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Why the power of the mighty Federal Reserve is finally on the wane
The Telegraph. UK ^ | April 29, 2011 | Jeremy Warner

Posted on 04/29/2011 2:34:22 AM PDT by Scanian

An unprecedented press conference was held in Washington on Wednesday – one that should have been convened a long time ago. And no, it wasn't the one to announce publication of Barack Obama's birth certificate, but rather the first of its kind by the US Federal Reserve. Believe it or not, the Fed has never before made itself directly answerable to the fourth estate for its monetary policy decisions. Accountability and explanation have instead been pursued through official statements, speech-giving, congressional committees and selective background briefings.

After nearly 100 years at the helm of the US economy, the Fed has finally decided to join the modern world. By common agreement, the occasion was a success. Ben Bernanke, the chairman, gave a reasonably good account of himself. But in the end, the appearance was less significant for what he said than what it stood for.

Central banking has always been characterised by mystique, an attribute its elders have cultivated to give the impression of god-like omnipotence. As Mr Bernanke pointed out, there was a time when the Fed didn't bother to announce its policy decisions at all – not letting the public know was very much a part of its modus operandi. The central bank saw itself as some kind of Delphic oracle, dishing out whatever judgments and interventions it deemed necessary for the survival of the nation. Lesser mortals were invited to believe in the wisdom of these judgments, but they were not allowed to understand them.

Alan Greenspan, Fed chairman from 1987 to 2006, may have been speaking with his tongue in his cheek when he said, "if I turn out to be particularly clear, you've probably misunderstood what I've said", but it summed up the order of the day. Obfuscation was not just preferable to transparency

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Government; News/Current Events; Politics/Elections
KEYWORDS: accountability; alangreenspan; bernanke; centralbanks; china; europe; fed; federalreserve; obfuscation; scrutiny

1 posted on 04/29/2011 2:34:27 AM PDT by Scanian
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To: Scanian

Crooks!


2 posted on 04/29/2011 2:38:31 AM PDT by taxtruth (Don't end the fed,jail the fed!)
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To: Scanian
After nearly 100 years at the helm of the US economy, the Fed has finally decided to join the modern world. By common agreement, the occasion was a success. Ben Bernanke, the chairman, gave a reasonably good account of himself. But in the end, the appearance was less significant for what he said than what it stood for.

After the robbery of a nation.

3 posted on 04/29/2011 2:59:46 AM PDT by taxtruth (Don't end the fed,jail the fed!)
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To: taxtruth

Crooks that deserved to be tried and imprisoned.


4 posted on 04/29/2011 2:59:47 AM PDT by mas cerveza por favor
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To: taxtruth

G.D. right!


5 posted on 04/29/2011 3:08:29 AM PDT by Scanian
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To: mas cerveza por favor
I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.

We are completely saddled and bridled, and the bank is so firmly mounted on us that we must go where they ill guide.

The dominion which the banking institutions have obtained over the minds of our citizens...must be broken, or it will break us.
-- Jefferson
6 posted on 04/29/2011 3:10:44 AM PDT by NamVet71MP
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To: Scanian
The FED has done a fantastic job.
7 posted on 04/29/2011 3:41:56 AM PDT by DannyTN
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To: DannyTN

>> Some people blame the FED for Congress overspending. But the FED didn’t do that, congress did.

No, the Fed didn’t spend the money.

But in The Bernank’s ignorant, misguided stupidity of buying a trillion or more dollars of Treasury debt so Congress can continue spending away three to five future generations’ wealth, he’s facilitating it.

In the end, the Fed failing in its currency oversight role will ruin this nation’s economy.


8 posted on 04/29/2011 3:57:48 AM PDT by Nervous Tick (Trust in God, but row away from the rocks!)
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To: Scanian
Where was the press conference held, I could not believe the room.
9 posted on 04/29/2011 4:13:06 AM PDT by org.whodat
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To: Nervous Tick

Well the fed did make loans directly to business that had no legal reason to obtain funds from the fed, a TARP scam.


10 posted on 04/29/2011 4:14:43 AM PDT by org.whodat
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To: DannyTN

Ben, Is that you?


11 posted on 04/29/2011 4:16:12 AM PDT by central_va (I won't be reconstructed, and I do not give a damn.)
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To: Scanian

Guess they got theirs so time to go home. Nice gig. Not sure how this will work out if that Judgement Day thingy comes to pass.


12 posted on 04/29/2011 4:21:15 AM PDT by poobear (FACTS - the turd in the punch bowl of liberal thought!)
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To: Scanian

Why does it take ten thousand dollars to buy the same amount that one thousand dollars bought in 1913. Thank God for the fed. Only the banks make out. No country’s economy has ever survived throughout history that has had a central bank. There was only one honest man in history and he was not a banker. Printing unlimited amounts of money only destroys an economy. But maby that is what the w.h. commies are trying to do. They are doing a very good job.


13 posted on 04/29/2011 4:33:22 AM PDT by G-Man 1 (-- get)
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To: Scanian

The Fed has pretty much done what it was created to do, steal the wealth of the US.


14 posted on 04/29/2011 4:33:39 AM PDT by freedomfiter2 (Brutal acts of commission and yawning acts of omission both strengthen the hand of the devil.)
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To: G-Man 1

I don’t have time for it but I would bet dollars to doughnuts that if someone polled the posters on this thread who are happy with the Fed they would find that they have done very, very well on the stock market.


15 posted on 04/29/2011 4:47:03 AM PDT by Scanian
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To: Scanian
I would bet dollars to doughnuts

First person I've heard use that term in decades...

16 posted on 04/29/2011 5:01:52 AM PDT by HangnJudge
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To: Scanian
I would bet dollars to doughnuts

Once upon a time that phase referred to an extremely safe bet because donuts were worth so much less than a dollar. Now after nearly 100 years of the Fed's constant inflation policy "bet dollars to doughnuts" is really close to 1:1 odds. Pretty soon we'll be saying "bet doughnuts to dollars" to mean a safe bet.

17 posted on 04/29/2011 5:20:30 AM PDT by KarlInOhio (Extremism in the defense of liberty is no vice! Tea Party extremism is a badge of honor.)
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To: DannyTN

I know the anti-fed people here are going to torch you, but I agree with you. The Fed has kept our economy relatively stable.

The dollar is heading to worthlessness daily not because of Ben’s policies, it’s 0bama, Reid & Pelosi’s reckless spending. The annual addition to our aggregate debt is far in excess of the world’s capacity to finance it with existing capital. So he has to print money to cover it; the only other option is to default the government and nobody in Washington is going to do that. The only issue I have with Ben is not that he’s printing money like mad, it’s that he’s lying about it. QE1 and QE2 have nothing to do with “stimulus” to the economy; it’s just monetizing debt. There will be QE3, or something like it under another name, because our government spends way too much money it doesn’t have until Ben prints it up out of thin air.


18 posted on 04/29/2011 5:28:35 AM PDT by henkster (Every member of Congress must put the fate of the nation over their next re-election campaign)
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To: DannyTN
It has kept the year to year variation in the dollar significantly lower than when we were on the gold standard.

I was not aware that when we were on the gold standard sometimes a $20 gold piece was worth $10 and sometimes worth $50.

19 posted on 04/29/2011 5:46:39 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: KarlInOhio

I was thinking that when I wrote it but I am a slave to my tired old cliches.


20 posted on 04/29/2011 5:55:02 AM PDT by Scanian
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To: taxtruth
Crooks!


21 posted on 04/29/2011 6:22:26 AM PDT by AAABEST (Et lux in tenebris lucet: et tenebrae eam non comprehenderunt)
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To: DannyTN

Politicizing the Fed — Congress seeks more control over the 12 regional banks (GRAPHIC WARNING!)
The Wall Street Journal ^ | 06-14-10 | The Wall Street Journal Editorial Staff
http://online.wsj.com/article/SB10001424052748704575304575297130299281828.html
Posted on Sunday, June 13, 2010 8:57:59 PM by GOP_Lady
http://www.freerepublic.com/focus/f-news/2533919/posts

For 97 years the 12 regional banks of the Federal Reserve system have operated relatively free of political interference from Washington. The looming financial reform bill threatens that independence, not least through an effort to impose new presidential appointees at the regional banks.

[snip] .... the Fed regional banks, which have long operated independently of political intrusion. Federal Reserve bank presidents aren’t appointed by the President precisely to avoid Treasury and White House control. They are appointed by their regional bank boards.

However, in another threat to Fed independence, the Senate bill departs from that tradition by making the president of the New York Fed a Presidential appointee. Blame for this Congressional intrusion goes to Treasury Secretary Tim Geithner and former Goldman Sachs executive Stephen Friedman for orchestrating the selection of former Goldman economist William Dudley as Mr. Geithner’s replacement at the New York Fed.

Mr. Friedman chaired the search committee to replace Mr. Geithner even as he increased his ownership of Goldman shares. Though this violated Fed rules, Fed Vice Chairman Donald Kohn and the Board of Governors gave Mr. Friedman a conflict-of-interest waiver. Congress has now seized on this to justify putting the New York Fed chief on a Washington political leash.

The Waters provision will also give Congress and the White House a new and powerful lever to influence the operation of the 12 regional Fed banks. Accusations of racial or gender indifference, much less outright bias, are politically deadly. With the threat of such an accusation in their holster, the Waters czars will have enormous clout to influence Fed governance and regulatory decisions, perhaps including monetary policy.

Fed regional presidents are often the main proponents of tight monetary policy. The presence of a diversity czar is one way Congress and the White House can intimidate these regional presidents to go along with the policies they favor. No Fed bank president will want to take the risk of being hauled before Congress to answer a report that the banks under his jurisdiction aren’t racially or gender sensitive enough in their lending.

This political sway is already clear from how meekly the Fed as an institution is bowing to the Waters provision. The Senate bill doesn’t have the same provision, so it could be removed in the House-Senate conference that begins this week. But we’re told that Fed officials in Washington have told the regional banks to keep quiet because it can’t be stopped and Ms. Waters and the House might punish them if they try. In other words, the political intimidation is already obvious even before the provision becomes law.

The public debate over Fed independence has focused on Congressional demands for an audit, but that’s benign compared to the threat of political appointees sitting on the senior staff of the regional banks and Board of Governors. While masquerading as reform, the Waters and New York Fed provisions are the most brazen attempt to hijack central bank policy since its founding nearly a century ago.

The law will make it harder for regulators to do what ought to be their main job, which is making sure that they don’t again let a credit mania run out of control. It’s one more way in which this much vaunted reform will make the financial system even more politicized, and thus more vulnerable to another panic.


22 posted on 04/29/2011 6:31:45 AM PDT by Matchett-PI ("Freedom's Just Another Word For Nothing Left to Tax " ~ Gagdad Bob)
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To: HangnJudge

I’d pass on the dollar to doughnut offer. a good doughnut costs a 1.40 around here ;)


23 posted on 04/29/2011 6:45:22 AM PDT by cableguymn
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To: DuncanWaring
I was not aware that when we were on the gold standard sometimes a $20 gold piece was worth $10 and sometimes worth $50.

And now it's worth $1000. The notion that the Fed has helped the dollar in any way is an outright lie. The value of the dollar has basically gone in 1 direction since the inception of the Fed - DOWN.

24 posted on 04/29/2011 6:47:41 AM PDT by SwankyC
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To: DannyTN
•It has kept the year to year variation in the dollar significantly lower than when we were on the gold standard.

•It has maintained a small amount of inflation, which is far preferable to deflation which is associated with depressions.

You're simply FOS:

Conspiracy hacks and people like Ron Paul claim the FED is unaudited. But the truth is that the audits are available on the web for all to see. Every dollar is accounted for by independent auditors.

Again, you're FOS. The audits you link to are not the type of audits being proposed under the transparency bill. THAT audit would be under the purview of Congress (i.e. The People) and would turn over rocks that aren't being turned over now by the hand-tied bean counters you refer to.

You know this hasn't been done, yet you and others like you continually post this ridiculous tripe. You even have the nerve to call those proposing the legislation "conspiracy hacks."

Is Jim Demint a conspiracy hack?

25 posted on 04/29/2011 6:52:53 AM PDT by AAABEST (Et lux in tenebris lucet: et tenebrae eam non comprehenderunt)
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To: Nervous Tick; DannyTN

The problem is our basic system of money being based on federal debt (basing it on gold would be worse); money should be based on some typical bucket of the goods and services a nation actually produces. There’s also a question of the basic usurpation involved in a central bank coining money and/or fractional reserve banking. Governments should coin money.


26 posted on 04/29/2011 7:18:52 AM PDT by wendy1946
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To: AAABEST
"You're simply FOS:"

Maintaining the purchasing value of the dollar over a 100 year period is not an important economic goal. The only one who cares about that is someone who intends to stick cash in a mattress and keep it there for decades instead of investing it.

Your charts don't show the "year to year" change in the CPI. They show the cumulative change. It makes a scary chart, but it's really not important.

Under the gold standard, we had wild swings, of inflation and deflation which were as much as 20 and 25% on the gold standard. You also had deflationary depressions every 20 years.

Under the FED, we've had consistent small amounts of inflation. But because it's constant inflation, and not alternating with deflation the purchasing value of the dollar does fall over a long period of time.

Again, it's the year to year fluctuation that is important, because that's what drives business decisions, or brings them to a screeching halt in the case of deflation. Deflation is very damaging to the economy because why should anyone invest if you can just hold cash and increase your purchasing power.

"Again, you're FOS. The audits you link to are not the type of audits being proposed under the transparency bill."

The only "rocks" that aren't turned over now are the policy making processes, and the only reason to audit those is to bring political influence into the processes.

The interest rate decisions are announced as soon as the Federal Reserve Board of Governor's meets. So there is sufficient transparency with regard to interest rate decisions.

The Open Market committee makes decisions on stabilizing markets. You don't want to make those transactions transparent at the time you do them, because traders like George Soros will work against you. But the dollars are accounted for and reported in the audits.

27 posted on 04/29/2011 10:21:09 AM PDT by DannyTN
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To: wendy1946
"The problem is our basic system of money being based on federal debt (basing it on gold would be worse); money should be based on some typical bucket of the goods and services a nation actually produces. There’s also a question of the basic usurpation involved in a central bank coining money and/or fractional reserve banking. Governments should coin money."

I don't think it's right to say our system of money is based on "federal debt". The government could pay off it's debt and we would still have a money supply.

It's probably fair to say that it is "debt" based, since the multiplier effect of lending is believed to be greater than one, meaning more money is created through repetitive lending, than originally existed.

For those following this discussion...The multiplier effect is where I deposit $100 in the bank, and the bank loans out $90 to Loan Recipient A. Loan Recipient A deposits $90 in his bank, and his bank loans out $80, etc. In this short example, you can see how money deposits grew from $100 to $100+$90+$80 = $270 through bank lending. In this example, the money supply grew because of lending not because of any Federal Reserve actions.

I agree with you basing it on gold would be much much worse. But I'm not aware of a reasonable alternative to debt based money. You could stop lending altogether, but then, entrepreneurs wouldn't be able to get funding, except by selling their ownership rights. It would make for a far less efficient capital market.

28 posted on 04/29/2011 10:34:37 AM PDT by DannyTN
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To: DannyTN
But I'm not aware of a reasonable alternative to debt based money.

Best take on the subject I've ever come across, but it takes a bit of reading.

29 posted on 04/29/2011 10:40:15 AM PDT by wendy1946
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30 posted on 04/29/2011 10:45:45 AM PDT by TheOldLady
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