For the Fed, God is Dead


Make no mistake, Fed Chair Ben Bernanke believes the Federal Reserve stands a fighting chance of re-inflating many segments of the economy and most categories of paper asset prices. Shrewdly, he is less confident that the Fed’s operations will result in a satisfactory recovery of America’s lost jobs. Fed Chair Bernanke can speak of the ongoing financial crisis as the worst since the Great Depression because his rescue of the banking industry will leave many Americans in the lurch. Yet he can offer optimism at the prospect that the junk assets acquired by the Fed may appreciate dramatically as the Fed adeptly games the system.

The Federal Reserve faces several hazards that could derail its strategy to exploit for elitist fraternities the financial crises that its prior laissez faire regulatory approach helped Wall Street create. The first hazard is Representative Ron Paul and his growing coalition of American monetary patriots. The Texas Representative’s initiative to audit the Fed could create huge political problems for the Fed by revealing the terrible condition of the Fed’s balance sheet. The Fed fears that if Representative Paul is successful in creating Fed balance sheet transparency, the public will pull power from the Fed before the Fed can work its magic to inflate the assets it has acquired — a process that will take several years to complete.

Under Bernanke’s direction the Fed purchased assets that had little more than fire sale value in the market. The Fed burdened the wealth of the general public by expanding the money supply to acquire damaged assets. Critically, the Fed gave privileged financial institutions far more new capital than their assets were worth, recapitalizing the Wall Street segment of the banking sector at the significant long-term expense of the rest of society. The Fed justified the strategy by arguing that our financial architecture did not allow the central bank to make Wall Street pay for her sins without punishing the general public in greater measure.

One can understand the Fed’s position if one believes God is dead and money rules supreme. If there is no Universal Sovereign, then mega-bankers’ choice for a surrogate deity is — mega-bankers. At no small convenience to themselves, mega-bankers have arranged their conquest of the world. But what if there is an Almighty God who holds nations accountable as many American Founders’ believed? Not only are the guilty being freed by the Fed, their capital-power is being pumped up in exchange for the dirt in their vaults. While the Fed wants to at least break even on its gambit, its greater concern is to keep in power the most derelict-of-duty elites this nation has ever known. How is this not an invitation for the Universal Sovereign to bring calamity upon the nation so as to throw out the manipulators and liars from their lofty lairs?

The Fed Chair does not rescue the nation, in spite of speaking like a lamb! He positions the dollar to be lost as the world’s reserve currency, sets up the U.S. to forfeit our economic sovereignty to international banking tribunals, and invites (blindly) the Almighty to judge our land and break the harvest basket as a means of crushing corruption in our institutions. How else can mega-bankers be stopped in their bottomless greed? Lacking a theologian’s eye for the economic horizon, the Fed Captain is sailing the ship of state directly into a Perfect Storm.

These reflections bring us to the second hazard the Fed Chair faces: Members of Congress like Alabama’s Senator Shelby are not yet ready to give up the ship. In a July 22 Senate Banking Committee hearing Shelby decried the Fed’s record as a failed bank regulator and said Congress should reconsider the Fed’s regulatory mandate. The very next day Shelby declared the danger of expanding the Fed’s powers, arguing that such power “will provide further incentive for the Fed to hide its regulatory failures by bailing out troubled firms,” doing so without Congressional approval. The Senator affirmed that “elected-officials should make decisions about fiscal policy and the use of taxpayer dollars, not un-elected central bankers.” He spoke of a risk of the Fed becoming a regulatory leviathan, and suggested that the Senate should consider “every possible alternative to the Fed as the systemic risk regulator.” Little wonder, then, that the Fed Chair is breaking precedent to go public on PBS with town hall meetings.

Many congressional scholars are not keen on the stewardship of Congress in matters of fiscal policy. Indeed, the Fed points to the failures of Congress to balance the budget as justification for the Fed taking fiscal policy-equivalent actions in recent times. Unfortunately, the Congress has been an accomplice in the Fed’s schemes for many years, becoming dependent upon loose monetary policy to juice the economy and help incumbents in both parties retain their seats. Nevertheless, the Congress is a more democratically accountable institution than the Fed and a better enduring storehouse for critical power.

The Fed’s passage to glory land could flounder in other ways as well. Mid-term elections are just a little over a year away. Israel continues to claim that all of its cards remain on the table regarding Iran. Commercial real estate problems are growing, prime mortgages are coming under pressure in some metropolitan areas, and Europe faces many structural problems. Some observers say China has overbuilt. Whatever the case, the Fed cannot project every wild card, so it holds its scorched portfolio with the unease of a veteran speculator, hopeful of a big win but aware that the recovery prognosis is still beset by clouded variables.

The most unbecoming aspect of the Fed’s financial leadership is that it plays the nation for a sucker regarding its economic sovereignty. Fed directors keep returning to subjects like economic growth, employment, inflation, and the health of banking institutions as though these are the only values that matter. The Fed is so focused on economic measures that it seems indifferent to the issue of economic autonomy. As long as the United States returns to growth, inflates assets, and secures people’s retirements, does it matter whether America loses its ability to resist becoming a “California-equivalent” state in a global banker’s federation?

What happens to First Amendment freedoms of speech and religion three decades after America’s Constitution is made subservient to a new world constitution? While there is undoubtedly a need for global cooperation in addressing many transnational problems, should we trust the superintendence of elites who created the blackmail environments we now face?

There are many leading Americans who really don’t mind our financial crisis because it moves the world toward a global open society in which those who have monumental capital can grow it most efficiently as the needy masses in various states compete against each other for jobs and the necessities of life. As the middle class in countries like the U.S.A. collapses into the lower middle class, the public becomes increasingly unable to withstand economic shocks, necessitating that the public capitulate to the solutions super-elites put before it. But what kind of America is this? Could this have been the vision that moved the pens of those who signed our Declaration of Independence? Hardly! So we’ve been led astray and our dream of America as a land of the free, the moral and the brave is now clouded! Will we find sufficient courage to restore and protect our honorable liberties and prospects?