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WASHINGTON (MarketWatch) -- A House panel led by longtime Federal Reserve critic Rep. Ron Paul will take direct aim at the central bank next week when it considers a bill to abolish the powerful institution.
The legislation will be among a handful of bills that will be looked at on Tuesday by the congressional committee that could all spell significant change to -- if not outright elimination of -- the Federal Reserve.
“More and more people are beginning to understand just how destructive the Federal Reserve’s monetary policy has been,” said Paul, a Texas Republican and chairman of the House Financial Services subcommittee on Domestic Monetary Policy and Technology, which has oversight authority over the Fed.
Paul, a Republican presidential hopeful this year, has consistently made abolishment or reform of the Fed a central plank in his sinking election platform, and introduced the bill to abolish the central bank that the panel will be discussing.
Criticism of the Fed first peaked in 2009, when lawmakers expressed outrage that the Fed didn’t initially disclose that its taxpayer-funded, $190-billion bailout package to keep troubled American International Group Inc. /quotes/zigman/557836/quotes/nls/aig AIG -4.04% afloat included large payments at par to foreign banks in China and Europe. Read about how criticism of the Fed expanded
After losing a court battle, the Fed released more details about secret lending it did during the height of the financial crisis. A Bloomberg article in 2011 reported that the Fed had lent or guaranteed more than $7.7 trillion to ailing banks during the financial crisis.
WASHINGTON (MarketWatch) — The Federal Reserve and its district banks earned the second-highest amount in its history last year as the central bank profited from increasing its balance sheet to boost the U.S. economy.
The Federal Reserve and its district banks said Tuesday that it earned $77.4 billion, down from $81.7 billion in 2010.
The bumper earnings allowed the Fed to distribute $75.4 billion to the U.S. Treasury, also the second-highest level ever. Its balance sheet reached $2.92 trillion in 2011, up from $2.43 trillion in 2010.
The Fed said the earnings were derived primarily from $83.6 billion in interest income on securities acquired through open market operations, from Treasury securities, federal agency and government-sponsored enterprise mortgage-backed securities, and GSE debt securities.
Because it effectively pays for those securities out of money it creates from thin air, the so-called quantitative easing programs are extremely profitable. A Federal Reserve official on Tuesday said the central bank doesn’t pay attention to profit when it conducts its operation.
THE FED: DISHONEST, IMMORAL, UNCONSTITUTIONAL
There is no greater threat to the security and prosperity of the United States today than the out-of-control, secretive Federal Reserve.
Imagine that parents, overwhelmed by debt and months behind on their bills, sent their spendthrift teenagers out each weekend for a night on the town with credit cards and blank checks. Would anyone be surprised if this family never got their finances under control?
Yet that is how a government which is almost 15 trillion dollars in the red behaves by entrusting taxpayers’ financial futures to the Federal Reserve, which pumps money into the economy whenever it chooses and makes secret deals with Wall Street executives, foreign central banks, and other politically-connected insiders without any significant oversight from Congress.
Snuck through Congress on Christmas Eve in 1913, the Federal Reserve Act established the Fed as America’s central bank. The Fed essentially creates money out of thin air, manipulates interest rates, and interferes with the free market. By doing so, the Fed fuels our economy’s boom-bust cycle and has helped devalue our dollar by over 95%.
According to the Minneapolis Federal Reserve branch’s own website, what you could buy with $1.00 in 1913 would now cost you $22.55.
Although Congress and the Treasury helped bring about the housing bubble and financial collapse with legislation, regulations, and keeping the funds flowing to reckless institutions like Fannie Mae and Freddie Mac, the Fed was the main cause of the crisis. Its interference in setting interest rates distorted the market, and its status as the “lender of last resort” ensured banks could hook individuals and businesses for loans on projects that weren’t in as high demand as forecasters believed.
When the crash occurred, common sense dictated a change in policy. But the Federal Reserve only increased its lending and intervention to historic highs.
While selling Americans a bill of goods that the economy would never recover without unprecedented bailouts, we now know that at the peak of its “emergency lending,” the Fed was providing nearly 90% of its discount window loans to foreign banks! This included making over 70 loans to a bank partially owned by the Bank of Libya.
The Fed was able to get away with these actions because Congress lacks the authority to thoroughly and completely audit it. In fact, Federal Reserve Chairman Ben Bernanke appeared before Congress early in the crisis and was able to refuse a direct request to disclose which institutions were receiving trillions of taxpayer dollars from the Fed.
IN THE SHADOWS
It was only thanks to overwhelming grassroots support for Ron Paul’s Audit the Fed legislation that we have been granted limited insight into the Fed’s operations. If it hadn’t been for last minute efforts to water down his bill, we would have learned even more about the Fed’s actions before and during the crisis.
TIME FOR SOUND MONEY
As President, Ron Paul will work for passage of comprehensive audit legislation, and he will also fight to legalize sound money so Americans will have alternatives to the Fed’s inflated paper money.
Ultimately, he will lead the charge to end the dishonest, immoral, and unconstitutional Federal Reserve System, enabling America to take a giant step toward economic security, financial responsibility, and lasting prosperity.
Originally posted by danj3ris
Federal Reserve: We understand the severity of the economic crisis we are facing. To keep things afloat, we are allocating 190 Billion dollars in a bail-out package to the companies that need it most.
The crowd goes wild.
*MASSIVE APPLAUSE. CHEERS ERUPTING*
One person exclaims: Wow gee willakers Federal Reserve! That sure is a lot of money! Where'd you get all that dough?
Federal Reserve nervously tugs at collar: The wonderful law-abiding tax-paying citizens of this great nation!
*Crowd immediately shuts the hell up.* 6 seconds of utter scilence....
Lone person in the back of the crowd: ....WHAT?