Monetary Policy and the Federal Reserve
Like most Americans who work for a living*, I was outraged by the TARP bailouts that totaled over $700 Billion.
I was offended on principle, of course…any amount of public (borrowed) money going to bail out privately-owned companies is wrong. But the amount–so large that no normal person can get their brain around it–was offensive, too.
The bailouts spawned protests and Tea Party events across the country, and probably helped fuel the electoral bloodbath of 2010.
But here’s the jaw-dropper, which has received next to no media coverage. Between December, 2007 and June, 2010, the Federal Reserve (which is not federal, nor is it a reserve) secretly bailed out politically-connected U.S. banks and corporations, AND foreign banks and governments, to the tune of $16 Trillion in U.S. taxpayer money.
Now, if you can’t imagine $700 Billion, there’s no way you can picture what $16,000,000,000,000.00 looks like, or what kind of value that represents.
I just found a video that puts these dollar figures into context, using a penny to represent $100,000,000 (one hundred million dollars). Disclaimer–it’s a pitch for a Republican congressional candidate in Texas, so please don’t be offended by that mention at the end of the video.
It’s just sickening…sickening is the only word I can come up with.
If you don’t know what the Federal Reserve is, or how it determines the value of the money you work hard for, I would highly suggest that you pick up a copy of The Creature from Jekyll Island to learn how the Federal Reserve came into existence and how it impacts your everyday life.
UPDATE: Here’s some sourcing for the $16 Trillion figure:
The Federal Reserve Bank committed some $7.77 trillion in funds to major Wall Street banks during the height of the 2008 financial crisis, according to a report published by Bloomberg News November 28 through a Freedom of Information Act request.
It’s unclear from the methodology explained by Bloomberg’s analysis of some 29,000 Federal Reserve documents released how much overlap there is with the Government Accountability Office audit published last July that counted some $16 trillion in Federal Reserve loans to major Wall Street banks. Bloomberg’s explanation of its methodology does indicate at least some overlap.
Throughout the financial crisis, Congress remained blissfully unaware that trillions of dollars were being committed by the Fed with the implicit guarantee of the U.S. taxpayer. “We were aware emergency efforts were going on,” Massachusetts Democrat Barney Frank told Bloomberg, but “we didn’t know the specifics.” Frank, who announced his retirement November 28 after the Massachusetts state legislature gerrymandered him out of his district, served as Chairman of the House Financial Services Committee at the time the bailouts began. That committee is charged with oversight of the Federal Reserve and the banking industry.
The Bloomberg report noted that top Wall Street banks** benefited most from the deal. “The big six — JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group Inc., and Morgan Stanley — took 63 percent of the Fed’s emergency-loan money as measured by peak daily borrowing,” the San Francisco Chronicle observed November 29 of the Bloomberg data.
*except those who belong to government employee unions, many of whom don’t actually work for a living
**AKA Mittens Romneycare’s chief source of campaign cash