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the Federal Reserve

Article Index

7 Reasons Not to Trust the Bernanke Testimony to Congress

By , Associate Editor, Money Morning • @DavidGZeiler -

As usual, the markets were hanging on every word of the Bernanke testimony to Congress today (Wednesday).

By now, everyone should know better.

In the years that U.S. Federal Reserve Chairman Ben Bernanke has been a member of the Fed - both as a member of the Board of Governors from 2002 to 2005, and in his two terms as chairman beginning in 2006 - he has been stupendously wrong time and time again.

Bernanke gave the markets what they wanted by hinting that his monetary easing policies won't change any time soon, pushing both the Dow Jones Industrial Average and the Standard & Poor's 500 Index up more than 0.5% in midday trading.

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The New Crisis Warning Just Issued to the Federal Reserve

By , Money Morning -

Before the housing market crash, economists warned that record low-interest and mortgage rates were fueling a housing bubble.

Unfortunately, those fears were both overlooked and underestimated.

Now, an advisory council to the U.S. Federal Reserve is warning the Fed that its record $85 billon-a-month stimulus and ultra-low interest rates are fueling new bubbles in student loans and farmland.

"Recent growth in student-loan debt, to nearly $1 trillion, now exceeds credit-card outstandings and has parallels to the housing crisis," according to minutes of the council's Feb. 8 meeting.
In addition, "agricultural land prices are veering further from what makes sense," the council said. "Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates."

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5 Things the Federal Reserve Hopes You'll Never Find Out

By , Associate Editor, Money Morning • @DavidGZeiler -

Most Americans assume the U.S. Federal Reserve is a powerful government institution that seeks only to safeguard the dollar, boost the economy and drive employment higher.

That's what the Fed wants you to think.

The illusion of the Fed as a stabilizing, positive government entity has more or less existed since its creation under dubious circumstances in 1913.

"It not only avoided the word bank, it cleverly implied federal, or government, control over the establishment of a pool of reserves that would backstop the new banking 'system,'" said Money Morning Capital Wave Strategist Shah Gilani.

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Do We Really Need the Federal Reserve?

By , Chief Investment Strategist, Money Map Report -

Last week I spent two days speaking to senior government officials and business leaders in Bermuda, which is one of the world’s leading international insurance and reinsurance hubs. The men and women in the room are responsible for hundreds of millions in assets worldwide.
As I was finishing up, I received one of the most provocative questions I’ve gotten in a long time:
"Does any nation really need a 'Fed'?"
Here is my unequivocal answer...

There's More Than One Way for the Fed to End QE

By , Money Morning -

The market has been looking ahead to the inevitable end of the U.S. Federal Reserve's quantitative easing (QE) program with considerable apprehension.

Most market observers expect the end of the Fed's QE asset-purchasing program to immediately result in a sharp sell-off in bonds and higher interest rates.

This is expected to hit the mortgage-backed securities (MBS) market, where the Fed has been very active, quite hard.

As part of a policy to communicate more openly with the markets, Chairman Ben Bernanke and the Fed have been regularly launching QE exit strategy trial balloons into the market to see how quickly they get shot down.

The latest exit strategy that has been gaining traction is the idea of "tapering" QE asset purchases so that there isn't a sudden halt to supply of money flowing from the Fed into the Treasury and MBS markets. The markets seem to be pretty sanguine about the tapering idea, although there has been no specific suggestion on timing.

Instead, the markets have been concentrating on how the Fed will get rid of all of the assets it has accumulated on its balance sheet during the QE program.

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Did the Fed Just Admit QE3 Has Been a Major Failure?

By , Associate Editor, Money Morning • @DavidGZeiler -

After four years of quantitative easing programs, including QE3 just last fall, U.S. Federal Reserve officials have started voicing doubts about its effectiveness and concerns that it is distorting the markets.

And it's not just the Fed's hawks, such as Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser, speaking out against the bond-buying extravaganza.

Doves like Atlanta's Dennis Lockhart and moderates like Kansas City's Esther George have expressed concerns about QE3 as well.

"I do think the growth of the Fed's balance sheet could have longer-term consequences that are worrisome. While I've supported these policy decisions to date, I acknowledge legitimate concerns," Lockhart said in a speech in Atlanta on Monday.

According to the minutes of the December Federal Open Market Committee (FOMC) meeting, several members "thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet."

If in fact sentiment within the FOMC is turning against QE3, then the easy money spigot that has helped fuel the stock market and other investments could be switched off sooner than most expected, which could have a sharp impact on the markets.

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What You Probably Don't Know About The Federal Reserve and Why It's So Dangerous

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

The Federal Reserve System is a government-sanctioned private enterprise that functions as a socialist tool.

It was conceived in 1910 and constructed for the benefit of the private bankers who control it. Congress blessed the scheme in 1913 with passage of the Federal Reserve Act.

These days the Fed doesn't just backstop America's too-big-to-fail banks. It has expanded its doctrine of socializing banking losses globally.

The Fed helped bail out private businesses, foreign big banks and central banks in Europe and Japan in the credit crisis of 2008 and is the model for the European Central Bank, as well as the ECB's primary backstop.

To understand how the Fed gets taxpayers around the world to pay the losses its member banks routinely incur, let's pull back the curtain on the Fed and explain how it operates.

Here's What the Fed Really Does

Banks lend money and sometimes they don't get paid back. That's not a problem if it doesn't happen too often and if profits from other loans and investments cover the loan losses.

But since banks have gotten really big and have to make big loans (due to economies of scale and return on capital expectations) they need big borrowers. There are no bigger borrowers on the planet than governments, and that's where a lot of banks are lending.

Of course, governments aren't immune to over-borrowing and insolvency.

All the big banks that lent to banks in countries now in financial straits continue to lend to them because if they don't they won't get paid back what they are owed. Banks would fail from a cascade of losses and would either have to be bailed out or shut down.

That's where the Federal Reserve comes in.

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The Federal Reserve's Magic Act is Destroying America

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

When it comes to the Federal Reserve, it's not a matter of what you see is what you get. It's more a matter of what you don't see is what you'll end up getting.

Getting, as in up the you-know-what!

I'm talking about getting socialism shoved up our capitalist backsides, for one thing.

It's simple: We are about to go over the so-called fiscal cliff. Why? Because Congress can't figure out how to stop spending money it doesn't have.

Forget the whole revenue side of the equation. It's only part of the mix of fixes, and the only fix that matters ain't fixed.

Stop spending money you don't have and you don't have to tax people more to pay for a bunch of crap they don't need, don't want, and don't even know they're getting.

Oh, that would be because on top of what we are getting there's even more that we're not getting.

Congress' paymasters are getting pork and beans for whatever they want because that's how our Congress gets elected, by greasing the wheels of insiders to get taxpayer money for their private purses, enough to plentifully pay for campaigns.

But that's only the "private" side of spending.

The spending scheme has mushroomed by expanding (and paying sickeningly outrageous wages and benefits) an ever-growing number of government workers.

And by expanding entitlements beyond what we are entitled to. And by expanding welfare and "social programs."

Yes, I am including 99 weeks of unemployment, and accompanying food stamps, and free money for unwed mothers to have more kids so they can collect more free money, and free day care, and all the other free stuff that ain't free if someone (that's you and me) is paying for it.

All that spending creates a class of people, a voting class. And, guess what they vote for?

Duh, that would be more free stuff.

So what's this got to do with the Fed?

I'm glad you asked...

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The Bare, Naked Truth About The Federal Reserve's Socialist Agenda

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

The top line story, according to the FDIC's latest Quarterly Banking Review, is that the majority of U.S. banks are in better shape today than they have been in years.

The untold story is that when the Federal Reserve is done transitioning the United States from capitalism to socialism, the few dozen banks that remain in America will all be profitable until they need bailing out again, but will never die and live on in infamy.

Is that just hyperbole or some wild conspiracy theory? It's neither. Unfortunately, it's the bare, naked truth about the Fed.

It doesn't matter that you didn't know the Federal Reserve System was the brainchild of a handful of the world's most powerful bankers.

Or that all of them took a secret train from New Jersey to Jekyll Island, Georgia (owned by J.P. Morgan) in 1910 aboard Rhode Island Senator Nelson Aldrich's private car to devise and orchestrate the creation of the Federal Reserve.

Or that Aldrich was an investment associate of J.P. Morgan, that his son-in-law was John D. Rockefeller, Jr., or that he was the political spokesman for big business and banking interests in Congress.

It doesn't matter if you don't know who the powerful bankers are today that run the Fed's twelve district banks. Or that the Fed's New York Bank conducts all its open market operations with a bunch of favored big banks it protects (Case in point, MF Global).

Or that one former Chairman of the New York Bank's Board, who was also and still is a Goldman Sachs board member, resigned from the Fed when it was discovered he bought $3 million worth of Goldman's stock right before the Fed made sure Goldman wouldn't have to go out of business at the height of the financial crisis.

What matters, is that without the Federal Reserve the banking system in the United States would be more honest, more competitive and less of a risk to the economy than it is now.

And what really matters, is understanding the Federal Reserve could never exist and do what it does in an open democracy, and that its agenda of socializing risks (making taxpayers eat bankers' losses) and privatizing their profits (letting them keep their bonuses) for the benefit of its club members (the banks) means the Federal Reserve has to transform America to a socialist model in order to maintain its own growth and ultimate power.

Of course, it's not a stretch to see how the Fed's socialist agenda will eventually encompass most of the American economy over time.

But to keep it simple, let's look at how the Fed has already done that to the benefit of its primary constituents: banks and bankers.

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The Federal Reserve Is Socialism's Insidious Tool

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

If you think for one second that the Federal Reserve System is a Godsend that backstops America's banks and our economy in times of trouble, you'd be right for that one second.

But if you take any time to learn how the Fed really works and in whose interest they operate, you'd make yourself sick for a long, long time.

The truth about the Federal Reserve is that it's a dangerous, insidious socialist tool.

Rather than allowing free markets to function as a "clearing mechanism" that rewards success and punishes failure, the Fed fosters underdevelopment of third-world nations, props up corrupt governments, protects the greedy, self-serving banking constituency it serves, and by design promotes socialism to further its mandate to enrich its masters.

I'm sick of the Fed and their control over the U.S. Congress, the American economy, and the world order.

It's about time the American public revolted against the Fed and our pandering Congressmen who pimp for it, abrogated their Constitutional duties to it, and get rich off it, all the while pretending they control it and it's some kind of Constitutional safeguard.

The Untold Story About The Federal Reserve

You see, the Fed was the brainchild of a bunch of the world's most powerful bankers and a few greedy U.S. Congressmen who were not surprisingly in the employ of banker backers.

The history of the Fed is a fascinating story about American politics and power-broking bankers.

The undisputed truth about the creation and mandate of the Federal Reserve System is laid bare, beautifully I might add, in G. Edward Griffin's The Creature from Jekyll Island.

I thought I knew a lot about the Fed, and it turns out I do. But there is so much more that I didn't know, and it's all laid out in the book, with all the accompanying references and proof.

It chilled me to my very core...

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Thanks to the Fed, It's All Proceeding According to "The Plan"

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

If you've been reading the headlines, you know Bank of America Corp. (NYSE:BAC) is in trouble. It could be in really big trouble.

Thank goodness they're so big!

Thank goodness all the big banks in America are all much bigger now than they were a few years ago, before the financial crisis brought them to their knees, by their own doing, of course.

Don't you just love it when a plan comes together?

Yeah, it's all part of "The Plan" to eliminate pesky banking competition.

Let me show you how nicely it's working...

The Fed's 100-Year Plan

The Plan was hatched a long time ago. Back in 1913, as a matter of fact.

That's when Congress devised the Federal Reserve System for eliminating competition and making sure U.S. taxpayers would be the lender of last resort to big bankers.

It has taken a while, 100 years, in fact. But it is working.

The first sign it was working came in the 1980s and '90s, when the savings and loans got into serious trouble playing the greed game.

They weren't covered by the Federal Reserve System. So they were shut down, or rolled up by government-backed insiders (Congress' puppet-masters), and later sold to big banks for sweet profits.

Anyway, they're gone. No more pesky competition from S&L associations.

Now look who's next on the chopping block...



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