Originally posted by nine-eyed-eel
reply to post by mnemeth1
If Barney Frank properly took responsibility for all his folly with Fannie and Freddie, he would have quit some time ago.
I can't tell which it is - is he corrupt, or just stupid, or both - but regardless he is incompetent to run things, and he has no class.
He's not stupid and he's not necessarily corrupt, he is engaging in legalized fraud.
Barney knows a few things to be true about life:
1. Government spending buys votes.
2. That without the Fed being protected, his ability to conduct government spending would be severely hampered.
The Fed is the tool through which treasury debt is issued and the "lender of last resort" not only to the banking industry but also to government
There are two evils of the Fed, one of which is bailing out failed banks and manipulating interest rates, the other is selling and purchasing
Without the Fed, the government would be limited in the amount of debt it could issue based on the amount of debt foreign countries would be willing
to purchase. - at rates set by the PURCHASER of that debt.
This would effectively put a "maximum limit" on the government credit card.
To a communist like Fwank, capping the government credit card is a sin against humanity. He would no longer be able to buy votes once the credit card
was tapped out.
Thus, he sees it in his best interest as a politician to ensure the government credit card remains uncapped.
Yes, congress declares supposed 'debt ceilings' which they routinely violate, but without the Fed, they wouldn't be able to violate the limits
because the market would effectively put a hard limit on them through the mechanism of the interest rates.
As the government issues more debt, its risk of default increases, thus the interest rates on that debt should increase according to the risk of
This is exactly the OPPOSITE of what we see occurring. Today, the government is more indebted than ever, yet interest rates remain incredibly low.
This is purely because of the Fed manipulating the rates.
Also, let us consider Fannie and Freddie, Mr. Fwank's babies.
Fannie and Freddie are still in business even though they are totally bankrupt because the Fed is ultimately backing those loans through its ability
to purchase treasury debt.
Fannie and Freddie never would have gotten off the ground without the implicit backing of their debt by government.
In normal banks, loans typically require collateral, such as a house, before a major loan will be made. This is to ensure the bank remains solvent
should the borrower default.
The Fed's collateral is ultimately your sweat and labor extracted from you at gun point by IRS agents.
[edit on 16-6-2010 by mnemeth1]