Here's what people don't realize about the Fed. It is an agency created <b>by</b> the banks to police the banks. That is about a big a conflict of interest as you'll find. This relationship with the banks causes the banks to act in the best interest of the banks, not the economy or the American public. The past few years is a perfect example. The Investment Banks were allowed, under the strict supervision of the Fed, to increase their leverage to a ratio as high as 75:1. Alan Greenspan sits back and states he didn't think the banks would "risk their equity" by taking on such risk and by using so much leverage. Greenspan expects us to believe the Fed had absolutely no idea Lehman was levered up to 75:1?
Fast forward to current day. The overnight borrowing rate for the banks is current 0-.25%, or effectively nothing. Go buy a car and see what kind of rate you'll end up paying, even with excellent credit. You're looking at somewhere in the area of 7%. 7% minus 0% means your borrowing costs are nothing and your revenues from lending are massive.
So the Fed first acted recklessly by allowing banks to wind up their books and make windfall profits if debt payments continued on an expected course and now that they haven't they are allowing the banks to make windfall profits by allowing them to borrow at the cost of nothing. The Fed suggests they are acting in the best interest of the economy by keeping rates low. The simple truth is the Fed is keeping rates low to maximize the profits of the banks -- the very banks that <b>created</b> the Fed, with the help of congress and coercement, in 1913.
The Federal Reserve has hijacked the United States and has the power to crush the economy with one stroke of the keyboard. For that reason it will not be audited or abolished any time soon. If it is America must be ready to go through another Depression that would probably eclipse the severity of the Great Depression.
The Fed provides a great deal of liquidity to the US Economy. Imagine what would happen if that liquidity was withdrawn overnight? Removing the Fed will be no easy task, even if Congress wanted to do it and considering the US Government has deep roots in Wall Street it's highly unlikely the Fed will come under any real scrutiny anytime soon. Conclusion: The Fed is sacred, unfortunately.
Fast forward to current day. The overnight borrowing rate for the banks is current 0-.25%, or effectively nothing. Go buy a car and see what kind of rate you'll end up paying, even with excellent credit. You're looking at somewhere in the area of 7%. 7% minus 0% means your borrowing costs are nothing and your revenues from lending are massive.
So the Fed first acted recklessly by allowing banks to wind up their books and make windfall profits if debt payments continued on an expected course and now that they haven't they are allowing the banks to make windfall profits by allowing them to borrow at the cost of nothing. The Fed suggests they are acting in the best interest of the economy by keeping rates low. The simple truth is the Fed is keeping rates low to maximize the profits of the banks -- the very banks that <b>created</b> the Fed, with the help of congress and coercement, in 1913.
The Federal Reserve has hijacked the United States and has the power to crush the economy with one stroke of the keyboard. For that reason it will not be audited or abolished any time soon. If it is America must be ready to go through another Depression that would probably eclipse the severity of the Great Depression.
The Fed provides a great deal of liquidity to the US Economy. Imagine what would happen if that liquidity was withdrawn overnight? Removing the Fed will be no easy task, even if Congress wanted to do it and considering the US Government has deep roots in Wall Street it's highly unlikely the Fed will come under any real scrutiny anytime soon. Conclusion: The Fed is sacred, unfortunately.
