"I know of no severe depression, in any country or any time that was not accompanied by a sharp decline in the stock of money, and equally of no sharp decline in the stock of money that was not accompanied by a severe depression." - Milton Friedman

May 2007 Federal Reserve reports assets of about $836 billion, 92% of them are the marketable securities.

By the spring of 2008 the values of marketable securities had dropped to $500 billion and total asset value had remained level until September of 2008.

September to December The Federal Reserve allowes the Monetary Base to increase from $836 billion to $1,479 billion.

December 2008 95% of the Federal Reserve "assets" are toxic collateralized debt obligations.

December 16 2008

Federal Reserve cuts interbank lending rate to a range of 0% to .25%.

"The banks have exchanged $2 trillion in toxic debt consisting of Asset-Backed Securities in sub-prime mortgages, stocks and other high-risk credits in exchange for cash and US Treasury bonds.

The Federal Reserve is holding some $2 trillion in toxic debt.

Any release of information is opposed as that might signal 'weakness' and spur short selling or a run by depositors.

The Federal Reserve does not want to discuss this.

That is clearly also behind their blunt refusal to reveal the nature of their $2 trillion assets acquired from member banks and other financial institutions.

Simply put, were the Fed to reveal to the public precisely what 'collateral' they held from the banks, the public would know the potential losses that the government may take." - F. William Engdahl 12/17/08

The interest tab to finance federal government expenditures was $412 billion in fiscal year 2008, or about one-third of the federal government's total income from personal income taxes which was $1,220 billion.

fungible assets

January 2009 Federal Reserve reportes assets of $2.1 trillion, an increase of $1.2 trillion from September 2008.

That represents loans worth $1.2 trillion - a startling increase more than doubling the size of the Monetary Base during the last quarter of 2008.

Ben Gisin, a former banker tracking statistical releases, says he has never seen anything like it.

Fungible assets magically appeared on the balance sheet of the Federal Reserve.

"The Fed Open Market Committee authorized $300 billion in purchases of long term treasury bonds for six months.

The central bank's latest efforts may help swell its balance sheet to more than $4 trillion this year." - Scott Lanman, March 25, 2009

"The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis." - Ben Salom Bernanke Sunday, November 29, 2009

The Federal Reserve is paying out roughly $400 million a year for "research" - much of it to outside economists who then advocate for the Federal Reserve agenda without disclosing their Federal Reserve ties.

Seven of the eight economists on a 2009 anti-oversight letter to Congress failed to note they are or were on the payroll of the Federal Reserve.

The Federal Reserve "so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the economic profession."

faux economic theories

"Under a misguided set of international rules that took hold toward the end of the 1990s, banks were allowed use their own internal risk measurements to set their capital requirements." - Joe Nocera

"To understand the real cause of the credit crisis and how it can be reversed, we first need to understand credit itself what it is, where it comes from, and what the real tourniquet is that has limited its flow.

Banks actually create credit; and if private banks can do it, so could public banks or public treasuries.

The crisis is not one of "liquidity" but of "solvency."

It has been caused, not by the banks' inability to get credit (something they can create with fungible accounting entries), but by their inability to meet the capital requirement imposed by the Bank for International Settlements, the private foreign head of the international banking system.

What actually constrains bank lending is the capital adequacy requirement, something that is imposed not by our own central bank but by the Bank for International Settlements.

Called "the central bankers" central bank, the BIS pulls the strings of the private international banking system from Basel, Switzerland." - Ellen Brown

"The Federal Reserve does not need slinky women in plunging necklines to peddle money.

All it needs is low interest rates.

When rates are pushed lower than the rate of inflation, the Fed provides a subsidy for borrowing.

If I offered to give you $1.00 for every 90 cents you gave me in return, you would buy as many dollars from me as you could.

The Fed operates the same way.

It generates market activity by creating incentives for borrowing.

Borrowing leads to speculation, and speculation leads to steadily rising asset prices or asset price inflation.

The Fed is not an unbiased observer of free market activity.

The Fed drives the market by fueling speculation and controlling investment behavior by fixing interest rates.

The Fed IS the market, which is why it is foolish to talk about a "recovery".

The idea of recovery implies a free-standing system based on supply and demand.

The bottom line, is that the current financial architecture is not designed to work; it is designed to make a handful of speculators very rich.

These speculators own congress, the White House and the financial media, which is why there has been no meaningful change in regulations." - Mike Whitney

Inflation: It's A Wealth Redistribution Scheme

"The Federal Reserve will ask a US appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in US history." - David Glovin 01/11/10

Freedom of Information Act requires federal agencies to make government documents available to the press and public.

US District Judge Loretta Preska notes in her August 24, 2009 ruling that loan records are covered by Freedom of Information Act and rejected the claim that their disclosure might harm banks and shareholders.

"The Fed speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed. Conjecture, without evidence of imminent harm, simply fails to meet the board's burden of proof." - US District Judge Loretta Preska

In its appeal, the Board of Governors of the Federal Reserve System argued that disclosure of "highly sensitive" documents, including 231 pages of daily lending reports, threatens to stigmatize lenders and cause them "severe and irreparable competitive injury."

eurozone foreclosures

What are they trying to hide?

"The outbreak of the current crisis and its spillover in the world have confronted us with a long-existing but still unanswered question, i.e., what kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the International Monetary Fund?

There were various institutional arrangements in an attempt to find a solution, including the Silver Standard, the Gold Standard, the Gold Exchange Standard and the Bretton Woods system.

The above question, however, as the ongoing financial crisis demonstrates, is far from being solved, and has become even more severe due to the inherent weaknesses of the current international monetary system.

Theoretically, an international reserve currency should first be anchored to a stable benchmark and issued according to a clear set of rules, therefore to ensure orderly supply; second, its supply should be flexible enough to allow timely adjustment according to the changing demand; third, such adjustments should be disconnected from economic conditions and sovereign interests of any single country.

The acceptance of credit-based national currencies as major international reserve currencies, as is the case in the current system, is a rare special case in history.

The crisis again calls for creative reform of the existing international monetary system towards an international reserve currency with a stable value, rule-based issuance and manageable supply, so as to achieve the objective of safeguarding global economic and financial stability.

Issuing countries of reserve currencies are constantly confronted with the dilemma between achieving their domestic monetary policy goals and meeting other countries' demand for reserve currencies.

On the one hand, the monetary authorities cannot simply focus on domestic goals without carrying out their international responsibilities, on the other hand, they cannot pursue different domestic and international objectives at the same time.

They may either fail to adequately meet the demand of a growing global economy for liquidity as they try to ease inflation pressures at home, or create excess liquidity in global markets by stimulating domestic demand.

The Triffin Dilemma, i.e., the issuing countries of reserve currencies cannot maintain the value of the reserve currencies while providing liquidity to the world, still exists.

The frequency and increasing intensity of financial crises following the collapse of the Bretton Woods system suggests the costs of such a system to the world may have exceeded its benefits.

Nixon Ends Bretton Woods International Monetary System

The desirable goal of reforming the international monetary system is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.

The International Monetary Fund creates the Special Drawing Rights when the defects of the Bretton Woods system initially emerge to mitigate the inherent risks sovereign reserve currencies cause.

A super-sovereign reserve currency managed by a global institution can be used to both create and control global liquidity.

When a country's currency is no longer used as the yardstick for global trade and as the benchmark for other currencies, the exchange rate policy of the country would be far more effective in adjusting economic imbalances.

This will significantly reduce the risks of a future crisis and enhance crisis management capability.

Special consideration should be given to giving the Special Drawing Rights (SDR) a greater role.

The SDR has the features and potential to act as a super-sovereign reserve currency.

Moreover, an increase in SDR allocation would help the Fund address its resources problem and the difficulties in the voice and representation reform.

Therefore, efforts should be made to push forward a SDR allocation.

The scope of using the SDR should be broadened, so as to enable it to fully satisfy the member countries' demand for a reserve currency.

The SDR, which is now only used between governments and international institutions, could become a widely accepted means of payment in international trade and financial transactions.

The allocation of the SDR can be shifted from a purely calculation-based system to a system backed by real assets, such as a reserve pool, to further boost market confidence in its value.

Entrusting part of the member countries' reserve to the centralized management of the IMF will not only enhance the international community's ability to address the crisis and maintain the stability of the international monetary and financial system, but also significantly strengthen the role of the SDR.

With its universal membership, its unique mandate of maintaining monetary and financial stability, and as an international "supervisor" on the macroeconomic policies of its member countries, the IMF, equipped with its expertise, is endowed with a natural advantage to act as the manager of its member countries' reserves." - Zhou Xiaochuan, governor of the People's Bank of China 03/23/09

"The stock of money, prices and output was decidedly more unstable after the establishment of the Federal Reserve than before.

Any system which gives so much power and so much discretion to a few men is a bad system. " - Milton Friedman

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