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Fed Gave Banks Eye-Popping Emergency Loans, Without Telling Congress
An anonymous reader writes with this excerpt: "The Fed didn't tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn't mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed's below-market rates, Bloomberg Markets magazine reports in its January issue."
$13 billion? Meh. Drop in the ocean. When we're all short of trillions, what's a few billion between friends?
Privatize the profits socialize the losses. Isn't capitalism great.
Is this really a surprise? It's sad really.
Unfortunately there are still powerful people that support this kind of secretive nonsense blocking any chance for a full audit of the Fed and transparency.
The Federal Reserve is not a government institution. Is not Federal. Is not a Reserve. It is a private bank, run for profit, with shareholders. In some regions they are even correctly listed in the Business Pages rather than Government listings. A private bank does not necessarily need government approval to take actions with another bank. What is unique about the Federal Reserve is that it is a private enterprise delegated the responsibility to print the nations money. Decide for yourselves if that is a good or bad thing.
How is it that these people saw no jail time for this nonsense? I'm as jaded as the next person when it comes to our country, but this is obscene.
And the masses cried out, "09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0!"
...below market loan? I would like the same opportunities to game financial markets and reap fast profits.
Oh, I'm just a stem cell scientist. I don't work hard (merit) enough to get rich this way (easy). [Sarcasm]
In some countries, scumbaggery like this ends with evisceration.
What you know, isn't capitalism. Hasn't been for quite a while.
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Jon Stewart covered this topic quite well the other day. So essentially we (US Treasury) loaned the banks money at 0.01% and then they loaned us (US Treasury) the money back at a higher rate. WTF?
"We make our world significant by the courage of our questions and by the depth of our answers." Carl Sagan
The big picture is really 7.7 trillion dollars altogether over 2 years. We're just waiting on the bubble to pop on the debt the westerner nations have now created. The debt is really not backed by anything, it's just a number in the computer. But 50% of GDP is a big number to give away.
Custom electronics and digital signage for your business: www.evcircuits.com
On the last Daily Show they said it was over 7T, and not 1.2T.
For some reason I trust the Daily Show for more accurate news then real news outlets...
Visit the Arcade Restoration Workshop @ http://www.arcaderestoration.com
Can somebody with a little credibility submit this story...
http://www.nytimes.com/2011/12/03/us/officers-punished-for-supporting-eased-drug-laws.html ...an officer fired for answering a wildcard question.
"... Bloomberg Markets magazine reports in its January issue" -- November just ended?
http://stephan.sugarmotor.org
Seriously...
Do a little graph of where they previously worked. Highly interesting.
Old boy's club owns America. Oh and Greece, Italy, ECB etc etc.
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Next time you get to spend far too many hours with your bestest buddies at Experian and Equifax, trying to get a $50 cable bill erroneously delivered to your old address for an account that you canceled when you moved wiped off your credit report, just remember that people more important than you had trillions in loans kept secret to avoid "stigmatizing" them.
What baffles me about this whole situation is that we haven't erected a guillotine in front of the bronze bull and gotten down to business...
The real issue here isn't that the Fed made money available, but the disparity of interest rates between that at which the money was available to select parties and that which the open market would bear: that let the banks borrow massive quantities at virtually no interest, only to lend it back out at much higher interest rates. Pure arbitrage between the "emergency" funds' near-zero interest rate on a restricted market and the open market's willingness to pay interest. It's not even clear that the banks taking the loans were unhealthy--they may have just recognized the profitability of free temporary money that could be loaned out for more than it cost (arbitrage). The Fed basically just shoveled profit to the banks. This isn't to say that the Fed didn't get all its loaned money back -- that's irrelevant. They knew full well that they were creating an artificial market for a select group of players and in direct opposition to the preexisting open market, and that they were creating a textbook case of arbitrage that could only profit the participants with access to the fed funds.
If someone doesn't go to jail for this, it'll be very hard not to listen to the anti-regulatory, anti-government fringe loonies. This is exactly what they've been squawking about for years. This is the kind of move that destroys the people's trust in the government's ability to regulate the markets: there's no way to see this except as blatant corruption and cronyism. That loss of trust, in the long run, is the most important fallout of this story. If this country is going to recover economically, there's going to have to be a sea change in ethics on both sides of the markets, both the money-making side and the regulatory side (and, yes, we still need both), and its going to have to be a credible change, not just a veneer, to restore confidence in the form of capitalism we claim we practice (and obviously no longer do).
http://politics.slashdot.org/story/11/07/21/1946234/fed-audits-initial-report-reveals-trillions-in-secret-loans
Well duh.
If only I could become a bank to borrow at the FED counter...
--- Hindsight is 20/20, but walking backwards is not the answer.
The latest tech stories that I couldn't find anywhere else (like an economics blog.)
You want bigger numbers?
Look at the bond sales... Quantitative Easing...
1. Treasury sells them.
2. Someone buys them.
3. Someone sells them on to the FED during POMO.
4. Profit.
Look, all filled in. No questions.
Guess who someone is.
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1) borrow risk free from fed at zero 2) invest in risk free treasuries at like 3 pct 3) PROFIT it doesn't take a genius to make money on wall street...
Is there a way to exclude Politics stories from my Slashdot page?
Looking for a job in Portland, Oregon?
And it's called Too Big To Fail. I'd vote for the candidate that will not allow any bank/wall street firm to get so big its failure can sink the economy. Current issue of Time has a write-up about such a candidate.
Rope is cheaper of course.
The bigger problem is these guys are zombies. They are insolvent the moment their "assets" are priced at market rates. It is going to take decades of support to keep them undead.
Remind you of Japan? The lost 2 decades? All because they refused to allow the people who fucked up to fail and those who didn't, to wipe out their debts and buy them out.
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They really must be incompetent to only make $13 Billion on 7.77 Trilllion of interest free money... How long is the term on these loans? Has it been paid back? I though the Federal Reserve only loaned money for a very short period of time (which would make the $13 billion more understandable). I disagree with Ron Paul on many issues, but he has been calling for the end of the undemocratic Federal Reserve for a long time.
It seems that the Fed is the only organization in America that would rather solve problems than score political points. From all accounds, they saved the economy from a liquidity crisis that would have shut down every business in America. I say, horray for the Fed!
http://www.geoffreylandis.com
For some reason I trust the Daily Show for more accurate news then real news outlets...
And the mystery of America's dysfunction deepens.
If you don't trust any of the 'real' news outlets then go do some research and figure out a bit of the truth yourself, or start finding trustworthy alternative papers and check their sources. Or don't bother with news at all.
The Daily Show is an entertainment product; just because it has a little news (and a big helping of insouciant liberal sarcasm) doesn't mean it's acceptable as a primary source of information. I'd rather watch the Daily Show than Nancy Grace or Glenn Beck, and I know the Daily Show will contain more true statements and fewer lies, but it's still not real news. It's something you watch after you figure out the real news, for some black comedy and hyperbole about how much the world sucks.
People who depend primarily on the Daily Show are better than people who depend primarily on Fox News, but not a lot.
WTF is that the Fed wanted money pumped into the system, to compensate for all of the (virtual) money that was disappearing. They were afraid of a deflationary cycle, where too little money was chasing too many goods, causing prices to fall, fewer goods to be made, more workers fired, and even less money.
But the Fed doesn't have branch offices, so they can't make loans to companies or individuals. Instead, they hired the major banks to do it. The gave the money to the banks, who loaned it out a higher rate. The higher rate compensates them for the risks of the losses they were taking: they still owed the money back to the Fed whether the loan was repaid or not. It also pays them for all of the infrastructure they have to maintain to make and service those loans: employees, computers, etc.
None of that is figured into that estimate of "profit", which was based on the difference between the rates, without taking their costs into account. And it amounts to getting about 1% of the transaction cost.
The fact that this was done without supervision by Congress is noteworthy, and needs to be investigated. Monetary policy needs to be coordinated, while the goal is to create some space between the Fed and the government to reduce the influence of politics, the government is still supposed to supervise the Fed.
But as fiscal policy, this is reasonably orthodox. The banks were paid to do what the banks do: give loans so that the economy can expand. Getting somebody else to do the same job would have cost more. The numbers are proportional to what you'd expect of trying to manage a country with a $14 trillion GDP when it's in a crisis.
And here you have the problem. As if this one time weren't bad enough, raiding the treasury will now become a thing that happens every time we turn over administrations.
Help stamp out iliturcy.
Unless you are someone who gives a flying fuck about money, in which case i feel sorry for you
See above.
You just have to find the "discount window." It's probably out back near the loading bays.
"When information is power, privacy is freedom" - Jah-Wren Ryel
The Fed actually did no wrong, they did exactly what they were supposed to do, HOWEVER: the CEOs of the banks on the receiving end of the loans should absolutely be investigated for defrauding investors, because going out in public and telling the public that your balance sheet is solid and can weather the storm, while simultaneously they are in need of taking on multibillion loans from the Fed just to stay afloat is fraud, plain and simple. Too bad the SEC is in the same bed so nothing is likely to ever happen.
And before you bemoan corporate cronyism, that isn't the only problem. We give 100% of federal revenue to the old and the poor these days
Huh?
Do you mean social security? Let me remind you, that's not a hand-out; it's paid for. And it's not "100% of federal revenue".
In any case, if you're looking at the US budget, Defense, not "the old and the poor," is the largest share. Here's the discretionary portion of the budget: http://oranges-world.com/the-federal-budget.html
http://www.geoffreylandis.com
Of course the Fed gave the banks loans and didn't disclose it. The way banks works relies heavily on short term borrowing and long term lending. For a simple example, consider a bank that takes deposits and offers mortgages. Very likely, the depositors will want to access their money at least monthly, while no one who buys a mortgage will want a month long loan. So consider a Great Depression style bank run (before the FDIC). The bank may be solvent (have enough assets like loans to correspond to the deposits) but most of their assets are in mortgages, and they can't just go and demand instant payments. So when too many people take out their deposits, the bank collapses, even if it was ok.
So that's the similar problem that happened here. The banks relied on short term loans to keep running. Their assets were long term, so they were illiquid - hard to convert to money. When people started getting nervous about the various derivative products like CMOs, they didn't really want to lend to banks. If the banks can't get short term loans, they'll collapse, like the old school bank with a bank run. The banks were very healthy in the long run, but if they couldn't get short term funding, they would collapse.
Now as everyone got nervous, it became a big problem for the banks to get loans. So the Fed needed to step in. The problem was that if the Fed says hey, I'm loaning to this bank, people will think that the bank is in danger. Now rationally, the bank is fine, but people just saw a big collapse, and didn't want to take any chances. If the Fed keeps the banks going and doesn't cause a panic, people will eventually regain confidence, and the banking system will be able to run again. A panic is really the worst thing that can happen to a financial system. Before the FDIC (which insures bank deposits), bank runs were a big problem. If you heard a rumor that your bank was in danger, you'd have to run to withdraw. If people had confidence in their banks, they'd leave their deposits and the bank would likely be fine. If people didn't have confidence, they'd run, the bank would have to give out it's reserves, and once they were depleted, it would collapse, leaving tons of people without their savings.
So really, the Fed's actions and secrecy were necessary to prevent worse financial problems. Now sure, the leadership of the banks made bad calls, and have done extraordinarily well since, but that's not the Fed's issue. Congress - the people who won elections - are the ones to deal with these problems through regulations and such. If you want to point fingers, look at bankers and elected officials, not the Fed.
Monetary policy is actually quite accessible, though lots of misconceptions exist. It's usually helpful to read some legitimate source - not Ron Paul - before attacking central banks.
In fact this is exactly the OPPOSITE of the free market.
The emergency loans were uncapitalistic government interference that denied market forces the chance to punish these boys with failure like they deserved.
Especially since those same banks wouldn't have hesitated to foreclose on their own debtors.
Is the counterfeiter considered rich?
They are thieves. Don't stigmatize them for being rich, stigmatize them for being thieves. Many people become rich, some fabulously so, by legitimate means, and in so doing do a great service to the rest of humanity. Don't conflate them with these "people".
It's interesting that some people used to say similar things about the Eastern Bloc, "They have stalinism; the word 'communism' doesn't belong anywhere near it!" The response to that statement would be that stalinist despotism leads inexorably from communism.
I hope the equivalent statement isn't true for linking crony capitalism and pure capitalism; I don't think the claim can be dismissed out of hand. (Speaking as a libertarian leaning moderate.)
So we all see it, we all complain about it, but what exactly are we going to do about it?
They wrote the 2nd amendment into the constitution because they knew this sort of thing would happen, what they didn't count on was everyone being so weak, bloated and stupid to actually use it.
"If any question why we died, Tell them because our fathers lied."
Just to put the actions of the FED into context.
It's purpose is to protect the banking sector, particularly a few Too Big To Fail banks. They did exactly what they were supposed to do.
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big deal. isn't that what one would expect from a financial institution? or, should they just stick the money under a mattress? rather than focusing in on the fact that banks made a tiny profit by putting their bailout money into safe investments (i'm looking at you, jon stewart), maybe we should be asking if ensuring confidence in our financial system was worth the $7.7 trillion price tag.
answer: no. regulation and transparency would have done the job for much cheaper. and, if we still don't have the R-word and the T-word in our financial markets, then we're just going to spend $ trillions more in another bailout at some point in the future.
All you have to do is let me buy bonds with currency i write into existence, and let americans pay taxes in TC-Bills.
I could put, i dunno, Jessica Alba's face on the notes, and promise to regulate the amount of currency in circulation to achieve 1.5-2% inflation. (Some inflation is needed to prevent people from hoarding the currency itself, if people want to hoard, they should hoard actual stuff instead (This is why gold fails as currency))
FRA: STFU GTFO
You know what happens if you don't give money to the old and poor?
They turn to crime. They must, since it is crime or starve for many of them.
Then they get arrested, and put in jail, where taxpayer dollars clothe them, feed them, and provide them with medical care.
You give them the money either way. But if you give it to them through social programs rather than jails, you save on security costs, prevent muggings, and generally keep everyone happier.
Alternatively, you could just send the poor to all go die in a pointless war. You get protests and stuff with too much of that, though, so you still wind up needing a workable long-term solution.
The banks got loans from the Fed totaling $7.7 Trillion at 0.01% interest, loaned or - and here's the kicker - invested a lot of it back into in Treasury Bills, either at a higher interest rate than the secret loans. In the cases where money was invested in T-Bills, the US government was (or the taxpayers were) effectively paying interest - to the banks - on the loans they made to the banks.... <foreheadsmack>
It must have been something you assimilated. . . .
Banks lend money to/from each other every day, often huge amounts for very short terms (1 day). This is normal operating procedure.
As far as I am concerned, if they are too big to fail, they are too big to exist.
Any company that reaches the point of "Too big to fail" needs to be taken over by the government and regulated as a government agency or public utility cause it has gotten to the point it is too big and too dangerous to allow it to be influenced by corporate greed or the overall market place to such a degree and should also operate at a non-profit status to keep it from exploding into a huge money sucking beast.
No, this is not the job of the FED. it might feel like that, but is not their job. Their job is regulating the money supply, and they actually do that quite well. They also happen to be way too easily influenced by Republican loons and goons and do deeply stupid things at times.
But nevertheless the US has the chance of having a central bank which does a pretty good job.
You can shift all your data all you want, the thing you don't get is everywhere you go there YOU are.
Sorry folks had to feed the troll =)
"If any question why we died, Tell them because our fathers lied."
You know he'd shut that shit down. Clean up the Fed, slash military expenditures, get us out of the wars. I doubt anyone else would do it.
http://youtu.be/HawiHvxloms
"The ability to delude yourself may be an important survival tool" - Jane Wagner -
I have a journal entry on this: How much is enough for a Keynesian?
It's really about Krugman's idea that if the bail out or stimulus isn't working, it means you aren't doing enough of it. That's what the basic principle of the failed Keynesian ideology is - counterfeit more money.
Of-course money is not pieces of paper, it's productive output of individuals, and that's the only thing that allows individuals to have purchasing power, because if you strip the economy of all the fluff and go back to basics, it's simply about barter: you grow some potatoes and corn and the other guy mines some iron ore and the other guy makes metal tools, they exchange with each other bartering.
Money is there to make exchange, accounting and store of value simpler than a pure barter system allows.
If you simply print the money and use it to 'buy' something, that is just stealing productive output of other people without producing anything in return. That's what FIAT money and counterfeit money allows people to do - to hide the fact that they didn't produce anything of value and are stealing products from others.
That's the fundamental problem with government's ability to issue debt and setting up a semi-private institution that is allowed to counterfeit money (clearly by going beyond and above the Constitutional authorization with all this printing of bills of credit).
Government is destroying the economy by stealing the money, and thus by destroying the investment capital and savings of people. If you can't overproduce and under-consume and have your money NOT stolen from you, you can't invest. You can't invest, you can't create more products and you lose your purchasing power.
If government is doing it to the economy, then the investment capital leaves to other economies (nations). That is where the previous comment on the issue of whether government should ever be allowed to pass new laws comes into play.
You can't handle the truth.
Because of the bush administration America is probably now the most corrupt nation Obama is just a puppet of the queen of England.
At least we have the most transparent government ever.
Read up on the origins of the federal reserve.
It was created for precisely this purpose.
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What is the per capita amount they spent? I would have that money in my pocket so I could put it in my bank of choice and reward the banks that actually care about customers. If banks and other financial institutions keep getting bailed out by the feds, then why what is going to make them care about their customers? Let's bail out the people and then the people can decide who gets their money.
No, it was created to prevent panics and bank runs, as well as regulating the money supply. Bank runs were common and destructive -- however it was not a matter of too big to fail as bank failure was common at the time.
Simply it was found not to help anyone, and the absence of a central bank put the US at a disadvantage compared to the European states: their economies were much stabler.
First, the intention and the stated regulation:
"What is the discount rate?
Banks also can borrow reserves directly from the Federal Reserve Banks at their "discount windows," and the discount rate is the rate that financially sound banks must pay for this "primary credit." The Boards of Directors of the Reserve Banks set these rates, subject to the review and determination of the Federal Reserve Board. ("Secondary credit" is offered at higher interest rates and on more restrictive terms to institutions that do not qualify for primary credit.) Since January 2003, the discount rate has been set 100 basis points above the funds rate target, though the difference between the two rates could vary in principle. Setting the discount rate higher than the funds rate is designed to keep banks from turning to this source before they have exhausted other less expensive alternatives. At the same time, the (relatively) easy availability of reserves at this rate effectively places a ceiling on the funds rate."
(http://www.frbsf.org/publications/federalreserve/monetary/tools.html)
--- discount window rate is determined by regulation A, though there is substantial freedom for rates to to below market (see http://www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/attachment.pdf, especially complaint that "above-market discount window framework generally would increase volatility" for their thought process)
--- as other comments have pointed out, the discount window was conceived as ample liquidity with a steep price
Second, the execution:
--- the data for federal funds and discount rate:
Date Discount Rate Federal Funds Rate
change New Level* Change New Level
Primary1 Secondary2
2010
Feb 19 +.25 0.75 1.25 N/A N/A
2008
Dec 16 -.75 0.50 1.00 -1 - -.75 0.00 - 0.25
Oct 29 -.50 1.25 1.75 -.50 1.00
Oct 8 -.50 1.75 2.25 -.50 1.50
Apr 30 -.25 2.25 2.75 -.25 2.00
Mar 18 -.75 2.50 3.00 -.75 2.25
Mar 16 -.25 3.25 3.75 N/A N/A
Jan 30 -.50 3.50 4.00 -.50 3.00
Jan 22 -.75 4.00 4.50 -.75 3.50
(http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html)
-- on 5 Dec 2008, federal funds target rate: 1.00
-- on 5 Dec 2008, published discount rate: 1.25 or 1.75
--- we already know the discount rate charged to these institutions was 0.01%
The most interesting question, for me, and the most pressing:
How is it that member banks learn that the discount rate is a goodly 0.01% if the published rate is 1.25% or 1.75%?
First off the Federal Reserve is not a government institution or organization. Congress merely delegated its monetary duties to a cartel of banks which monopolized the nations currency. In exchange for this the government gets unlimited financing. The major banking elites own the Fed and get guaranteed 7% dividends on their shares. The banks appoint half the board of governors while the government appoints the other half and the chairman. They are all employees of the Federal Reserve not the Government. The federal reserves job is to inflate the currency and make sure all the member banks can make money by lending it out (especially to the government). Any fed profits are remitted to the U.S treasury, and any losses are liabilities to the treasury as well. The banks needed the federal reserve to absolve them of risk associated with the fraudulent practices of fractional reserve banking. The U.S. dollar has lost over 90% of its value since the Federal Reserve was created in 1913. It also created the boom of the 1920's and inevitably the great depression when the fraud collapsed. It has not resulted in a stable currency and has been in the driving seat of every financial crises for the past 100 years. You cannot task the same corrupt system which created the crisis's with also rectifying them. They will only get larger and more frequent as bailout never fixes anything but only papers over the problem creating bigger one down the road. There is no free market, let alone in banking. Banks do not want a free market as they would actually have to compete for peoples savings, and pay free market interest rates on them. The government would also have to raise all revenues for funding expenditures through taxes or legitimate borrowing from the public. Capitalism has no place in modern banking. Free market money is commodity money (such as gold or silver) which cannot be counterfeited at will by governments or central banks to ripoff the entire public at large. Enjoy your fascism, it will only end it tears and misery for the majority.
Only if you had $1 trillion of collateral.
They also have a second chartered goal, which is to maximize employment. So they have to lend at the smallest necessary rate to get their primary job done.
No, it was created by Wall Street banks in order to save their asses when they screwed up and pump the leverage up too high. That's what it does.
The people who created the Federal Reserve were Wall Street:
http://en.wikipedia.org/wiki/Jekyll_Island#Planning_of_the_Federal_Reserve_System
Paul Warburg - Kuhn, Loeb & Co. (Rothschild) - Lehman Brothers
Frank Vanderlip - National City Bank of New York - Citibank
Henry P. Davison - JP Morgan
Benjamin Strong - JP Morgan
Charles D. Norton - First National Bank of New York - Citibank
Bank runs and failures prevent banks from becoming Too Big To Fail, and taking down the entire world economy. Which they did just as soon as they were able to ramp up the leverage (backed by the FED) during the "roaring" 1920s (can you say Credit Bubble?) until the inevitable result ... The Great Depression, Hitler, World War II etc.
Banks are fundamentally unstable organisations, they operate through leverage so small negative changes cause catastrophic results, and central banks as lenders of last resort provide insurance, which allow banks to lend with higher leverage than they would if they had no insurance. The losses are obviously then socialised. This is highly desirable if you happen to be a Wall Street banker. Lucky they've got one then eh?
That is, central banks make the problem bigger. Tada, here we are again. Great Depression? Greater Depression? Greatest Depression? Are we going to see World War III as the results continue to roll round the world?
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GP post focused on the government, but the article was about the federal reserve. Now everyone is arguing about the federal budget and social security, when this has nothing to do with either.
The fed gave out loans at below market prices, I think .01% The fed turns over all profits minus 6% dividend to the treasury, meaning that these loans made money for the federal government. This was no bailout unless you count giving heavy discounts a bailout. No money was lost.
The bad thing is the banks turned around and bought Treasury bills, which actually is part of the federal government, the budget, and national debt, and market prices. This is where you get people saying that "the government" gave out zero interest loans and the banks made money off those loans. It's a close summary, but not exactly correct. Misleading at best, although it might reach ignorant and possibly malicious.
The other bad thing of course is companies reporting they were healthy when they weren't, especially publically traded ones which may qualify as securities fraud. But if they worked out a loan deal with the Fed, maybe they actually were covered, and it wasn't a problem. We don't know.
Base money created by the state and credit (private money) creation by banks.
It has only relatively recently been acknowledged that banks do indeed create money. The vast majority of the population have no idea that when they take out a loan, the bank creates new money to give to them. Most assume that the money actually came from depositors, but that isn't the case.
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The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counterparties would shun firms that used the central bank as lender of last resort -- and that needy institutions would be reluctant to borrow in the next crisis.
No shit, Sherlock! I sure wouldn't invest in something that racked up that much debt, and I'd be wise to avoid doing so. But I guess if you're not going to keep secrets in a way that entices people to make terrible investments, it makes sense to plan for the next crisis instead of fixing this one.
This space reserved for administrative use.
Yup and unfortunately because they did it in secret no significant changes have been made to prevent this type of situation from occurring again.
name me one, just one, super rich person that got there by legitimate means. Just one. Please. I'm looking for some hope.
Thank you, taxpayer. Now go back to work and talk about them goddamn hippies occupying wallstreet!
I see the usual confusion on this topic - how is Social Security funded, what role does the Federal Reserve play, what are the major expenditures for the US govt.
All of these should have been addressed for high school graduates, and in fact, a Republic (or other forms of democratic government) require that the populate be well educated. Well, we fail on that...
A fun read is the last book in the Little House on the Prairie, where Laura has to pass her high school examination. I bet fewer than 5% would pass the test today.
I hope that's a +5 insightful for political satire.
The FED most definitely scored political points. Wall street is a huge political donor machine, a lot of favors were called in to let the banks play with free money. Setting aside the fact that the FED is a private bank controlled by the mega banks, created in secret by wall street and the big banks, the FED is not worthy of being cheered for their actions. If they had saved the economy from implosion then perhaps - ignoring everything else the FED is. Instead the decades of screwing over everyone in the name of making money has continued.
Those actions are the the reason people are complaining about the 1%. It's not about the smart business person, lucky inventor who made it big, or dotcom startup - but the bankers who profited from their connections, and continue to do so, at the expense of everyone else. All allowed by the continued failed policies of the FED.
Too Big to Fail was an interesting look at the collapse. A modern day horror story. Here's a fun quote :
Michele Davis: They almost bring down the US economy as we know but we can't put restrictions on how they spend the $125 billion we're giving them because... they might not take it!
[the Assistant Secretary of the Treasury for Public Affairs upon hearing that the 9 bank CEOs may refuse to take free money from the federal government if they had to be held accountable for how they spent it]
The FED prints money, which as stated previously, is simply STEALING from those who actually produce real products/services.
The only hope is RON PAUL is elected.
Just to put it into context, The Fed can only issue money based on the level of Government bonds it holds. Government bonds are backed by tax earnings. So essentially the US Taxpayers were forced to become indebted to the Fed for all of the secret Trillions given to the banks.
Participatory Governance : The only feasible option for a real democracy, where everyone really does have a say.
Just because this nonsense got modded 5+
Ok, same analogy
Look at my uncle Sam.
He earns $23K/year
He spends $23K/year
He's doing just fine.
Now, 10 years go by. He's still earning 23K/year. But it costs twice as much to put gas in his 10 year old car, his rent's up 50%, He pays 50% more for groceries and utilities are up 20%. He goes to his boss for a raise. But his boss can't afford that cause he needs all that money to create jobs. Never mind that his boss is sitting on 4 trillion in assets and he's running the factory with 50% less workers thanks to automation. So now Sam
earns $23K/year
spends $36K/year
and he's falling further and further behind. He'd like to go get a better job, but he gave the best years of his life to this company, and he's past his prime. Nobody'll hire him...
I don't want to loan uncle Sam more money. I want him to earn a Living Wage.
You see, the trouble with your narrative is it's too simple. It sounds great, because it's so simple, but that's not really what's going on in the American economy.
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Nowadays very little of the top 1%'s money is what you and I think of as 'income'. Most of their wealth comes from investments with either low taxes or shifted off shore. When they need actual money, they use a very simple scheme: they borrow at below market (remember that 7.7 trillion they just got), skim whatever they need off the top and then use the rest to buy enough treasury bonds and/or misc investments to pay the loan back w/o cost. If this sounds too complicated a scheme to work, you've got to remember these are people without a real job. The only thing they do is shift money around for their own personal benefit. Parasites really.
Anyway, The reason the bottom 99%'s income tax has dropped is because we've just plain got less to take. There are more and more people who earn so little they don't pay income tax. That said, they pay a LOT of other taxes. Warren Buffet has remarked more than once that, as a percentage of his (real) income, his secretary pays more than him.
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Yes.
One thing people need to keep in mind about why the Fed is partially independent from the government:
The federal government has a significant conflict of interest when it comes to inflation and increasing the money supply through generating credit. Generally speaking inflation helps those with high debt burdens. Inflation helps the government balance its budget, ie the govt has less incentive to maintain 'price stability' (considered consistently low but positive inflation) -- not only does it tax the generation of currency directly through seignorage but levies taxes directly on the population so as to make inflation in and of itself a very positive thing, from the governments perspective. Central banks that are too entrenched in government interests are at a higher risk of causing hyperinflation or generating too much currency and devaluing the currency.
So let them pay it back with interest, we dont care as long as we get our money back, especially if they are showing profits again..... it was to help them ou, they are ok now, so pay us back (else we send guido after you!)
Because in a capitalist system, money is power and the corporations can have much more than any individual, therefore they have more power in a capitalist system.
Corporate corruption of the nation is an inevitable consequence of capitalism, as much as state corruption of the nation is an inevitable consequence of Communism.
bc most sane countries spend about 2%. Only places like Libya and North Korea spend that sort of GDP on military.
"Too Big To Fail" is the wrong mentality. They are really "Too Big to be Allowed to Exist", and are exactly the kind of entities that should be broken up, and quickly, for the good of everyone else.
>That is, central banks make the problem bigger. Tada, here we are again. Great Depression? Greater Depression? Greatest Depression? Are we going to see World War III as the results continue to roll round the world?
Aaron Russo said that Nick Rockefeller once told him in private that the ultimate goals of the international banking cartel is to digitize all money, create an international central bank, that counterfeits an international currency, and have everyone in the world implanted with RFID chips that contain records of people's money, controlled of course by the international bankers through their enforcement wing called the world's governments.
If you don't like what they do, if you resist, then they will just turn off your chip, and you'd be without any way to engage in the globalists' "managed" market.
If you think this is just silly conspiracy theories, then I hate to break it to you, but the world's economies are unfortunately being manipulated by vicious anti-social psychopaths who want to control you, so that you cannot economically compete with them. I suggest you not take my word for it just because I say so, I implore all of you to do your own research, and have an open mind, and never, and I mean NEVER, assume that governments have your interests at heart. Just look at OWS and how the government's police are treating them. Yes, they're not as vicious as the police in some of the more backwards nations around the world, but that's because America STILL contains the ideology of individual freedom. Imagine how big of an intellectual revolution the enlightenment must have been, for the effects to STILL be reverberating today, where most people don't even know how it is that they came to live in a more or less free country, which is nevertheless standing even with the incredibly oppressive central banking system.
The Fed is the second most evil institution that has ever been introduced in the land we call America. And if it is not stopped, if it not abolished, the future of this country cannot be one of progress towards freedom. We will continue to slide towards dictatorship, as the executive's declaration to assassinate American citizens without trial or lawyer, nor even release of evidence, is going to be followed by more, and more, and more, and more draconian oppressions of our freedom until we'll be seeing war on the streets just like in the middle east. The oligarchs WANT that to take place. They are going to continue to seek power and they will continue to destroy US civilization until they have an excuse to let loose the US army on US soil.