Bernanke to Congress: I Don't Know to Whom We Gave Half a Trillion Dollars
Alan Grayson is a Democratic Congressman representing Florida's 8th congressional district. He was elected in 2008, having beaten the 4-term Republican incumbent. Despite his freshman status, Grayson is already developing a reputation as a fierce advocate for taxpayer interests in the wake of massive bailouts of the financial sector that have been orchestrated by the Treasury Department and Federal Reserve. Serving on the Financial Services Committee and subcommittee that deals with capital markets, the congressman, having been a successful entrepreneur, clearly knows how to read a balance sheet and ask relevant questions. Thus, the stage was set when the Florida congressman had the opportunity to question Fed Chairman Ben Bernanke when the latter appeared before Congress to present an update on the economic crisis gripping America and much of the world.
Congressman Grayson demanded details from Bernanke on a half trillion dollars in liquidity swaps to foreign central banks undertaken by the Federal Reserve, apparently under the radar and in the dead of night. Demonstrating that he and his staff had done their fact-checking, Grayson noted that in 2007 these swaps with overseas central banks were a mere $24 billion, but had swelled to a staggering $553 billion in 2008 with the onset of the Global Economic Crisis.
The exchange between Grayson and Bernanke appears almost Kafkaesque in its reality-defying character, conveyed in the following, as a clearly uncomfortable Fed Chairman provides a tortured explanation regarding this half trillion dollar transaction:
Bernanke: "Those are swaps that were done with foreign central banks..."
Grayson: "So who got the money?"
Bernanke: "Financial institutions in Europe and other countries..."
Grayson: "Which ones?"
Bernanke: "I don't know."
Grayson: "Half a trillion dollars and you don't know who got the money?"
Bernanke: "Um, um, the loans go to the central banks and they then put them out to their institutions..."
Half a trillion dollars is a number so grandiose, it defies comprehension unless it is reduced to its ultimate simplicity. These credit swaps that exchanged American dollars for various foreign currencies were done without any consultation with elected officials, and amount to more than $1,800 for every man, woman and child residing in the United States. Under section 14 of the Federal Reserve Act, according to Chairman Bernanke, the Fed's Open Market Committee (FOMC) can engage in swapping U.S. dollars with foreign central banks without any limitations, at any time, without any requirement for congressional scrutiny. In other words, "Congressman Grayson, why are you wasting my valuable time with these irrelevant questions," Bernanke seemed to be implying through his frosty demeanor. Never mind that the Federal Reserve Act was originally passed in 1913, nearly a century ago.
"Is it safe to say that nobody in 1913 contemplated that a small little group of people would decide to hand out half a trillion dollars to foreigners," Grayson pointed out. He raised as an example New Zealand, which received $9 billion from the Federal Reserve, an amount equal to $3,000 for every one of that nation's citizens.
The congressman from Florida's 8th district is to be commended for his focused inquiries directed at the Fed Chairman, and steadfastness in the face of Bernanke's evasiveness. More importantly, Grayson raises anew serious questions regarding the unlimited power placed in the hands of the Federal Reserve. The defenders of the Fed's current position of fiscal omnipotence maintain that its independence from political influence must be preserved.
However, the historical record, especially in the last 20 years, clearly shows that the Federal Reserve is influenced politically, either through the executive branch and the power of the President to reappoint the Fed Chairman, or through the large financial institutions on Wall Street, which have a level of access to Fed decision-making not available to any other category of citizens. More importantly, since the onset of the current financial and economic crisis, the Federal Reserve and its chairman have proven to be highly fallible, having made many errors in judgment, not the least being their original overly-optimistic pronouncements when the first tremors from the sub-prime meltdown arose.
Congressman Grayson's penetrating inquiry serves as a reminder that the ultimate systemic risk to America's financial system and economic superstructure stems from allowing a small, fallible clique to make speedy decisions involving incalculable sums of public money without any consultation with or checks and balances from the nation's elected representatives. This is not only fiscal tyranny by any other name; it is a recipe for unintended and disastrous consequences.
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To paraphrase a quote attributed to Everett Dirkson - half a trillion here, half a trillion there, pretty soon it adds up to real money.
Of course, Dirkson was talking billions, not half a trillion.
But, apparently, to the Fed, Bernanke and Obama - there doesn't seem to be a difference - as long as it isn't bankster money, just taxpayer money.
Perhaps the Senate will require the next head of the Fed to be have basic accounting skills. The fed chief should be able to count billions, don't you think? Do something more than give money to bankers for their compensation packages?
One might include in the subprimes many large loans to people based on little collateral - people like Trump, in the red, who tells a banks to give him money because they will lose the loans they have already provided. Michael Jackson wants new loans, even after his death. there are many people who are living basically off loans like billionaires.
There were many leaks of capital from the system - the subprime mortgages were just one. Bad loans to developing nations were initially the problem, and also the possibility of serious corruption in the international banking community - by agents of governments anti-alined with Western finance. There is also, quite probably operations like the S&L scandal, on an international level. There is no one to stop this sort of action.
With TARP insuring catastrophic losses, the best game to play is
Double Down.
You start with a relatively small investment. If it wins, you make another investment, if you lose, you double your bet and make another investment. Odds are one of the investment WILL win, so you get your profit.
Trouble is, the inevitable bank breaking losing streak wipes out everything times 1000.
Fortunately, TARP now pays off those worst losses, so
Let the Gambling continue!
We did not need to bailout the banks.
Had we simply spent that money in infrastructure, rooftop solar, biochar in the USA,
ALL THE MONEY WOULD END UP IN THE BANKS ANYWAY!
Where do people keep their money?
Bernanke sits on the board of the Bank for International Settlements and claims he doesn't know where the money went?
Whenever Bernanke opens his mouth, I know another whopper of a lie is going to pop out. The Fed has to be audited.
Same with Geithner. I just watched his testimony today from Friday to the Banking and Finance Committee on C-Span.
This myth of "Fed Independence" is extremely annoying. The Fed acts in concert with the US Treasury to buy US debt and print money to fund our government. The Congress has the constitutional power to coin money and regulate its value, not a banking cartel.
DON'T FORGET THE FED, OWNED BY THE WORLD'S LARGEST BANKS - WANTS TO BE OUR CONSUMER FINANCIAL PROTECTION AGENCY!
This must be STOPPED or we will SEE MILLIONS MORE FACING UNEMPLOYMENT and DISASTER!
FED Reserve System is NOT a government Agency but is owned and run by the BANKS for the BANKS to take from the P00R to give to the RICH EL1TES!
AUDIT the FED and it will BL0W your S0CKS 0FF!
Then Take it away from the Banks who OWN and RUN it as their very OWN PIGGY BANK with endless DEBT for the Rest of America.
The FED Debt System has DRIVEN America from being the # 1 Creditor Nation to being the #1 Debtor Nation! China run by C0MMUN1STS is run better and more competently then the FED does in America!
END THE FED! AT LEAST AUDIT THEM!
AMERICA NEEDS A REAL CONSUMER FINANCIAL PROTECTION AGENCY = NO FED!
Audit the Taxes that are paid by the institutio
It has been a long time coming to end the FED. We definitely require an audit. I can't believe we have to pay interest on the money we loaned them. This is pure crap. The only thing that gives me hope is the fact that Americans are taking their second amendment rights seriously and are beginning to arm themselves.
think this may help ben http://www
so let me get this right, Bernanke, who never saw the financial collapse coming, did the right thing in buying currencies to keep this house of cards from falling further? I hope so
but I think he might have just delayed it
Another misleading article.. they sold US dollars to foreign banks for their currency. It was an asset sell/currency exchange.
Given drop in U.S. dollars value since then.. he won/made profit..
Its was done because the currency interchange markets froze and due to a huge drop in Asset values due to us Americans being unable to repay what we borrow... the money supply had dropped. We needed more Dollars in circu;ation.
The Congressman asked a dumb question.
If you sell your car and get cash.. does the car salesman know what you did with the car you bought or do yoiu know what he did with the cash. And does either party care.. its their asset now.
The echcange of currency was between central banks... what a foreign government did with that currency is their business. Most likley used to buy our debt since we are the worlds largest debot nation since we dont make anything for the last 30 years and borrow to buy what we dont make..
Regards
Why is this ignored by virtualy all meda? Because Wall Street insiders have influence over our media as well as over our politicians. The Fed has broken the law, looted untold billions and refuses to be exposed to the light of transparent truth.
Remember that phrase "Fanny and Freddie are implicitly backed by the US Government?"
Those securities were sold overseas on that idea with politically connected Fannie and Freddie officials such as Rahm Emanuel on foreign tours.
Paulson said during his term he was hectored much during foreign tours about American fiscal irresponsibility.
Bush fought it, but relented. He was under pressure--remember the stories after the House of Representatives said no to the bailout--from foreign sources. He caved, Fanny and Freddie are openly "government backed"--meaning, investors take no risk. The foreigners were bailed out, no hair cuts.
The foreign leverage over Bush? They would stop financing US deficits. America was weak, and getting weaker this year with higher deficits. No one is listening to Obama, not even tiny Honduras. When they demanded more money for the IMF, Obama and Congress jumped.
It's not "fiscal tyranny" ... it's "high crime."
"But let me put it to you quietly, oh honorable Committee members. I shall offer you the carrot or the stick. The carrot is $5 million in gold. You get that if you ask Bernanke dumb questions but promise above all not to do anything. Do NOT, for example, state something so crass as, 'It appears to me, Mr. Geithner, that you and Mr. Bernanke are colluding together to empty the entire United States Treasury, and furthermore that you have done so.' Do NOT, under any circumstances, say that.
"And here is why, your Honors. Because if you do, I shall tell everyone that over the course of the last year alone you have accepted more than $50 million in bribes from me. I will not call it 'lobbying.
"Excellent. Now here is $2 million in gold coins. Call it a 'down payment.' But do not forget what I have said to you, Congressman ..."
This year it was called for a private enity to audit the Fed. However it was stopped by Barnie Frank and his followers just like they stopped the regulation of Fannie and Freddie. Why can't the American people have an accounting of the Fed. I trust Bernake as far as I can throw him. I trust Barnie Frank even less.
http://www
AIG was kept afloat in secret from Aug 2004 till October of 2008.
Bush would never have been re-elected if AIG had crashed in August of 2004.
Paulson put an Auditor at AIG that was allowed to add money to AIG's books with the stroke of a pen.
From Jan 2005 to June 2008 Billions of shares of stock were sold quitely by insiders who all the time were making clams about how great the matkets was doing.
Pls note Europe and the rest of the world was holding 30% of our bad debt/home loans... You know like man... they gave us money and we gave them back paper... and nothing else!
Second just like Tarp ,, we did not give out the money w/o getting assets in return... We got their currency in exchange..
If you pay some one for a car ... and get a car... its called an asset exchange, not a gift.
Of course we could have allowed foreign governments financial institutions to collapse because they loaned Americans money they could not pay back that buy our treasuries
The money supply quickly dropped as asset devaluations occured... the Fed wanted to inrease the dollars in circulation to make up for this drop in the money supply which kills an economy!
Its this type of reporting that keeps us stupid. I dont know what the car salesman did with the money I gave him for the car he gave me either... and he does not know where the car is now...
And dont let this out but the Fed has not been printing money, actually reducing the money supply since last December!
Regards
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