. When you owe the rest of the world $11 trillion, inflation makes the debt less burdensome. The dollar will decline versus gold. With the enormous amount of currency creation and spending by the government, the economy will eventually pull out of this depression. The acceleration will take the Federal Reserve by surprise. They will be hesitant to raise interest rates. The inflation genie will get out of the bottle and will not go back. The hyperinflation that takes hold will lead to social unrest, rioting, and a drastic reduction in the American standard of living.
There is no solution that will not be painful to everyone in the United States. The only solution that would put America back on a path of sustainable prosperity would be a gold/precious metals backed currency that would force government and its citizens to live within its means. Congress would need to vote for something that would take away its power. With our current political system, this is impossible. Money is power. This leads to only one conclusion. The existing Ponzi scheme will have to collapse before we can adopt a rational financial system for America. It may take decades, or it may happen in 2010. No one knows.
Cutting Edge Economic Crisis Analyst James Quinn is a senior director of strategic planning for a major university. This article reflects the personal views of James Quinn. It does not necessarily represent the views of his employer, and is not sponsored or endorsed by them.

Jindal to refuse some stimulus money

Alexander Burns
Fri Feb 20, 5:10 pm ET
Louisiana Gov. Bobby Jindal announced Friday that he will decline stimulus money specifically targeted at expanding state unemployment insurance coverage, becoming the first state executive to officially refuse any part of the federal government’s payout to states.
In a statement, Jindal, who is slated to give the Republican response to President Barack Obama’s message to Congress on Tuesday, expressed concern that expanding unemployment insurance coverage would lead to increased unemployment insurance taxes later on.
“The federal money in this bill will run out in less than three years for this benefit and our businesses would then be stuck paying the bill,” Jindal said. “We must be careful and thoughtful as we examine all the strings attached to the funding in this package. We cannot grow government in an unsustainable way.”
Jindal is one of a small group of Republican governors, which includes South Carolina’s Mark Sanford and Mississippi’s Haley Barbour, who have said they might refuse some or all of the stimulus money targeted to their states.
In an interview Friday, Barbour said he, too, would likely decline funds for broadening access to unemployment insurance.
“Subject to learning more, my position is that Mississippi won’t accept funds that require us to have a tax increase later, because [they would force] us to change our rules for qualifying for unemployment compensation,” he said.
It is not clear which, if any, other parts of the stimulus funding Republican governors will decline. But initial suggestions that anti-stimulus governors might decline all the funds targeted for their states have faded.
Joel Sawyer, Sanford’s communications director, said the South Carolina governor was still reviewing his options with respect to the stimulus.
“We haven’t made any decisions on any part of the stimulus yet,” Sawyer said.

U.S. explores converting stakes in banks:

Fri Feb 6, 2009 6:47am EST
(Reuters) - U.S. officials are examining ways to convert government stakes in banks into ordinary shares as banks accumulate losses, the Financial Times said, citing people close to the discussions.

Policymakers are considering an idea that the government change its existing holdings in the banks, which have taken the form of preferred shares -- non-voting stock that carries a fixed dividend -- into convertible preferred shares that could be converted into common stock, the paper said.

Under this proposal, the shares would automatically convert into common equity if there was a decline in the bank's health, as measured by its tangible equity ratio, for example, the paper reported.

The government may also make future capital injections in the form of such convertible preferred shares, the paper said.

The Obama administration is considering an expansion of the Federal Reserve's consumer-lending facility, known as the Term Asset-Backed-Securities Loan Facility (TALF) that could potentially buy up toxic assets clogging the system, the Wall Street Journal said, citing people familiar with the plans.

Under TALF, announced in November 2008, the Federal Reserve Bank of New York will lend up to $200 billion to holders of securities backed by student, auto, and credit-card loans.

The Obama administration is trying to expand the TALF to provide financing for other older assets, such as mortgage-backed securities, the WSJ said.

The Treasury did not immediately reply to a Reuters email, which was sent outside of normal business hours, seeking comment.

U.S. Treasury Secretary Timothy Geithner will unveil the Obama administration's intensely awaited plan for strengthening the financial system in a Monday speech, a Treasury official told Reuters on Thursday.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Andrew Macdonald)

Federal obligations exceed world GDP

Does $65.5 trillion
terrify anyone yet?
Posted: February 13, 2009
11:35 pm Eastern

By Jerome R. Corsi
WorldNetDaily

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.

The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

(Story continues below)

But the numbers in the 2008 report are calculated on a GAAP basis ("Generally Accepted Accounting Practices") that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.

"As bad as 2008 was, the $455 billion budget deficit on a cash basis and the $5.1 trillion federal budget deficit on a GAAP accounting basis does not reflect any significant money [from] the financial bailout or Troubled Asset Relief Program, or TARP, which was approved after the close of the fiscal year," economist John Williams, who publishes the Internet website Shadow Government Statistics, told WND.

Find out what's behind the chaos at the White House, in the No. 1 best-seller "Obama Nation"

"The Congressional Budget Office estimated the fiscal year 2009 budget deficit as being $1.2 trillion on a cash basis and that was before taking into consideration the full costs of the war in Iraq and Afghanistan, before the cost of the Obama nearly $800 billion economic stimulus plan, or the cost of the second $350 billion in TARP funds, as well as all current bailouts being contemplated by the U.S. Treasury and Federal Reserve," he said.

"The federal government's deficit is hemorrhaging at a pace which threatens the viability of the financial system," Williams added. "The popularly reported 2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full amount has to be funded by Treasury borrowing.

"It's not likely this will happen without the Federal Reserve acting as lender of last resort for the Treasury by buying Treasury debt and monetizing the debt," he said.

"Monetizing the debt" is a term used to signify that the Federal Reserve will be required simply to print cash to meet the Treasury debt obligations, acting in this capacity only because the Treasury cannot sell the huge of amount debt elsewhere.

The Treasury has been largely dependent upon foreign buyers, principally China and Japan and other major holders of U.S. dollar foreign exchange reserves, including OPEC buyers purchasing U.S. debt through London.

"The appetite of foreign buyers to purchase continued trillions of U.S. debt has become more questionable as the world has witnessed the rapid deterioration of the U.S. fiscal condition in the current financial crisis," Williams noted.


"Truthfully," Williams pointed out, "there is no Social Security 'lock-box.' There are no funds held in reserve today for Social Security and Medicare obligations that are earned each year. It's only a matter of time until the public realizes that the government is truly bankrupt and no taxes are being held in reserve to pay in the future the Social Security and Medicare benefits taxpayers are earning today."

Calculations from the "2008 Financial Report of the United States Government" also show that the GAAP negative net worth of the federal government has increased to $59.3 trillion while the total federal obligations under GAAP accounting now total $65.5 trillion.

The $65.5 trillion total federal obligations under GAAP accounting not only now exceed four times the U.S. gross domestic product, or GDP, the $65.5 trillion deficit exceeds total world GDP.

"In the seven years of GAAP reporting, we have seen an annual average deficit in excess of $4 trillion, which could not be possibly covered by any form of taxation," Williams argued.

"Shy of the government severely slashing social welfare programs, federal deficits of this magnitude are beyond any hope of containment, government or otherwise," he said.

"Put simply, there is no way the government can possibly pay for the level of social welfare benefits the federal government has promised unless the government simply prints cash and debases the currency, which the government will increasingly be doing this year," Williams said, explaining in more detail why he feels the government is now in the process of monetizing the federal debt.

"Social Security and Medicare must be shown as liabilities on the federal balance sheet in the year they accrue according to GAAP accounting," Williams argues. "To do otherwise is irresponsible, nothing more than an attempt to hide the painful truth from the American public. The public has a right to know just how bad off the federal government budget deficit situation really is, especially since the situation is rapidly spinning out of control.

"The federal government is bankrupt," Williams told WND. "In a post-Enron world, if the federal government were a corporation such as General Motors, the president and senior Treasury officers would be in federal penitentiary."

Obama Hails Stimulus Passage as 'Major Milestone'

By Michael D. Shear
CHICAGO -- President Obama today called congressional passage of his stimulus plan "a major milestone" in efforts to turn around the nation's economy, and he said he would soon sign the massive legislation into law.

The comments, in his weekly Internet and radio address, came just hours after a late-night vote in the Senate gave final approval to the $787 billion spending and tax cut plan.

In the address, Obama said the plan would "ignite spending" in the country, and he praised the members of Congress -- almost exclusively Democrats -- who "came together in common purpose to make it happen."

He also promised skeptical listeners that the government's poor track record of wasting money would not be repeated this time.

"Our goal must be to spend these precious dollars with unprecedented accountability, responsibility, and transparency," he said.

"Once the plan is put into action, a new Web site -- recovery.gov -- will allow any American to watch where the money goes and weigh in with comments and questions. And I encourage every American to do so," he said. "Ultimately, this is your money, and you deserve to know where it's going and how it's spent."

The president warned that the stimulus package, one of the largest spending plans ever passed by Congress, was only part of what will be necessary to right the economy.

He said the weeks to come will require efforts to fix the banking system, get the housing industry back on its feet and reform regulatory structures that failed to catch the problems in the first place.

He also promised to submit a budget later this month that will "begin to restore the discipline these challenging times demand."

He said deficit spending is necessary to jump-start the economy. But he said that the country's "long-term" goal must be to tame the deficit.

"Our long-term economic growth demands that we tame our burgeoning federal deficit; that we invest in the things we need, and dispense with the things we don't," he said.

After weeks of sobering, even depressing speeches, Obama's address ended on a hopeful note, quoting former president John F. Kennedy, who said, "Do not pray for easy lives. Pray to be stronger men. Do not pray for tasks equal to your powers. Pray for powers equal to your tasks."

Obama said: "America, we will prove equal to this task. It will take time, and it will take effort, but working together, we will turn this crisis into opportunity and emerge from our painful present into a brighter future. After a week spent with the fundamentally decent men and women of this nation, I have never been more certain of that."

Fed Lacks Consensus on Treasuries as Yields Rise (Update1)

By Scott Lanman and Craig Torres


Feb. 9 (Bloomberg) -- Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank’s objective of cutting borrowing costs for consumers and businesses.

Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.

Forgoing purchases of Treasuries may exacerbate a jump in borrowing costs for the government as federal debt managers seek to finance an unprecedented budget deficit. Benchmark 10-year note yields this week exceeded their level of Dec. 1, when Fed Chairman Ben S. Bernanke first talked about the option. That’s raised other borrowing costs, potentially delaying a recovery.

“The Fed will get a lot more bang for its buck by buying mortgages than buying Treasuries,” said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed economist. “We were kind of a little surprised when the Fed wanted to go down this route” in comments starting in December, Ryding said.

Fed officials are seeking other ways to use monetary policy to ease credit after cutting the benchmark interest rate almost to zero, completing more than 5 percentage points of reductions since September 2007.

FOMC Meetings

The debate over buying Treasuries has now continued for two meetings of the Federal Open Market Committee. The potential acquisition of government debt to help finance a bank rescue doesn’t appear in the minutes of the December meeting.

The FOMC’s post-meeting statement on Jan. 28 signaled that not all participants are convinced. The panel “is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets,” the statement said.

That’s still a harder line than on Dec. 16, when policy makers said they were “evaluating the potential benefits of purchasing longer-term Treasury securities.” Bernanke said in a Jan. 13 speech that the FOMC will focus on the “potential” of the purchases “to improve conditions in private credit markets, such as mortgage markets.”

Fed Split

Richmond Fed President Jeffrey Lacker dissented from the Jan. 28 decision, highlighting a split between the Board of Governors and some Fed presidents on how to stem the credit crisis and revive economic growth. Lacker preferred to expand the money supply “by purchasing U.S. Treasury securities rather than through targeted credit programs,” the FOMC statement said.

Buying Treasuries would reduce yields on government debt, prompting a decline in rates on mortgages, corporate bonds and other types of borrowing, according to Lacker and some other policy makers.

Still, there’s no guarantee the purchases would work, given that cuts in the Fed’s main interest rate failed to pare costs for corporations and other borrowers. Also, money created by the central bank to buy the Treasuries may fuel inflation should the Fed fail to quickly unwind the purchases as the economy begins to rebound.

‘Higher’ Bar

“The bar is a lot higher than we thought,” said Brian Sack, vice president at Macroeconomic Advisers LLC, and a former section chief at the Fed Board. “The statement said they are going to employ all available tools and yet they are reluctant to use the tool that is most readily available.” The FOMC next meets March 17.

Rates on long-term Treasuries have climbed this year as investor hopes faded for a quick start to Fed purchases. The yield on the 30-year government bond was 3.70 percent today, compared with 2.68 percent on Dec. 31. The yield on the 10-year note was little changed at 2.99 percent.

Costs for home loans are also rising. The average U.S. rate on a 30-year fixed mortgage increased to 5.25 percent last week from 5.10 percent the previous week, housing-finance provider Freddie Mac said on Feb. 5. In the week ended Jan. 23, mortgage applications in the U.S. slumped by the most in 16 years as refinancing plunged.

Fed purchases of Treasuries would sustain demand amid speculation China and other nations may curtail their holdings in U.S. debt, said Bill Gross, co-chief investment officer of Pacific Investment Management Co., the world’s biggest bond-fund manager.

China Investment

China is the largest investor in U.S. government securities, holding $681.9 billion of Treasuries.

“To the extent that the Chinese and others do not have the necessary funds, someone has to buy them,” Gross said in an interview with Bloomberg Television. “It is incumbent upon the Fed to step in. If they do, that will be a significant day in the bond market and the credit markets.”

Investors were disappointed when the Fed didn’t announce plans to buy long-term Treasuries in its Jan. 28 statement. The yield on 30-year Treasury securities rose 17 basis points to 3.41 percent that day. A basis point is 0.01 percentage point.

“What are they waiting for?” said Mark Spindel, who invests about $100 million as chief investment officer at Potomac River Capital in Washington. “I don’t understand this resistance from the Fed. Mortgage rates are now beginning to rise.”

Corporate Borrowing

One index shows the premium for corporate borrowing costs over 10-year Treasuries. While the spread has narrowed to 5.19 percentage points since reaching a high of 6.22 points on Dec. 16, it’s still more than triple the average spread of 1.66 percentage points in the year before the credit crisis started in August 2007.

As of Feb. 4, the Fed had bought $7.38 billion of mortgage- backed securities, out of $500 billion authorized, and $29.9 billion of debt issued by Fannie Mae, Freddie Mac and Federal Home Loan Banks, out of a possible $100 billion.

The Fed plans this month to announce a start date for the Term Asset-Backed Securities Lending Facility, or TALF, to prop up the market for student and auto loans, credit-card debt and small-business lending.

The Fed will release minutes of the Jan. 27-28 FOMC meeting on Feb. 18. Bernanke will testify before Congress on Feb. 10, give a speech on Feb. 18 and provide semiannual testimony on monetary policy to the Senate and House starting Feb. 24.

US Federal Reserve becoming de facto world central bank

On Sunday, I warned about indications that there may be a move afoot to establish a global central bank, I also said that "the US benefits from the current arrangement [with the US dollar as the world reserve currency] and will resist any adjustment away from it, but when it becomes clear that it cannot last, it will jockey for the highest position in the system that follows."

I imagined it might happen along the lines laid out by Hans-Hermann Hoppe in 2003:

Even this system is unsatisfactory, however. In a world of many countries, and even if the U.S. is a superpower with troops stationed in well over 100 countries around the globe, this system of coordinated inflation is bound to crack again and again... [A] U.S.-dominated country might suffer more inflation than the U.S., its currency would depreciate against the dollar, and in order to save government-connected investors in those countries, the U.S. might be compelled to engage in expensive bailout operations, i.e., buying up the falling currency in order to stabilize it.

...As the final solution in the drive toward monetary imperialism and as a decisive intermediate step in the drive toward world government, the U.S. has been working long and hard to establish a U.S.-controlled world central bank issuing a single, world-wide accepted paper currency. Only then are all obstacles to government counterfeiting eliminated because then the currency can no longer rise or fall against any other as no other currencies are left. The monetary integration currently under way in Europe, the establishment of a Europe-wide EURO, is an important step in this direction. (emphasis mine)

The US has not begun buying failing foreign currencies (among which I am tempted to count the pound sterling), but on Monday when the US Federal Reserve announced an agreement to extend an unlimited amount of loans to the Bank of England, the European Central Bank, and the Swiss National Bank, it amounted to, as Michael Rozeff points out, the Federal Reserve directly delegating itself the role of a de facto world central bank, a lender of last resort for foreign central banks.

Taxes and Treasuries

How are we going to replace the taxes lost by the big drop in gas prices? We have lost around 75% of the tax income that was being generated by federal, state and local taxes imposed on fuel. Are we going to see a new tax soon? Maybe a carbon tax or maybe a federal sales tax. Our government (I say our) the government must increase taxes somewhere to charge us with the bill for TARP and the new stimulus coming. That money is not free; the federal government does not have products to sell so it MUST pass the bill on to you and me. Where are you going to get the money to pay your share. The new stimulus will cost us enough to pay off 90% of our mortgages. Yet you will not get that much but you will have to pay it back.

OPEC- can no longer afford to buy our debt through treasury note purchases and other debt based government securities. Most of the construction in Dubai has stopped as well. Now the federal reserve which is a privately held banking cartel of sorts has announced that it may start buying Treasury Notes. That is funny to me; as they created, out of thin air mind you, the money that is loaned out that the T-notes are backing. If it seems like a vicious circle; it is, and it will come crashing down on us in the form of devalued currency and probably taxes.

Dose this bother you?

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

Financial Rescue

The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.

Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.

The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp.

The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.

‘All the Stops’

“The Fed, Treasury and FDIC are pulling out all the stops to stop any widespread systemic damage to the economy,” said Dana Johnson, chief economist for Comerica Inc. in Dallas and a former senior economist at the central bank. “The federal government is on the hook for an awful lot of money but I think it’s needed to help the financial system recover.”

Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort.

Commitments may expand again soon. Treasury Secretary Timothy Geithner postponed an announcement scheduled for today that was to focus on new guarantees for illiquid assets to insure against losses without taking them off banks’ balance sheets. The Treasury said it would delay the announcement until after the Senate votes on the stimulus package.

Program Delay

The government is already backing $301 billion of Citigroup Inc. securities and another $118 billion from Bank of America. The government hasn’t yet paid out on any of the guarantees.

The Fed said Friday that it is delaying the start a $200 billion program called the Term Asset-Backed Securities Loan Facility, or TALF, to revive the market for securities based on consumer loans such as credit-card, auto and student borrowings.

Most of the spending programs are run out of the Federal Reserve Bank of New York, where Geithner served as president. He was sworn in as Treasury secretary on Jan. 26.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return. Collateral is an asset pledged by a borrower in the event a loan payment isn’t made.

Fed Sued

Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month, according to the court docket. Bloomberg asked the Treasury in an FOIA request Jan. 28 for a detailed list of the securities it planned to guarantee for Citigroup and Bank of America. Bloomberg hasn’t received a response to the request.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

US watchdog attacks bail-out plan

The Congressional Oversight Panel says the government overpaid for distressed financial assets and shares last year.

It says the US Treasury paid $78bn (£53bn) more than it should when buying stakes in banks through the $700bn Troubled Assets Relief Program (Tarp).

The Treasury had paid $254bn in 2008 in return for shares in a number of troubled financial institutions.

The findings may influence Congress when it considers how to spend the remaining $350bn in bail-out funds.

The oversight panel was established in October 2008 to "review of the state of financial markets and the regulatory system", and to measure how effectively the government bail-out programmes were working to correct the problems.

'Better managed'

The new US Treasury Secretary, Tim Geithner, is expected to bring fresh proposals to Congress next week, outlining how the new administration wants to spend the rest of the bail-out money.

He is likely to accept that more of the bail-out money needs to go to help struggling homeowners and small businesses, releasing some of the money given to the banks.

And the administration has already signalled that it will introduce tough new limits on executive pay for banks that receive additional bail-outs.

With the US financial sector still troubled, there have been calls for additional funds to be made available.

But Democratic Senator Evan Bayh said that "there will be no additional funding for this programme without airtight assurances that it will be better managed".

Rushed bail-out

The US House of Representatives passed the $700bn government plan to rescue the US financial sector in October last year, having rejected an earlier version of it.

The package was aimed at buying up the bad debts of failing financial institutions on Wall Street.

But it was rapidly switched to supplying additional capital to the banks, on terms that were not fully disclosed at the time.

Many members of Congress have been unhappy with how the distribution of Tarp funds has been handled.

The head of the oversight panel, Elizabeth Warren, told a congressional committee that after three months on the job, her panel is still not getting enough answers from the Treasury.

She described the bail-out as "an opaque process at best".

Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

Steve Watson
Infowars.net
Tuesday, Jan 27th, 2009

Texas Congressman Ron Paul has warned that passing the latest proposed economic stimulus package would be akin to pouring kerosene on an already raging fire.

Paul, who is also a member of the House Financial Services Committee, warned that such measures will cause a recession to turn into a full scale depression possibly worse than that of the 1930s.

During a Television interview with CNN, Paul explained why he believes stimulus funding is such a destructive policy.

“It’s because the government is spending it. If the people were spending it it would be fine, but the government never does anything productive. They have to take money from productive individuals and spend it in non productive ways, so it’s just digging a bigger hole, getting us into bigger debt, and that is the problem.” Paul said.

“This stimulus package is going to cost each and every American $6700 of more debt, so how can that be beneficial? If debt was the answer we would of never had a problem.”

“We are doing exactly what we did in the 1930s, we are taking a recession and working very hard to try and turn it into a depression.” The Congressman added.

“What we’re worried about right now, well certainly I am, is that it’s worse than the 30’s because we’re on the verge of destroying the dollar. So if you think the financial crisis is bad, and the financial system isn’t working, wait ’til you find out when the Dollar doesn’t work.”

The Congressman told viewers that only by liquidating debt, allowing the market to operate freely and allowing prices to come down will the problem be corrected.

Paul also spoke to those who have blamed the free market for the downturn and have suggested that deregulation is a primary cause of the financial crisis.

“We never had a hands off approach, that’s the fallacy, and as long as we believe that we will never correct our problem. If you blame Capitalism and free markets and sound money for this then we can’t win the intellectual fight.” Paul urged.

“If you want to regulate, regulate Government agencies, regulate the Treasury, regulate the Federal Reserve. The Federal Reserve has no oversight, they’re not even permitted to be audited by law, so that’s the kind of oversight we need. The Federal Reserve has committed trillions of dollars to individuals, corporations and banks, they don’t even have to tell us where it’s gone to.” he added.

The Congressman also appeared on MSNBC this morning to discuss the same issue.

One commentator suggested that Paul’s analysis was misguided because “The house is already on fire” and something must be done to put it out.

“You are correct, the house is on fire,” Paul fired back, “and you think you’re putting water on it, but I think you are pouring kerosene on it.” he added.

“We got into this mess by spending too much, borrowing too much and inflating too much. Government was too big and we had too many regulations. We had rejected the market economy for decades, we have rejected the notion of sound money for decades, and we got into a mess this way. So what is the proposal? Spend more money, borrow more money, print more money, regulate more, it makes no sense whatsoever.” Paul asserted.

The Congressman suggested that a more sound approach to the crisis would be to abolish income tax and business tax to get Americans spending, whilst simultaneously cutting overseas spending to cover revenue losses.

“But the problem is no one wants to cut the American Empire,” Paul explained.

“Even Obama’s administration wants to increase spending overseas and increase military spending. As long as you want to run the world empire at a trillion dollars a year, believe me you cannot solve this problem.” he added.

Dollar’s days as dominant currency numbered

Written by John Kemp

The shift in the status of the dollar is probably already under way as faith in the once-invincible greenback and US financial system declines.
January 19, 2009: For the world monetary system, the financial crisis which erupted in the summer of 2007 is a cataclysmic shift that will prove every bit as significant as the outbreak of the First World War (which heralded the sterling’s demise as a reserve currency) and the suspension of gold convertibility in 1971 (which marked the end of bullion’s monetary role).

The crisis marks the passing of an era in which the US dollar has been the world’s undisputed reserve currency for making international payments and storing wealth.

The dollar is not about to lose its reserve status completely. But it is set to become less “special”. In future, it will increasingly have to share its reserve status with the euro, the yen and perhaps the currencies of the other advanced economies. In time, it may even have to share its status with China’s yuan.

In fact, the whole concept of a single reserve currency (the dollar) and a principal reserve asset (US Treasury bonds) is set to undergo a profound shift. Policymakers, businesses and households will in future think about and hold a whole portfolio of competing reserve currencies and assets.

Multipolarity in the world of security and economic relations is set to be matched by a world with multiple reserve currencies. One positive consequence may be greater stability in a more diversified financial system, once the current crisis is passed.

But the price for the United States may be a loss of policy autonomy for Treasury and Federal Reserve officials used to being able to ignore the international dimension when deciding interest rates and budget deficits.

Leading economists agree that global imbalances lie at the root of the current crisis. But opinions are more sharply divided on their origins, which countries are to blame, and what should be done to resolve them.

The Fed’s critics argue that cheap money policies in the late 1990s and early 2000s are mainly responsible for fuelling a debt-driven consumer boom, and sucking in record volumes of imports, many from the newly industrializing economies of Asia.

Funding all this required issuing huge volumes of debt, much of it securitised against dubious mortgages and consumer debts, and sold to foreigners when domestic savings proved inadequate.

In contrast, Fed Chairman Ben Bernanke and some leading commentators blame China. In their view, China’s reliance on export-led growth, refusal to allow the yuan to appreciate, accumulation of foreign reserves, and recycling of surplus foreign exchange back into the market for US government bonds and mortgage-backed securities created a “global savings glut”.

This glut artificially reduced global interest rates and created the perverse incentives for an unsustainable build up of debt in the United States.

Differing interpretations about the origin of the imbalances lead to the two sides to proffer different solutions. Fed critics argue the solution lies in a long-term tightening of US credit conditions and higher domestic savings. Bernanke and his supporters argue the solution is for China to stimulate domestic demand, appreciate the yuan and reduce reserve accumulation.

In reality, it takes both a lender and a borrower to create a debt crisis; the solution to the crisis lies in balanced adjustments on both sides.

While it is tempting to blame China’s “mercantilist” trade policies for the crisis, China is only the latest in a long line of countries the United States has blamed for its own trade and financial problems (Germany and France in the 1960s, Japan in the 1970s and 1980s, the Asian Tigers in 1990s).

But it seems more likely there is something that makes the United States uniquely prone to excess domestic spending and running large trade deficits that in put pressure on the country’s external position.

Several Candidates
There are several candidates for the source of American exceptionalism. But perhaps the most obvious cause is the role of the dollar. The United States has run larger budget and current account deficits than most other countries simply because as the issuer of the principal reserve currency it can.

The positive side has been the ability to borrow more cheaply and in larger amounts than other countries. The dark side has been a steady accumulation of internal and more importantly external debt that is now a source of enormous financial instability.

This paradox linked to the provision of the world’s reserve currency was first noted by Yale economist Robert Triffin. In a famous warning to Congress in 1960, Triffin explained that as the marginal supplier of the world’s reserve currency the United States had no choice but to run persistent current account deficits. As the global economy expanded, demand for reserve assets increased.

These could only be supplied to foreigners by America running a current account deficit and issuing dollar-denominated obligations to fund it. If the United States stopped running balance of payments deficits and supplying reserves, the resulting shortage of liquidity would pull the global economy into a contractionary spiral.

Excess Liquidity
But Triffin warned that if the deficits continued, excess global liquidity risked fuelling inflation. Worse still the build up in dollar-denominated liabilities might cause foreigners to doubt whether the United States could maintain gold convertibility or might be forced to devalue.

Triffin was writing in a world of fixed exchange rates, but his work provides a useful way of thinking about the current crisis. In the 1950s, the fear was convertibility of greenbacks into gold.

Today, the fear is dollar devaluation, inflationary default on Treasury bonds, or capital losses on securitised products linked to widespread insolvencies.

Triffin’s work suggests that the Fed did have a choice in the late 1990s and early 2000s, albeit an unpalatable one. Officials could have refused to supply the incipient demand for liquidity.

Higher interest rates could have prevented the (worldwide) borrowing boom and widespread deterioration of financial standards seen in recent years. But they would also have meant lower growth in the United States and the rest of the world.

Instead, senior officials chose to accommodate overseas demand and reserve accumulation. Low interest rates and the resulting current account deficit provided record liquidity to the rest of the world but at the price of deteriorating credit standards and increasing fragility.

The United States is not the first country to discover the perils as well as the benefits of issuing the world’s main reserve currency. The United Kingdom experienced chronic instability during in the 1918-1939 period in part because the large outstanding “sterling balances” overseas threatened to overwhelm the country’s limited gold reserves and financial system if reserve holders tried to convert them into gold or other currencies.

Maintaining sterling’s convertibility into gold and the integrity of the sterling area required a recognition that attempted conversion would involve “mutually assured destruction” (the United Kingdom would be forced off gold and the Dominions would find the value of their sterling holdings cut). The United States and China are now locked in a similar embrace over China’s massive holdings of U.S. Treasury bonds.

But perhaps the clearest warning about the problems of being the dominant supplier of reserves to the rest of the world was issued by Henry Fowler, secretary of the U.S. Treasury in the mid-1960s: “Providing reserves and exchanges for the whole world is too much for one country and one currency to bear”.

Triffin’s own solution to the dilemma — the creation of new sources of liquidity based on issuing more IMF special drawing rights that would not be liability for any one country— is politically unrealistic.

But reducing reliance on the dollar and US Treasuries and supplementing them with other reserve assets is a necessary step to reduce system fragility. The shift is probably already under way as faith in the once-invincible dollar and US financial system declines.

Rescue of U.S. banks hints at nationalization

By Edmund L. Andrews
Friday, January 16, 2009
WASHINGTON: Last fall, as Federal Reserve and Treasury Department officials rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks.

They may no longer have that luxury. With two of the nation's largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are "too big to fail" and yet unable to function as the sinking economy erodes their capital.

Particularly in the case of Citigroup, the losses have become so large that they make it almost mathematically impossible for the government to inject enough capital without taking a majority stake or at least squeezing out existing shareholders.

And the new ground rules laid down by Obama's top economic advisers for the second half of the $700 billion bailout fund, as explained in a letter submitted to Congress on Thursday, call for the government to play an increasing role in the major activities of the banks, from the dividends they pay to shareholders to the amount they can pay executives.

"We are down a path that this country has not seen since Andrew Jackson shut down the Second National Bank of the United States," said Gerard Cassidy, a banking analyst at RBC Capital Markets. "We are going to go back to a time when the government controlled the banking system."

The approximately $138 billion aid package on Thursday for Bank of America — including injections of capital and absorbed losses — as well as a $300 billion package in November for Citigroup both represented displays of financial gymnastics aimed at providing capital without appearing to take commanding equity stakes.

Treasury and Fed officials accomplished that trick by structuring the deals like insurance programs for big bundles of the banks' most toxic assets.

Instead of investing tens of billions of taxpayer dollars in exchange for preferred shares in the banks, which has been the Treasury Department's approach so far with its capital infusions, the government essentially liberated the banks from some of their most threatening assets.

The trouble with the new approach, analysts say, is that it is likely to conceal the amount of risk that taxpayers are taking on. If the government-guaranteed securities turn out to be worthless, the cost of the insurance would be much higher than if the Treasury Department had simply bailed out the banks with cash in the first place.

Christopher Whalen, a managing partner at Institutional Risk Analytics, said the approach also covers up the underlying reality that the government is already essentially the majority shareholder in Citigroup.

"There's nobody else out there to invest in them," Whalen said. "We already own them."

Ben Bernanke, chairman of the Federal Reserve Board, outlined the elements of what could become the Obama administration's new approach to bank rescues in a speech on Monday.

Speaking to the London School of Economics, but addressing American audiences as much as European ones, Bernanke warned that the U.S. government had no choice but to put more money into banks and other financial institutions if it had any hope of reviving the paralyzed credit markets.

Known officially as the Troubled Asset Relief Program, or TARP, the rescue program has infuriated lawmakers in both parties, who complain that Treasury Secretary Henry Paulson Jr. has doled out money to banks without demanding accountability in return. Obama and his top economic advisers convinced enough lawmakers that shoring up the banks was essential to preventing a broader financial collapse, and offered written assurances that they would address the lawmakers' biggest complaints.

But Bernanke proposed an array of alternative approaches to dealing with the banks in the months ahead, and all of those options reflected a fundamental shift from the original assumptions of the Bush administration.

Paulson had insisted that the government would be investing only in healthy banks, some of which might take over sicker rivals. The Treasury would invest taxpayer dollars in exchange for preferred shares, which would pay a regular dividend and come with warrants that would allow the government to profit from increases in company stock prices.

By contrast, Bernanke proposed various ways to fence off the troubled assets, from nonperforming loans to mortgage-backed securities that investors had stopped buying at almost any price.

Bernanke's options included guarantees for bank assets, which was at the heart of the rescue packages for Bank of America and Citigroup. Citigroup received its rescue package in November, but it is expected to report additional losses on Friday that could top $10 billion.

In both of those deals, the U.S. government set up a complicated arrangement that would limit the banks' losses on hundreds of billions of dollars worth of their worst assets.

Citigroup's deal in November covered $300 billion in assets. Citigroup agreed to absorb the first $29 billion in losses. The Treasury agreed to take a second round of losses up to $5 billion, and the Federal Deposit Insurance Corporation agreed to take a third round of losses of up to $10 billion. The Federal Reserve then agreed to lend Citigroup money at low interest rates for the value of the remaining assets.

As a second option, Bernanke and other Fed officials have proposed putting a bank's impaired assets into a separate new "bad bank." The effect would be much the same as providing a federal guarantee: the bank would be able to free itself from the need to set aside reserves for extra losses.

Both the idea of a government "wrap" and a government-backed "bad bank" have the virtue of protecting the bank's common stockholders from being wiped out by the government.

By contrast, the Bush administration's original approach to recapitalizing banks — injecting capital in exchange for preferred shares with warrants to convert to common stock — had the effect of squeezing out the common shares. That was because any losses would have to first wipe out common stockholders before the bank could stop paying dividends on preferred shares.

"One of the problems with TARP has been a result of the government not wanting to own the banks," said Fred Cannon, chief equity strategist at Keefe, Bruyette & Woods. "If you get losses, there is less common stock. What we are hopefully moving toward, to the extent that the government guarantees some of the assets, is a structure that protects common shareholders and allows the company to go out and raise common shares through the market."

But a growing number of analysts warned that the approach may be too clever, because it gives policy makers too many ways to conceal true problems at banks and true risks to taxpayers.

"What we have is a weird, shadow nationalization," said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm in Washington. "The government does not want to and should not want to own banks. But if they get forced into that situation, they should resolve that situation. Here, what you have is a huge diversified financial services industry with recognized losses and looming losses in every aspect of its operations. There's nothing straightforward about it."

Investors Selling the US dollar before COLLAPSE

Investor Jim Rogers urged people to get out of the dollar and says he expects to be rid of all his U.S. currency assets by summer next year.

"If you have dollars, I urge you to get out,'' Rogers said in an interview from Singapore. He is chairman of New York-based Rogers Holdings, formerly known as Beeland Interests Inc. "That's not a currency to own.''

... Rogers, who predicted the start of the global commodities rally in 1999, criticized Federal Reserve Chairman Ben S. Bernanke for comments on the currency before a congressional committee on Nov. 8.

"He is a total fool,'' Rogers said. "He said Americans who buy only American goods are not affected if the value of the U.S. dollar goes down. I was terrified.''

Bernanke said the only effect of a weaker dollar on a typical American with their wealth in dollars, buying consumer goods in dollars, would be "their buying powers, it makes imported goods more expensive.''

Rogers said that's not right.

"If you only buy American products and the dollar goes down, the price of oil goes up, copper goes up, wheat goes up,'' he said. "That affects you. He doesn't understand the economy as far as I can see.''

The Taj Mahal is not accepting Dollars anymore either. .

U.A.E. May Peg to Currency Basket, Al-Suwaidi Says

Chinese TV: Dump the Dollar
America Will Soon Owe More Than Its Citizens Are Worth
FINANCIAL CONDITION OF THE USA

The Manipulation Of The Gold Market

By Bill Murphy
Created 2005-11-16 08:00
The key to understanding the manipulation of the gold market, this enormous scandal and fraud, is that it can be compared to a murder trial. In the United States a murderer can be put to death if he is found guilty beyond a reasonable doubt. Many times murder defendants are convicted based solely on "circumstantial" evidence because a reasonable person could reach no conclusion other than guilty.

For seven years GATA has discovered one piece of evidence after another supporting our long-held contention that the gold market is managed by certain central banks and their agents, the bullion banks. It is a price-fixing case involving some very powerful people and institutions … in fact it is a Gold Cartel. The U.S. attorney handling the Samsung conspiracy conviction said in an interview this fall that the United States had experienced an "epidemic" of price-fixing cases in the late 1990s. All GATA has done is uncovered one of them, the grandest of all.

For one to appreciate how this can go on and on and not be brought to the attention of the public, one need only to reflect on Enron and Refco. Before its initial public offering of stock, Refco was audited by the most highly regarded firms on Wall Street and nothing wrong was discovered. Yet look at what was really transpiring behind the scenes. Now the company is bankrupt and under criminal investigation.

That said, GATA does have its "smoking gun." It has to do with derivatives and central bank gold. The mainstream gold world says the central banks have nearly 32,000 tonnes of gold in their vaults (minus a small amount that has been sold in recent years or is on loan to gold producers for their hedging operations). GATA says the central banks have less than half of that -- the difference being what was clandestinely fed into the market to suppress the gold price over the last 10 years. The work of three respected GATA consultants -- Reg Howe, Frank Veneroso, and James Turk -- each using different methodologies, supports GATA's contention of vastly diminished central bank gold supply.

Veneroso made a presentation at GATA's African Gold Summit in Durban, South Africa, on May 10, 2001, laying out why the central bank gold loans are far higher than generally believed. This presentation, "Facts, Evidence and Logical Inference ... A Presentation On Gold Supply/Demand, Gold Derivatives and Gold Loans," may be reviewed at:

http://www.gata.org/node/5275 [1]

Howe and Turk have done the same at their Internet sites:

http://www.goldensextant.com/ [2] and http://www.goldmoney.com/ [3].
Meanwhile the International Monetary Fund has instructed central banks to lie about their gold reserves -- to count gold loans and swaps as gold in their vaults. So as not to be so audacious without backup to validate our more than dramatic claim, let me explain. Canadian GATA supporter Andrew Hepburn posed the following question to the IMF in October 2001:

Why does the IMF insist that members record swapped gold as an asset when a legal change in ownership has occurred?

See http://groups.yahoo.com/group/gata/message/903 [4]

The IMF responded:

"This is not correct: the IMF in fact recommends that swapped gold be excluded from reserve assets. (See Data Template on International Reserves and Foreign Currency Liquidity, Operational Guidelines, para. 72, http://www.dsbb.imf.org/guide.htm"

(For more on this, see http://groups.yahoo.com/group/gata/message/904 [5]. The IMF link mentioned above is no longer operating. It was in 2001 as noted in the GATA dispatch.)

Yet a footnote on the Internet site of the central bank of the Philippines contradicts the IMF's claim and reveals it to be bogus:

"Beginning January 2000, in compliance with the requirements of the IMF's reserves and foreign currency liquidity template under the Special Data Dissemination Standard (SDDS), gold swaps undertaken by the BSP with non-central banks shall be treated as collateralized loans. Thus, gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap."

(See http://www.bsp.gov.ph/statistics/sefi/fx-int.htm [6].)

The European Central Bank and other central banks corroborated exactly what the central bank of the Philippines declares about counting gold loans the same as gold in the vault.

The "smoking gun" part of this has to do with the gold derivatives on the books of the Bank for International Settlements in Switzerland. The gold establishment says the gold derivatives on those books have been associated with gold producer hedges. Yet in the last four years gold producers have reduced their hedges by more than 2,000 tonnes of gold, or more than 50 percent of their hedging at its peak. Consider this excerpt from a Reuters report from November 8, 2005:

"LONDON -- .... The Hedge Book report produced by Haliburton Mineral Services and industry consultants Virtual Metals said the so-called hedge impact of the global book fell by 1.0 million ounces to 52.8 million ounces. ... The global hedge impact in the July-September quarter was just more than half its level in the same quarter of 2001 when it peaked at 102.8 million ounces."

Meanwhile, gold derivatives have gone up during that period of time, not down. While these are complicated and technical, Howe updated GATA's evaluation of the BIS gold derivatives in a report he posted at GoldenSextant.com in June, "Gold Derivatives: Skewing the World":

"On May 20, 2005, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries for the period ending December 31, 2004. The total notional value of all gold derivatives rose from $318 billion at mid-year 2004 to $369 billion at year-end. As subsequently detailed in table 22A of the June issue of the BIS Quarterly Review, released June 13, 2005, forwards and swaps increased slightly from $129 to $132 billion while options rose dramatically from $189 to $237 billion."

Howe's report can be found here:

http://www.goldensextant.com/commentary29.html#anchor3776 [7]

The only explanation for the dichotomy between the reduced hedges and the increased gold derivatives on the books of the BIS is undisclosed lending of gold and writing of central bank call options associated with the price suppression scheme.

There is one other anecdotal point to make proving how right GATA has been all along and what it means for gold investors in the years to come. For years GATA has claimed that the key to the eventual surge in the price of gold was the rising physical demand for gold amid the diminishing supply of central bank gold used to suppress the price. The gold establishment has associated the rise in the price of gold over the years with the weakening of the U.S. dollar. GATA has claimed otherwise.

We said the Gold Cartel was using the action of the dollar for price-rigging purposes. GATA has said over and over that the price of gold could rise hundreds of dollars per ounce and the dollar do nothing relative to other currencies. We said it would happen when the gold cartel began to lose control of its price manipulation scheme.

Well. ...

The euro came into existence on January 1, 1999, at $1.17. The price of gold that day was $284. As this is written in mid November 2005, the euro approached $1.17 again while gold has rocketed $194 per ounce since the beginning of 1999.

Here's more that helps to prove GATA's case about the gold market. At the beginning of 2005 gold was $420 and the euro was $1.30. In mid November the euro was trading at $1.17. But the price of gold was $478. The argument that gold is tied to the dollar has gone the way of the Dodo bird. Of course, should the dollar crash, which it should, this can only help the gold price.

The price of gold is headed to well beyond $2,000 per ounce. GATA knows why.

Now you do too.

Federal Reserve Bank (Inc.) A Murderous History?

May 1, 1776 Adam Weishaupt retained by Rothschild's completes world dominance plan.

1776-1790: U.S. Independence - Free Banking -no formal central bank.

1791-1811: First Bank of the United States.

1816-1836: Second Bank of the United States.

1837-1862: Free Banking Era -no formal central bank.

1862-1913: System of National Banks (Consequence of Lincoln's War).

1914-crrent: A consortium of 12 privately held banks called the Federal Reserve Bank. The largest share holder of the bank are the Rothschild's of London.

The accomplishments of the Rothschild's and fellow banksters is nothing short of astonishing. They have literally got the world to hand them the right to manufacture money out of nothing and then to turn around and lend the mammon back to the world plus usurious interest! Almost singlehandedly, this small group of men have dominated the world. However, in their efforts to dominate the world they have caused extraordinary pain and agony and even potentially the complete destruction of life on earth.

The Federal Reserve Bank is a consortium of twelve private banks which are not part of the United States Government.

These private banks purchase paper notes from the U.S. mint for printing cost or simply enter digital money into their computer then lend back the money plus interest to the people through member banks. The profits go into the share holders of the bank's pocket's, the U.S. public receives no benefit.

The Primary Owners of the Federal Reserve Bank Are:

1. Rothschild's of London and Berlin

2. Lazard Brothers of Paris

3. Israel Moses Seaf of Italy

4. Kuhn, Loeb & Co. of Germany and New York

5. Warburg & Company of Hamburg, Germany

6. Lehman Brothers of New York

7. Goldman, Sachs of New York

8. Rockefeller Brothers of New York

All the primary owners are branches of European establishments. Foreigners, almost entirely Jewish, control the United States Money supply. They literally own exclusive rights to the dollar and simply enter dollars into their banks books to make money which they then lend back to us at a profit. For them money does not grow on trees, it is simply a data entry into their account. Clearly the private ownership of the U.S. Dollar is by far The Greatest Crime of the Century. The owners of this bank have been responsible for instigating all the major wars and depressions in the last 100 years. They own the bank, they own the dollar and they own all the major media channels, the military industrial complex and most politicians, judges and cops.

Sometimes the bank pays an arbitrary 'franchise fee' to the U.S. government to keep the politicians paid off.

The first two private National Banking Systems lasted about 20 years before being eliminated. The current Federal Reserve Bank private National Bank has lasted nearly 100 years.

In Producer Aaron Russo's must see Movie "AMERICA: Freedom to Fascism", when interviewing Congressman Ron Paul, Aaron asks: "So the Federal Reserve is actually an illegal entity functioning within the Federal Government?" Ron Paul's response: "It's illegal. And what we have given to this so-called agency is the authority to counterfeit money."

The cost of this system to the U.S. public is hundreds of billions of dollars every year while holding the nation and people in a constant state of debt.

There have been assassination attempts on every President who attempted to eliminate these private National Banks. The privately held Federal Reserve Bank has not once been audited and never pays any income tax on their astonishing income.

The bank is supposed to bring stability to the economy, however, almost every major marked crash and war can be attributed to the Federal Reserve Bank, including the Great Depression, WW I, WW II, the Gulf War etc.

In 1913 in exchange for paying for his Presidential campaign, President Woodrow Wilson signed the Federal Reserve Act handing over the U.S. currency to twelve regional private banks. In 1933 Roosevelt confiscated citizens gold and handed it to these private banks.

Arguably the formation of the Federal Reserve Bank is

The Crime of the Century

The Federal Reserve Banking Act, passed in 1913 is categorically unconstitutional, it is unlawful.

The Federal Reserve Bank's money fraud has devalued the dollar to about four percent of its worth in 1930

Henry Ford once said "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning".

Article 1, section 8, of the Constitution reads:

The Congress shall have the Power.....To coin Money, regulate the Value thereof,....

Congress has no authority to delegate this responsibility to third parties.

As a show of audacity and control, the Federal Reserve Bank prints their Notes with the faces of Presidents who adamantly opposed having a private National Bank, and Presidents the bank either tried to or did kill.

There will never be world peace, there will never be economic stability, there will never be a free economy as long as these banksters control the worlds money supply. Their goal is to achieve a socialist one world government - a "New World Order", as is printed in Latin on their $1 Note.