Fed fight heats up

The Federal Reserve is pushing back against mounting criticism of the central bank, even as those pushing for reforms ratchet up their attacks.

Fed officials have in recent weeks met in private with staffers from both parties, focusing primarily on the Senate, according to sources familiar with the meetings. Meanwhile, Chairwoman Janet Yellen and other Fed officials have publicly sounded off against a proposal championed by Sen. Rand Paul (R-K.Y.) that would give Congress more sway over the bank.

The uptick in outreach from the independent agency signals an effort to quell calls for significant changes at the Fed and assuage concerns that it has become too opaque and too cozy with Wall Street.

"It almost seems like they're running scared," said Vern McKinley, an attorney who advises governments on central banking policies. "It's beneath them to be doing this lobbying."

McKinley, who has done work with the Fed and the Treasury Department, called the Fed's political outreach efforts "surprising" and "unseemly."

Though subject to congressional oversight, the Federal Reserve is not beholden to Congress for funding and is empowered to move on policy decisions without approval from either Congress or the president.

The 2010 Dodd-Frank Wall Street reform law only added to the Fed’s jurisdiction, handing the bank new regulatory powers over financial institutions.

As a result, the Fed is attracting more political attacks, said one financial services industry insider who works with banks and is familiar with the Fed's outreach efforts.

"As Fed officials get deeper into the regulatory space, we are now starting to see them acting more like regulators,” the industry source said. "[They're] commenting on issues of concern beyond interest rates — that's new."

Brash criticism from Paul and others have brought upon the bank a level of scrutiny unseen since the 2008 economic crisis, when Fed officials pushed Congress to approve massive bank bailouts in order to save the country from an even larger recession.

Outgoing Dallas Fed President Richard Fisher added to the calls for reform this month, urging a restructuring of the central bank that would shift more power to the regional bank presidents.

Paul's "Audit the Fed" legislation calls for increased Congressional oversight of the bank. Fed officials have slammed the proposal, saying it would politicize the Fed and decrease its independence.

Yellen told reporters in December that she would "forcefully" fight against the proposal.

“Clearly the Federal Reserve fears the information that may be disclosed as part of an audit,” Paul spokesman Brian Darling said. “Maybe they fear that the revolving door between the Wall Street and the Federal Reserve will be exposed. Or maybe they worry about the revolving door between the Department of Treasury and the Fed."

Sources said the Fed’s Congressional Liaison Office had been focusing its outreach in the Senate, where Paul’s bill would need support from a handful of Democrats to pass.

“The Fed has been very active in the public domain in lobbying against the idea of an independent Federal Reserve audit and I have to assume they are reaching out to friends in the House and Senate to stop it,” he said.

Still, he said Paul expects a vote on the measure this year. If it doesn’t pass as a standalone bill, its language could be attached to other “must pass” legislation, potentially including a measure to raise the national debt ceiling.

Rep. Thomas Massie (R-K.Y.) introduced a version of the legislation in the House, where similar proposals have passed overwhelmingly in recent years.

"They're worried and they're concentrating on the Senate because they believe that this water has already gone over the dam in the House of Representatives," Massie said.

He said the mounting political criticism against the Fed reflects leftover angst from the economic crisis.

"There’s still this sense — and I think it’s justified — among the public that this is an oligarchy that bears no resemblance to a democracy and that the Fed officials come from the industry that they are helping — Wall Street," Massie said.

At the same time, the bank has come under scrutiny from Democrats. Sen. Elizabeth Warren (D-Mass.) and Rep. Elijiah Cummings (D-Md.) are demanding the Fed to disclose details surrounding the bank's investigation into a 2012 leak of sensitive, market-moving information.

Mark Calabria, a former Senate Banking Committee aide to Sen. Richard Shelby (R-Ala.), said that the increased clout of Paul and Warren — rising stars from their respective parties, with possible presidential ambitions — has contributed to Fed's political approach.

Paul held an "Audit the Fed" rally in Des Moines, Iowa, earlier this month and has used the issue to raise funds.

Calabria noted that Warren and progressive groups were instrumental inremoving former Treasury Secretary Larry Summers from consideration for the Fed chairmanship.

"Warren and company fought for her," said Calabria, director of financial regulation studies at the Cato Institute. "So you could argue that Janet Yellen would not be chair if it weren't for progressives."

The Hill reported this week that Yellen and Warren met over lunch on Dec. 2. In January, she met with Senate Democrats on Capitol Hill.

Yellen has gotten a sympathetic ear from Senate progressives, with regard to Paul’s bill. Sen. Sherrod Brown (D-Ohio), the top Democrat on Senate Banking, has come out against the proposal, which is also opposed by Warren.

"He does not see how this legislation will benefit working Americans, which he thinks should be a top priority of the Fed at this time," Brown spokeswoman Meghan Dubyak said in a statement to The Hill.

Yellen will testify for the first time before the new-GOP controlled Congress next week.

Further complicating the situation is a rocky relationship between the Fed and Shelby, who has signaled plans to convene a hearing on Paul’s bill.

"It’s not just that the Chairman of the Fed is perhaps the most powerful individual in the global economy — it’s that the institution itself is in utterly uncharted waters," Shelby said in a Senate floor speech opposing her confirmation.

There are two issues with respect to the fed.

The issue that might or might not be resolved by an audit is the question of the gold stock.

According to testimony from counsel to the fed to Ron Paul’s committee two and a half years ago, the fed surrendered all of its gold to the Treasury at the time of FDR’s confiscation order in exchange for “gold certificates”. What the rights of the holders of such certificates are is uncertain.

But you might assume that whatever rights are conferred, the fed essentially has quasi ownership rights conferred by the Federal Reserve Act of 1913 to about 8200MT of gold owned by the Treasury.

What do you do at an audit? Look at the certificates? Confirm the fed still owns and holds them? I doubt there is much question on those topics. What else is it you want to confirm with an audit?

The real issue with the gold is where it is now and who owns it. According to counsel’s testimony, the gold is owned by the Treasury which has possessory control. And by the way, he also testified that the Treasury has acquired more gold since 1934—it now had (at the time of his testimony) about 9600MT.

The prospect is that some, much, or all of the gold has been leased to third parties or other countries who have sold it into the market. It is still on the Treasuries balance sheet—how does that work?

Well it is only leased. But the lessee sold it. Well maybe but the buyer (maybe) took title subject to a pledge back that the gold after sale is held under by the NY Fed or others so the Treasury has an absolute right to get it back at the end of the lease as it sees fit. Maybe.

But that takes an audit of the Treasury gold stock, not the Fed and it should be done under the power of Congress oversight—if legislation is needed to clarify the power of Congress, that is the legislation you need.

The second issue with the Fed is more fundamental. It doesn’t work; hasn’t accomplished any legitimate objective of government monetary policy; has damaged the operation of the economy; has taken money from one group of American taxpayers, saver’s, and transferred it to the benefit of the banking system.

We don’t need the Fed; it doesn’t do anything for us; the Federal Reserve Acts should be repealed tomorrow. Monetary policy should be managed by the Treasury subject to spending authority in Congress.

In its primary open market tool, the fed has increased the money supply by the credit device, resulting in an overhang of debt in the economy which, when debt service is ultimately forced by credit conditions, will cause a Domestic Depression that will make the 1930’s look tame by comparison.

Bernanke’s thesis was wrong. The Depression of the 1930’s was directly caused by fed injection of excess reserves and money stock in the 20’s resulting in debt that could not be serviced from a reasonable share of GDP and collapse of the capital economy.

Present conditions point to a similar end of much greater impact.

The term Federal Reserve Note actually imparts more gravity to these pretty little pieces of circulating evidence of debt (which, along with the “interest” accruing thereto) can NEVER be redeemed or repaid. I prefer Federal Reserve Accounting Unit Denominator — FRAUD for short.

It is the subtle way of ripping off the labor and productivity of the serfs (that’d be us) by the elite political ruling class and their bankster co-conspirators we were warned by many of the Founders to never permit to come into existence. Lord Keynes described the process back in the 20s.

It was Mr. Jefferson who warned that ‘When the servants of the people are paid in something other than that which the people themselves produce (i.e., REAL value from their labor and production), the roles of master and servant will be reversed.” Now you understand why — except during those periods when they return to you to trick you (and the millions of new dependents they have created with the fruits of YOUR labor and productivity who keep them in office) — the ruling elites no longer give a damn what YOU think.

The scam has gone global as it also allows these same folks to scam trading partners such as China. The de-facto devaluation of the currency (those FRAUDS) is effectively a repudiation of those debt instruments held by the other party. Wars have ensued from such actions and will almost certainly do so again if only to redress the embarassment of, in this example, the Chinese ruling class for buying into the (LOL) ”full faith and credit of the United States” thingy.

Let’s assume you are a “Director” of the Fed and have just left one of their SECRET ludicrously named “Open Market Committee” meetings where it was decided to hike the interest (Fed Funds) rate. The effect of that in street “lingo” is to take away Wall Street’s punch bowl by slowing the creation of credit and paper “money”. The markets nearly ALWAYS drop when that happens.

Let’s say you have a friend who is awating your unlawful, illegal, immoral, unethical, unscrupulous (sorry, but I’ve run out of adjectives) TIP to short various markets (or, if the rate is going down, to go long them) and you drop dime on him and settle back to receive your hefty kickback. Not possible, say you. I consulted a friend who plays the markets for a living and is a 30+ year student of the Fed and its activities. He confirms that not only is it POSSIBLE, it’s been going on since the Fed scam was hatched in 1913 (along with the INCOME TAX).

He went on to offer that a few years ago, a fellow made a practice of photographing then videoing the members of the OMC as they emerged from their meetings to announce for the media what they MIGHT do to rates. He noticed that several members made rather interesting and repetitive hand gestures as they stood behind the head fed. The photog has since disappeared.

I’ll leave you with this question: How much wealth do you think could be stolen from other citizens by this slimy technique? Can you say “As much as you want to?”

Most of you on this forum aren’t wired this way but ask your less engaged friends and neighbors to think about it — between those all important football, baseball, basketball games and American Idol airings.

From the article: "...this is an oligarchy that bears no resemblance to a democracy and that the Fed officials come from the industry that they are helping — Wall Street,"

From the post: "...taken money from one group of American taxpayers, saver’s, and transferred it to the benefit of the banking system..."

--and once we destroy the capitalist oppressors we'll have a worker's paradise where we can cr@p on squad cars!!! ...or not.

OK so we all got a big list of problems but let's agree on the fact that monetary policy (inflation) is low on the list and high on the list are fiscal policy (taxes and redistribution) and foreign policy (those pesky 'death-to-America' clowns).

........Check out Post # 9.

Excerpted:

There are two issues with respect to the fed.

The issue that might or might not be resolved by an audit is the question of the gold stock.

The real issue with the gold is where it is now and who owns it.

We don’t need the Fed; it doesn’t do anything for us; the Federal Reserve Acts should be repealed tomorrow.

Thanks, David.

Thanks for the ping, LucyT

HOORAY David.

6. But the grand nostrum will be a public debt…

9. The management of a great funded debt and a extensive system of taxes will afford a plea, not to be neglected, for establishment of a great incorporated bank. the use of such a machine is well understood. If the Constitution, according to its fair meaning, should not authorize it, so much the better. Push it through by a forced meaning and you will get in the bargain an admirable precedent for future misconstructions.

/Freneau - "Rules…" 1784-1796

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