By now, we’ve all heard about the about $750 billion bailout passed last month, but what is making news now is that Federal Reserve’s own efforts to save the banking industry. Specifically, it has been revealed that since September 14th the Fed has loaned out $2 trillion. Ponder that for a second. While the $750 bailout was kicked about back and forth between the two houses of congress and President Bush and well as both Presidential candidates weighed in on it, the Federal Reserve was loaning (i.e. making money out of nowhere) money that was far in excess of that. Who did they loan it to? They’re not telling. Bloomberg has sued the Federal Reserve under the Freedom of Information Act to see if they can get the court to force disclosure of the information.
Let me break this down in terms we can all understand. The Federal Reserve is a privately owned institution. Who owns it? The member banks do. So the bank-owned Federal Reserve has created money out of nowhere and lent it to the banks against various form of collateral the banks provided. In essence, the Fed is merely obeying the wishes of its master, the banking industry. The American people have been convinced that the Federal Reserve works for them. In fact, most Americans believe that the Federal Reserve is part of the Federal government; it does have “Federal” in the name after all. But the Fed isn’t for the people. It is for the banks. The banks own the Fed, and the Fed is now serving them far better than anyone else could. Oh, and as for the collateral that’s been offered to the Fed for all of these loans, they’re not telling us that either.
I’ve been studying the Fed for years, and this amazes me. Not that the Fed would do something like this, but the idea that this is allowed to go on in front of all of us and hardly anyone makes a mention of it is just astounding. And what really kills me is that all that money that the Fed is creating is the liability, not of it, but of the American taxpayer. If you write a check, then it’s your liability that your bank must make good with (ideally) the money that you have in your account. These loans that the Fed have made must be made good by everyone else. In essence, the Fed is allowed to legally counterfeit- to print up unlimited quantities of notes that are someone else’s liability. And who owns this fantastic money making machine? Not the people, but the banks.
I guess I’d be hoping that we the people would be more incensed about all of this, but few people seem to care. In the last Presidential election, the Libertarians were the only major party to be taking about the dangers of the Federal Reserve and the fiat money system, and they got even fewer votes than Ralph Nader. The American system of government has been throughly perverted. Instead of fearing the obvious abuses of power that we are currently witnessing by the Federal Reserve, many people seem to have become seduced by the idea that Barack Obama can somehow make everything OK. This is insanity.