Impeach bernanke

TheBramble

Legendary member
8,394 1,170
I know Larry Levin has a thread or one of his people does somewhere, but I don't think it gets updated that frequently. So, I thought this letter was worth posting up. I somehow doubt the powerbase will ever get round to policing its own activities as what's the point of being that powerbase in the first place if you can't use any means available to maintain it? Be they unconstitutional, illegal or immoral.

An open letter to Congressman Ron Paul of Texas

Antal E. Fekete

April 6, 2011

Dear Dr. Paul:

There are serious questions about the legality of Quantitative Easing. You are among the few who are well-qualified and well-placed to get to the bottom of it.

Most people believe, and the media confirm them in that belief, that the Fed can legally create dollars ‘out of the thin air’ in any quantity, and can do with them as it pleases. This may well be the pipe dream of Dr. Bernanke who is quoted as saying that the U.S. government has given the Fed a tool, the printing press, to stop deflation — but it hardly corresponds to the truth. The Fed can create new dollars only if some stringent legal conditions are satisfied, and then, it can only dispose of them in certain ways prescribed by law.

Contrary to a statement of Dr. Bernanke, made before he became the Chairman of the Board of Governors of the Fed, he could not drop freshly printed dollars from a helicopter, no matter how many reasons for such an action he may be able to cite. Another thing the Fed is not allowed to do legally is to purchase Treasury paper from the U.S. Treasury directly. It must be purchased indirectly through open market operations. If you don’t put the Treasury paper through the test of the open market before the Fed is allowed to buy it, the presumption is that the market would reject it as worthless, or would take it only at a deep discount. The law does not allow the F.R. banks to purchase Treasury paper directly from the Treasury because that would make money creation through the F.R. banks a charade, reserve requirements a farce, and the dollar a sham.

If that were the only problem with Quantitative Easing, it would be bad enough. But there is something else that is even more ominous. The fact is that the Federal Reserve banks can purchase Treasury paper only if they pay with F.R. credit that has been legally created.
F.R. credit (F.R. notes and F.R. deposits) is legally created if it has been issued in accordance with the law. The law says that F.R. credit must be backed by collateral security at the time of issuance, usually in the form of an equivalent amount of U.S. Treasury paper. The procedure is as follows.

The F.R. bank seeking to expand credit takes its Treasury paper, owned outright and free from encumbrances, and posts it as collateral with the Federal Reserve agent who will then authorize the issuing of credit. In other words, if the F.R. banks do not have the unencumbered Treasury paper in their possession, then they cannot create additional credit legally.

There is some evidence that the F.R. banks do not have F.R. credit available to make the kind of purchases Dr. Bernanke is talking about as part of his Quantitative Easing. Nor do they have unencumbered Treasury paper in sufficient quantity that they could post with the F.R. agent for authorizing the issue of additional F.R. credit.

The point is that the process of posting collateral first, and augmenting F.R. credit afterwards must under no circumstances be reversed. What the F.R. banks cannot legally do is to buy the Treasury paper first with unauthorized F.R. credit, post the paper as collateral, and justify the illegal issuance of credit retroactively. Nor can they borrow the bond from the Treasury, post it as collateral, and pay for the bond retroactively.

This is an important limitation separating the regime of market-based irredeemable currency from the regime of fiat money involving outright monetization of government debt — the graveyard where the Continental dollar, the assignat, the mandat, the Reichsmark, and the Zimbabwe dollar (among countless others) rest.

At any rate, retroactive authorization of F.R. credit, if that’s what the Fed is up to, would be a violation of both the letter and spirit of the F.R. Act. It would mean converting the dollar into outright fiat money through the back door, bypassing Congress. It would show absolute bad faith on the part of the Chairman of the Federal Reserve Board of Governors, Dr. Ben Bernanke, who certainly knows what the law is. Such a blatant violation of the law would make him totally unfit for the powerful office he occupies. It would call for his immediate and dishonorable discharge by the President, pending Congressional investigation of the matter.

The various violations of the law of which the Fed is accused point to a concerted effort to remove the shackles the law has put on the money spigots lest crooks help themselves to the public purse. These violations are not isolated incidents. They are aiming at the corruption of the monetary order of the nation and the world. Moreover, they would ultimately figure prominently among the causes of the financial instability the world has been suffering from since 1971 and, more recently, since 2008.

Without understanding this fundamental truth, all talk about stabilizing the monetary system and reining in the runaway budget deficit is an exercise in futility.

Yours very sincerely,

Antal E. Fekete
Professor (retired)
Memorial University of Newfoundland
 

Mr. Charts

Legendary member
7,370 1,194
I do read Larry Levin's daily rant since you mentioned it a few weeks ago. He really gets his knickers in a twist every day, but there's a lot in what he says and it's often entertaining; bit like Glenn Beck on Fox News.

Th expansion of the money supply caused by high levels of POMO will probably cause major inflationary pressures and an asset class bubble but as long as the velocity of money supply doesn't go orbital we might just get away with it.
But hey, what do I know, I'm just a trader not an economist. Not that they know either.
Richard
 

dmt257

Active member
220 9
Its best to use Bernanke as a contrarian indicator as he has NEVER gotton ANYTHING correct in his career at the Fed.

I got sick of owning worthless bits of paper that central banks counterfeit at will, so I took everything I had and got myself some real money a few years ago....silver and gold.

We all know how that story has developed:D
 

kimo'sabby

Experienced member
1,622 287
Its best to use Bernanke as a contrarian indicator as he has NEVER gotton ANYTHING correct in his career at the Fed.

I got sick of owning worthless bits of paper that central banks counterfeit at will, so I took everything I had and got myself some real money a few years ago....silver and gold.

We all know how that story has developed:D


Jim Rogers fortold it all a few years back, in quite a detailed fashion.
 

Martinghoul

Senior member
2,690 276
This letter is bull****...
 
B

Black Swan

0 0
ooh ooh, you've just reminded me it's time for my daily night visit to ZH.. :D
 

wackypete2

Legendary member
10,229 2,055
Say whatever you want, but we steered clear of a full recession, whether it was because of Bernanke, Paulson, legally, illegally, moral or immoral , plain dumb luck or whatever else you feel you can make an argument for. I'm not endorsing anyone. My view of most politicians, analysts, economists, and bankers is they all rank lower than dog sh1t.

Besides I want Ben to stay in. Being a short term trader I get great opportunities every time he speaks, whether it's hot air or not.

Peter
 

kimo'sabby

Experienced member
1,622 287
Say whatever you want, but we steered clear of a full recession, whether it was because of Bernanke, Paulson, legally, illegally, moral or immoral , plain dumb luck or whatever else you feel you can make an argument for. I'm not endorsing anyone. My view of most politicians, analysts, economists, and bankers is they all rank lower than dog sh1t.

Besides I want Ben to stay in. Being a short term trader I get great opportunities every time he speaks, whether it's hot air or not.

Peter


Lucky for u yanks, you had tent cities, so the recession probably didn't feel that bad.
 

marbig

Active member
129 11
Say whatever you want, but we steered clear of a full recession, whether it was because of Bernanke, Paulson, legally, illegally, moral or immoral , plain dumb luck or whatever else you feel you can make an argument for. I'm not endorsing anyone. My view of most politicians, analysts, economists, and bankers is they all rank lower than dog sh1t.

Besides I want Ben to stay in. Being a short term trader I get great opportunities every time he speaks, whether it's hot air or not.

Peter

I agree. If it wasn't for Q.E. we would have seen the mother of all depressions. It would have made the Depression of the 1920-30's look like a minor dip of a recession.
We were on the brink of an international, worldwide, financial meltdown where no one (including all the banks) would trust ANY other counterparty with any money.
You would have seen runs on all banks everywhere around the world. Everyone would have withdrawn their money until every bank ran out and then closed their doors. Then the crowds of people demanding their money would have got violent and started ransacking everything else.
 

Martinghoul

Senior member
2,690 276
In what respect?
For all the claims the author makes about Fed's actions being illegal, there's not a single reference to a particular part of the law. I know the Federal Reserve Act and there's nothing in there that makes creation of bank reserves illegal.
 

TheBramble

Legendary member
8,394 1,170
For all the claims the author makes about Fed's actions being illegal, there's not a single reference to a particular part of the law. I know the Federal Reserve Act and there's nothing in there that makes creation of bank reserves illegal.
Perhaps you should write to Prof. Fekete and let him know.

Ron Paul and Bernanke too...I'm sure Ben will be relieved...
 

anley

Senior member
2,730 229
Its best to use Bernanke as a contrarian indicator as he has NEVER gotton ANYTHING correct in his career at the Fed.

Correct. He's either stupid or a liar, I go for the latter.

What amazes me is why anyone listens to a word he and the Fed say anymore. Watch CNBS ands they slave over him as if he's some sort of God. Surely even those morons must have realised now that he's playing the media.

Mark my words when the 1998 - 2018 financial history books are written people are going to laugh at how wrong and clueless everyone was, or how corrupt they were.
 
B

Black Swan

0 0
I agree. If it wasn't for Q.E. we would have seen the mother of all depressions. It would have made the Depression of the 1920-30's look like a minor dip of a recession.
We were on the brink of an international, worldwide, financial meltdown where no one (including all the banks) would trust ANY other counterparty with any money.
You would have seen runs on all banks everywhere around the world. Everyone would have withdrawn their money until every bank ran out and then closed their doors. Then the crowds of people demanding their money would have got violent and started ransacking everything else.

Instead of which you have 45 million Americans on food stamps and a transfer of wealth not seen since the Normans confiscated everything in England and the very best part of it (for the global political and banking elite) is that the average USA citizens don't even know they've been raped..LOL...Similar in the UK; they've bought the "it's the deficit innit" line, hook, line and sinker, stupid fookin proles...

Avoided recession..hahahaha..yep by creating a depression (multi generational stagflation) that'll be played at over a long time as the losses are socialised and the muddled class destroyed...
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock