Black People : Is the Federal Reserve a National Deity?

Discussion in 'Black People Open Forum' started by Putney Swope, Sep 9, 2009.

  1. Putney Swope

    Putney Swope Well-Known Member MEMBER

    Jun 27, 2009
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    Published on Tuesday, September 8, 2009 by The Guardian/UK
    What Exactly Did the Fed Do with $2 Trillion?
    by Dean Baker

    To combat the financial crisis set off by the collapse of the housing bubble, the Federal Reserve Board [1] has lent out more than $2tn through various special lending facilities. While the Fed discloses aggregate information on the loans made through each of the facilities, it will not disclose how much money it lent to specific banks or under what terms. By contrast, the Treasury puts this information about its $700bn TARP bailout [2] up on its website [3].

    Partly in response to this huge increase in the Fed's power (its secret lending is equal to two-thirds of the federal budget), more than 270 representatives in Congress have co-sponsored a bill that would have the Government Accountability Office audit the Fed. In principle, this audit would examine the Fed's loans and report back to the relevant congressional committees, which could decide to make this information public.

    Most people might consider it perfectly reasonable to have Congress's auditing arm review what the Fed has done with $2tn of the taxpayers' money to ensure that everything is proper. After all, we wouldn't let other government agencies spend one millionth of this amount ($2m) without some sort of record that could be verified.

    However, the Fed and its chairman Ben Bernanke [4], do not see it this way. Bernanke warned Congress [5] last month that such an audit could jeopardise the Fed's independence, which in turn, "could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability".

    OK, Bernanke warned Congress that if the Fed had less independence, it could lead to "reduced economic and financial stability." We have just been through a year in which the Great Depression was a more frequent topic of conversation than the Superbowl, World Series, and Oscars combined. In fact, Bernanke is given credit for preventing another Great Depression. The Congressional Budget Office is now projecting that unemployment will average in the double digits throughout 2010 and it will not be until 2014 that the unemployment rate falls back to its normal level.

    Did Bernanke forget about the current state of the economy and the financial collapse that he was frantically trying to head off when he warned Congress that if the Fed were less independent, it could lead to "reduced economic and financial stability"? After all, how do you get less economic and financial stability than the Great Depression?

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