THE FED TO THE AMERICAN PEOPLE: YOUR MONEY IS NONE OF YOUR FUCKING BUSINESS
This issue relates somewhat to what I've talked about recently: the seeming paradox of the Federal Reserve, its constituent banks, its board of governors, and the 22 or so-odd institutions first in line for its money. As mentioned, the Fed is private (though it has quasi-governmental features), and the NY Fed, responsible for much of the various bailout money over the last six months, is completely private.
The paradox, of course, comes from the fact that the President appoints the chairman of this private institution. And that the private institution has a monopoly over the right to issue the currency all American citizens are bound to use as legal tender. A monopoly despite the fact that it isn't required to own anything of value backing that legal tender. Which means it can inflate, and thereby devalue, that currency. And has inflated it at a 95% rate in the 96 years of its existence.
So what's the issue I'm talking about today? Well, as you may know, Bloomberg News sued the Federal Reserve last fall under the Federal Freedom of Information Act ("FOIA"), seeking an injunction forcing the Fed to disclose the identity and amounts of TARP money it "lent" to various banks and institutions. And without wading into all the details, one of the Fed's defenses asserts that the NY Fed (which "lent" the money and houses most of the documentation) is not a federal agency, and therefore doesn't fall under the reach of FOIA.
They put forth other defenses, all of them equally nauseating, but that's the one that really gets me boiling. Anyhow, do a search for Bloomberg LP v. Board of Governors of the Federal Reserve System, and prepare to wretch if not rave.
Have a nice weekend . . . until you remember that most Treasury/Federal Reserve shenanigans have gone down over weekends. When you wake up Monday morning, don't be surprised to learn that we've bailed out Citibank to the tune of hundreds of billions of dollars.
And don't be surprised if that private bank that destroys your currency tells you it's none of your goddamn business what it's done with your money in an effort to dole it out to its friends. Nah, don't do any of that Monday morning.
Just Wake Up.
The paradox, of course, comes from the fact that the President appoints the chairman of this private institution. And that the private institution has a monopoly over the right to issue the currency all American citizens are bound to use as legal tender. A monopoly despite the fact that it isn't required to own anything of value backing that legal tender. Which means it can inflate, and thereby devalue, that currency. And has inflated it at a 95% rate in the 96 years of its existence.
So what's the issue I'm talking about today? Well, as you may know, Bloomberg News sued the Federal Reserve last fall under the Federal Freedom of Information Act ("FOIA"), seeking an injunction forcing the Fed to disclose the identity and amounts of TARP money it "lent" to various banks and institutions. And without wading into all the details, one of the Fed's defenses asserts that the NY Fed (which "lent" the money and houses most of the documentation) is not a federal agency, and therefore doesn't fall under the reach of FOIA.
They put forth other defenses, all of them equally nauseating, but that's the one that really gets me boiling. Anyhow, do a search for Bloomberg LP v. Board of Governors of the Federal Reserve System, and prepare to wretch if not rave.
Have a nice weekend . . . until you remember that most Treasury/Federal Reserve shenanigans have gone down over weekends. When you wake up Monday morning, don't be surprised to learn that we've bailed out Citibank to the tune of hundreds of billions of dollars.
And don't be surprised if that private bank that destroys your currency tells you it's none of your goddamn business what it's done with your money in an effort to dole it out to its friends. Nah, don't do any of that Monday morning.
Just Wake Up.
posted by Mike at 6:32 AM
13 Comments:
By the way, notice that the Fed refuses to reveal AIG's counterparties.
Also notice how hell bent the government is to keep AIG out of the bankruptcy process.
Why?
Could it be that the Fed's most important "friend" -- Goldman Sachs -- happens to be on the other side many of those AIG contracts?
To drive home the idea here: Golmdan gambles, but hedges by betting against their gamble with AIG. AIG says "hey we can write you any contract you want."
But AIG can't pay, because they've written too many of these contracts, with little regard for the maginitude of the risk their book has taken on.
But AIG management doesn't mind, because they generate fees this way. Each quarter they say "we beat the number." They issue themselves options and cash in quarter after quarter. Oh, and to keep share count growth subdues, they buy back stock.
And Goldman doesn't mind. And why don't they mind?
Because they have Goldman alums placed throughout the highest levels of government. And they know, with absolutely certainty, that at the end of the day...
The US government will make good on AIG's obligations to Goldman.
But not only that, Goldman knows that the Fed stay tight-lipped about the whole thing and if a few pesky reporters or senators raise a ruckus, the Fed will say:
"Fuck off."
Now keep this in mind: there are a bunch of farmers out there who have delivered fertilizer or whatever out there to then-solvent, now-bankrupt entities that aren't paying for such deliveries.
Will the Federal givernment keep their counterparties alive long enough to pay these farmers?
HAH!
Applesaucer
delivered fertilizer
Don't forget, however, that in this day and age, "fertilizer" implicates Homeland Security and other nosy governmental agencies in the "War Against Terror," so that may not be the best example.
It makes perfect sense why Geithner was selected for Treasury, considering he was president of the NY Fed. More bailouts, here we come!
More bailouts, here we come!
You can count on it. Citibank is coming, and coming soon.
Just a brief style tip: Every time you end a post with "wake up" my response is "fuck you".
Every time you end a post with "wake up" my response is "fuck you".
That's not very friendly.
Hey man, it's your money, feel however you like. If you wanna sleep, then by all means, sleep well. I'm the first to admit, Bluepill looked a lot nicer, a lot easier than Redpill. Hard to blame anyone for making that choice.
Hey man, it's your money, feel however you like. If you wanna sleep, then by all means, sleep well. I'm the first to admit, Bluepill looked a lot nicer, a lot easier than Redpill. Hard to blame anyone for making that choice.
I am not asleep. I perceive things differently from you. Your continued insistence that your gloss on the financial mess is the One True Vision and that the rest of us are asleep is repulsive. You want people to listen to you, stop being a condescending prick.
I am not asleep.
Fine. Then I assume you actively support the economic measures of the last six months. And I vehemently disagree with you. I'd love to hear your explanation for why you support these measures.
I perceive things differently from you.
You perceive "theft" differently? Am I missing a certain subtlety in the definition?
Your continued insistence that your gloss on the financial mess
My gloss? I'm not that smart. I read Roubini, Ritholtz, Yves Smith, and others who know what they're talking about.
the One True Vision
That overstates it. But as I've said, I'd love to hear your alternative explanation.
that the rest of us are asleep is repulsive.
Your response to my (and others far smarter than me) assertion that we're being robbed blind is to tell me without explanation that I'm wrong.
That makes me repulsive.
You want people to listen to you
Not to me. To the view that I subscribe to. For the Nth time, it's not my view. I'm not that smart. Just cause I've taken the time to understand this view doesn't mean I have the acumen to run with it in completely new directions.
(Though I admit I hope to get that good someday.)
stop being a condescending prick.
Check out the comments threads here over the last month or so. Sorry to be immodest for a moment, but I think I've been rather effective at getting folks to think about this. At that point, it's all on them.
I'd ask you to take the same leap, but I guess you'll just respond by saying "Fuck you."
On an unrelated note, should anything be inferred from this? Or is it trivial?
You perceive "theft" differently?
It is not theft. You can disagree with Geithner's approach (such as it is) but calling it theft is plain stupid. At the very best it's an embarrassing oversimplification and an unfair attribution of motive. At worst it's hysterical demagoguery.
should anything be inferred from this? Or is it trivial?
Hard to know. One interpretation is that Geithner has no idea what he's doing, that he's totally in over his head. Another possibility is that Obama is in no mood for any more tax shenanigans.
It is not theft. You can disagree with Geithner's approach (such as it is) but calling it theft is plain stupid.
Oh? From Merriam-Webster: "the felonious taking and removing of personal property with intent to deprive the rightful owner of it"
Felonious refers, of course, to a felony, which means a crime for which you go to jail. I'll admit that part of the definition is subjective. I want Geithner and Paulson and Bernanke and Summers to go to jail for their "taking and removing" of the American taxpayers' money in order to "deprive the rightful owner[s]"(i.e., the American taxpayer) of that money of that money . . . to give it to their friends.
Toast, you're a taxpayer. You still have the money you paid as tax? Or does AIG have it? Or Citibank?
Please explain to me -- if you can -- why my understanding of the concept of "theft" is "plain stupid."
Look guys. Like it or not the FED has a role and that's it's job. If the FED was part of the government it would get out of control. They would just print money any time there wasn't enough money in the budget and they would never ever be required to balance or even know that they weren't in balance. The FED loans money to financial institutions at the discount rate and if it if it doesn't have enough money to lend then it prints more. It's job is also to keep inflation to a minimum while keeping the economy in order which can seem kind of contradictory at times but it's really not since when the economy is in trouble there really is no inflation which means when the FED prints money the only drawback is a loss in currency value which really isn't that big a deal since that usually increases exports because our stuff can be bought for cheap. On top of that the FED can loan money with collateral in an emergency to companies or other organizations. I say all this and it is a lot because no where in here does it mention any thing about the fact that it's your money because it isn't. IT is the FED's money. The FED has a job to do and it isn't to give money to the American people. It is to manage the economy. Period, and if the FED loans money to AIG and it loses it, the FED loses the money and not you and I. And since AIG has collateral which in all likelihood will not go any devalue any further, then the FED is going to get their money and in the meanwhile they will be collecting interest until AIG pays them back with asset sales which will is due in 2 years and by the way all profits from the FED go to the US government which is our money and that's good. Now GM is a different story. The government loaned them money and if GM doesn't pay it back then it comes out of our pockets and in my eyes that's much worse.
I say all this and it is a lot because no where in here does it mention any thing about the fact that it's your money because it isn't. IT is the FED's money. The FED has a job to do and it isn't to give money to the American people. It is to manage the economy. Period, and if the FED loans money to AIG and it loses it, the FED loses the money and not you and I. And since AIG has collateral which in all likelihood will not go any devalue any further, then the FED is going to get their money and in the meanwhile they will be collecting interest until AIG pays them back with asset sales which will is due in 2 years and by the way all profits from the FED go to the US government which is our money and that's good.
Barry, that's just not correct. Check out this post -- and the comments -- from earlier this week:
http://mikesneighborhood.blogspot.com/2009/03/theres-good-reason-dollar-bill-has.html
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