May 7, 2010
The ‘Audit the Fed’ bill has been watered down by Senator Bernard Sanders right at the last minute (a common strategy: pretend to be a populist, then at the last minute, the politician “gives in” in the spirit of compromise). The Audit the Fed bill could go to vote in the Senate any day now.
Obama opposed the bill, until the rewrite. One can only imagine what type of pressure his administration applied to the Senate.
Bernanke opposed the bill, and even said that an audit of the Fed’s monetary policy could “seriously threaten” the Fed’s independence. This statement couldn’t be more true. The Fed is not bound in any way to transparency and informing the American people how much money the Fed is printing or to whom it is being given, however, the American taxpayers are on the hook for the debt. The Federal Reserve opposes an audit of its monetary policy (what the plans are for the economy and the means by which it will be carried out) because then it would appear in print and the criminal nature of the Fed would become apparent.
The Federal Reserve is a cartel: an agreement between parties to refrain from competition in a true free market, thus creating a monopoly that has extended into an oligarchy (the rule over the masses by a few). The bankers created the bubble that caused the debt, have prolonged recovery by keeping interest rates low and monetizing the debt. Obama’s Financial Reform Bill will create perpetual bailouts for the bankers. Bailouts are not anything new, in the past, many large entities like Amtrak, New York City and Chrysler have been bailed out by the taxpayer, the difference now is that it is moving at a breakneck pace. The bankers control the economy and have overwhelming influence over Congress and government.
Unless the Audit the Fed bill passes in its original form, with the full audit conducted by the Government Accounting Office (GAO), it would be unlikely that the American taxpayers would actually find out which banks received the bailout money, how much money and under what conditions. G. Edward Griffin, author of the classic book, ‘The Creature From Jekyll Island’ pointed out that an audit (that lacks GAO direction) would only result in a whitewash- the appointed auditors would likely be a commission comprised of friends of the Fed, it would be narrow and superficial. It would give the impression something was being done,and after a long time, theaudit report would be cover-up, assuring the people that everything was fine. An example of this is the 9/11 “Omission Report” that completely neglected the most damning evidence: Building 7.
Having said that, the ‘Audit the Fed’ bill is important, in its original form, because it is has alerted the public to the possibility of corruption, leading them to question the Fed, the American government and our financial system, which is based in debt. It is obvious to everyone who understands the Federal Reserve how much power they have, as this popular bill is being squashed, even though the people want it. An audit of the Fed’s monetary policy (included in the original version of the bill) would perhaps generate enough noise to awaken the sleeping masses.
- A d v e r t i s e m e n t
A real solution lies in repealing ‘Legal Tender’ laws that create a monopoly and require, under law with the threat of imprisonment or fines, that a certain type of money be used in trade. By introducing competing currencies, a true free market is encouraged. Ron Paul introduced legislation earlier this year, that has been ignored and silenced, that would introduce competing currencies, and should be enthusiastically supported.
Interestingly, Idaho introduced legislation allowing residents to pay their taxes in silver medallions. This would have benefitted the people and government of Idaho by:
• Creation of a competing currency and limiting the Federal Reserve monopoly
• Idaho would have increased real assets (precious metal)
• Idaho is silver rich and an expanded mining industry would have created jobs
• State sovereignty and removal of undue influence of bankers
This bill died despite its popularity.
In a related topic on banking, you may be wondering how the failing banks that received TARP bailout money have been able to pay back their loans. G. Edward Griffin has been following this in his newsletter, the Unfiltered News (1), and discovered that one of the bookkeeping tricks used was the recent sale of warrants. Warrants are like a hybrid of options and derivatives; they are contracts that allow the holder to buy more of a firm’s shares in the future at a fixed price.
Another bookkeeping trick that has allowed banks to show a profit is FAS 157, which is a complicated accounting rule similar to the accounting practices that Enron used.(2) FAS 157 divides assets into 3 categories:
• Level 1 is market-to-market; an asset’s value is based on its actual price
• Level 2 is mark-to-model; an asset’s value is estimated based on observable inputs when there aren’t any quotes available
• Level 3 is based on assumptions, when no observable or comparable data exists (for example, an illiquid security), and the reporting entity values the item according to what market participants would use to price the asset or liability, using the best information available.
By letting banks use internal models instead of market prices, and allowing them to take into account the cash flow of securities, FASB’s change could boost bank industry earnings by 20 percent. (3)
Companies weighed down by mortgage- backed securities, such as New your based Citigroup, could cut their losses by 50 to 70 percent. This could turn net losses into net gains. (4)
This means that the banks are able to legally cook their books so that their failing enterprise looks prosperous on paper. The problem with that is that the banking enterprise will continue to function for a little while longer, requiring bailout funds along the way to maintain salaries and bonuses, but the underlying problem is never solved, just swept under the rug where it gets worse, making the eventual day of reckoning more devastating to the taxpayers. It is the legalization of fraud.
If you’re tired of the joke being perpetrated against the American people by the banksters, watch the Ron Paul video and take action by calling Senators today.