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Old August 31st, 2009 #21
Alex Linder
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North was also a Y2K hoax profiteer; I'm not recommending him for anything other than his column, which is pretty good.
 
Old August 31st, 2009 #22
Rick Ronsavelle
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"So now we know why the site exists. He wants to spread the word about Christian Reconstructionism. Not a bad thing in itself, until you dig a little deeper and get closer to the roots of North's beliefs. In this quote he talks about religious freedom, which is the entire basis for the existence of this country. His words are shocking and horrifying to me, and, I think, to any US citizen.

So let us be blunt: we must use the doctrine of religious liberty to gain independence for Christian schools until we train up a generation of people who know that there is no religious neutrality, no neutral law, no neutral education, and no neutral civil government. Then they will get busy in constructing a Bible-based social, political and religious order which finally denies the religious liberties of the enemies of God.

--Gary North, quoted in Albert J. Menendez, Visions of Reality: What Fundamentalist Schools Teach (Prometheus Books, 1993)"

http://www.sweetliberty.org/garynorth.htm

>>Yes, what he wrote is very good, and must stand alone.
 
Old August 31st, 2009 #23
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Chart of who "owns" the Federal Reserve:

http://www.save-a-patriot.org/files/view/whofed.html
 
Old September 16th, 2009 #24
Alex Linder
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Priceless: How The Federal Reserve Bought The Economics Profession

by Ryan Grim

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.

Despite all this, Bernanke has been nominated for a second term by President Obama.

In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.

Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."

So who seduced them?

The Fed did it.

Three Decades of Domination

The Fed has been dominating the profession for about three decades. "For the economics profession that came out of the [second world] war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s," says University of Texas economics professor -- and Fed critic -- James Galbraith. "The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn't a culture of consulting, and it wasn't the same vast network of professional economists working there."

But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and "officers" -- who are generally also economists -- the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.

Just how dominant is the Fed today?

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation [and] aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.

Robert Auerbach, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, "Deception and Abuse at the Fed". A chapter in that book, excerpted here, provided the impetus for this investigation.

Auerbach found that in 1992, roughly 968 members of the AEA designated "domestic monetary and financial theory and institutions" as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it's fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field.

Auerbach concludes that the "problems associated with the Fed's employing or contracting with large numbers of economists" arise "when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications."

[much more at link]
http://www.huffingtonpost.com/2009/0...ml?view=screen

Last edited by Alex Linder; September 16th, 2009 at 04:50 PM.
 
Old September 16th, 2009 #25
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Quote:
But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation [and] aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.
Kosher parasites, every last one of them.

The kikes have really created a paradise for themselves, or should I say, the goyim have really created a paradise for the kikes.
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Old September 16th, 2009 #26
Alex Linder
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The Third Rail of Academia

by Gary North

The Social Security system has long been described as the third rail of American politics. "Touch it, and you die." You get electrocuted. If you should somehow survive, the next subway train will cut you in pieces.

There is such a rail in academia: the Federal Reserve System.

A fascinating article appeared on the Huffington Post on September 10. Its title was good, and its content was better: "Priceless: How the Federal Reserve Bought the Economics Profession." The title is a veiled reference to a popular series of MasterCard TV ads. The author began with this, and never looked back.

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

It is a long article and well worth reading. It presents evidence that the Federal Reserve for three decades has had almost the entire profession of monetary economists on its payroll, one way or another.

He offers this example. In 1993, Greenspan informed the House Banking Committee that 189 economists worked for the Board of Governors (a government operation) and 171 worked for the 12 regional Federal Reserve banks (privately owned). Then there were 703 support staff and statisticians. These came from the ranks of economists.

This was only part of the story: the proverbial tip of the iceberg. From 1991–1994, the FED handed out $3 million to over 200 professors to conduct research.

This is still going on. There has been growth. The Board of Governors now employs 220 Ph.D.-level economists. But the real growth has been in contracts.

Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That is a great deal of money. This amount of money, the author implies, is sufficient to buy silence. He adds that there are fewer than 500 Ph.D.-level members of the American Economic Association whose specialty is either money and interest rates or public finance. In the private sector, about 600 are part of the National Association of Business Economists' Financial Roundtable.

If you count existing economists on the payroll, past economists on the payroll, economists receiving grants, and those who want in on the deal, "you've accounted for a very significant majority of the field."

In addition, the FED has editors of the academic journals on its payroll or grants list.

"It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

This suggestion is dismissed as "silly" by Robert King, editor-in-chief of The Journal of Monetary Economics, who is a visiting scholar at the Federal Reserve Bank of Richmond.

Just plain silly. Nothing to it.

If you do not get published in an academic journal, you do not gain tenure at the top three-dozen universities in the United States.

The author cites a 1993 letter from Milton Friedman, which was sent to a critic of the FED, Robert Auerbach.

"I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results."

How many economists who sit on the seven top journals as editors are connected to the FED? Almost half: 84 of 190.

Nothing to it. Silly. It's just one of those things, just one of those crazy things.

The author cites testimony from Alan Greenspan before the House Banking Committee in 2008. This quotation is all over the Web. I will use the version cited in the Wikipedia article on Greenspan.

Referring to his free-market ideology, Mr. Greenspan added: "I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact."

Mr. Waxman pressed the former Fed chair to clarify his words. "In other words, you found that your view of the world, your ideology, was not right, it was not working," Mr. Waxman said.

"Absolutely, precisely," Mr. Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

And yet, and yet. . . .

The author did not ask what I thought should have been an obvious question. "Why was the Federal Reserve System immune to criticism from 1914 to 1975?"

Ask that question, let alone answer it, and you will not get your article published in anything but a conspiracy journal or LewRockwell.com.

IMMUNITY FROM 1914 TO EARLY 2009

The Federal Reserve System has been untouchable from the day that the Senate passed the Federal Reserve Act late in the afternoon of the day before Christmas recess in 1913, when only a handful of Senators remained on the floor to vote, and Woodrow Wilson signed it that evening.

There have been a few critics in Congress. In the Wilson years, there was Congressman Charles A. Lindbergh (the father of the flyer). He laid it on the line. His statement appears in his Wiki entry.

This Act establishes the most gigantic trust on Earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized, the people may not know it immediately but the day of reckoning is only a few years removed. . . . The worst legislative crime of the ages is perpetrated by this banking bill.

In the 1930's, there was Congressmen Louis McFadden, a former banker. He was the author of the 1927 law that prohibited interstate banking. (It was repealed in 1994.) He was a hard-liner. He moved to impeach Herbert Hoover in 1932. For a Republican, this was unique for his era. Seven House members voted with him. He even introduced a resolution to bring conspiracy charges against the FED's Board of Governors. It also failed. He was hard-core. He was a fringe figure, as hard-core people usually are.

In the 1940's, there was Jerry Voohis, a fiat money greenbacker whose claim to fame was that he lost to Richard Nixon in 1946. In the 1950's and 1960's, there was Wright Patman, the eccentric populist from Texas, who chaired the House Banking Committee. For the last three decades, there has been Ron Paul.

That is pretty much it, 1914 to 2009. This is why Ron Paul's bill to audit the FED is such a breakthrough. For the first time since 1914, the FED is being called into question.

That is why the Huffington Post article misses the point. The economics profession, the American political system, and the media have been silent about the FED until the last year. This is what needs explaining.

ACADEMIA'S SILENCE

Back in my graduate school years, a generation ago, there was only one thoroughly critical book on the FED that was written by an academic free market economist: Fifty Years of Managed Money. The author was Elgin Groseclose, who was an advocate of the gold standard. The book did not go down the memory hole. It never got out of it. In 1980, it was republished under a new title, America's Money Machine. It stayed in the memory hole. The good news is that it is now available on-lime for free.

All this is to say that the FED received a free ride from academia and everyone else long before it began doling out hundreds of millions of dollars a year to academic economists.

How was this possible? I offer these suggestions, each of which would make a great rejected doctoral dissertation topic.

1. The advisory cartels that shape public opinion and politics in every nation, without exception has always favored central banking.
2. The methodologies of all schools of economic opinion except Austrianism and Marxism favor central banking.
3. Politicians of all parties want a lender of last resort to buy government debt at below-market prices.
4. Investors and their brokers want a floor for stock prices.
5. A conspiracy of bankers has pursued a cartel protected by central banking ever since 1694: the Bank of England.

But, you may respond, some of these topics are suitable for a dissertation topic in a history department. Political science, too. Quite true, and the dissertation will be rejected on the day the ABD (all but dissertation) student proposes it. Yet the FED does not fund historians and political scientists.

The protected status of central banking is universal. This is not unique to the United States. Central banking is by far the most protected anti-democratic institution in the modern world. The supporters of no other institution publicly defend the institution on this basis: a necessary means of protecting the nation from its legislature.

"IT'S THE METHODOLOGY, STUPID!"

Modern economics, except for Austrians and Marxists, teach that economics is a true science. Its model is physics. The economists are unwilling to accept the fact that human beings, unlike rocks, make decisions. These decisions make economics a realm of human action rather than physical cause and effect.

The Austrians begin with acting individuals to explain economic causation. The Marxists (all eight of them) begin with the mode of production. The Marxists are collectivists in every sense, but they view economics as a science based on dialectical materialism, not physics.

There is a third group, behavioral economists, who also break with the mainstream. But they do not break with the mathematical formulation of their theories of human action.

The supply-siders have yet to develop their theories into a consistent system. There is no college-level textbook based on their views. Their main pitch is that the government can and should cut marginal tax rates so that the government can and should collect more revenue.

The methodology of Keynesians, neoclassical economists, monetarists, behavioral economists, public choicers, and even rational expectationists are united: it is possible for central bankers to create economic growth and avoid recessions by increasing the money supply. They argue about the correct rate of fiat money growth. None of them concludes: "Shut down every central bank and let the free market decide the correct supply of money, given the right of non-fraudulent contract."

This is a legal question: What constitutes the right of contract in monetary affairs? This has been answered comprehensively and in great detail by Prof. J. H. de Soto. No other legal theorist-economist has ever presented anything comparable to his 874-page book, Money, Bank Credit, and Economic Cycles. It is on-line for free.

The economics profession favors either central banking or else, in the case of strict monetarists, believe the central bank can keep the economy working smoothly by a constant increase of the money supply by 3% to 5% per annum.

CONCLUSION

Until Ron Paul's H. R. 1207, Congress had remained comatose with regard to the FED ever since 1914. Bernanke is the first Chairman to face skepticism regarding the independence of the FED. This has to do with politics. Politicians want to find out which big banks got how much. This has nothing to do with the fundamental question, namely, the theoretical case for a bankers' cartel enforced by a central bank.

That question has not been raised by 99.9% of academia, the media, and politicians since 1914.

The Powers That Be will keep the public bamboozled for as long as the economy does not collapse, either through mass inflation, mass depression, or both.

They have had a free ride for a long time. The central banks' bad policies have resulted in what Austrian School economists had said would happen. Only they have provided a highly developed theory of how central banking necessarily distorts supply and demand, and why this distortion will inevitably be corrected by economic crisis. They do not say when, only that it must take place when the market vetoes the plans of entrepreneurs and politicians who believed in central bank central planning.

The bills are coming due. The crash will come. The consumers' veto will come. The FED's free ride will end.

In the meantime, audit the FED.

September 16, 2009

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

http://www.lewrockwell.com/north/north757.html
 
Old September 16th, 2009 #27
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Quote:
Originally Posted by Alex Linder View Post
All this is to say that the FED received a free ride from academia and everyone else long before it began doling out hundreds of millions of dollars a year to academic economists.

How was this possible? I offer these suggestions, each of which would make a great rejected doctoral dissertation topic.

1. The advisory cartels that shape public opinion and politics in every nation, without exception has always favored central banking.
2. The methodologies of all schools of economic opinion except Austrianism and Marxism favor central banking.
3. Politicians of all parties want a lender of last resort to buy government debt at below-market prices.
4. Investors and their brokers want a floor for stock prices.
5. A conspiracy of bankers has pursued a cartel protected by central banking ever since 1694: the Bank of England.
Take one and five, replace "advisory cartel" with "jew media" and "bankers" with "jew bankers", and you've got the answer.

Not that North would ever say so in public.
 
Old September 16th, 2009 #28
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The central bank could be called the Central Wank. Wank is English slang for masturbate. It is also a town in Austria.

 
Old September 16th, 2009 #29
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Ron Paul: Fed Threatens Depression, $100 Bills Worthless
DateSep 15, 2009

Reviewed by David M. Kinchen

Ron Paul Wants to 'End the Fed': Bring Back Sound Monetary Policies Backed by Something More Substantial Than Printing Presses

Don't Steal, the Government Hates Competition. -- Plaque on the desk
of Rep. Ron Paul

Judging by the plaque on the desk of Ron Paul, R-TX, the so-called (by his detractors) "Doctor No" of the Congress, one would think he hates government. But, as he shows in his latest book, End the Fed (Grand Central Publishing, 224 pages, $21.99) he doesn't hate government, he just wants it to do what the Constitution says it should do -- nothing more and nothing less.

One institution that he thinks is not only unconstitutional, but philosophically, economically and morally wrong is the Federal Reserve System, established in 1913 -- the same year as the federal income tax -- as a backdoor approach to a central bank. It was developed -- like the various czars, Troubled Asset Rescue Program (TARP) and bailouts of car companies and banks -- in response to a financial depression, one that occurred in 1907.

In the post-meltdown world, Paul says it is irresponsible, ineffective, and ultimately useless to have a serious economic debate without considering and challenging the role of the Federal Reserve. Throughout the book -- and especially in the last chapter, "The Way Out," Paul shows how the nation functioned just fine without a central bank. The states don't have central banks and must rely on tax revenue to live within their means, he says. He would like to see a return to the gold standard, but even without this ideal situation we shouldn't wait for one before we end the Fed. Too, arguments that a central bank would prevent financial panics certainly haven't come true in the almost 100 years we've had the Fed. In his view, the Great Depression was at least partially caused by the actions of the Fed.

Questioning the Fed is like questioning Mom, apple pie and the American way to most people who are unaware of its genesis at a meeting at Jekyll Island, Georgia in 1910. Most people think of the Fed as an indispensable institution without which the country's economy could not properly function. But in End the Fed, Ron Paul, a 2008 GOP Presidential contender and the 1988 Libertarian Party Presidential candidate, draws on American history, economics, and fascinating stories from his own long political life to argue that the Fed is both corrupt and unconstitutional. It is inflating currency today at nearly a Weimar Republic (Germany from 1919-1933) or Zimbabwe level, a practice that threatens to put us into an inflationary depression where $100 bills are worthless.

What most people don't realize is that the Fed -- created by the Morgans and Rockefellers at a private club off the coast of Georgia -- is actually working against their own personal interests. Paul's urgent appeal to all citizens and officials tells us where we went wrong and what we need to do fix America's economic policy for future generations.

Paul, a physician, is a dedicated follower of the Austrian school of economics -- he's a distinguished counselor to the Ludwig von Mises Institute, keeper of the flame for the Austrian school -- and he quotes many of that school's economists in his arguments against the Fed.

One of them is the late Murray N. Rothbard, who argued in his book History of Money and Banking, that the Fed did not originate as a policy response to national need. It wasn't erected for any of its stated purposes. It was founded by two groups of elites: government officials and large financial and banking interests. Rothbard adds a third critical element: economists hired to give the scheme a scientific patina.

Opposition to the Fed has come from the Left and the Right. An AlterNet story on the Left quotes a study by Huffington Post's Ryan Grim makes the same point Rothbard made in his book: That the Fed has dedicated itself to marginalizing economists who question the Fed.

Grim writes that "The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found."

Like Paul, Grim says that "this dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too."

Grim quotes Joshua Rosner, a Wall Street analyst who correctly called the meltdown: "The Fed has a lock on the economics world. There is no room for other views, which I guess is why economists got it so wrong."

Grim says, backing up Ron Paul's assertion that Keynesian economics has dominated the field, that one "critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past."

The timing is eerie, with the Huffington Post story coming two days before the Sept. 16 publication of End the Fed: Both Grim and Paul cite the failure of the Fed to see the housing bubble as it happened, with former Federal Reserve Chairman Alan Greenspan saying that "a national severe price distortion [is] most unlikely." His successor, current Fed Chairman Ben Bernanke said that the housing boom "largely reflects strong economic fundamentals.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect[s] strong economic fundamentals."

Despite all this, Bernanke has been nominated for a second term by President Barack Obama, convincing many observers that Obama's first term is becoming George W. Bush's third.

In a July 19, 2009 interview with Politico, the interviewer notes that "Dr. No" -- a nickname invented by his detractors -- is finding that "With the economy in the tank, the same cable news shows that spurned him during the election now keep asking him on to talk monetary policy. Republican House members are finally voting with him on spending measures."

Politico notes that "following his exhilarant, if quixotic, quest for the presidency, Paul finds himself simultaneously gratified and frustrated by his return to the friendlier-than-before confines of the House of Representatives. He thinks he’s well situated in Congress to push for his Libertarian causes, but then claims he doesn't "pay a whole lot of attention" to the activity on the House floor these days, adding, "I don't think it's relevant to the big picture: “A lot of this is just tinkering, bailing out, more money, more spending, no shift of direction and it's a little bit frustrating."
Ron Paul manages to unite those on the Left and the Right of the political spectrum. The book's jacket has this endorsement from liberal Arlo Guthrie: "Rarely has a single book not only challenged, but decisively changed my mind."

And, on the Right, actor Vince Vaughn says: "Everybody must read this book -- Congressmen and college students, Democrats and Republicans -- all Americans." Vaughn is a Libertarian who concluded after reading an advance copy of End the Fed that "the Federal Reserve, which serves private banks, has compromised our economy and is undermining our freedom. It can and must be stopped now."

Whether you agree with Ron Paul or not, End the Fed is must reading for everyone, especially those who've accepted the conventional wisdom about the Fed.

http://www.basilandspice.com/financi...worthless.html
 
Old September 17th, 2009 #30
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September 16, 2009, 11:00 AM ET

Ron Paul Q&A: Audit the Fed, Then End It

By Sudeep Reddy

For three decades, Rep. Ron Paul has waged a lonely battle in Congress to abolish the Federal Reserve. But he has more foot soldiers across the nation today, particularly after the financial crisis, who are leading the drive for wider congressional audits of the central bank. (See today’s Journal story for more on their movement.)
Rep. Ron Paul speaks to a growing group of followers. (Getty Images)

In his new book — “ End the Fed” — released today, Rep. Paul walks through his critique of the central bank and lays out a strategy (briefly) for eliminating it. We sat down with the congressman to hear his views on a money system backed by gold, the Fed’s challenge of withdrawing its stimulus and his legislation to audit the central bank. Excerpts of the interview:

What would a world without the Fed look like?

You’d go back to the day that if you wanted to borrow money to build a house, somebody would’ve had to save some money. You wouldn’t have zero savings and all the credit in the world. That’s just a total distortion of capitalism. Capital comes from savings. The part you don’t use for everyday living which you have left over, you reinvest and you save or you loan it out. We were living with something absolutely bizarre that had nothing to do with capitalism. We had no savings whatsoever yet there was all the credit in the world.

So without the Fed, there wouldn’t be as much credit.

Yeah, it would be different. If you were selling me a car and the car was worth $10,000 and I didn’t want to pay cash, you could take credit from me. You’ve got to have something to measure it by. What is a dollar? We don’t even know what a dollar is. There’s no definition for a dollar. There’s never been a time in law that said a Federal Reserve note is a dollar. That’s the basic flaw. There’s no definition for money. We’ve built a worldwide economy on a measuring rod that varies every single day. That’s why it was fragile, and that’s why it collapsed. There was no soundness to it. So that’s why you have to have a stable unit of account.

If you live in a primitive society, you’d trade goods. And if you wanted to advance, then you would trade a universal good, which would be a coin. But we’ve become sophisticated and smart and say, ‘Oh, you don’t have to go through that. We’ll just print the money. And we’ll trust the government not to print too much, and distribute it fairly.’ That’s often just a total farce. People are realizing that it is.

Don’t you think the Fed has moderated the business cycle over the past century?

Yes, I think they did smooth things out. The market’s always demanding the correction of the malinvestment and the excessive debt. … Since Bretton Woods broke down, I think every recession has been moderated by the Fed. That’s why the trust kept being built. That’s all a negative. You have to get rid of the mistakes. Moderating it means that we have slowed up the correction. The fact that they have been successful is probably the worst part about it. They’re moderating the rapidity of the crash and the correction by holding the mistakes in place.

What if, years from now, we see that the Fed has returned its balance sheet to its old size and pulled that money back from the system? Would that not be a validation of its approach?

There has only been one time that I know of where they have done that significantly, to withdraw anything of significance. That was after the Civil War. They withdrew greenbacks to a degree, they quit printing greenbacks, and they balanced the budget. I don’t think you can find any other time in our history and probably the history of the world. Because it’s an addiction, and the withdrawal is always much more serious than the continuation. The immediate problem of continuing the inflation is always more acceptable than withdrawal symptoms. Politically there will be continued inflation until it self-destructs.

So you don’t think it’s possible to pull it off?

They might try a little bit. With a weak economy, they’ll say it’s better for the economy to have low interest rates. If we didn’t have a Federal Reserve today, interest rates might be market driven. A lot of people would go bankrupt, but it would benefit the people who save. Capitalism is supposed to benefit the people who save. Even though they’re cheating the people who save, they’re cheating those on fixed income and the elderly, they will not quit inflating. The pain will be too great. They’re smart enough to know? They weren’t smart enough to know when they printed. They created the bubble. All of a sudden they’re going to get smart enough to know when to withdraw this? There’s not one chance in a million that’s going to happen.

But if the Fed were to pull this off and return its balance sheet to a normal size, where would that leave you?

If they were able to shrink their assets by 50%, to a trillion dollars or so … I would say it would challenge a lot of people. But I think the economic laws are in place. It’s only going to be temporary. It’s not going to happen. The only way you could do that is what I’ve been advocating for these last several years. You’ve got to cut spending, you’ve got to balance the budget, you’ve got to stop fighting these wars, you’ve got to bring our troops home, you’ve got to quit expanding the welfare state here at home … But I just don’t think the conditions exist. In theory you could, but if you do that without shrinking the size of the government and shrinking the deficit, it will be disastrous. It won’t work.

How would an audit lead to ending the Fed?

It’s a stepping stone. I think what’s going to lead to the next step is the destruction of the dollar, just like economic events moved further ahead than my legislative process. I wasn’t getting anywhere. But the economic events demanded that we look into it. So even if this bill passes and we have more information and we’re talking about monetary policy reform, I don’t think that’s the way this system is going to be ended. I think it’ll be ended when it’s a total failure and then it’ll have to be replaced by something. It could be replaced with a more authoritarian government, a more socialistic government.

Do you think the Fed will be abolished during your career?

I always thought the day would come… This economy is going to get worse and this dollar is going to get a lot worse. It’ll take care of itself. My real goal is educating people to the nature of money so that when this system fails, that they’ll know what to do and not just say ‘Well, we need a better manager.’

http://blogs.wsj.com/economics/2009/...d-then-end-it/
 
Old September 17th, 2009 #31
Alex Linder
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[Doltish WN repeat jewsmedia lies that the problems with banking come from lack of regulation. In fact, the problems are because of regulation.]

Jim Rogers Says Bank Regulators Should be in Jail For Not Allowing Banks to Fail

September 15th, 2009

There is a lot to say on the consequences of the policies of the regulators and the Federal Reserve from outrageous and irresponsible bailouts of big banks and some big businesses, and we’ll continue to talk about and expose that at American Banking News. But Jim Rogers gets to a very simple core principle of free market capitalism, and that is that allowing businesses and banks to fail has been part of the risk inherent in going into business in the first place, and is a end result of the quality and skill of those running those businesses.

So when the government uses and leverages taxpayers’ dollars to shore up poor management, they’ve interfered in the market in ways that they will never admit to and with results that will be difficult to lay blame at their doorstep as the years go on. They know that, and so continue on their merry way, understanding they may never be held accountable for their actions, nor their actions understood by most.

Jim Rogers and others will have none of that though, and Rogers said recently at the CNBC Wordwide Exchange that he not only wished that Lehman Brothers had failed, but 10 other banks as well. He even adds that the government was thrilled that Lehman Brothers failed because it gave them an excuse to “jump in and support banks.”

Here’s how Rogers sees the current problem and its source:

“The real problem over the past 10-15 years has been that regulators have not let people fail. Had they let people fail we would have solved this problem a long time ago. I don’t know why they’re not in jail.”

When Rogers says this, understand he’s identifying the problem as it is today, not attacking the ultimate root of the problem, which is the Federal Reserve and the need to abolish it. But to wonder why they’re not in jail for their actions is a powerful statement by Rogers as to what their practices have brought about, and the consequences of those actions across a wide sphere of our social makeup.

Rogers has been accurately hitting hard for some time on the foolishness of propping up any business by the government which has obviously been run poorly. He rightly exposed the stupidity of supporting businesses and banks which aren’t able to compete with better run companies, and although dead, are allowed to live, not based on improved practices, but on the infusion of taxpayer money which they think will be offered in endless supply. That’s why Rogers always uses the term “zombie” when referring to businesses and banks this type of artificial life support.

When you follow this line of reasoning and use zombie as a metaphor, think of those monster movies you’ve watch. It’s not natural to have something come back from the dead and walk around the streets feeding off of that which is alive. But that’s exactly what the Federal Reserve and regulators have allowed to happen. And every time they do it, the terribly run banks get bigger and are allowed to continue operating, doing business as usual, knowing every time they’re bailed out it’s one more step toward always being bailed out because they’re “too big to fail.” This is truly monstrous and a waste of assets.

Rogers takes the practices of the Federal Reserve with the blessing of the government and extends them to their logical conclusion, which is zombie banks will end up with zombie capitalism. By that he means the system is being fought from being allowed to cleanse itself and the quality companies emerge even stronger after the bad companies have been removed from the system. He now expects ‘zombie capitalism’ to run rampant over the next 15-20 years, with many large companies that should have been left to die, resuscitated by mortgaging the futures of our children and grandchildren.

In the end, no matter how much money you throw at at problem, if the business and banking practices are wrong, you’re doing nothing but wasting money and extending the problem by not allowing the genious of the free market system to cleanse itself of the impurities of managments that don’t know what they’re doing.

On top of all these problems and the usual unintended consequences, Rogers adds that we’ll enter into either a full currency crisis, or at minimum a semi-crisis, sometime with the next year or so.

It’s as simple as allowing banks and business to fail when others are run better than they are. How hard can that be for the Federal Reserve and regulators to understand?

http://www.americanbankingnews.com/2...banks-to-fail/
 
Old September 18th, 2009 #32
Alex Linder
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Lehman Died So TARP and AIG Might Live

by Mike Whitney

"Lehman's fate was sealed not in the boardroom of that gaudy Manhattan headquarters. It was sealed downtown, in the gloomy gray building of the New York Federal Reserve, the Wall Street branch of the U.S. central bank."

~ Stephen Foley, UK Independent

Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who wanted to create a financial 9-11 to scare Congress into complying with his demands for $700 billion in emergency funding (TARP) for underwater US banking behemoths. The whole incident reeks of conflict of interest, corruption, and blackmail.

The media have played a critical role in peddling the official "Who could have known what would happen" version of events. Bernanke and Paulson were fully aware that they playing with fire, but they chose to proceed anyway, using the mushrooming crisis to achieve their own objectives. Then things began to spin out of control; credit markets froze, interbank lending slowed to a crawl, and stock markets plunged. Even so, the Fed and Treasury persisted with their plan, demanding their $700 billion pound of flesh before they'd do what was needed to stop the bleeding. It was all avoidable.

Lehman had potential buyers – including Barclays – who probably would have made the sale if Bernanke and Paulson had merely provided guarantees for some of their trading positions. Instead, Treasury and the Fed balked, thrusting the knife deeper into Lehman's ribs. They claimed they didn't have legal authority for such guarantees. It’s a lie. The Fed has provided $12.8 trillion in loans and other commitments to keep the financial system operating without congressional approval or any explicit authorization under the terms of its charter. The Fed never considered the limits of its "legal authority" when it bailed-out AIG or organized the acquisition of Bear Stearns by JP Morgan pushing $30 billion in future liabilities onto the public's balance sheet. The Fed's excuses don't square with the facts.

Here's how economist Dean Baker recounts what transpired last September 15:

"Last September, when he (Bernanke) was telling Congress that the economy would collapse if it did not approve the $700 billion TARP bailout, he warned that the commercial paper market was shutting down.

This was hugely important because most major companies rely on selling commercial paper to meet their payrolls and pay other routine bills. If they could not sell commercial paper, then millions of people would soon be laid off and the economy would literally collapse.

What Mr. Bernanke apparently forgot to tell Congress back then is that the Fed has the authority to directly buy commercial paper from financial and non-financial companies. In other words, the Fed has the power to prevent the sort of economic collapse that Bernanke warned would happen if Congress did not quickly approve the TARP. In fact, Bernanke announced that the Fed would create a special lending facility to buy commercial paper the weekend after Congress voted to approve the TARP." ("Bernanke's bad Money," Dean Baker, CounterPunch)

The reason Bernanke did not underwrite the commercial paper market was, if he had, he wouldn't have been able to blackmail congress. He needed the rising anxiety from the crisis to achieve his goals.

Here's a clip from an editorial in the New York Times (admitting most of what has already been stated) that tries to put a positive spin on the Fed's behavior:

"Mr. Nocera says that almost everyone he’s ever spoken to in Hank Paulson’s old Treasury Department agrees that without the immediate panic caused by the Lehman default, the government would never have agreed to make the loans needed to save A.I.G., a company it knew very little about. In effect, the Lehman bankruptcy caused the government to panic, which in turn caused it to save the firm it really had to save to prevent catastrophe. In retrospect, if you had to choose one firm to throw under the bus to save everyone else, you would choose Lehman.... it is quite likely that the financial crisis would have been even worse had Lehman been rescued. Although nobody realized it at the time, Lehman Brothers had to die for the rest of Wall Street to live. ("Lehman Had to Die So Global Finance Could Live," Sept. 14, 2009, New York Times)

So, according to the muddled logic of the NY Times, everything worked out for the best so there's no need to hold anyone accountable. (Tell that to the 7 million people who have lost their jobs since the beginning of the meltdown.) This latest bit of spin is pure cover-your-ass journalism, an attempt to rewrite history and absolve the guilty parties. The fact is, Paulson and Bernanke deliberately created the crisis in order to jam their widely-reviled TARP policy down the public's throat. The Times thinks the public should be grateful for that because, otherwise, the crooked insurance giant, AIG, would not have been bailed out and Goldman Sachs and other Wall Street heavies would not have been paid off.

The reason panic spread through the markets after Lehman filed for bankruptcy, was because the Reserve Primary Fund, which had lent Lehman $785 million (and received short-term notes called commercial paper) couldn't keep up with the rapid pace of withdrawals from worried clients. The sudden erosion of trust triggered a run on the money markets. Here's an excerpt from a Bloomberg article, "Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion":

"On Tuesday, Sept. 16, the run on Reserve Primary continued. Between the time of Lehman’s Chapter 11 announcement and 3 p.m. on Tuesday, investors asked for $39.9 billion, more than half of the fund’s assets, according to Crane Data.

“Reserve’s trustees instructed employees to sell the Lehman debt, according to the SEC.

“They couldn’t find a buyer.

“At 4 p.m., the trustees determined that the $785 million investment was worth nothing. With all the withdrawals from the fund, the value of a single share dipped to 97 cents.

“Legg Mason, Janus Capital Group Inc., Northern Trust Corp., Evergreen and Bank of America Corp.’s Columbia Management investment unit were all able to inject cash into their funds to shore up losses or buy assets from them. Putnam closed its Prime Money Market Fund on Sept. 18 and later sold its assets to Pittsburgh-based Federated Investors.

“At least 20 money fund managers were forced to seek financial support or sell holdings to maintain their $1 net asset value, according to documents on the SEC Web Site.

“When news that Reserve Primary broke the buck hit the wires at 5:04 p.m. that Tuesday, the race was on." (Bloomberg)

This is what a run on the shadow banking system looks like. Bernanke and Paulson pinpointed the trouble in the commercial paper market and used it to put more pressure on Congress to approve their bailout bill.

Bloomberg again:

"It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy – not a breakdown in credit-default swaps or bank-to-bank lending....

“Like ice-nine, the fictitious substance in Kurt Vonnegut Jr.'s 1963 novel Cat’s Cradle, a single seed of which could harden all the world’s water, commercial paper was the crystallizing force that froze credit markets, choking off the ability of companies and banks to borrow money and pay bills." (Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion, Bob Ivry, Mark Pittman and Christine Harper, Bloomberg News)

Bernanke could have fixed the problem in an instant. All he needed to do was provide explicit government guarantees on money markets and commercial paper. That would have ended the bank-run pronto. But he chose not to. He chose to wait until Congress capitulated so he could net $700 billion for his banking buddies.

According to the UK Telegraph:

"On Thursday night, the Treasury went literally down on his knees before Nancy Pelosi, speaker of the House of Representatives, begging her to agree taxpayer money to bail out the financial system. Bernanke, a scholar of the financial panic that caused the Great Depression, told fearful lawmakers there wouldn't be a banking system in place by Monday morning if they didn't act. Paulson talked openly about planning for martial law, about how to feed the American people if banking and commerce collapsed."

Despite their dire warnings, on Monday morning, the banking system was still intact, just as it was a full month later when the first TARP funds were handed out to the big banks. It was all a hoax. The problem wasn't the banks toxic assets at all, but the commercial paper and money markets. The Fed and Treasury knew that they could count on Congress's abysmal ignorance of anything financial; and they weren't disappointed. On October 3, 2008, Congress passed the Financial Rescue Plan (TARP). Paulson's fear-mongering had triumphed.

Here's a quick look at the Lehman chronology:

On Sept. 15, 2008, Lehman Bros. filed for bankruptcy sending the Dow plummeting 504 points.

On Sept. 17, the Dow falls 449 points in reaction to AIG bailout.

On Sept. 29, the Dow tumbles 777 points after House votes "No" on TARP.

On Oct. 3, the House passes Financial Rescue Plan (TARP). The Dow falls 818 points.

On Oct. 7, the Fed creates the Commercial Paper Funding Facility to backstop the commercial paper market. Two weeks later, Bernanke announces the Money Market Investor Funding Facility to make loans of longer maturities.

These are the two facilities which relieved the tension in the markets, not the TARP funds. It's clear that Bernanke knew exactly how to fix the problem, because he did so as soon as the TARP was passed. Here's economist Dean Baker in The American Prospect:

"Bernanke was working with Paulson and the Bush administration to promote a climate of panic. This climate was necessary in order to push Congress to hastily pass the TARP without serious restrictions on executive compensation, dividends, or measures that would ensure a fair return for the public's investment.

“Bernanke did not start buying commercial paper until after the TARP was approved by Congress because he did not want to take the pressure off, thereby leading Congress to believe that it had time to develop a better rescue package. ("Did Ben Bernanke Pull the TARP Over Eyes?", Dean Baker, The American Prospect)

The American people have been ripped off by industry reps working the policy-levers from inside the government. That's the real lesson of the Lehman bankruptcy. Happy anniversary.

September 18, 2009

Mike Whitney [send him mail] lives in Washington state.

http://www.lewrockwell.com/whitney/whitney13.1.html
 
Old September 18th, 2009 #33
Alex Linder
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Lehman Died So TARP and AIG Might Live

by Mike Whitney

"Lehman's fate was sealed not in the boardroom of that gaudy Manhattan headquarters. It was sealed downtown, in the gloomy gray building of the New York Federal Reserve, the Wall Street branch of the U.S. central bank."

~ Stephen Foley, UK Independent

Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who wanted to create a financial 9-11 to scare Congress into complying with his demands for $700 billion in emergency funding (TARP) for underwater US banking behemoths. The whole incident reeks of conflict of interest, corruption, and blackmail.

The media have played a critical role in peddling the official "Who could have known what would happen" version of events. Bernanke and Paulson were fully aware that they playing with fire, but they chose to proceed anyway, using the mushrooming crisis to achieve their own objectives. Then things began to spin out of control; credit markets froze, interbank lending slowed to a crawl, and stock markets plunged. Even so, the Fed and Treasury persisted with their plan, demanding their $700 billion pound of flesh before they'd do what was needed to stop the bleeding. It was all avoidable.

Lehman had potential buyers – including Barclays – who probably would have made the sale if Bernanke and Paulson had merely provided guarantees for some of their trading positions. Instead, Treasury and the Fed balked, thrusting the knife deeper into Lehman's ribs. They claimed they didn't have legal authority for such guarantees. It’s a lie. The Fed has provided $12.8 trillion in loans and other commitments to keep the financial system operating without congressional approval or any explicit authorization under the terms of its charter. The Fed never considered the limits of its "legal authority" when it bailed-out AIG or organized the acquisition of Bear Stearns by JP Morgan pushing $30 billion in future liabilities onto the public's balance sheet. The Fed's excuses don't square with the facts.

Here's how economist Dean Baker recounts what transpired last September 15:

"Last September, when he (Bernanke) was telling Congress that the economy would collapse if it did not approve the $700 billion TARP bailout, he warned that the commercial paper market was shutting down.

This was hugely important because most major companies rely on selling commercial paper to meet their payrolls and pay other routine bills. If they could not sell commercial paper, then millions of people would soon be laid off and the economy would literally collapse.

What Mr. Bernanke apparently forgot to tell Congress back then is that the Fed has the authority to directly buy commercial paper from financial and non-financial companies. In other words, the Fed has the power to prevent the sort of economic collapse that Bernanke warned would happen if Congress did not quickly approve the TARP. In fact, Bernanke announced that the Fed would create a special lending facility to buy commercial paper the weekend after Congress voted to approve the TARP." ("Bernanke's bad Money," Dean Baker, CounterPunch)

The reason Bernanke did not underwrite the commercial paper market was, if he had, he wouldn't have been able to blackmail congress. He needed the rising anxiety from the crisis to achieve his goals.

Here's a clip from an editorial in the New York Times (admitting most of what has already been stated) that tries to put a positive spin on the Fed's behavior:

"Mr. Nocera says that almost everyone he’s ever spoken to in Hank Paulson’s old Treasury Department agrees that without the immediate panic caused by the Lehman default, the government would never have agreed to make the loans needed to save A.I.G., a company it knew very little about. In effect, the Lehman bankruptcy caused the government to panic, which in turn caused it to save the firm it really had to save to prevent catastrophe. In retrospect, if you had to choose one firm to throw under the bus to save everyone else, you would choose Lehman.... it is quite likely that the financial crisis would have been even worse had Lehman been rescued. Although nobody realized it at the time, Lehman Brothers had to die for the rest of Wall Street to live. ("Lehman Had to Die So Global Finance Could Live," Sept. 14, 2009, New York Times)

So, according to the muddled logic of the NY Times, everything worked out for the best so there's no need to hold anyone accountable. (Tell that to the 7 million people who have lost their jobs since the beginning of the meltdown.) This latest bit of spin is pure cover-your-ass journalism, an attempt to rewrite history and absolve the guilty parties. The fact is, Paulson and Bernanke deliberately created the crisis in order to jam their widely-reviled TARP policy down the public's throat. The Times thinks the public should be grateful for that because, otherwise, the crooked insurance giant, AIG, would not have been bailed out and Goldman Sachs and other Wall Street heavies would not have been paid off.

The reason panic spread through the markets after Lehman filed for bankruptcy, was because the Reserve Primary Fund, which had lent Lehman $785 million (and received short-term notes called commercial paper) couldn't keep up with the rapid pace of withdrawals from worried clients. The sudden erosion of trust triggered a run on the money markets. Here's an excerpt from a Bloomberg article, "Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion":

"On Tuesday, Sept. 16, the run on Reserve Primary continued. Between the time of Lehman’s Chapter 11 announcement and 3 p.m. on Tuesday, investors asked for $39.9 billion, more than half of the fund’s assets, according to Crane Data.

“Reserve’s trustees instructed employees to sell the Lehman debt, according to the SEC.

“They couldn’t find a buyer.

“At 4 p.m., the trustees determined that the $785 million investment was worth nothing. With all the withdrawals from the fund, the value of a single share dipped to 97 cents.

“Legg Mason, Janus Capital Group Inc., Northern Trust Corp., Evergreen and Bank of America Corp.’s Columbia Management investment unit were all able to inject cash into their funds to shore up losses or buy assets from them. Putnam closed its Prime Money Market Fund on Sept. 18 and later sold its assets to Pittsburgh-based Federated Investors.

“At least 20 money fund managers were forced to seek financial support or sell holdings to maintain their $1 net asset value, according to documents on the SEC Web Site.

“When news that Reserve Primary broke the buck hit the wires at 5:04 p.m. that Tuesday, the race was on." (Bloomberg)

This is what a run on the shadow banking system looks like. Bernanke and Paulson pinpointed the trouble in the commercial paper market and used it to put more pressure on Congress to approve their bailout bill.

Bloomberg again:

"It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy – not a breakdown in credit-default swaps or bank-to-bank lending....

“Like ice-nine, the fictitious substance in Kurt Vonnegut Jr.'s 1963 novel Cat’s Cradle, a single seed of which could harden all the world’s water, commercial paper was the crystallizing force that froze credit markets, choking off the ability of companies and banks to borrow money and pay bills." (Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion, Bob Ivry, Mark Pittman and Christine Harper, Bloomberg News)

Bernanke could have fixed the problem in an instant. All he needed to do was provide explicit government guarantees on money markets and commercial paper. That would have ended the bank-run pronto. But he chose not to. He chose to wait until Congress capitulated so he could net $700 billion for his banking buddies.

According to the UK Telegraph:

"On Thursday night, the Treasury went literally down on his knees before Nancy Pelosi, speaker of the House of Representatives, begging her to agree taxpayer money to bail out the financial system. Bernanke, a scholar of the financial panic that caused the Great Depression, told fearful lawmakers there wouldn't be a banking system in place by Monday morning if they didn't act. Paulson talked openly about planning for martial law, about how to feed the American people if banking and commerce collapsed."

Despite their dire warnings, on Monday morning, the banking system was still intact, just as it was a full month later when the first TARP funds were handed out to the big banks. It was all a hoax. The problem wasn't the banks toxic assets at all, but the commercial paper and money markets. The Fed and Treasury knew that they could count on Congress's abysmal ignorance of anything financial; and they weren't disappointed. On October 3, 2008, Congress passed the Financial Rescue Plan (TARP). Paulson's fear-mongering had triumphed.

Here's a quick look at the Lehman chronology:

On Sept. 15, 2008, Lehman Bros. filed for bankruptcy sending the Dow plummeting 504 points.

On Sept. 17, the Dow falls 449 points in reaction to AIG bailout.

On Sept. 29, the Dow tumbles 777 points after House votes "No" on TARP.

On Oct. 3, the House passes Financial Rescue Plan (TARP). The Dow falls 818 points.

On Oct. 7, the Fed creates the Commercial Paper Funding Facility to backstop the commercial paper market. Two weeks later, Bernanke announces the Money Market Investor Funding Facility to make loans of longer maturities.

These are the two facilities which relieved the tension in the markets, not the TARP funds. It's clear that Bernanke knew exactly how to fix the problem, because he did so as soon as the TARP was passed. Here's economist Dean Baker in The American Prospect:

"Bernanke was working with Paulson and the Bush administration to promote a climate of panic. This climate was necessary in order to push Congress to hastily pass the TARP without serious restrictions on executive compensation, dividends, or measures that would ensure a fair return for the public's investment.

“Bernanke did not start buying commercial paper until after the TARP was approved by Congress because he did not want to take the pressure off, thereby leading Congress to believe that it had time to develop a better rescue package. ("Did Ben Bernanke Pull the TARP Over Eyes?", Dean Baker, The American Prospect)

The American people have been ripped off by industry reps working the policy-levers from inside the government. That's the real lesson of the Lehman bankruptcy. Happy anniversary.

September 18, 2009

Mike Whitney [send him mail] lives in Washington state.

http://www.lewrockwell.com/whitney/whitney13.1.html
 
Old September 18th, 2009 #34
Alex Linder
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We really should have a massive jews-in-Fed/finance/TARP scandal, with pictures and connections, showing how it all fits together. Not that I fully understand myself, I don't. I have a decent general idea, that's it.
 
Old September 18th, 2009 #35
Alex Linder
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The American people have been ripped off by industry reps working the policy-levers from inside the government. That's the real lesson of the Lehman bankruptcy. Happy anniversary.

This is why regulation is not the answer: the regulated parties will have a revolving door with the government. The answer is not to regulate. Let (banks) fail. Let consumers cry. The short-term pain for some beats long-term pain for all caused by the religious faith in regulation and the illusionary safety it is supposed to afford.
 
Old September 18th, 2009 #36
N.B. Forrest
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Quote:
Originally Posted by Alex Linder View Post
We really should have a massive jews-in-Fed/finance/TARP scandal, with pictures and connections, showing how it all fits together. Not that I fully understand myself, I don't. I have a decent general idea, that's it.
That's what keeps Average Joe from exploding in rage over the most gigantic hosing in history: if even people with brains can't fully grasp all the nuances of such an incredibly - and deliberately - complex scam, how can he?

It's called "baffling 'em with bullshit".

Lefty Taibbi does the best job of explaining what it's all about I've yet seen.
 
Old September 18th, 2009 #37
Alex Linder
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Quote:
Originally Posted by N.B. Forrest View Post
That's what keeps Average Joe from exploding in rage over the most gigantic hosing in history: if even people with brains can't fully grasp all the nuances of such an incredibly - and deliberately - complex scam, how can he?

It's called "baffling 'em with bullshit".

Lefty Taibbi does the best job of explaining what it's all about I've yet seen.
Yeah, he's good.

You can say that "the jews running the government printed a trillion dollars and used it to bail out a bunch of their superrich banker jew friends. The meaning to you is that your money is going to lose a lot of purchasing power due to inflation."

But if there is no inflation or obvious, felt negative to the actions, no matter how theoretically odious, it's hard to get people fired up.
 
Old September 18th, 2009 #38
Steve B
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Quote:
Originally Posted by N.B. Forrest View Post
That's what keeps Average Joe from exploding in rage over the most gigantic hosing in history: if even people with brains can't fully grasp all the nuances of such an incredibly - and deliberately - complex scam, how can he?

It's called "baffling 'em with bullshit".

Lefty Taibbi does the best job of explaining what it's all about I've yet seen.
As you say the crimes are so complex and so layered and apparently all pervasive that it boggles the mind. Take Madoff for example. 50 billion. It's such a huge number that it overwhelms and you ask yourself...how can that happen? How much did congress sell us out to the fed in taxpayer bailout money that the big jew banks received? Is it 800 billion or has it reached a trillion yet?

Isn't this how revolutions start?
 
Old September 18th, 2009 #39
Alex Linder
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Alex Linder
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Originally Posted by Steve B View Post

Isn't this how revolutions start?
When the middle-class women have to turn tricks for bread, and wheelbarrows are needed to move the notes to buy that bread - that is when revolutions begin. When the Olive Garden neverending pasta bowl comes to an end, that's when the bourgeois lift their selfish heads up and for once listen. If the System's filling their gut and their wallet, they don't want to hear anything.
 
Old September 19th, 2009 #40
Mike Parker
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Join Date: Jul 2007
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Mike Parker
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Originally Posted by Alex Linder View Post
This is why regulation is not the answer: the regulated parties will have a revolving door with the government. The answer is not to regulate.
You're still not explaining the inconvenient fact that under the old (moderate to me) regulatory regime, the financial sector was far more stable than under deregulation.
 
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