Fed Audit shows...

[rbohlig]

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3


The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression.

[wgadget]

Gulp....SIXTEEN TRILLION???

[Ben Richards]

Wow

[Original_Intent]

This has got to go viral, because I will be AMAZED if a peep of this gets out thru the MSM.

[BenIsForRon]

Bump, this report could have some serious bombshells.

[MJU1983]

Holy shit.

[Carson]

I see congress is trying to set a cap on the counterfeiting they have been doing. Well talking about it anyway.

The scary part to me is going to be regaining control of the central bank. The don't seem like the kind of people that will relinquish control easily. Or the kind of people that would resort to spending their own money for what they want.

[mport1]

Holy shit.

+1 I didn't realize it was that bad.

[sevin]

holy shit, it's worse than i thought!

So are they just sitting on this money? If they start lending it out, hyperinflation will be here in no time.

[d1sCo]

Un-freaking-believable.

Or perhaps sadly, this is too believable given the amount of warning that Ron Paul has given us about The Fed. I am spreading this as far and as wide as my reach allows.

-d1sCo

[NewRightLibertarian]

They've outdone themselves. Startling to even the most grizzled FED-hating Ron Paul supporters.

[sevin]

Un-freaking-believable.

Or perhaps sadly, this is too believable given the amount of warning that Ron Paul has given us about The Fed. I am spreading this as far and as wide as my reach allows.

-d1sCo

Same here. This has to go viral. People need to WAKE UP!!!

[Avalon]

The report posted doesn't seem very critical (mostly it makes excuses for blatant abuses unearthed) and I see no mention of 16T. BS?

[Agorism]

So does Paul get credit or Bernie Sanders?

[heavenlyboy34]

OP is misleading a bit. The audit was only in regards to certain FED actions from circa 2008-10. I imagine a full audit of the FED would turn up some really incredible, sordid things beyond our imaginations. The gist of the conclusion is just that the branches of the FED need to be more responsible. The recommendations at the end seem to suggest a further centralization of FED activity, which IMO would give the FED much more power to do damage.

[NewRightLibertarian]

So does Paul get credit or Bernie Sanders?

The socialist will of course be lionized by the media. The power elite knows that they need to transition to a socialist system to stay in power after their empire collapses

[Agorism]

drudge bomb.

I like the raw story link better as it doesn't give sanders as much credit

[heavenlyboy34]

Same here. This has to go viral. People need to WAKE UP!!!
Yeah, but I think most of this report is going to go over the head of Boobus Americanus. Someone should write up a synopsis in simpler language for distribution to the masses.
ETA: the chart of MBS purchases on page 148 is A-fucking-MAZING. :eek:

[Patriot123]

There are roughly $830 billion dollars in circulation. The Fed lent $16 TRILLION. Our economy totals $14 trillion. Our national debt totals $14 trillion. They lent out $16 trillion. That is totally absurd. How can they do that? Seriously? What gives?

[heavenlyboy34]

There are roughly $830 billion dollars in circulation. The Fed lent $16 TRILLION. Our economy totals $14 trillion. Our national debt totals $14 trillion. They lent out $16 trillion. That is totally absurd. How can they do that? Seriously? What gives?

Power does what it wants. :mad:

[HarryBrowneLives]

This is incredible even by our knowledge and standards. $16 F$%^ing Trillion! Good Lord. There aren't enough helicopters in the world to dump out that many dollars.

[MJU1983]

I tweeted this: http://twitter.com/#!/mju1983/status/94247956617768960

Maybe I should change but I think the hashtags are okay.

[hugolp]

Well, now we know how they repayed TARP so quickly... And they were bragging about it.

[Patriot123]

How is that even possible? How is that economically possible? To lend out more than our economy is worth? To lend out more dollars than we have in circulation? Did they just go ahead and PRINT all the damn money? "Hey, we're going to go and print the amount of dollars that we have in circulation and then some, thereby more than doubling the amount of dollars in circulation! Can you say Weimer F*^(ing Germany?" What IS this? Seriously, how is it possible? How is lending $16 trillion economically possible? We don't HAVE that many dollars in circulation, and our economy isn't even that large! That's bigger than the size of our national DEBT.

EDIT: I just thought about this, too. It's not like they lent $16 trillion, and then took it all back in and got rid of the money. That money is now in CIRCULATION! It exists. Meaning we're going to have GIGANTIC INFLATION, will we not? Someone?

[Exponent]

I don't have a source offhand, but it was my impression that these loans were in the form of ultra-short-term loans for banks that didn't have enough reserves for handling the rise and fall of day-to-day operations, but didn't really need any help over the long term. So $16 trillion total got loaned out over that period of time, but most if not all of that $16 trillion got repaid, and at no single point in time was the total of money loaned in this manner close to $16 trillion.

[mit26chell]

Damn! So Alex Jones hasn't been exaggerating his numbers!

[Avalon]

Again, the articles are BS. The figures they cite are not in the GAO report they link to.

[The Magic Hoof]

If you add up the tallies starting on page 131 of that 277 page report, you'll see that it's around 16 trillion. Or maybe there's something I'm missing here.

[Keith and stuff]

I tweeted this: http://twitter.com/#!/mju1983/status/94247956617768960

Maybe I should change but I think the hashtags are okay.

Great work, here is mine, http://twitter.com/#!/nhfreedom/status/94262317839167488

And then I resent Sen. Sander's message, http://twitter.com/#!/SenatorSanders/status/94051240064991232

[The Magic Hoof]

http://img21.imageshack.us/img21/6/unledqsg.jpg

http://img600.imageshack.us/img600/9508/unled2di.jpg

[The Magic Hoof]

Look at the bottom right of the first screenshot. Now, that's in billions as noted by the top part. :eek:

http://img21.imageshack.us/img21/6/unledqsg.jpg

http://img600.imageshack.us/img600/9508/unled2di.jpg

[flightlesskiwi]

wow. just wow.:eek::eek::mad:

[MJU1983]

Look at the bottom right of the first screenshot. Now, that's in billions as noted by the top part. :eek:

http://img21.imageshack.us/img21/6/unledqsg.jpg

http://img600.imageshack.us/img600/9508/unled2di.jpg

YouTube - FIAT EMPIRE: Why The Federal Reserve Violates The U.S. Constitution-Full Length (http://youtu.be/8Xt5US8FUpw)

^ In this video they have a document which shows that the controlling interests as of July 26, 1983 - 5 member banks owned 53% of the stock in the Federal Reserve Bank of New York, the most major of the 12 Federal Reserve Banks, this is a controlling interest in the controlling bank.

I took those corporations and looked at what we call those companies today.

Bankers Trust Company, now Deutsche Bank. (438,831 shares)
Bank of New York, now The Bank of New York Mellon. (141,482 shares)
Chase Manhattan Bank, now JPMorgan Chase Bank, NA (1,011,862 shares)
Chemical Bank, now JPMorgan Chase Bank, NA (544,962)
Citibank, now Citigroup (1,090,813)
European American Bank & Trust Co, a subsidiary of Société Générale. (127,800 shares)
J. Henry Schroder Bank & Trust, now Schroders. (37,493 shares)
Manufacturers Hanover, then Chemical Bank, now JPMorgan Chase Bank, NA (509,852 shares)
Morgan Guaranty Trust, now J.P. Morgan & Co, aka JPMorgan Chase & Co. (655,443 shares)
National Bank of North America, now National Westminster Bank, aka Royal Bank of Scotland Group (RBS) (105,600 shares)

So, the controlling interest in the NY Fed, assuming the share levels remain the same as in July 26, 1983 would look like this today:

1, JPMorgan Chase & Co- 2,722,119
2, Citigroup- 1,090,813
3, Deutsche Bank- 428,831
4, The Bank of New York Mellon- 141,482
5, Société Générale- 127,800
6, Royal Bank of Scotland Group - 105,600
7, Schroders- 37,493

Total: 4,654,138….a 66.43%.

Total outstanding shares: 7,005,700

The major stockholders of this major bank are confidential. No one in government knows who they are nor can they find out…

That sure explains the bailouts pretty well………..they were all bailed out via TARP, the AIG bailout, the Goldman Sachs bailout, or of course the Fed (as per above graphs).

Where's the bank bailout money? - CNN.com (http://edition.cnn.com/2008/US/12/22/bailout.accountability/)


CNN contacted the banks that were given the biggest chunks of the bailout: Citigroup, JPMorgan Chase, Wells Fargo and Bank of America.

Citigroup, JPMorgan Chase and Wells Fargo each received $25 billion -- the largest amount given to any bank.

Follow the money: Bailout tracker - CNNMoney.com (http://money.cnn.com/news/storysupplement/economy/bailouttracker/)

Bear Stearns bailout, $29 billion.

JPMorgan acquires troubled Bear - Mar. 16, 2008 (http://money.cnn.com/2008/03/16/news/companies/jpmorgan_bear_stearns/index.htm)

The deal values Bear Stearns at just $2 a share. Regulators hope purchase will stave off wider chaos in financial markets.


NEW YORK (CNNMoney.com) -- JPMorgan Chase & Co. said Sunday that it would acquire troubled Wall Street firm Bear Stearns for a mere fraction of what it was once worth amid deepening fears about further erosion of the world's financial markets.

Citigroup secures government lifeline - Nov. 23, 2008 (http://money.cnn.com/2008/11/23/news/companies/citigroup/index.htm)

Government will guarantee losses on more than $300 billion in troubled assets and make a fresh $20 billion injection.


NEW YORK (CNNMoney.com) -- The U.S. government on Sunday announced a massive rescue package for Citigroup - the latest move to steady the banking giant, whose shares plunged in the past week on fears about the bank's health.

First, the U.S. Treasury and the Federal Deposit Insurance Corporation (FDIC) will backstop some losses against more than $300 billion in troubled assets.

Second, the Treasury will make a fresh $20 billion investment in the bank. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.

Treasury's bank bailout list - CNNMoney.com (http://money.cnn.com/news/specials/storysupplement/bankbailout/)

10/28/2008 - JPMorgan Chase & Co., New York, N.Y. - $25,000,000,000
10/28/2008 - Citigroup Inc., New York, N.Y., - $25,000,000,000
10/28/2008- Bank of New York Mellon Corp. - New York, N.Y. - $3,000,000,000
10/28/2008- Goldman Sachs Group Inc., New York, N.Y. - $10,000,000,000

Goldman, Deutsche Got Funds From AIG Bailout, Journal Reports - Bloomberg (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alVNurhm1hvE)


March 6 (Bloomberg) -- Goldman Sachs Group Inc. and Deutsche Bank AG were among at least two dozen financial institutions that were paid $50 billion from the bailout funds received by American International Group Inc., the Wall Street Journal reported, citing a confidential document and unidentified people familiar with the matter.

Goldman and Deutsche got about $6 billion each between September and December, the Journal said. Merrill Lynch & Co., Societe Generale SA, Morgan Stanley, Royal Bank of Scotland Group Plc and HSBC Holdings Plc were other counterparties that also received payments, the newspaper said, citing the document.

Follow the money: Bailout tracker - CNNMoney.com (http://money.cnn.com/news/storysupplement/economy/bailouttracker/#AIG)

AMERICAN INTERNATIONAL GROUP
Multifaceted bailout to help insurer through restructuring, minimize the need to post collateral and get rid of toxic assets
AIG total - $182 billion

AIG names recipients of its bailout money - CNN (http://articles.cnn.com/2009-03-15/us/AIG.banks.list_1_aig-federal-bailout-money-bonuses-and-compensation?_s=PM:US)


The list released Sunday of "counterparties" that benefited from the bailout is topped by European banks Societe Generale and Deutsche Bank, which received $4.1 billion and $2.6 billion, respectively.

Goldman reveals where bailout cash went - USATODAY.com (http://www.usatoday.com/money/industries/banking/2010-07-24-goldman-bailout-cash_N.htm)


Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.

He added, "We thought originally we were bailing out AIG. Then later on ... we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world."

Overall, Goldman Sachs received a $12.9 billion payout from the government's bailout of AIG, which was at one time the world's largest insurance company.

The list of companies receiving money includes a few familiar foreign banks, such as the Royal Bank of Scotland and Barclays.

DZ AG Deutsche Zantrake Genossenschaftz Bank, a German cooperative banking group, received $1.2 billion, more than a quarter of the money Goldman paid out.

Dylan Ratigan Exposes The Stealth Goldman Sachs Bailout: "Robbing And Thieving The American Sucker - Once*Again" - Home - The Daily Bail (http://dailybail.com/home/dylan-ratigan-exposes-the-stealth-goldman-sachs-bailout-robb.html)


The answer is Henry Paulson, former Goldman Sachs CEO who ran the US Treasury, and Tim Geithner, current Treasury Secretary who at the time ran the New York Federal Reserve, willingly delivered Goldman Sachs the $70 Billion --with no strings attached.

Société Générale - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Soci%C3%A9t%C3%A9_G%C3%A9n%C3%A9rale)


March 2009
Potential loss of $11 billion averted due to US government bailout of AIG

On March 15, 2009, AIG disclosed that, among its counterparties, Société Générale was to date the largest recipient of both credit default swap (CDS) collateral postings ($4.1 bn) and CDS payments ($6.9 bn), payments made possible in part by the 2008 U.S. government bailout of AIG.

RBS will get 'billions' in US bail-out of economy - Herald Scotland (http://www.heraldscotland.com/rbs-will-get-billions-in-us-bail-out-of-economy-1.826927)


The Royal Bank of Scotland is to be one of the biggest beneficiaries of the planned $700 billion bail-out that comes courtesy of the American tax-payer if the US Congress gives the financial rescue package the go-ahead this weekend.

Top All-Time Donors, 1989-2010 | OpenSecrets (http://www.opensecrets.org/orgs/list.php)

JPMorgan Chase & Co: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000103)
Citigroup Inc: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000071)
Goldman Sachs: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000085)
Morgan Stanley: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000106)
Bank of America: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000090)
Merrill Lynch: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000108)
AIG: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000123)
Fannie Mae: Summary | OpenSecrets (http://www.opensecrets.org/orgs/summary.php?id=D000000205)

Top Contributors to Barack Obama | OpenSecrets (http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=n00009638)
Goldman Sachs $994,795
Citigroup Inc $701,290
JPMorgan Chase & Co $695,132
UBS AG $543,219
Morgan Stanley $514,881

Of course you can go further and look into the people involved at the Treasury, the Fed, and most of those companies. It's a revolving door...

[The Magic Hoof]

I don't understand/know very much about economics at all, I'm still learning everyday. So can someone clear up the following for me and put it really simply/shortly? What I want to know is this:

This supposed 16 trillion dollars deal... I'm guessing this AOG department looked at some books they didn't have access to until recently due to Paul's Audit The Fed bill passing, and discovered that there were 16 trillion dollars given that we didn't know about?

Like, did we know about any of this before? And shouldn't this be all over the news and stuff?

And thanks to MJU, I'm digging into your post now.

[freshjiva]

I don't understand/know very much about economics at all, I'm still learning everyday. So can someone clear up the following for me and put it really simply/shortly? What I want to know is this:

This supposed 16 trillion dollars deal... I'm guessing this AOG department looked at some books they didn't have access to until recently due to Paul's Audit The Fed bill passing, and discovered that there were 16 trillion dollars given that we didn't know about?

Like, did we know about any of this before? And shouldn't this be all over the news and stuff?

And thanks to MJU, I'm digging into your post now.

Yes, this is the Government Accountability Office's audit of all Federal Reserve discount window transactions from December 31, 2007 through December 31, 2009.
It is the result of the passage of the Dodd-Frank Wall Street Reform Act, not Ron Paul's Fed Audit bill (HR 1207/ S.604). Remember, RP's bill failed to pass the Senate, however, the Fed audit movement was at fever pitch at the time, and so a "softer" version of the stringent demands of the original bill was included along with the broader regulations and reformations in the Dodd-Frank bill.

The $16T that this article seems to be referencing is the sum total of all the various lending procedures the Fed has engaged in. I'm still trying to understand the difference between those columns (TAF, PDCF, etc).

I believe this $16T figure includes all the toxic derivatives (primarily mortgage-backed securities and repos) that the Fed absorbed from the banks, QE1 and QE2 Treasury-purchase programs.

[ord33]

I don't understand/know very much about economics at all, I'm still learning everyday. So can someone clear up the following for me and put it really simply/shortly? What I want to know is this:

This supposed 16 trillion dollars deal... I'm guessing this AOG department looked at some books they didn't have access to until recently due to Paul's Audit The Fed bill passing, and discovered that there were 16 trillion dollars given that we didn't know about?

Like, did we know about any of this before? And shouldn't this be all over the news and stuff?

And thanks to MJU, I'm digging into your post now.

I'm not an expert by any means, but I'm pretty sure what I'm going to type below is correct (if not, someone please correct me - where is gonegolfin when you need him?!)

This audit was from the Dodd/Frank bill that passed. Ron Paul wanted the bill to have an even more in-depth audit. Instead this is what we got. We pretty much knew a lot of these numbers already. If you go to the companies reports, they have to disclose it because of Sarbanes Oxley. Now that doesn't apply for all the banks the Fed extended loans to - although we had a pretty good idea of what banks received them, but I don't think we knew the magnitude.

All of these loans have been paid back to the Fed. Most were very short term - less than 30 days. The Fed basically made the loan to them at very low interest rates (and I don't believe any fees?) because the market froze up and the banks couldn't obtain the funds they needed because of the panic of the crisis.

I'm all for ending the Fed, but if they didn't step up, it would have been havoc. Like Ron Paul said, we can face the crisis now or we can keep on extending it out later.

This highlights how deep the financial crisis was and the severity.

In my opinion, the PROBLEM that arises with the Federal Reserve doing this sort of action is two-fold. First, it allows banks and other companies to rely on (or fall back on) the Fed to bail them out in the future possibly. So, this could in turn make them take on even more risk in the future with the intention of making even more profit. It doesn't account for risk proportionately if the Fed is going to come in and save those who it wants to save (or extend gigantic short term loans to). Second, it allows the Federal Reserve to pick favorites. They don't like "Company A" so the hell with them, they can go under. Company B, however, they like so they will extend a helping hand out to them. This makes it easier for corruption - essentially to become buddy buddy with the Fed.

[The Magic Hoof]

Thanks for the replies. So, all of this was paid back huh? So maybe we're making a big stink about it if all of it has been paid back... but maybe there's still more to it. I'm going to watch a documentary or two on the Fed soon.

[KCIndy]

Just sent the link in to Drudge. If headlines this.....:eek::eek:

[ord33]

Thanks for the replies. So, all of this was paid back huh? So maybe we're making a big stink about it if all of it has been paid back... but, what if it wasn't? :|

If it wasn't paid back, I would assume the bank (or company) that was lent the money would be insolvent?

This story is important to show the massive injection the Fed put into the banks and how dire the circumstances were, but yes, the money has been paid back. And the $16 trillion wasn't all at one time - it is cumulative. For example, Bank A needs $100 billion in an overnight loan to make ends meet. The Fed lent them the money and then the next day or over the next several days paid it back. A week later Bank A needed an additional $100 billion and so on. Multiply this by many different banks across the globe and multiple short term loans for each bank and you get the $16 trillion total.

I think the scary part is the Fed can pick the "winners and losers" by opting to either loan or not loan to a certain company. Also, like I mentioned in my previous post, it could cause a scenario where the banks consistently take on more risk in the future if they believe they are going to be bailed out. Basically, a recalculation of risk. They profit massively when times are great, but if the SHTF and they are about to go under, they can count on the Fed (if the Fed likes them) to come to their rescue.

All the loans to the foreign banks are worrisome, but the case could be made it would have been a domino effect. If they hadn't bailed out "Bank A" overseas, it would have led to failures here in the US because of the intertangling of financial instruments. (Now I'm sounding too much like Bernanke...so I will stop!)

[thehighwaymanq]

If this out because of Ron?

[MJU1983]

How does anyone know it's been paid back? Did someone text Bernanke? If they just say "oh yeah, it's been paid back and we made money on the deal." Why would anyone believe them?

[ord33]

How does anyone know it's been paid back? Did someone text Bernanke? If they just say "oh yeah, it's been paid back and we made money on the deal." Why would anyone believe them?

It is in the companies' annual reports. Also, it is in the GAO study as well. http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

So, in order for it to be corrupt and them not really paying the loans back, the companies would have to be lying on their annual statement along with the Fed in their statements. If that was the case, then you would have the news story of a lifetime! Not that I would put it past them!

[freshjiva]

I'm not an expert by any means, but I'm pretty sure what I'm going to type below is correct (if not, someone please correct me - where is gonegolfin when you need him?!)
All of these loans have been paid back to the Fed. Most were very short term - less than 30 days. The Fed basically made the loan to them at very low interest rates (and I don't believe any fees?) because the market froze up and the banks couldn't obtain the funds they needed because of the panic of the crisis.

I'm all for ending the Fed, but if they didn't step up, it would have been havoc. Like Ron Paul said, we can face the crisis now or we can keep on extending it out later.

This highlights how deep the financial crisis was and the severity.

In my opinion, the PROBLEM that arises with the Federal Reserve doing this sort of action is two-fold. First, it allows banks and other companies to rely on (or fall back on) the Fed to bail them out in the future possibly. So, this could in turn make them take on even more risk in the future with the intention of making even more profit. It doesn't account for risk proportionately if the Fed is going to come in and save those who it wants to save (or extend gigantic short term loans to). Second, it allows the Federal Reserve to pick favorites. They don't like "Company A" so the hell with them, they can go under. Company B, however, they like so they will extend a helping hand out to them. This makes it easier for corruption - essentially to become buddy buddy with the Fed.

You have only identified the two ancillary issues with the presence of the Fed.
As Ron Paul highlighted during the last Q&A session with Bernanke, the biggest issue with the Fed's lending practices is that it's not really lending. For one party to make a loan to another party requires you to have the capital to begin with. Capital can only be created through labor or intellectual-intensive production.

What labor or intellectual product/service does the Fed offer to the marketplace? None! It's a completely off-budgetary institution. The "loans" made here are not really loans because the Fed never had to produce to have available the capital required to make the loan.

In other words, the capital lent to the banks was fabricated out of thin air, credited to the banks' personal depository accounts at the discount window. This is not real lending because it expands the monetary base without any increase in the supply of goods/services in the market economy.

[The Magic Hoof]

Thanks. Learning a lot here.

[The Magic Hoof]

In other words, the capital lent to the banks was fabricated out of thin air, credited to the banks' personal depository accounts at the discount window. This is not real lending because it expands the monetary base without any increase in the supply of goods/services in the market economy.

The 16T that the fed did loan - when they got it all back................. did they destroy it, or is that 16T still floating around and our dollar is devalued even more now?

[TheViper]

Thanks for the replies. So, all of this was paid back huh? So maybe we're making a big stink about it if all of it has been paid back... but maybe there's still more to it. I'm going to watch a documentary or two on the Fed soon.
I'll explain why this is bad.

1. The Fed doesn't have $16 trillion to loan out (neither all at once or even in chunks) because the Fed simply creates money from nothing. We'll call it funny money.
2. Now this funny money is given to the bank and then later the bank pays it back in real money. Essentially, it's like money laundering.
3. Now this money has become part of the inflated money supply which devalues it.

Now you may be asking how can a bank pay it back so fast. The answer is Fractional Reserve Banking and inflation.

Watch this 10:00 minute video and it will explain quite well what I mean.


http://www.youtube.com/watch?v=pEAjOk_UY9I

Basically, the banks were able to loan the money back out, creating new money which easily enabled them to pay the old money back to the Fed. And with Fractional Reserve Banking at an average of 9:1, that $16 trillion could actually generate $144 trillion in new money.

[The Magic Hoof]

You answered my question above with #3. And oh my god.... now I see why this is terrible. 16T has now been added to our money supply =/

[rbohlig]

This needs to be gotten out to everybody...spread this like a wildfire. Call into local radio stations, hannity, mark Davis, I am sure Alex Jones will cover this tomorrow

[Tarzan]

Sounds like its time for the Andrew Jackson solution... we just walk away.
The term "Federal Reserve" is a misnomer and we should start calling them what they are... The Banking Cabal.

Have the President instruct the Department of Treasury to stop using the Cabal and let them stew in their own juices.

I am not naive enough to think it is that simple... but this whole thing is a banking shell game. The only way to win the game is to realize it's a con, leave the table and stop playing the game by their rules.

Here's an interesting read about AJ and the Central Bank:
http://21stcenturycicero.wordpress.com/fraud/andrew-jackson-and-the-bankwar/

and, yeah... it's worse than I thought too

[StilesBC]

Ok, wow. Lots of misinformation so far.

No, $16T has not been added to the Money Supply. It was not created out of thin air. Much of it was asset swaps. The programs that contribute to this $16T number include PDCF (Primary Dealer Credit Facility), TAF (Term Auction Facility), ABCPMMMFLF (Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility), etc. Yes, they actually called it that.

Most of these programs are aimed to alleviate balance sheet problems that arose from enormous rates of leverage and rising delinquencies. They would allow them to (for example) swap a 30 day bond from a financial services company that normally paid an interest rate of 0.88% (but the market was only valuing at $0.60 cents on the dollar) for a 30 day US Treasury bond at an interest rate of 0.25% (trading at par). After 30 days they would have to swap back. But then they kept rolling over the transaction. Another kind of transaction was for the Fed to swap securities of shorter duration for a similar security of a longer duration.

There was also more risky swaps. Like exchanging derivatives for government debt securities - and doing it with those that were known to be near insolvent. And there were surely billions scraped off along the way by both sides. You know, "service charges."

But this was not a "helicopter drop" of $16 Trillion dollars physical or digital. They have done that, but that's not what this is about. Our main argument over this information should be about the Fed picking winners and losers, not allowing failure, engaging in these activities with foreign institutions, price fixing not only the benchmark interest rate, but also trying to control corporate bond rates, munis, etc with these swaps. And in doing so, it is putting its own solvency at risk. All while having no mandate to engage in any of that activity.

Please do not start screaming about "$16 Trillion dollars being printed out of thin air." It makes us look shrill and uneducated. Now, it can be argued that these swaps allowed the other party to continue lending out money at fractional reserve, which is essentially money printing, whereas without the swap their lending would have almost stopped completely. But we don't know how much of that occurred (if any at all, to the Fed's dismay).

There are other operations of the Fed that should be targeted for "money printing." But these programs should be criticized for their own moral hazards, picking winners and losers and the legality of it all.

[MJU1983]

It is in the companies' annual reports. Also, it is in the GAO study as well. http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

So, in order for it to be corrupt and them not really paying the loans back, the companies would have to be lying on their annual statement along with the Fed in their statements. If that was the case, then you would have the news story of a lifetime! Not that I would put it past them!

It wouldn't surprise me if a Fed Member Bank was corrupt because who would know? Even when there is blatant fraud and corruption our wonderful regulators within the SEC, OCC, OTS, etc have proven themselves quite inept. The Fed itself certainly wouldn't tell us. The people don't care because they have the FDIC which is another program that continues to promote the Moral Hazard for all this recklessness.

TheViper made a good point...

Think about the $16T the Fed "created" and "loaned" out...that money could be leveraged 9:1 with fractional reserve banking essentially creating $144T. I mean, what else would the banks do with all that money except continue the scheme?

[TheViper]

Please do not start screaming about "$16 Trillion dollars being printed out of thin air." It makes us look shrill and uneducated. Now, it can be argued that these swaps allowed the other party to continue lending out money at fractional reserve, which is essentially money printing, whereas without the swap their lending would have almost stopped completely.
Isn't that technically the same thing? Regardless of the instrument used, it enabled $16 trillion to enter the books and then enter the loan cycle. "Printing it out of thin air" is just a catch all idiom of the actions of the Fed does to inject money into the system.

[Keith and stuff]

If this out because of Ron?

Without Ron Paul or the creation of Campaign for Liberty, this detailed audit of the Federal Reserve would not have happened, IMO.

[freshjiva]

Ok, wow. Lots of misinformation so far.

No, $16T has not been added to the Money Supply. It was not created out of thin air. Much of it was asset swaps. The programs that contribute to this $16T number include PDCF (Primary Dealer Credit Facility), TAF (Term Auction Facility), ABCPMMMFLF (Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility), etc. Yes, they actually called it that.

Most of these programs are aimed to alleviate balance sheet problems that arose from enormous rates of leverage and rising delinquencies. They would allow them to (for example) swap a 30 day bond from a financial services company that normally paid an interest rate of 0.88% (but the market was only valuing at $0.60 cents on the dollar) for a 30 day US Treasury bond at an interest rate of 0.25% (trading at par). After 30 days they would have to swap back. But then they kept rolling over the transaction. Another kind of transaction was for the Fed to swap securities of shorter duration for a similar security of a longer duration.

There was also more risky swaps. Like exchanging derivatives for government debt securities - and doing it with those that were known to be near insolvent. And there were surely billions scraped off along the way by both sides. You know, "service charges."

But this was not a "helicopter drop" of $16 Trillion dollars physical or digital. They have done that, but that's not what this is about. Our main argument over this information should be about the Fed picking winners and losers, not allowing failure, engaging in these activities with foreign institutions, price fixing not only the benchmark interest rate, but also trying to control corporate bond rates, munis, etc with these swaps. And in doing so, it is putting its own solvency at risk. All while having no mandate to engage in any of that activity.

Please do not start screaming about "$16 Trillion dollars being printed out of thin air." It makes us look shrill and uneducated. Now, it can be argued that these swaps allowed the other party to continue lending out money at fractional reserve, which is essentially money printing, whereas without the swap their lending would have almost stopped completely. But we don't know how much of that occurred (if any at all, to the Fed's dismay).

There are other operations of the Fed that should be targeted for "money printing." But these programs should be criticized for their own moral hazards, picking winners and losers and the legality of it all.

Solid post. Thank you for clarifying this, however, a few questions popped into my mind:

You say the $16T was not "new money" but rather mostly asset swaps. Fair enough, but isn't it possible that at least some of the $16T total was newly created money? Otherwise, how do we explain the jump in the monetary base, as measured by the St. Louis Fed, from $800B to $3T over this particular time period? Also, how do you explain the ballooning of the Fed's assets on their balance sheet to explode in their ownership of MBS and Agency debt? An expanding balance sheet implies the Fed is indeed purchasing assets from the open market, which in effect, expands the money supply, does it not?

http://marginalthought.files.wordpress.com/2011/07/monetarybase_2008-2011.png

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%20havenstein/Balance%20Sheet%203.2.jpg

[StilesBC]

Post 54: Yes, technically. But it didn't happen to the extent being implied by previous posters. Nor can it really be proven to what extent it did happen. During the crisis, when these programs were primarily in operation, did private credit contract by a few hundred billion less than it would have otherwise? Probably. But how can we say exactly how much it would have contracted without this intervention?

The Fed's "money multiplier model" was (and still is) totally broken. They thought if they provided the banks with reserves, the banks would then turn around and lend them out at fractional reserve. But that's not how it works. Banks make loans based on whether they think they will get their principal back, with interest. They couldn't find anyone creditworthy. At the same time, there was talk about changing capital ratios and accounting standards on a daily basis, so banks were paralyzed. And this is when the US government deficits started exploding and the Fed started "quantitative easing" to buy the new government debt. That is money printing.

Post 56: Yes, the Fed's expansion of its balance sheet toward $3T can be considered a form of money printing. But again. We're talking an increase of 1 point something Trillion - not $16 Trillion.