Bernanke's Economic Cure: More Deficit Spending, Re-Inflate Housing Bubble
(The New American) -- by Thomas R. Eddlem --
Federal Reserve Open Market Committee Chairman Ben Bernanke's told the congressional Joint Economic Committee of Congress October 4 that he has the remedy for the ailing economic recovery he admits is "close to faltering": More of the same deficit spending, monetary stimulus, and work to re-inflate the housing bubble.
Bernanke acknowledged to Congress that deficit spending is out of control. "One crucial objective is to achieve long-run fiscal sustainability. The federal budget is clearly not on a sustainable path at present," he told members of the House-Senate joint committee. The Fed Chairman termed the work of Congress' other joint House-Senate "Super-Congress" committee, charged with cutting some $1.5 trillion of the estimated $8-9 trillion in expected deficits over the next 10 years, "a substantial step; however, more will be needed to achieve fiscal sustainability.... In sum, the nation faces difficult and fundamental fiscal choices, which cannot be safely or responsibly postponed."
By those remarks, Bernanke didn't mean that federal, state, and local governments should balance their budgets and stop using deficit spending to continue their stranglehold on the credit markets. To the contrary, Bernanke's prescription for the faltering economy is more of the same. Governments must, Bernanke contended, continue deficit spending and hire more people while the Fed tries to re-inflate the housing bubble and loosen credit markets with more "quantitative easing" and interest rate suppression.
Bernanke noted that governments — especially state and local governments, which are shedding jobs and balancing their budgets — need to spend and borrow more in the short term in order to "avoid fiscal actions that could impede the ongoing economic recovery." Bernanke fretted about the "increasing drag being exerted by the government sector. Notably, state and local governments continue to tighten their belts by cutting spending and employment in the face of ongoing budgetary pressures, while the future course of federal fiscal policies remains quite uncertain."
Governments living within their means is a bad thing to followers of the Keynesian school of economics, to which Bernanke adheres. This contrasts with the free market Austrian school, which holds that deficit spending and monetary inflation and interest rate suppression creates economic dislocations, including especially the 2001-2007 housing bubble and its subsequent housing bust...MORE...LINK
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1 day ago
Would your readers have an interest in the following letter ?
I am the original source.
Open letter to my senators
RE: THE FEDERAL RESERVE HEIST
HOW BERNANKE HIDES $4 BILLION DAILY
Mr. Ben Bernanke told the Senate Banking committee that the government must take action (deficit spending) to prevent an economic collapse. Did he tell Congress that every dollar of such spending would be profit for the Fed that would be hidden by the FRBNY in apparent violation of the law ??
A popular concept is that the government will “borrow” from the Federal Reserve. This involves giving a Treasury security (bill, bond, or note) to the Fed as collateral and the Fed will credit an account of the government in the amount of the security. The government then spends the (book-entry) funds while the Fed (theoretically) holds the collateral; i.e. deficit spending. Voila !! Additional (fiat) money has been injected into the economy of the Nation which, in the opinion of Mr. Bernanke, may stabilize the economy.
Observe that the Fed holds the collateral. When the collateral matures, government must pay the Fed to redeem the security. The fiat money spent by government must be re-acquired and paid to the Fed. But the government has already spent the money and the bank account is zero.
So the Fed can sell the collateral at the Treasury auctions (if it has not already been auctioned). If the funds went to the government, the Fed would essentially give up the security. Bankers are not known to generously give up money.
Also, if the funds went to the government, they would be used to pay off the debt of the security that had been issued and that would negate the existence of the debt and further it eliminates any inflation from the currency in circulation being increased. Since this does not happen, the funds from deficit spending cannot go to the government.
The Federal Reserve Bank of New York has the responsibility of handling all accounting and funds for Treasury auctions. The funds from deficit spending go into the FRBNY but they are not recorded as coming out. These items are not included in the ANNUAL REPORT TO CONGRESS nor are they dispensed in any government record. The profit can be disbursed to the Primary Dealers (owners) by vouchers for redeeming maturing securities using bogus CUSIP numbers.
Receipts from the 2010 Treasury auctions totaled $8.4 trillion. $7 trillion was used to roll-over preexisting securities (without increasing the national debt) and $1.4 trillion was received from deficit spending as detailed above. That $1.4 trillion ($4 billion every day--7/52) disappeared in the catacombs of the FRBNY.
Profit of the Fed legally belongs to the government. Concealment of funds belonging to the government is identified as embezzlement and subject to one year incarceration per count. Ref. 18 USC section 641. Nonpayment of monies belonging to the government is a separate crime and subject to five years incarceration. Ref. 18 USC section 1001. Anyone knowing of such an offense who “relieves, comforts or assists the offender…to prevent his apprehension, trial or punishment, is an accessory after the fact.” Ref. 18 USC section 3.
Perhaps members of Congress would want to reflect on their involvement.
PS Conclusion: The Federal Reserve wants more money to (temporarily) bail out the NY banks from their fraudulent derivatives gambles while your constituents get ripped off from inflation and an increasing inescapable, unpayable national debt that will bankrupt the Nation and transfer ALL wealth to the (unknown) owners of the FRBOG by their Ponzi scheme.
[NOTE: This letter is excerpted from and documented in RIP OFF BY THE FEDERAL RESERVE, http://www.scribd.com/doc/48194264/rip-off-by-the-Federal-Reserve-revised ]
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