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Fed Audit's Initial Report Reveals Trillions in Secret Loans
An anonymous reader writes "The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression."
You do realize that it was Bernie Sanders, not Paul, who ordered this audit, right? You know, Sanders (S-VT), where "S" is the Socialist Party of Vermont?
Its not some sort of secret, it has been disclosed by the Fed in their annual reports as required by law.
http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/ Fortune Magazine Article
The gold standard is overrated. The longer a country stayed on the gold standard during the Great Depression, the longer it took that country to get out of the Great Depression.
As this article notes,
Enough with the gold standard nonsense already.
Prevent Windows piracy. Use Linux instead.
A) These are loans, almost all of which get paid back.
B) this is not a secret. Just because something goes on you didn't know about, doesn't mean it was a secret. It just means you where ignorant.
C) This benefits the US. The US MADE money from this.
I just had to get that out there, I know it wont stop the frothing lunatics.
The Kruger Dunning explains most post on
"No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.
Since when is the Federal Reserve an agency of the United States government? Last time that I checked it was and still is a privately owned corporation.
Just be sure to wear the gold uniform when you beam down -- you know what happens when you wear the red one.
But Ron Paul does not advocate return to pure gold standard, he advocates allowing competing currencies, some backed by gold, other by silver, third by "trust in US Government", and letting people/markets decide which one do they prefer.
Because multiple competing currencies worked so great during the Articles of Confederation days, right? Oh wait, it was an abysmal failure.
As a poster suggested above, these were overnight loans that were almost immediately repaid.
Thats total, not at once. Lend out $100 Billion to someone on Monday night, they pay it back Tuesday morning, and borrow it again Tuesday night to pay back Wednesday morning. Do that for a week and you just lent out a Trillion.
Lets say I have 5 dollars.
I lend you 5 dollars, the next day you pay me back 5 dollars and 5 cents.
The I lend that 5 dollars to someone else and they paid me backs 5 dollars an 5 cents.
I lent out 10 dollars during those 2 days, but I never lent more then I had. And I ended with 10 cent more then I started.
Get it?
Listening to most slashdotters talk about finance is like listening to accounts talk about a computer. simple painful.
The Kruger Dunning explains most post on
If some one creates a way to artifically produce gold on a vast scale, then what? It's already happened with diamonds, but there's no cartel to protect gold prices.
For accuracy's sake I should say that artificial gold is a practical impossibility until we have cheap transmutation; diamonds are just a form of common carbon, while gold is made of precious gold. To answer your specific question of what might happen when we have the technology to cheaply create synthetic gold, I can only imagine: our economies might well have moved past physical scarcity by that point in time.
Perhaps you should have been thinking about cheaply extracting the gold that already exists on Earth. Getting it from seawater is an idea that I've heard mentioned a few times and if that were possible then the price of what is basically just an expensive commodity would plummet, so naturally basing a currency on it would be a Bad Thing. Until that happens I've no idea why the gold standard is bad but then again I don't know how to cast the bones like an economist.
If God forks the Universe every time you roll a die, he'd better have a damned good memory.
hahahahaha...no we didn't actually...our super status was not really sealed until after WWII. We all know that we began to move off of the gold standard under Roosevelt, but still had some of our money supply backed up by gold reserves. Moving off of the gold standard was what allowed our economy to grow exponentially after WW2. This is a simplistic explanation as it is much more involved than that. We were a player on the world stage, but not really what you would deem a super power.
It had nothing to do with us and everything to do with the rest of the industrialized world being leveled during WWII while our factories were still operational. In it's superior productivity position, the US basically strong-armed implementation of the Bretton Woods system that essentially set international trade pegged to the dollar, part of which was swallowed because it was pegged to gold, which the US was holding onto since, during the war, wealthy nations during the war had shipped it there for safe keeping.
Essentially, the US stole the world's gold reserves by exchanging it for dollars and under the Bretton Woods formed World Bank, pegged all trade to the US dollar by pegging all foreign currencies to the US dollar. Then we changed the ounces of gold per dollar. Then we eliminated all pretext and made the dollar pure fiat... now that vital commodities like oil were traded in, yep, US dollars.
The superpower status of the US was as much a scam as the USSR's superpower status, except we actually managed to steal much of the world's wealth while the USSR was too deluded by the communism illusion to admit they had nothing.
Here's the deal on this: Ron Paul is one of the minority in Congress who actually believes what he's saying and isn't for sale. It's actually not unusual for him to ally himself with the likes of Bernie Sanders (S-VT) and Dennis Kucinich (D-OH), because he will come to the same conclusions they do for completely different reasons. For instance, Kucinich and Paul have worked together trying to stop the war in Libya. Dennis is against it for typical liberal peacenik reasons like thinking it immoral to bomb people who present no threat to the United States. Ron is against it because he thinks of big military spending as tax-and-spend big government.
Now, Paul has been pushing "audit the Fed" from a conservative angle for years. Sanders, on the other hand, actually managed to get it into law. Kudos to both of them for making the right decision.
I am officially gone from
no nonsense, U.S. went off the gold standard in 1973. The Depression had everything to do with self-referential paper pyramid scams, same as recession of now. Quit being a shill for the banking cartel parasites who have been draining our wealth.
seriously guys, this isn't news.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
It's on page 131, table 8, bottom right:
In short, it's a pretty absurdly inflated number. Loaning 10 billion for 1 day, and doing it for 30 days, is counted as 300 billion of loans, rather than a 10 billion 30-day loan.
"Table 8 aggregates total dollar transaction amounts by adding the total dollar amount of all loans but does not adjust these amounts to reflect differences across programs in the term over which loans were outstanding. For example, an overnight PDCF loan of $10 billion that was renewed daily at the same level for 30
business days would result in an aggregate amount borrowed of $300 billion although the institution, in effect, borrowed only $10 billion over 30... In contrast, a TAF loan of $10 billion extended over a 1-month period would appear as $10 billion. As a result, the total transaction amounts shown in table 8 for PDCF are not directly comparable to the total transaction amounts shown for TAF and other programs that made loans for periods longer than overnight"
Further, this is pretty much regular operations of the Fed as part of their work in stabilizing the economy through monetary policy. It's what they were made to do.
The GAO is pointing out failures in controls. Offering some perspective as a public company auditor (not a government auditor) I see failures in control all over because there is the concept of an ideal control environment, but every control represents additional costs and times, and general inefficiency. It adds hoops to jump through to get things done. At some point companies look at the risk and the cost needed to implement additional controls on that risk and decide that it's not worth it to strive for 100% security against a problem that may or may not exist. However, auditors point out these risks because that's their job, and the risks are real, whether or not the cost/benefit makes sense. In this specific case, revolving around conflicts of interest, there's only so much you can do, but considering the nature of the issue, it is damned important to have strong controls in these area. In summary, it's not suprising to see control deficiencies, and control deficiencies are not evidence of fraud or misstatement, but it's always better to have less control risk.
Got news for you, before WWII, our solders pointed broomsticks at cars ("tanks") and said, "eh, eh, eh, eh, eh, eh", to simulate firing an imaginary weapon. During WWI, gunners trained by using their finger and pointing at imaginary targets while spinning in a swivel chair. The US absolutely did NOT become a super power until after the close of WWII. And in large part, that was thanks to the Germans (including Nazis) absorbed by the US.
At the Battle of Leyte Gulf, we had forty aircraft carriers: 8 fleet, 8 light, and 18 escort. Plus a dozen battleships and over a hundred fifty other ships.
Forty fucking aircraft carriers.
We were a super power--and the only nuclear power--before the end of World War 2.
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
Our money is controlled by the Federal Reserve, a for profit, privately owned financial institution. Every dollar that is printed equals more than a dollar in debt to the Federal Reserve. They're the main reason we are in the mess that we are in now, we need to go back to the silver standard. JFK attempted to do this and was assassinated for doing so. Fiat currency only exists to line bankers pockets.
Inflation is only easy to control if you get to define 'inflation' to mean whatever you feel like. As in "something went up in price so we'll make up an excuse to exclude it - see we have no inflation". Or "oh, beef got more expensive, but eh, people will eat processed dog instead so their meals got no more expensive - see, we have no inflation".
Perhaps, if we got accurate measurements of inflation it would be a workable model, but unless things like asset inflation get included we'll just get an endless process of bubble-crash-bubble-crash as malinvestments get stuffed into segments that are not accounted for.
A deflationary economy would ultimately be less painful, but as it would put significant problems for stealth taxation and it would create less benefit for the economic actors closest to money creation, it is unlikely to happen.
Since when is the Federal Reserve an agency of the United States government?
I would guess ever since the Federal Reserve System was created by an act of Congress, which has been amended some 200 times. All banks are required to be members of the Federal Reserve.
Last time that I checked it was and still is a privately owned corporation.
It is technically private but that doesn't mean it doesn't answer to the government. The Fed needs some independence to do its job properly. But the Fed is a quasi-governmental entity. It is backed up by the full faith and credit of the US government and only exists because Congress delegated some powers to it. It is private in the same sense that Fannie Mae was private. Technically true but well understood that it had the backing of the government.
. 13 other countries besides the U.K. had decided to abandon their currencies' gold parity in 1931. Bernanke and James' data for the average growth rate of industrial production for these countries (plotted in the top panel above) was positive in every year from 1932 on. Countries that stayed on gold, by contrast, experienced an average output decline of 15% in 1932. The U.S. abandoned gold in 1933, after which its dramatic recovery immediately began. The same happened after Italy dropped the gold standard in 1934, and for Belgium when it went off in 1935. On the other hand, the three countries that stuck with gold through 1936 (France, Netherlands, and Poland) saw a 6% drop in industrial production in 1935, while the rest of the world was experiencing solid growth. - this entire paragraph is ridiculous.
The US didn't begin a recovery in 1933 at all. US only recovered once the WWII ended, so the government stopped with the spending and the credit could be reallocated back into the private sector. 1929-1945 were the years of bail outs and stimulus. And when talking about 'output decline', yeah, that's their most important metric. For the government of-course, as when prices fall in a deflation, they collect less taxes and they owe money, so to a government this is a double hit - they collect less in taxes and they must repay debts in appreciating currency.
Of-course they hate deflation, but deflation is great for the consumer. FDIC was created to fight an imaginary problem - only 2% of deposits were wiped out during the Depression, but the prices fell by a much bigger amount due to the deflationary pressure, which was a healthy unwinding of the bubble, that the US government has created in the twenties, when it was buying UK debt, to prop up UK pound, so they inflated a huge bubble in agriculture, prices needed to go down and they fought it tooth and nail by printing so much money, it was obscene by those times.
The consumers who didn't have their deposits disappear, gained hugely from the increase in purchasing power, much more than 2%, as the prices for agricultural products were plummeting, and government was trying to keep the prices up then, just like it's trying to keep prices for houses and various companies (banks, GE, GM, etc.) up today.
Real gold standard wouldn't have let US to get into the Great Depression in the first place, because the Fed wouldn't be able to print money. The current depression wouldn't have happened either.
You can't handle the truth.
Except other currencies have been relatively stable with the dollar.
And before you start saying "well, they had 200% inflation too!", they didn't, because the prices of non-gold commodities didn't go up by the same amount. Gold is in a bubble.
Bullshit. How about oil? And how about industrial commodities? Have you compared the price of gold over time to the price of wheat?
I also suggest you take a careful look at the stock market, which the "experts" in Washington and at the Fed claim is indicating a recovery. In fact, the stock market prices simply reflect the first place where the devalued dollar starts to show large price increases. Check out the indexes vs. the price of gold, and you'll notice that the market is still depressed, and the only thing that is failing is the fiat "money" that the elites are fooling everyone with and using to rob the lower classes.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
You do realize that it was Bernie Sanders, not Paul, who ordered this audit, right? You know, Sanders (S-VT), where "S" is the Socialist Party of Vermont?
Actually, it was originally Ron Paul's bill. Sanders sold out, gutted it, and instead of a comprehensive full audit of the Fed became and extremely limited, one-time audit instead.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
The Sanders amendment was passed over Paul's amendment. Paul's amendment was an actual top-to-bottom audit of the Fed, while the Sanders was incredibly watered-down by comparison. For example, the gold will not be audited. For all other multi-billion dollar assets, owners require periodic audits of the asset, yet for some reason the gold in the Federal Reserve has not been audited in over 60 years.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.