Monday, January 25, 2010

The Bernanke Monarchy

The Federal Reserve now holds 4 trillion dollars worth of Treasury’s. Do you get the feeling that a lot of stuff that would have hit the fan, got bought by the Fed? All of Goldman Sach's bets with AIG were paid. Fannie and Freddie are GSA’s that should have dropped dead and didn't.

It is the Congress who spends our taxes but the Federal Reserve can spend the cash it creates with Treasury securities, without Congressional approval. They can buy bad debts and hope they get the money back later (It isn’t going to happen). The Fed is spending money at a faster rate than our Congress ever could. Of course it is not really spending; it is just a loan from the Treasury which they will buy back.

It is noble that  Ben wants to save the financial system. He can spend the money on wine women and song or bad real estate loans, it makes no difference, the money is not coming back. He has borrowed money, he has no right to access. Hail Ben Bernanke, our King, Sovereign ruling over all, Congress be dammed.

This is one guy that will never be out money as long as he has a pen.  And we thought we had to worry about Congress--forget them, they are asleep at the switch or more probably text messaging a girlfriend to renew their Viagra prescription.


MiTurn said...

Bernanke obviously can't spell.

Jim in San Marcos said...

Hi MiTurn

I corrected it Thanks!

AIM said...

Would be as pleasant as Massachusetts if Bernanke wasn't reappointed. "We the people" would finally score a few points.

Bernanke... an expert on The Great Depression and its causes? Our financial hero who saved us from economic collapse last year? Time's "Man of the Year"?

What planet am I on?


AIM said...

I hope everyone here has faxed or called the undecided senators and urged them to vote NO on Bernanke's reappointment.

And also request that they vote on Audit the Fed first, BEFORE voting on Bernanke.

Anonymous said...

What if 'Audit the Fed' is a ruse, meant to pacify the public. Meanwhile, America continues to be gutted.

Jim in San Marcos said...


Maybe Congress will wake up. We got stuck with Fannie and Freddie. There is a pretty good chance we get stuck with Bernanke's paper and Congress wasn't even in the loop.

I think that Bernanke will get confirmed. If anything goes wrong, it will be blamed on the Republicans who first put him in office. He gets to take the fall later.

I guess we wait and see what happens, it could go your way.

Take care.

Anonymous said...

Anon 12:25

Audit the Fed was started by Ron Paul. He's been on this track for 30 years. You're saying he is a ruse?


Jim in San Marcos said...

Hi Anon 7:58

I guess the real issue here is the "audit the Fed."

I think if we do it, it will end up like Andrew Jackson killing The Second Bank of the United States.

An interesting proposition already played out in history.

Thank you for your comments.

Anonymous said...

Any economic historians out there? Do you know what effect the closing of the 2nd USB had on the US economy?

Did it improve or worsen?

How was the economy doing from then up until 1913 when the FRB (the next central banking system) came into operation?

Anonymous said...

I'm not saying it is a ruse. I'm saying, what if it is? It is just a point to ponder.

The ruse wouldnt be Paul, of course. There are more players than that in this game.

Anonymous said...

If a true, full audit is done by a competent neutral third party, and The Fed hasn't cooked the books or altered the data in ANY way----- we will know the truth.

If it isn't a full audit done competently on the true numbers----- we won't know the truth.

I will wager that it will never be a complete and full audit on the true numbers----- because if it were, the people would go into riot mode and Bernanke and all other key players would go to prison.

Anonymous said...

I read up on the Second Bank. The banks that took over did as well as the FED is doing today:
"due to the practice of banks issuing paper banknotes that were not backed by gold or silver reserves, there was soon rapid inflation and mounting state debts"

Goose said...

We apparently haven't gotten the change we need with Obama, and why would we, so far as the status quo can be sustained. It's when the current system completely collapses, that a new system may be built. In the mean time, let's just limp along and hope when the ground opens up beneath your feet, that you would have gone to heaven already.

Anon on a CA Mtn said...

History has shown over and over that it is always debt that destroys empires and countries (except for war, climate change and migration away from failing crop lands).

Usually after a financial crisis you have a number of sovereign defaults (because of all the bailout, stimulus and drops in tax revenue). The cycle: a government goes into excessive debt that can finally no longer be managed or serviced... it can't get money from tax revenues, trade or the economy, so... in desperation it raises taxes and becomes very aggressive towards its citizens... this slows growth even more... capital flees and so do citizens... the downward spiral worsens... more desperate measures from a government that is impossibly in the red... and then it is spin, crash and burn.

Egypt, Rome and Greece are a few examples of that.

We Americans have now entered into this cycle.

Our politicians and 99% of economists don't understand what is going on and have no chance of remedying the situation. To place hope in them is folly.

The deflation and deleveraging can't be stopped. The correction/recession/depression can be postponed but never avoided... and it will be more painful and destructive in direct ratio to the length of postponement.

We've been on a credit expansion cycle since the mid 40's. It has ended and is beginning its contraction cycle now.

Don't worry about the FRB printing 2T into the money supply. With 30+T of derivatives and other assets that are collapsing, 2T is a mosquito bite. Inflation worries are premature. This is deflation.

Bernanke is back in and we will be the worse for it.

Figure out how to survive in an environment of high taxes, slow to no growth, oppressive government, lower standard of living, poorer infrastructure and lower levels of social services.

Anon On A Calif Mountain