The Federal Reserve's 'breathtaking' $7.7 trillion bank bailout

It's a two-way street between government borrowing money and the Fed creating more money.

 

We do know that the 5 largest US banks hold around $200T in derivatives against only $10T is real assets.
https://www.google.com/url?sa=t&sou...FjAAegQIAxAB&usg=AOvVaw1kCovedFEdo3-UiBgHefJZ.

I think we know what the FED is propping up

(Link from office of the comptroller of the currency)

 

The Gov consolidates power and riches along with the big banks who own the FED

 

I wonder how that is even possible.

 

Debt pyramid made possible by the FED.
Check the link.
Office of the Comptroller of the Currency

 

Just in case anyone was not aware, when the Central Bank (entity issuing the money) creates too much inflation it cuts into the purchasing power of the Treasury (government spending). So when the Central Bank (in the US that's the "Fed") expands the money supply to pay for a bailout, that ends up getting paid for out of taxpayer money. And the government has to raise tax rates even more to offset the loss in purchasing power of the revenue it collected.

How it works is if the Central bank pays 400 million to buy assets that are actually only worth 300 million, then it dilutes the worth of all the money they have already issued. It changes the ratio of Reserve Asset worth to amount of Reserve notes (currency or dollars) outstanding. The 100 million they're basically giving away is paid for by inflation.

 

Truthfully, i am not convinced that any of us had the expertise to decide what the fed should do

I do not know to what extent these fed actions were effective, or not. We do know the economy has recovered. We can never know what would have happened if the fed did not act. We do however know what happened in 1929 when the fed actions made things worse

Finally, although we can and do legitimately resent the large institutions that grifted the economy..., i do not see that the feds actions have negatively impacted our lives. We have not paid higher taxes have we?

 

exactly

Bush changed the rules to make it easier for banks to gamble our money, course sometimes they make the wrong bets - and being too big to fail, when they lose, they don't lose or even get punished

 

In 2008 the world economy faced its most dangerous Crisis since the Great Depression of the 1930s. The contagion, which began in 2007 when sky-high home prices in the United States finally turned decisively downward, spread quickly, first to the entire U.S. financial sector and then to financial markets overseas.
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Bear sterns collapsed in early 2007
ThenAIG needed a bailout
Then junk bonds started collapsing
Then housing prices collapsed
Then the stock market crashed
Then credit markets froze
Then hank pauson kneeled in front of pelosi asking for help stabilizing the system by passing the TARP

All this happened in 2007

 

They should be allowed to gamble. And they should be allowed to fail if they lose that gamble.

If they want protection from government, at the very least they shoukd have been forced to pay an extra insurance rate.

 

I find it odd that you seem to trust the FED when you admit (and I agree) that their actions exacerbated the Great Depression. I'm not a fan of rule by experts since the experts seem to be wrong so often that I'm not even sure why they are called experts, but if you feel comfortable that the FED knows best, then there ya go.

 

Well obviously the causes precede 2008, but the actual financial crisis was in 2008, particularly in September when Lehman Brothers dissolved, the Treasury nationalized Freddy and Fannie, and AIG almost collapsed. But obviously there were things going on years earlier that lead to that.

 

People did a lot of stupid things 80 years ago. Since then, people have studied and tried to learn from mistakes.... notably ben bernanke. As it turns out.... some of the stupid things that the fed did was to act as though gold was our real money supply, and also advocate for a balanced budget etc.... all the things that conservatives reflexively do when faced with a depression

Of course experts are sometimes wrong, but By in large i would rather trust an expert... and i imagine that you do also when it comes to things like cancer, fixing your car, etc.

No offense, but given a choice of whom to trust in the face of a depression.... i would go with bernanke over you

 

Well I think it's perfectly legitimate of you to choose an opaque system in which "experts" make the decisions and you as a voter have zero impact in.

I just don't prefer that system.

 

The banks got the bad assets removed from their books and received the cash in exchange. No strings attached.
Much got parked at the FED and the banks were collecting a cool .5% interest on the deposit of money that was given to them in the first place.

Also mark to market and GAAP accounting principles were suspended for the big banks.
Lastly their reserve ratios for lending were eliminated

 

That's why the markets tank every time the FED tries to normalize interest rates.

Savers and pensioners have been decimated for the benefit of the large banks, for over 10 years

 

When the Fed lowers interest rates, they're basically spreading their tentacles out and grabbing up equity in all the investment assets.

Obviously that pushes the price up, and so yields go down. (the investment return from the asset remains the same)

Yeah, tough luck for a pensioner looking for an asset to invest in.

 

And savers get denied the proper market time value of their demand deposit, that is, interest.

 

that is my point, they are gambling and taking the winnings when they win, but as they are too big to fail no one is letting them lose

 

Cause a global crisis, bonus yourselves hundreds of millions. Get to keep your insolvent banks and do it again. Rinse and repeat

 

no.. I think you are reading criticism in my post when I merely made an observation. America's foreign policy as it stands now, is aggressive and has very strong monetary implications for America and the rest of the world. Looking at the size of the bailouts since the second world war and the current debt situation along with clear indications we are moving towards recession and potentially a period of stagnation after, I made this observation.

In norther Iraq Russian oil companies have moved in and the contract I linked to was in conjunction with a Chinese company.... you are being oversensitive.

 

I honestly dont know how to keep from going broke

 

OK we're a little past the end of the second world war. If you simply go back a generation, there isn't a whole lot that the US has done foreign policy wise that has benefited the US financially. I think you kind of gave it away with your critic of Exxon contracts in 2019 Iraq. That was a left wing criticism of the Iraq war that it was a "blood for oil" war, but the US never seems to get any actual oil out of the deal. The US has wasted far more money in overseas ventures than it's ever recouped financially from sweet deals afterwards.

 

I'm sorry but you need so much education, I have no time for this... go and read

John Perkins, Confessions of an Economic hitman
https://www.amazon.com/New-Confessions-Economic-Hit-Man/dp/1626566747/ref=dp_ob_title_bk

A Century of War: Anglo-American Oil Politics and the New World Order
https://www.amazon.com/Century-War-Anglo-American-Politics-World/dp/1615774920

It details American foreign policy and economic gain... in fact the Anglo American book starts all the way pre-world war 1 and gives you a good perspective on how we managed to get where we are today..

 

Hey @Lil Mike @scarlet witch @kazenatsu @squidward @ARDY @FreshAir @Quadhole @wgabrie @Distraff @jack4freedom @61falcon
I have an idea. I'm reading a book on the crash and banking and it's loaded with pretty shocking facts about banking and finance that few of us know about. So I think I'll post individual facts in individual posts and forum participants can dig into them, flesh them out, understand them better, and discover the depth and enormity of the financial and economic problems we face. Maybe it would be best to post them each in their own thread. Any opinions on this?

Here's the first set of facts/data items:
FEDERAL RESERVE BANKS

* There are 12 Federal Reserve Banks
* They are organized as private corporations (with some modifications)
* Commercial banks ("member banks") appoint 6 of the 9 members of each Fed Bank's Board of Directors and have a vote in the election of the Reserve Bank presidents.
* Each has a vote in the election of the Reserve Bank presidents (who serve on the Federal Open Market Committee, which sets national monetary policy)
* "The Fed" is independent of oversight by politicians
* Federal Reserve "member banks" are the various commercial banks, and each owns stock in the Federal Reserve Bank.
* Thus, commercial banks "own" the Federal Reserve Bank
* The Federal Reserve Chair appoints the Fed's Inspector General. What could possibly go wrong?
* The GAO is prohibited from reviewing many important aspects of the Fed's work.
​

Since 1970s the Fed and other central banks have been independent of political control, but are captured by very large banking interests. During the Depression and afterward the Fed took direction from the W.H. and the Treasury. Today it calls its own shots. Timothy Canova, Professor of Law and Public Finance at Nova Southeastern University, Said that this decade during which the Fed was directed by the W.H. and Treasury was the most successful in American economic history.

The Federal Reserve System‍—‌also known as the Federal Reserve or simply as the Fed‍—‌is the central banking system of the United States today.

In 2008 the central bank advocated interventions that directly benefited the institutions it was supposed to be regulating at the expense of the public interest. In the run-up to the 2008 crash, US regulatory bodies and particularly the N.Y. Federal Reserve Bank failed to identify major systemic risks and to properly supervise banks. This led to questions about conflicts of interest. Many of the 12 Federal Reserve Banks board members were affiliated with banks and companies that received a total of about $4 TRILLION in emergency low-interest loans from the Fed during the crash.

Next: the shadow banking system.