The head of the US Federal Reservehas partially opposed president Barack Obama‘s new rules to regulate financial firms.
Legislation unveiled earlier this week by the Obama administration suggested that the central bank would supervise only the biggest banks in the event of a possible failure.
The Federal Reserve would be limited to supervising banks with more than $US50 billion in assets.
Because the role of the US Federal Reserve is at the heart of the proposed legislation, the Federal Reserve chairmanBen Bernanke has come out to say he wants more control over smaller banks as well.
Mr Bernanke, who during the financial crisis was accused of not seeing it coming, warned that there needs to be a change in culture and structure in allfinancial institutions to make sure everyone does a better job.
Speaking to theHouse Financial Services Committee in Washington, he responded to questions about the Fed’s poor record in forecasting the global financial crisis by saying: “So there were mistakes and problems throughout the system. Other regulators and the Federal Reserve, private sector and even Congress made mistakes in this crisis. We have been doing a lot of soul searching and a lot of changes.”
The U.S.economy ceased to function this week after unexpected existential remarks by Federal ReservechairmanBen Bernankeshocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.
Calling it “basically no more than five rectangular strips of paper,” Fed chairman Ben Bernanke illustrates how much “$200″ is actually worth.
What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world’s largest economy.
“Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…” said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. “You know what? It doesn’t matter. None of this—this so-called ‘money’—really matters at all.”
“It’s just an illusion,” a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. “Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless.”
According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, “Oh my God, he’s right. It’s all a mirage. All of it—the money, our whole economy—it’s all a lie!”
Screams then filled the Senate Chamber as lawmakers and members of the press ran for the exits, leaving in their wake aisles littered with the remains of torn currency.
Enlarge Image U.S. markets closed as traders left their jobs and resolved for once to do or make something, anything of real value.
As news of the nation’s collectively held delusion spread, the economy ground to a halt, with dumbfounded citizens everywhere walking out on their jobs as they contemplated the little green drawings of buildings and dead white men they once used to measure their adequacy and importance as human beings.
Global Research E-Newsletter (crgeditor@yahoo.com)
By Prof Michael Hudson February 2, 2010
If the economy deteriorates in the L-shaped hockey-stick rut that many economists forecast, what political price will President Obama and the Democrats pay for having returned the financial keys to the Bush Republican appointees who gave away the store in the first place? Reappointing Federal Reserve Chairman Ben Bernanke may end up injuring not only the economy but also the Democratic Party for years to come. Recognizing this, Republicans made populist points by opposing his reappointment during the Senate confirmation hearings last Thursday, January 27 the day after Mr. Obamas State of the Union address.
The hearings focused on the Feds role as Wall Streets major lobbyist and deregulator. Despite the fact that its Charter starts off by directing it to promote full employment and stabilize prices, the Fed is anti-labor in practice. Alan Greenspan famously bragged that what has caused quiescence among labor union members when it comes to striking for higher wages or even for better working conditions is the fear of being fired and being unable to meet their mortgage and credit card payments. One paycheck away from homelessness, or a downgraded credit rating leading to soaring interest charges, has become a formula for labor management.
Since everyone else is throwing in their two cents about 1) whether Ben Bernanke should be reappointed to a second term as Federal Reserve chairman; 2) what moves the FOMC will (or should) make next; and, 3) the policymaking and regulatory role the Fed will (or should) play in future, I figured I might as well do the same.
Although I didn’t quite plan it this way, below are three posts — my six cents, you might say — published today byGoing Concern, Sense on Cents, and Wall St. Cheat Sheet, respectively [all of which have long been on my blogroll, as it happens], which should give you some sense of where I stand when it comes to Mr. Bernanke and our nation’s central bank:
Trouble ahead. Another crash is virtually certain, thanks to Washington‘s $23.7 trillion explosion in debt, the Fed‘s support for the $670 trillion shadow banking system, and Wall Street lobbyists. Atlas reader Jim Q ……….
Maybe I’m wrong here, but banks are getting destroyed at their core businesses. Remember, a banklends out depositors money to borrowers at a profit.
They are however making loads from trading with money they did not have as capital a year ago.
I can’t be the only one who sees this.
Why do you suppose Geithner is now terrified to testify about the money-go-round of a year ago?
And Bernanke insists that it was all because of lax regulation………….
The market is up 50% but where are the corp earnings to justify this?
The market is up and the govt tells us the UR is at 10%.
You believe this? The UR is definitely higher than 10%. Check out Food Stamps requests.
You believe the govt inflation figure .22% month over month? Where do they shop? Makethe money now, but get out soon.
C4L staffers have been working very closely with Senator Jim DeMint’s office in recent days to advance Audit the Fed (S. 604) in the Senate.
Just a little while ago, it was announced that Senator DeMint, who is the lead Senate cosponsor of Audit the Fed, has put a “hold” on Bernanke’s confirmation for a second term as Federal Reserve chairman until S. 604 receives an up or down vote on the Senate floor.
Keep reading for more details on how your immediate action could help make this vote possible.
While Ben Bernanke was handed a few softball questions from establishment politicians during today’s Senate Banking Committee hearing on his nomination, he also faced serious grilling from senators who are tired of his evasive answers and secretive practices.
DeMint is joined by SenatorJim Bunningand S. 604 sponsor Senator Bernie Sanders in pledging to block action on Bernanke’s reconfirmation.
Things could get ugly fast. With the Democrats backing-off on a second round of stimulus, the Fed signaling an end to quantitative easing, and Obama moaning about rising deficits; there’s a good chance that the stumbling recovery could turn into another sharp plunge. Bank lending is shrinking, consumers spending is off, housing prices are falling, unemployment is soaring and the wholesale credit markets are in a shambles. This isn’t the time to slash government support in the name of “fiscal responsibility”. Obama needs to ignore the gloomsters and alarmists and pay attention to the Nobel laureates like Joe Stiglitz and Paul Krugman. They’re the guys who know how to steer the ship to safe water.
But there are troubling signs that Obama has joined the ranks of the deficit hawks and is planning a policy-reversal that will pitch the economy into a nosedive. Here’s what he said on his tour through Asia:
“I think it is important to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”
So it’s true. Obama has aligned himself with the faux-prophets and dollar demagogues who think that the end is nigh. But trimming the deficits now (when they should be expanding) will lead to a viscous cycle of debt deflation that will push-down asset prices, increase defaults, force more layoffs, slow consumer spending, lower earnings and send the economy into a downward spiral. The president is paving the way to a double-dip recession, a slump that could be worse than the first.
Has Obama perused the jobless figures lately? Has he noticed the Fed shoving more than a $1 trillion under the collapsing housing market with no sign of improvement? Has anyone told our blinkered accountant-in-chief that the entire financial system is propped-up with $11.4 trillion of dodgy scaffolding that could buckle in the first big gust?
Much has been written (especially here) about the Federal Reserve Bank but nothing previously revealed about the Fed comes close to the outrageous arrogance as displayed when they thumb their nose at the government in response to a simple legitimate request for information.
The Federal Reserve Boardhas rejected a request by U.S.Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance. Let us also remember that the Fed has never been audited by the government since 1913 when this abomination was created at the urging of powerful domestic and international bankers.
The Obama administration, to the surprise of many of us, proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
But after agreeing to the review, the Fed leadership saw a potential threat to Fed independence after the Treasury released the proposal. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”
“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”
Indeed, the Fed considers itself above the government! So independent it regards itself that the Fed need not respond to requests by thePresident of the United States – what hubris!
We’re at a truly fascinating crossroads in modern economic times. Financial theory as we have come to know it will be changed forever based on the recent actions of Ben Bernanke and global central bankers. Millions of textbooks will be rewritten in the coming 10 years and careers will either flourish or die on the back of the actions of these bankers. Those in favor of Bernanke’s legendary helicopter drop are celebrating a 6 month rally in equities, but a vital piece of the recovery puzzle remains missing. While Bernanke and Co. fire up the printing presses, and the banks sell the recovery hook line and sinker to the investing public, we continue to see very weak consumer trends.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_a.png?x-id=bc26b66c-5ef4-4679-9511-a900a00137de)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_a.png?x-id=1fe4d109-24c4-4bfb-bb83-aeea9a861c4d)
