Spitzer: Federal Reserve is ‘a Ponzi scheme, an inside job’

[Random.Capital]

Quote from monty21:

Bubbles didn't occur EVERY decade before the FED...

That's true. Primarily because the busts - or "panics" - lasted far longer than they do today. There are multiple decade+ strongly deflationary periods in the 19th century. That is not a Good Thing.

...essentially because the money supply went out of whack.

That is not an accurate description of what has been going on in the US. The Fed is not nearly as independent as people would like to think, and is essentially powerless to stop the bubble cycle when Congress after Congress and White House after White House is busy spending money into existence.

Yes, in theory, the Fed could slam interest rates sky high and refuse to move them until the federal government restores fiscal sanity, but let's be blunt, a hypocrite like Ron Paul would be the first in line demanding the Fed's head, if not outright abolishment, if they actually tried doing that.

The Fed is limited to reacting to what the People's duly elected representatives decide to do.

 

[monty21]

Quote from Random.Capital:

That's true. Primarily because the busts - or "panics" - lasted far longer than they do today. There are multiple decade+ strongly deflationary periods in the 19th century. That is not a Good Thing.



That is not an accurate description of what has been going on in the US. The Fed is not nearly as independent as people would like to think, and is essentially powerless to stop the bubble cycle when Congress after Congress and White House after White House is busy spending money into existence.

Yes, in theory, the Fed could slam interest rates sky high and refuse to move them until the federal government restores fiscal sanity, but let's be blunt, a hypocrite like Ron Paul would be the first in line demanding the Fed's head, if not outright abolishment, if they actually tried doing that.

The Fed is limited to reacting to what the People's duly elected representatives decide to do.

Ok... I don't want to get into too many history lessons. Every scenario is essentially unique.

How do you feel about Spitzer labeling the Fed as a ponzi scheme. Do you think sole control over the money supply is not too much power?

 

[mgmaggie]

Quote from monty21:

http://www.youtube.com/watch?v=sIA055kYVyM

http://rawstory.com/08/news/2009/07/25/spitzer-federal-reserve-is-a-ponzi-scheme-an-inside-job/

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated he had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

The Federal Reserve nor any of the Banks have ever cared or any other government agency. They could care less how their actions reflex on anyone. Their salaries and bonus packages are just a little example. It is pure and simple about money. They will never get an audit of the Reserve's actions at best it will be the same lawyers and accountants that provide the accounting for the other trouble Banks providing an altered report to accommodate the Public as Wall St. is an arms lenght partner.

 

[Random.Capital]

Quote from monty21:

Do you think sole control over the money supply is not too much power?

It might be, if such a thing actually existed. But it doesn't, so it's moot.

 

[mgmaggie]

Quote from monty21:

I'm really surprised that this thread is not getting any attention on ET... Spitzer's comments on the FED is a huge deal.

More importantly, I'm shocked that the mainstream media is not discussing this. Well, maybe "shocked" is the wrong word. I'm sure the "elite" bankers don't want to get this opinion out. Even though Spitzer messed up huge with the prostitution sting, he is the hound of Wall Street.

Schumer is trying to curb front-running by high frequency traders, and that is getting a lot of press. Surprisingly Spitzer's comment has been silenced.

Sure does explain the rally though last few months.

 

[clacy]

The FED may not be ideal, but let's face it, we're not going back on the gold standard. That would curtail way too much congressional power and spending.

So the FED is by far the lesser of two evils. I certainly would rather the fed control the money supply than congress.

In fact, just the thought of Reid, Pelosi and Frank setting monetary policy, makes me want to vomit