Changing of the guard at the Federal Reserve

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By George Miller

Hearings for Janet Yellen’s nomination to replace current Federal Reserve Chairman Ben Bernanke are underway.  National attention has instead been focused on the spectacular failures of Obamacare, along with its websites and sign-up systems, so Yellen’s confirmation hearings, which have profound importance,  have occurred in relative obscurity and approval is almost a sure bet.

Major bankers met at the now infamous Jekyll Island (below), SC in 1910 and cut a deal among themselves to take over the monetary system of the U.S., in response to the devastating financial crash of 1907. This led to the Federal Reserve being established by statute in the waning hours of 1913, after most Congressmen had gone home for the holidays and a bill was rammed through to authorize a century of private central banking.  It is questionable whether the outsourcing of national monetary policy is even constitutional and whether the vote on it was ever legally conducted.

The Fed’s contract turns 100 years old and expires this year. Some people are contacting their congressional representatives and urging them not to review the Fed charter and to also conduct an audit.  The stated purpose of the Fed was to stabilize the value of the dollar and help achieve full employment. The value of the dollar has instead dropped 96% since the Fed was established and the percentage of people in the workforce is the lowest since the Great Depression.   The crashes of 1921, 1929, 1987, 2008 as well as deep recession in 1982, have all occurred on its watch.

The Chairman of the Federal Reserve, in some respects, is as important as the President of the United States. Monetary policy affects the entire world. After a tumultuous reign, which encompassed the largest systemic financial failures since the Great Depression, Federal Reserve Chair Ben Bernanke is stepping down. Obama’s first successor choice, Larry Summers, is opposed by Democrats, for reasons other than competence.  Janet Yellen is the next choice, whether by him or other people with their own self-interests. It appears that Yellen is made from the same mold as previous Fed chairmen in our era- a Keynesian monetarist, committed to massive borrowing or even printing money via “QE” (Quantitative Easing) at any volume required to keep the economy going status quo.  Most people don’t know that the Federal Reserve is neither Federal, nor does it have reserves. It is a private banking consortium, delegated by Congress to handle monetary policy, which is actually the constitutional duty of the Treasury.

Some members of Congress want to impose conditions that the Federal Reserve be subject to regular audits, which never happens. Nor have the gold reserves been audited since 1954. In 2011, the GAO (General Accounting Office) conducted a study which they at one time labelled an audit.  If an audit, it was the first we have seen that lacked a balance sheet and income statement. Interestingly, it noted that the Fed had made commitments of about $16 TRILLION since 2007, half of that to foreign banks.

BernankeYellinIt was amazing how little debate and challenges there have been at the hearings.  Democrat Senator Warren’s questioning about whether the Fed allowed the 2008 disaster was about the only thing that made Yellen (shown with Obama and Bernanke, at left) sweat, since it happened on her watch and Warren was spot-on. Yellen easily dodged questions from Republican Senator Vitter about an audit, with the absurd rejoinder that it could impair the Fed’s independence.  It would certainly make secrecy more difficult, but independence- really?

Latest Fed audit attempt is Senate 209, a bill introduced by Senator Rand Paul and known as the “Federal Reserve Transparency Act of 2013. Father and son have both attempted this.

 

 

Media coverage

This article from the NY Sun makes some good points: Yellen Strikes Out-

Vice Chairman Yellen’s testimony before the Senate this morning moves us to oppose her confirmation to succeed Chairman Bernanke at the Federal Reserve. We don’t mind saying it’s an odd position for us, since we have great regard for her capacity as a forecaster, her character, and her comportment. She displays none of condescension that Mr. Bernanke so often allowed to show (we once expressed surprise that he wasn’t held in contempt). What transports us into the opposition is Mrs. Yellen’s truculence on the issue of auditing the Fed.

Read more : http://www.nysun.com/editorials/yellen-strikes-out/88490/

Read NRP Report: http://www.npr.org/blogs/thetwo-way/2013/11/14/245212322/federal-reserve-nominee-yellen-navigates-confirmation-hearing

ZeroHedge:  http://www.zerohedge.com/news/2013-11-14/yellen-timestamp-no-bubble

MSM weighs in: Yellen to defend Federal Reserve policies before Senate Banking:committee: http://www.washingtonpost.com/business/economy/yellen-to-defend-federal-reserve-policies-before-senate-banking-committee/2013/11/13/c376bad8-4ca6-11e3-be6b-d3d28122e6d4_story.html?tid=hpModule_79c38dfc-8691-11e2-9d71-f0feafdd1394

http://www.thedailybell.com/news-analysis/34752/What-Janet-Yellen-Will-Host-and-Why/

 

Extent of Federal Reserve Commitments (source: http://www.gao.gov/new.items/d11696.pdf  page 131)

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George Miller is a Citizen Journalist, “retired” operations management consultant, active in civic affairs, living in Oxnard.

4 Responses to Changing of the guard at the Federal Reserve

  1. Stefan Djordjevic November 19, 2013 at 4:00 pm

    I wonder if Milton Friedman will be taught in Common Core.

    Reply
    • admin November 20, 2013 at 12:10 am

      We’d bet not.

      Reply
  2. KD November 19, 2013 at 1:59 pm

    It’s worse than you think

    To watch the San Diego 6 News TV segment click here: http://www.sandiego6.com/story/kimberly-dvorak-washington-politics-20131117

    We are only beginning to understand the massive transfer of public cash to private banks and companies through the Federal Reserve’s preferred lending programs that provided $7.7 trillion dollars of taxpayer money at sub-par rates to the politically connected.
    Keep Reading: http://www.examiner.com/article/the-federal-reserve-and-easy-money-for-insiders

    Reply

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