http://www.unelected.org/audit-of-the-f … t-bailouts
"What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs."
It will be interesting to see how the Fed's defenders will explain this one away. What is the point in raising taxes on the rich if they're just going to get that money back from bail-outs whenever there's a crisis?
The comment you quoted mixed the author's opinion with results of the GAO audit. The GAO made no conclusion that "the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs." That was strictly the conclusion of the libertarian website writer.
OH MY GOD!! NOT A MILD INTERJECTION OF OPINION!!!
I'm pissed off. That money directly affects MY money.
So the 16 Trillion was well spent eh? How about putting all of that money into 'creating jobs'?
Yes. It was well directed. "Spent" is not the right word.
Okay. Well, I need to direct my money into the local branch of Sainsbury's who in turn will direct me some food, so I shall be back later.
Money is always spent.
It is spent on food, spent on good deeds, spend on services, spent as investments, spent as a hoard of value.
Because money represents real resources (albeit, not so well with today's "print money out of thin air" system), money is ALWAYS spent.
Not surprising, the federal reserve was the reason for the depression in the 1930's. Whenever things are good for America they give themselves credit and whenever anything goes wrong they blame everyone else.
Herbert Hoover said that he had learned that the federal reserve was a weak reed for a nation in a time of trouble. The federal reserve bank had been set up seventeen years previous to the depression for the specific purpose preventing such calamities from occurring. When they devised a plan to save the other banks, specifically the bank of the United States it failed and on 10 December 1930 that bank went under. This spurred a far reaching effect that caused the entire nation to suffer as other banks began to fail, and the federal reserve stood idly by as the nation plummeted into the worst depression in United States history, when it had the power the responsibility and the duty to provide the needed money to prevent those banks from closing.
I'll bite. Great question. Makes me feel really "good" (not) about paying an effective mortgage rate of 80% a month when one fifth of my payment goes off the capital amount and the rest goes to interest on the loan. Glad we are all sharing the load in this financial crisis. Glad the banks are making 80% interest off me and the federal reserve of the US is making ... nothing ... that seems fair doesn't it?
The Federal Reserve has been doing an almost single handed job of getting our economy back on track. Bernanke deserves a medal.
Nonsense. Inflation (calculated properly) is near 6%. This is a direct result of printing trillions out of thin air.
Bernanke should be rotting in a gulag.
Evan, you need to take a good course in economics. However calculated, inflation is quite low by historical standards. Bernanke has done a superlative job of balancing between the Scylla of inflation and the Charibdis of unemployment in accordance with his mission as defined by the U.S. law which guides the Fed. You are correct that there are several ways by which economists calculate inflation, but none produces a result even close to 6 percent.
Roger Lowenstein (economics journalist, formerly with the Wall Street Journal and director of the Sequoia Fund) in the April "Atlantic" says the following (paraphrased):
During Bernanke's tenure, inflation as measured by the Consumer Price index has averaged 2.4 percent, lower than under any other Fed chief since the Vietnam War. Anti-Fed populism is doing a great disservice to the country. In 2010 the Fed's strategy was condemned in a widely circulated open letter to Bernanke signed by 23 Republican-leaning financial "experts." The letter, which demanded an immediate halt to Bernanke's program, stated "We disagree with the view that inflation needs to be pushed higher." At that time, inflation was trending down toward 1 percent. One reason the Great Depression lasted so long was is that prices kept falling, year after year. A primary aim of Bernanke's new program (quantitative easing) was to ward off deflation, which it did...
6% inflation is low?
Actually, it was largely negative for the majority of mankind's history.
Inflation is closer to 2% than 6%. Did you make the 6% up out of thin air?
Inflation and mortgage interest rates are at postwar lows. The danger of deflation or depression is greater than for inflation at the present time. Do a little research instead of making wild, unsupported assertions.
The "official" CPI is at 3% - so you're wrong from the get-go.
However, CPI is redefined on a decade-ly basis. The free-market measurements of CPI are hovering around 6%
http://www.shadowstats.com/alternate_da … ion-charts
I don't see why deflation is a bad thing.
Look at the price of computers - it's gone down, year on year. It just means that more people can afford computers, which is good news for the computer manufacturers and good news for people like yours truly, who is very happy that she can buy a laptop for £300 when ten years ago she'd have had to pay £1,000 for a half-decent desktop PC.
Oh, and every time another round of quantitative easing is announced, I always think "So the price of our weekly shop is going up. Again." QE sounds like another pyramid scheme to me - it benefits people at the top of the pyrimid (i.e. the first people who receive all that extra money that's being pumped into the system), but not people on small/fixed incomes, who just get the fallout in the form of increased prices.
Here's why deflation is a bad thing-- (from Wikipedia)
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the longest, most widespread, and deepest depression of the 20th century.
In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can decline. The depression originated in the U.S., starting with the fall in stock prices that began around September 4, 1929 and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). From there, it quickly spread to almost every country in the world.
The Great Depression had devastating effects in virtually every country, rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%.
Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as cash cropping, mining and logging suffered the most.
Some economies started to recover by the mid-1930s. In many countries, the negative effects of the Great Depression lasted until the start of World War II.
Yeah but why did stock prices fall? - That's the important part. What you are doing is like pointing out the fact that people die during wars, and that if we stopped all deaths, all wars would stop. It's backward logic.
Statists and interventionists' 'solutions' tend to fix the result of a problem rather than the problem itself. This also tends to exacerbate the problem, and then the answer is: "we didn't go far enough!" and then the cycle continues until the entire system collapses, as it will within the next few years. Then we will start again, and hopefully we will do it right this time.
There's a huge difference between a catastrophic deflation rate of 60%, and an inflation rate of 1%, which is what you quoted earlier as the trigger that prompted Bernanke to go in for quantitative easing.
And I still don't see that QE would actually improve matters - not in any real sense, anyway. AFAICT quantitative easing is one of those cosmetic devices that makes the economy look good in the short term, because it makes borrowing easier. But it doesn't address any underlying problems and while it makes lots of lovely juicy money for the banks and insurance companies who are selling their assets to the government, it really screws up all the little people. Especially those who want to save rather than borrow.
The way I see it, the value of deflation and inflation depends entirely on whether you are an owner or not and what products you want to buy. It's a means to an end, just like wealth, employment, GDP, all of it.
The deflation/depression of the 1930s inflicted great damage on nearly everyone. When people are unemployed the output that they could have produced had they been working is lost FOREVER, never to be regained. Same for the taxes they and the businesses that employed them--lost FOREVER. Basically, you are long on opinions but short on knowledge of economics.
The Great Depression was not caused by deflation, it was caused by the creation of money.
The roaring twenties was a decade long boom that was caused by monetary creation to help Britain keep its monetary unit from debasing relative to gold.
Economic historians usually attribute the start of the Great Depression to the sudden devastating collapse of US stock market prices on October 29, 1929, known as Black Tuesday; some dispute this conclusion, and see the stock crash as a symptom, rather than a cause, of the Great Depression.
Even after the Wall Street Crash of 1929, optimism persisted for some time; John D. Rockefeller said that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again." The stock market turned upward in early 1930, returning to early 1929 levels by April. This was still almost 30% below the peak of September 1929....
There were multiple causes for the first downturn in 1929. These include the structural weaknesses and specific events that turned it into a major depression and the manner in which the downturn spread from country to country. In relation to the 1929 downturn, historians emphasize structural factors like major bank failures and the stock market crash. In contrast, economists (such as Barry Eichengreen, Milton Friedman and Peter Temin) point to monetary factors such as actions by the US Federal Reserve that CONTRACTED THE MONEY SUPPLY, (Bernanke has been increasing the money supply) as well as Britain's decision to return to the Gold Standard at pre–World War I parities (US$4.86:£1).
Deflation is NOT a bad thing.
All the mainstream economists think it's terrible because they say "people won't spend money if things will cost less tomorrow"
They're clearly wrong because the entire computer industry has been in hardcore deflation for the past 40 years, and people are buying more computers day after day.
Computer prices have come down as production and sales volumes have increased and the technology has improved. That's not customarily referred to as deflation.
Sorry, but If it walks like a duck and quacks like a duck, well ,,,It's a duck
Sometime the simple explanation is best
You mean a simplistic, misleading explanation. That video is ignorant crapola. Fomenting populist anti-fed sentiment is doing the country a disservice. Because the stimulus actions passed by Congress and signed by Obama were insufficient, Bernanke's actions have prevented a double dip recession and possibly a depression. He deserves a medal. Politicizing the Federal Reserve is a big mistake.
Personally I feel the Feds whole existence is in question. Please understand,I am not an economist but, rewarding the fed for" Pulling money out of their "ARSE" is not in our best interest. The average working slob is getting pummeled by "Quantitative Easing" Which is what,anyway?
Who is enjoying the fruits or their"So Called " labor.
Who gave who the the right to let the Banks have a business model to get money from the FED at .025% and they in turn loan it to me at 14%. This is a load of crap. Gee Ralph, that stupid simple cartoon was distorting what? The Fed needs to operate in secret? B.S.
http://www.youtube.com/watch?NR=1&f … CWXrMCGJT4
http://www.youtube.com/watch?v=v_V7UwmE … re=related
http://www.youtube.com/watch?v=dXGSVOg7 … re=related
These were all direct question and answer sessions,no spinning or propaganda,all of a sudden those bears aren't so far off weren't they?
"they in turn loan it to me at 14%."
Look around. Home mortgages are available at 3-4%, historic lows. My credit card with USAA charges 6% on unpaid balances. Of course the banksters charge more like 12 or 14%.
You have a habit of avoiding most of the points raised Ralph.
Home mortgages are artificially low so that people who have no capability of paying them back will buy them and thus begins the inevitably disastrous cycle that created the 2008 crisis to begin with. Whatever economics class you've been taking has been leading you down the primrose path. The hypocrisy is SO CLEAR from anybody looking at it from an outside perspective. You only need to describe exactly what the Fed does for otherwise uneducated people to go "wait . . . why are they allowed to do this again?"
Life is too short to deal with all the misinformation you and Evan put up.
So you're going to allow us to misinform all these nice people on HubPages? That's not very nice. There's not many people replying but there are people reading, trust me. So demonstrate why we are incorrect instead of telling us to take economics classes.
To respond to Ralph, I don't have a home loan and I turned down my mortgage acceptance offer of 350 k in 2003, good thing huh? Paying child support and getting dragged to court for college payments on top of that makes stable income a little un reliable. Being in construction since the early 80's makes it hard to understand why people overpay for a house. We are still in a correction. This leaves me with UN secured credit or Credit Cards. I am paying paying them off. What is the average credit card APR ? Maybe not 14% what 12.99 You are a veteran and I am not so you can get the USAA credit. You still miss the point .025% to say 10% not a bad business model. Why can't average Americans get this rate? Please Tell me why?
"I'm Ralph Deeds! I think that printing money out of thin air is a good thing! Also, we should probably take away more freedoms."
Not necessarily. It depends on the circumstances. In the current case the Fed's purchases of bonds prevented a deeper recession or depression.
The history of the federal reserve's failure was well documented but not loudly enough publicized because it was a failure on the part of the US Government.
http://www.youtube.com/watch?v=dgyQsIGL … re=related
The Federal Reserve is the third American central bank. Both of its predecessors were eliminated as a result of ignorant populist fervor, and both times the elimination of the central bank was followed by a deep recession. Look up the history.
Yeah, and the recessions were ended within a year or two.
The Austrian Business Cycle explains why this happens easily, and your argument here perfectly illustrates why the Central Bank must be abolished.
When you print money, interest rates go down, but people are still spending money.
When Interest rates go down, people invest money differently than they normally would.
People invest in long term investments requiring a lot of resources.
However, people are still using resources as they were before - no one is saving.
The economy appears to be in a boom.
The normal spending has to compete with the new money flooding in to the economy from the long-term investments.
There is only a limited number of resources.
Prices have to increase.
The long term projects can only be sustained with lower and lower interest rates.
Prices have to keep going up.
The interest rate has to be increased, or else hyper inflation ensues.
The long term investments prove to have been wastes of money, and the capital must be liquidated.
The consumers have to stop spending money to pay off debts and maintain wealth.
We see a bust.
A horrendous crash results, and the Central Bank blames speculators for their own errors.
Your arguments ring hollow to those who haven't had their minds poisoned by "leading" economists.
The fed failed to predict: the great depression, the post WWII boom, 1970-80s stagflation, the dot-com crunch, and the great recession.
The fed also has decreased the purchasing power of your dollar by some 98% since 1913.
The FEDERAL RESERVE HAS A HISTORY OF FAILURE.
Why do you defend it?
So one dollar is now worth 2% of its previous value ? so in 1913 one dollar would have purchased 50 times what it does today ??
So if that rate had been maintained you would be buying computers from China or cars from Japan at 1/50th of the current price ?? New cars would be going for a few hundred dollars against an average income of what, 30,000 dollars per annum ??
You seriously need to get onto a good economics course Evan.
There's seriously no reason why not. I know it is difficult, because in order to accept this you have to accept that the economy has been tremendously stunted by the federal reserve for 100 years and you ate it all up.
And for most of the hundred years the standard of living and life expectancy of the average American has increased steadily, at least until the Reagan de-regulation and redistribution of income and wealth began which has resulted in a huge increase in inequality of income and wealth in this country.
Steadily, but not exponentially like during the industrial revolution. The government deigns to give us better standard of living to give us the illusion of growth and quality of life, it is not one of their principal interests.
For many years until the 1980s real productivity and real incomes increased at 2-3 percent per year. In recent years real incomes of the middle class have declined or remained stable while the income and wealth of top income people have increased dramatically to the point where many Americans are losing faith in our democratic, capitalistic system. Someone recently commented that since the Citizens United decision and Super-Pacs, American politics has become a billionaire's game. Alienation with the system has fueled both the Occupy Wall Street and Tea Party movements.
I don't have issue with any of that. What's your point?
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