Tuesday, September 4, 2012

$16 Trillion and Counting..and That's Not the Deficit!

This is turning into a farce. At least for those who can see it. The Fed waxes elegant about the need for more ' financial accommodation' while surreptitiously printing money in proportions that would make the mafia blush.

Here's the latest report by an official US Government agency, the GAO nonetheless, about the Feds actions from 2007 to 2010.

While this report is scary in itself, what has been going on since?

Anyway, there is no doubt the "QE or not to QE" merry-go-round has been but a smokescreen for this horrendous exponential inflation of the money supply.

Wikipedia says, "The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars."

Here's a section from page 125 of the report:

"The Federal Reserve Board did not fully document the basis for its decisions to extend credit on terms similar to those available at PDCF to certain broker-dealer affiliates of four of the primary dealers. In September and November of 2008,

"However, to fulfill its statutory requirement under the Emergency Economic Stabilization Act of 2008 to publicly report on the justification of each action taken under section 13(3) of the Federal Reserve Act, the Federal Reserve Board included short descriptions of these exceptional credit extensions ...and did not provide complete explanations of how these exceptional credit extensions satisfied section 13(3) criteria."

In other words, the Fed was in such a panic, it didn't do the right thing and detail where the huge amounts of money was going and why.

Also, in a September 21, 2008, the Federal Reserve Board could not provide documentation explaining why these extensions were provided specifically to affiliates of these four primary dealers.


Furthermore, the Fed didn't understand what they were dealing with:

"FRBNY (New York Fed) hired vendors to help manage the complexities associated with its assistance to individual institutions and its interventions in new markets, such as the markets for commercial paper and asset-backed securities."

Great, that makes us all feel confident the bank of bankers knew what actually went on in the derivatives market.

Now here's the clincher, You may have thought that the Fed was allowed to bailout those big banks to the tune of $700 billion, that being TARP. You know, the urgent funds debated in a weekend during the crisis of September 2008.

Well, think again. While you were going about your normal work from 2007 to 2010, the Fed was passing out $16 trillion, yes you saw right, $16 trillion to large banks and their subsidiaries. Now if that doesn't make your hair curl, nothing will. And, it's not over.

As has been said before, the exponential rise in money supply will last but a brief moment, and then the system will die.

Here's the table from page 130 of the report:

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