We’ve extensively documented that the Federal Reserve is intentionally locking up bank money so that it is not loaned out to Main Street. Specifically – due to Fed policy – 81.5% of all money created by quantitative easing is sitting there gathering dust in the form of “excess reserves” … instead of being loaned out to help Main Street or the American economy.

And we’ve extensively documented that a large percentage of the bailouts went to foreign banks (and see this and this). (A 2010 Fed audit also revealed that of the $1.25 trillion of mortgage-backed securities the central bank purchased after the housing bubble popped, some $442.7 billion – more than 35% – were bought from foreign banks.)

It turns out that these themes are all connected.

Specifically, most of the Fed-created money which is gathering dust is actually being held by foreign banks.

On a related note, lots of push from Dems for someone other than Larry Summers, architect of derivative deregulation that got us into this mess, to be nominated to the Fed Reserve Board.



  1. dusanmal says:

    Yet another case where original Constitutional interpretation and small, weak, limited Government would solve it. Federal Reserve is creation of “living interpretation of the Constitution”. You want “living interpretation” for some issues – be ready for this type of unavoidable consequences. You want powerful politician(s) to push benefits for you – bend over for this kind of benefits for others.
    Fed’ should be abolished and money linked to something tangible. Yes, there are consequences for that decision too but those are very positive consequences making society to operate rationally.

    • ReadyKilowatt says:

      Central banks and fiat currency have been debated from day one of the founding of our country.

      http://amazon.com/Hamiltons-Curse-Jeffersons-Revolution—ebook/dp/B001FA0JNC/

    • Sea Lawyer says:

      Having a fiat currency not tied to precious metals is a different issue from whether or not it is a good idea to have a central bank to serve as a lender of last resort.

      • msbpodcast says:

        There is some question as to who truly engineered the LIBOR scandal (London Inter Bank Offer Rate.)

        With the LIBOR discredited and the Fed’s credit window interest rates at near 0%, the Fed has become the US’s lender of first resort.

        The Fed was supposed to only be the holder of US government promissory notes.

        Thanks to Nixon putting the US$ on the floating fiat currency, we’ve seen the US go from a creditor nation to a debtor nation.

  2. mirabel says:

    Yup. Let’s support the Clinton-Bush solution and loan funds to individuals and biz that don’t otherwise qualify.

    So far, government loans since the Great Recession have a lower default rate than prior. It may be too complex for folks to comprehend; but, banks won’t start making chancier loans till they’re allowed higher rates.

    • msbpodcast says:

      banks won’t start making chancier loans till they’re allowed higher rates

      BULLSHIT!!!!!

      Banks used to come in two types: consumer and business.

      Consumer loans for piddling amounts used to be meted out only after a supplicant practically was given a colonoscopy and they used to charge a decent rate of interest, but not one that would get you excommunicated.

      Business loans, being inherently riskier, used to charge higher interest rates to compensate banks for carrying the riskier loans, at rates that were competing with “Vinnie the Shark” and would get you shot in the knee-caps if you didn’t pay it back.

      When the Glass-Steagall banking act was torn up by Clinton after all the banks had promised to be good little boys and girls, (and we all know what happened, $15 trillion in debt, the world’s economy in ruins,) the distinction between consumer loans (low rates but due diligence) and business loans (higher rates but the loans were slightly less risk averse,) was also erased.

      This led to consumers paying the higher rates as charged to businesses, (and judging by my statements at the end of the month my bank now wears a Zoot suit and a fedora and uses “Big Fists Malone” as a collection agent,) and consumer loans were made that previously would never have passed any kind of smell test while the banks used their ability to lend each other money (where LIBOR steps in) to generate income.

      The gold painted turds that are mortgage backed securities were turned into investment vehicles and sold to Wall Street idiots in big mixed bundles (believe me there are plenty of idiots on Wall Street. I smoked cigars with the best & the worst of them.)

      “The Smartest Guys in the Room” were goombahs who eventually got what they deserved, but only after they had wrecked California’s energy policies and had spread their shit to other states.

  3. Dallas says:

    The neato suggestions in here are awesome and groovy! However, I’m good with leaving monetary policy to the experts.

    • msbpodcast says:

      I’m good with leaving monetary policy to the experts.

      If you weren’t kidding, rename yourself to Ben Dover.

      • Dallas says:

        I wasn’t kidding !

        I know my statement is controversial in some circles but I do believe monetary policy should be left to the experts.

        • Steve S says:

          Experts we want, just not the current batch. Repeat after me; “These are not the experts that you are looking for.”

          • Dallas says:

            Do you want to pick the experts or should experts and other qualified pick the experts? I think the latter is better.

            You can pick paper or plastic

  4. bobbo, the iconoclastic non-conflating non-dogmatic existential Idol defiling cynosure says:

    1. Nice pic but the “excess reserves” are but an entry in our National Bookkeeping system. The reserves are not “sitting” anywhere but rather are inchoate artificial constructs. The Gold Reserve is a different issue.

    2. Douche: “Yet another case where original Constitutional interpretation and small, weak, limited Government would solve it.” /// It? What is it? Are there any other its that would be impacted that are even more important? Get it??

    3. Ready: National Debt occurs immediately on the founding of any country. How that country handles that financing issue is often the key between success and failure.

    4. Mirabel: a National Banking/credit mechanism ((ie/eg==fund the credit unions and let all the big banks go Bankrupt)) was the alternative move from a Bail Out. I don’t think that solution was ever mentioned… and its still not proposed or uttered while we wait for the next very same System Default to occur.

    Hoomans………….what does experience teach us?…………….nothing.

    • Mr Diesel - Bobbo who thinks nothing is wrong with child porn says:

      Who gives a shit about your opinion.

      • bobbo, who thinks nothing is wrong with child porn===other than any encouragement to take the original pictures…. and even then, it depends says:

        Ha, ha. Mr D flipping out. I believe its bad protocol to drag the issues/concerns of one thread to another completely unrelated thread?

        Not as bad as anal rape….. but STILL!!!

        Check your Umbrage. I see the excess pressure light is on.

        There is “porn” and then there is “crime.” Then there are children, and then are adults. Then there is prurient interest, and then there is innocence and art.

        How many combinations can you make?

  5. MikeN says:

    They shouldn’t be loaning out the money. They shouldn’t be creating it in the first place, but loaning it out would introduce even more inflation. Gold price has fallen a bit, but it is still way too high. We had gold around $300-400 when Clinton was president and about 20 years prior to that. Now we are over a thousand, which signals a tripling or quadrupling of prices. But hey, you can just borrow the money right?

    • Dallas says:

      You recommend we transact with gold coins? Seems a car loaded with hold nuggets is fuel inefficient.

    • MikeN says:

      Nah, just a currency linked to gold so it is stable.

      • Dallas says:

        Gold standard? How unAmerican, simplistic,impractical and unnecessary.

        The US dollar is backed and legal tender for all debts, public and private. It’s written in small letters near God’s eye.

      • MikeN says:

        Yes it is simple, but the other parts are wrong. It was used in America for about two hundred years so it is clearly American and practical. It is necessary to protect the value of people’s money.

        • Dallas says:

          So you believe that wild and short term fluctuations in the price if hold are good?

          Lets assume you went to the store to buy a roll of toilet paper and bring only a dollar. In your scenario, that roll could skyrocket to $1.50 by the time you arrive and then you’d have a shitty mess. No thanks

          • MikeN says:

            Laugh out loud, you think that’s how a gold standard works? You are more likely to have prices not change under a gold standard. Instead we have milk prices rising. McDonalds costs $20 now.

          • Dallas says:

            Short term fluctuations in the price of gold is EXACTLY one of the key reasons it makes no sense. There are another dozen reasons why it’s not only impractical, but unnecessary.

            I understand that your pal, Rand Paul, wants that but he’s a tool and everyone in the financial community think he’s insane.

  6. Two bits says:

    Economics give me an ice cream headache. Gold, diamonds, rare artwork, paper money…

    Whether or not these abstractions keep the economic wheels turning depends on public confidence and the attitude of 1%’ers.

  7. The Mick says:

    I thought it was just Conspiracy Theory that bankers controlled the world.

    Huh.

    • msbpodcast says:

      A conspiracy theory?

      I’ll have another glass of “Chateau Baron Louis Philipe de Rothschild” and get back to you on that.

  8. MikeN says:

    Larry Summers was the author of derivative deregulation? The real opposition was because while President of Harvard, he suggested that maybe boys are more interested in science, wanted Cornel West to spend more time teaching and less time rapping, and the biggie, that affirmative action should be tested scientifically.

  9. Taxed Enough Already Dude says:

    Its Bush’s fault, then the Republicans…

    http://guardian.co.uk/commentisfree/2013/jul/25/democratic-establishment-nsa

  10. Tim says:

    That’s not stockpiles of physical monetary assets; That’s McDonalds Big Breakfast hotcakes and sausage boxes. If I had to field a guess as to where, then Nashville.

  11. Green Pieces says:

    What makes you think that any politician can influence a PRIVATE COMPANY like the Federal Reserve?

    Whatever list of candidates who are up for promotion to become the next chairman is entirely up to the Federal Reserve BOARD! It’s all just “smoke and mirrors” if you think the government has any control – or even a say – in any of it.

    The fact that so many fools think the government has any part in the internal business of the Federal Reserve is probably because the Fed simply ALLOWS the government to merely pick whoever they want as the next puppet chairman. The key thing to realize is that the list of candidates to be chairman comes from the Federal Reserve, NOT the government!

    So if the next chairman isn’t Larry Summers then it will probably be someone Larry knows very well.

    … And is this a scam? HELL YES! It’s a scam. It’s been going on since NINETEEN-THIRTEEN (1913) when DEMOCRAT Woodrow Wilson signed a bunch of new LAWS that gave the Federal Reserve and even the IRS all their CURRENT legal powers!!!

    In fact, I’d be willing to bet that you don’t think we are taxed enough which only PROVES how totally clueless you are!

  12. incident_man says:

    The Federal Reserve, along with all other Central Banks, is the biggest scam for social manipulation ever created. When the US gov’t needs money, the Fed LOANS it to them with interest (in exchange for gov’t bonds). These loans typically get deposited in a commercial bank account. The Fed published a document in the 1990s called “Modern Money Mechanics.” This document describes money creation in a “Fractional Reserve” banking system. Each bank is required to maintain a “reserve,” currently 10%, of their total deposits. Let’s say the gov’t borrows $100,000 from the Fed and deposits it in a bank. The bank then isolates 10%=$10,000 as the required reserve and the remaining $90,000 can be used for new loans. John Q. Public then walks into the bank, wanting to borrow the $90,000, but the $90,000 doesn’t come out of the original $100,000 deposit. Rather, the bank “creates” $90,000 out of thin air, leaving the total $100,000 deposit in it’s reserves. “Modern Money Mechanics” states this definitively: “Of course, the banks do not actually pay out loans from the deposits they receive…What the banks do when they make loans is accept promissory notes in exchange for credits to the borrowers’ transaction accounts…..The banks’ reserves are unchanged by the loan transactions, but deposit credits constitute new additions to the banking system.” Thus, the money supply is expanded. John Q. Public then takes the $90,000 to his bank and the cycle repeats, Allowing another 90%=$81,000 to be created out of thin air by his bank, and so on. This cycle can go on and on, but the result is that 9 times each deposit can be created out of thin air. The money supply in circulation is the principal obtained by these loans, but where does the money come from to pay the interest on these loans? It doesn’t exist, which means that new loans, expanding the money supply further, are needed to pay the interest from the original loans, thereby creating even more interest and debt. For all intents, as long as there is money in circulation, there will always be public debt, and this is why gov’ts around the world are experiencing spiraling national debt problems.

  13. bobbo, who thinks nothing is wrong with child porn===other than any encouragement to take the original pictures…. and even then, it depends says:

    In a close Tangent, Ralph Nader on Chuck Todds “All In” giving wood to the Federal Reserve and Obamas failure to rein them in. I googled it–he’s been doing this for years/decades.

    Conversation started with Nader’s current effort to recruit 1 or more Billionaires to run for President. I REALLY LOVE Saint Nader. His idea is that the right man can change the direction of the election by getting issues on the table that the two party system ignores. What a terrifically smart insight into politics, reality, money.

    He just said the current issue of insider trading on Wallstreet is a diversion from the bigger issue: the collapse of pension plans.

    I love that guy. Would have been a trip for him to be Pres. I would never have voted for him though===absent the evidence of popular support and a wild ass chance he could have been elected.

    Great man though.

  14. MikeN says:

    Whose idea was it to put more regulation on gold sellers into ObamaCare? What does that have to do with health care?
    We see they are making sure that people can’t get away from their inflated money. Obama has already suggested defaulting on the national debt, when he says he wants to get the budget in balance except for interest payments.
    Now, we see that businesses were given an exemption under ObamaCare, and his own tax policies for years have involved lowering corporate tax rates.

  15. msbpodcast says:

    … instead of being loaned out to help Main Street or the American economy…

    Something just occurred to me.

    Who’s being helped by this policy?

    The oligarchs; the 12,400 families with real wealth. The merest blip in the demographics who make the 1%ers dance to their tune while those 1%ers make us 99%ers toil and graft to earn our bread,

    Washington has become as corrupt as Haiti under Papa Doc Duvalier so the US is no longer a place of any interest to the oligarchs. It can collapse and it really doesn’t matter.

    But Beijing is a brand new country with a brand new system.

    They should be okay for a bit, while Russia and then Europe are being rebuilt. Maybe the 12,400 will bet back to us when they’ve blown through what the Chinese, the Russians and the Europeans have built (and maybe Africa, if they ever survive the plagues that are being perpetually being tried out on them.)


0

Bad Behavior has blocked 13671 access attempts in the last 7 days.