News & Analysis
GAO: Fed Issued $US16 Trillion During 2008 Crisis!
"As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," Sanders said in a statement. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else." – Washington Post
Dominant Social Theme: Simply a glitch. The US$16 trillion was issued in good faith by the stewards of the democracy. They were saving the "system." What, you didn't get any of it? Maybe next time ...
Free-Market Analysis: With nary a ripple in the mainstream press, the US Government Accountability Office has released an "audit" of the Federal Reserve loan program in 2008 that, according to the Washington Post (see above excerpt) highlights possible conflicts of interest in the issuance of some US$16 trillion. We would bet it's more than that.
The GAO found two things wrong with the "bailout." First of all there were conflicts of interest; second, in making the determination that an emergency bailout was called for, the Fed's leaders imputed powers that probably were not really there. They acted like an entirely private enterprise even though they clearly are not.
The GAO made recommendations that the Fed's top men are vowing to take seriously. But this is a joke. An institution that has in the past several years printed some US$20 trillion or more (including QE 1 and 2) – and no one really knows how much higher it is – is not going to voluntarily limit itself or its actions based on bureaucratic recommendations.
In fact, without the agitation of people like libertarian-conservative Congressman Ron Paul (R-TX), there would have been no audit to begin with. It wasn't something the Fed sought. Even so, the US mainstream press is not exactly providing aggressive coverage. It's not of great import, apparently. That's certainly the dominant social theme.
The meme is being conjured in numerous ways. One way the mainstream press is handling this is by focusing on the conflict-of-interest rather than the impossible numbers involved. Another way is by simply ignoring the issue. We searched Google News for cites and found only 72 articles. This news has received general coverage since perhaps Friday; at the same singer Amy Winehouse's death has received some 6,000 cites.
A search of the general Google queue (not just Google news) turns up nearly 500,000 cites. This is an absurdly skewed ratio. What it means in our view is that the Internet alternative news services (which Google refuses to allow in into its news algorithm) are covering the release while the mainstream is not.
Google, by the way, is continually fiddling with its news presentation and reducing in scope and size the presentation of alternative news. Even five years ago, Google made available a queue of articles from a variety of sources. But today, Google's front page news queue carefully presents mainstream sources first and makes alternative news sources difficult to find. This obfuscation is carried out within the guise of readership service and technology upgrades.
Back to the Fed. The elites are terrified about these numbers. We can tell by the way the dissemination is being downplayed, and we have written about this many times before.
Because of the Internet, the scope of the bailout cannot be concealed. Many people in the US and the Western world are quite aware that while they lost their homes and jobs, central banks were handing out TRILLIONS to the very entities that helped create the financial crisis. You can read an editorial about it here: Anthony Wile – The Morality of Gold.
This is the era of the Internet Reformation. Bankers are being nailed to the wall like Martin Luther's theses. The great, grasping mechanism of mercantilist central banking has been exposed for all to see. The bottom line issue is one of fairness. Comity and civil society are at risk when people feel they are being taken advantage of at a fundamental level.
This excerpt, above, lies at the heart of the unspoken dialogue that has taken place. People continue to do what they need to do survive but the moral construction of the Western economic system has collapsed. It wasn't meant to be this way, but that's how it turned out.
The elites counted on their control of mainstream media to cover-up the reality of the money system (that a handful of people can print as much money as they want whenever they want). But in the 21st century, thanks to the Internet Reformation, they have lost control.
If this were the 20th century, they would have been able to control the message. But in the 21st century they have not been able to do so.
Another way the mainstream media is providing damage control for the Anglo-American power elites that essentially own the central banks around the world is by minimizing the actual news event itself. This article offered by the Washington Post is interesting, too, in terms of its composition It only offers the figure – US$16 trillion – as an afterthought, toward the bottom.
One of the best commentaries we could find on this report was written by the American Dream blogsite. Here is the lede:
A one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act has uncovered some eye-popping corruption at the Fed and the mainstream media is barely even covering it. It turns out that the Federal Reserve made $16.1 trillion in secret loans to their bankster friends during the financial crisis. You can read a copy of the GAO investigation for yourself right here. These loans only went to the "too big to fail" banks and to foreign financial institutions. Not a penny of these loans went to small banks or to ordinary Americans.
Not only did the banksters get trillions in nearly interest-free loans, but the Fed actually paid them over 600 million dollars to help run the emergency lending program. The GAO investigation revealed some absolutely stunning conflicts of interest, and yet the mainstream media does not even seem interested. Solid evidence of the looting of America has been put right in front of us, and yet hardly anyone wants to talk about it. Many Americans have a hard time grasping just how large 16.1 trillion dollars is. It is an amount of money that is almost inconceivable. It is more than the GDP of the United States for an entire year. It is more than the U.S. government has spent over the last four years combined.
Still another compelling summary was provided by Business Insider, which is not exactly an alternative news source, but it does tend to publish a wider variety of news and commentary than the US mainstream. Ironically, the article is written by someone offering a tutorial (a paid course) on how to survive the coming fiat meltdown, but nonetheless, the lede is fairly compelling:
While the world waits with baited breath on the Contrived Drama of the Debt Ceiling, the real show has already been played out, secretly and behind the scenes. The first audit of the privately owned and foreign owned Federal Reserve by the Geishas turned up $16 Trillion dollars of loans all over the world to prop up the global fiat empire. This massive money creation is over and above Hank Paulson's $700 billion dollar heist of the American public.
It is also in addition to QE1 and QE2 that resulted in an illusionary recovery of the economy. All of this money printing has done nothing to create any economic growth and it never will. The scary part is that this was done with no oversight or accountability . (Thank God we have someone like Ron Paul to hold these Elite accountable and expose their crimes before the collapse.)
The writer makes several good points here. The GAO report was released in the dog-days of summer at the height of the "debt-ceiling" crisis. Many of the articles seem to have been written or posted on Friday, which is when anyone in the news business knows is the time when "bad news" is supposed to be disseminated.
Friday is the day to release bad news; Monday, when people's attention spans are refreshed, is the time to release news of consequence. The GAO controls its own news flow. The coverage was surely no accident. In these matters, nothing is. The Washington Post and numerous other mainstream publications – the ones that did cover it – reported on the GAO release from the standpoint of conflict-of interest. But this is not the story. The real story is that a handful of people – already very wealthy – received US$16 trillion while everyone else did not.
Invariably this impossible bailout (it is not possible to conceive of US$16 trillion – which doesn't even include the additional trillions of QE 1 and 2) is cast as a necessary piece of bad business. But it fails to address the reality of what has actually occurred.
Two things have happened: First, people have been made aware as never before of the essential unfairness (not a strong enough word) of the system; second, the massiveness of the bailout (handout) shows clearly that the system itself is finished. The last time something of this magnitude occurred was during the Great Depression and it took a World War to reconfigure and reassert elite control.
Absent another world war (which is impossible because of nuclear devices) nothing is going to bring it back. The price distortions are so great, thanks to the directed money printing, that it cannot unwind. In fact, around the world, central banks are busily printing money for the very elite power nexuses (banks and financial institutions) that need to fail. Those in charge of the money printing will not let them fail. This means the unemployment and misery will continue to grow.
The whole system is insane. It is beyond salvage. Those in power will make the argument that they are "saving" the system; in fact they are the very ones who have destroyed it. Not talking about the ramifications will not make the fundamental issues go away.
Conclusion: What has been revealed will not be forgotten; gangrenous resentment will continue to grow and spread, eating away at people's willingness to participate in the system as the Internet Reformation rolls on. The elites have no answer except to ignore the larger issue; and thus the dénouement to this sorry saga has yet to be written.
Posted by bewer on 08/09/11 03:39 PM
A little nauseousus, I am. Give $17,000 to me from the US gov? Those hogs share with me rather than a bankster?
Posted by firstname.lastname@example.org on 08/01/11 08:13 AM
I am writing to you from EKAI Center, an Spanish think tank specialized on economic policy and, very specifically, in monetary and banking policy.
The opinions of Mr. B. Sanders on the GAO Report about the Federal Reserve System are being quite disseminated in Internet. Very specially, related to the 16.1 trillion figure.
I don't know if you can help us clarifying it.
We have found in the GAO report, pages 131 to 133, two different tables:
In Table 8 we find the mentioned data of 16 trillions of 'total loans', but, as the report says, it is not 'time adjusted'. It may be more related to the legal or political consequences of the different decisions taken to approve new loan operations.
In Table 9 we have the same data but 'term-adjusted' and here the 'total loans' are not 16 trillions, but 1.1 trillion. If we are correct, it is the medium borrowed amount during the period. I understand that, from an economic point of view, this should be the really relevant data, as a measure of the real economic risk and effort made by the US government and FED. Is it correct? I understand that Table 9 measures the medium effort made by US public institutions. So, shouldn't it be the data to be used in the media? Please, correct me if I am wrong.
Thank you very much,
Posted by seanmPWH on 07/31/11 11:15 PM
Another world war is impossible because of nukes????? This makes no sense. Why would that stop the people who think world population should be parred down to 500 million. What do you think the underground compound at Denver is all about?
Posted by reegje on 07/27/11 04:55 AM
I like this Middle Class Enslave Formula (MCEF) already! I'll use this to illustrate this to my circle of friends! This definitely will put their heads around the problem! Thanks
Posted by Jimi Bigbear on 07/27/11 12:36 AM
Crikey - link still broken - takes you to an Internet company it looks like. So I made it a tinyurl so this should click through to the right page:
Click to view link
Reply from The Daily Bell
Posted by Jimi Bigbear on 07/27/11 12:31 AM
the link to McFadden is broken it should be this:
Click to view link~becraft/mcfadden.html or change the (dot)s to periods and copy and paste into a browser tab
Posted by Berthe on 07/27/11 12:29 AM
Paul Craig Roberts mentioned the $16 trillion in a recent column. In a previous column he talked about the debt/deficit/debt ceiling crisis as smokescreen to cut Medicare and Social Security. What am I missing? If they cut Medicare spending, its not like it disappears, its not like the money is "saved." Someone else has to pay for it, i.e., the American public. And it will be more expensive. Medicare negotiates very good prices.
Our elites really are the enemy.
Posted by Jimi Bigbear on 07/27/11 12:24 AM
In a recent grilling of Bernanke by Paul, (should be) President Paul pointed out that if stimulating consumer economy was desirable, that for the 5.1 trillion we gave the banksters, that we could have given EACH of the 300 million (legal) inhabitants of the US $17,000. Click to view link This indicates to me that Dr. Paul "gets" more about money than he lets on. Family of 4 gets windfall of 68,000?!?! I've got your economic stimulus right here, Obama! [grabs crotch]
The real crime that is escaping the attention of even the Internet Reformation alternative media is that the government is BORROWING this money that they are turning around and giving to the banksters, when we (US) could (and SHOULD) just issue it ourselves! I think even the Bell will concede that the banksters create the money out of thin air - a right that belongs to the People. So the choice comes down to this:
DO WE CREATE THE MONEY OUT OF THIN AIR OURSELVES OR DO WE ALLOW BANKERS TO DO IT (CREATE IT OUT OF THIN AIR) AND THEN CHARGE US USURY FOR DOING SO? It really is that simple.
Just finished 2nd reading of John Graham's Blood Money
Click to view link
this morning, and was reminded that the Federal Reserve Act itself allows US (Congress) to buy back the FED from the Banksters - for a measly billion dollars - about a day's interest on the so called national debt. Since Congress still has the power to coin money and set the value thereof, they could instruct the mint to coin a Frisbee sized gold coin - say a full pound of gold (about $26,000 as I write, referring to the Click to view link widget to my right.) Then the mint stamps Congressman (and former banker) Louis T. McFadden's likeness on the obverse side - along with the amount $1 Billion Dollars, and voila, the MONEY POWER is back in PUBLIC hands!
In like fashion, a few more similar large coins could be minted with $1 trillion value, and POOF! the (so called) national debt disappears!
This little thought experiment also proves that the value of money is set by the stamp - NOT by the value of the underlying commodity (if any.) Kind of obviating Dr. Paul's second question to Bernanke - questioning Mises' edict that Gold is Money, and elevating Aristotle Axiom that money (nomisma) is a creation of Law (nomos) and not Nature.
Firebrand that he is, Dr. Paul can't hold a candle to his predecessor on the House Banking committee - McFadden.
Click to view link~becraft/mcfadden.html
Excerpt from McFadden's 1934 speech:
"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed has cost enough money to pay the National debt several times over.
"This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it."
Just as the Rothschilds sent Richard Lawrence to assassinate President Jackson - payback for killing their SECOND PRIVATELY held central bank - masquerading as government (2nd Bank of the US,)McFadden was shot at and twice poisoned for his efforts. The second time, they succeeded.
Posted by EntropyAnn on 07/26/11 09:20 PM
I believe the better word you're looking for is "inequity", Daily Bell, and the qualifier should be "rank", with two meanings that aren't mutually exclusive. Systemic would make a nice adjective, too. Systemic and rank inequity are defining features of our presently cartelized system.
Posted by TimurTheLame on 07/26/11 09:08 PM
@ cat Writer
If you attempted Beelzebub then you are a better man than I am. Even Orage struggled with it. Gurdjieff was some form of master but a supreme rascal. His theme was that you must conciously suffer in your work be it mental or physical to get closer to self . Ouspensky was much more readable but he could not jump the height of G and he knew it. He submitted and tried but could not put G into text. He died a miserable and broken man.
Reading things along these lines humbles and inspires me. Little else does these days....
Posted by cat writer on 07/26/11 07:14 PM
No. Closest to such an entity may be my wife. ;-) I note that several market indicators use 14 day (time periods) and other lunar-based cycle time frames.
I have plowed through much Gurdjieff, even attempted Beezlebub's Tales... I have spent more time reading Ouspensky's material; he had the writing talent Gurdjieff did not have. Colin Wilson has also written about Gurdjieff's message ("The War Against Sleep").
I never heard of Nott. I figure that the best source material on this matter would start with Gurdjieff and Ouspensky.
Posted by NAPpy on 07/26/11 07:05 PM
You still have faith that government can fix things?
Posted by TimurTheLame on 07/26/11 05:41 PM
@ Cat Writer
I do not recall stating that Graves and Shaw were the only ones offering perspectives on lunar influences. I only take notice of this because you capitalized 'NOT' which might imply that I made a controversial and definitive comment.
Might you want to wager that you have NOT read more Gurdjieff than I have? ( pun intended for I am presently reading C.S. Nott's book as a refresher because I have always found the source reading difficult).
Have I encroached on some sacred territory of yours? Are YOU the Moon Goddess?
Posted by injun1 on 07/26/11 04:57 PM
I wish I had the ability to write the narrative you present. Your description is right on the money. Thank you so much!
Posted by cat writer on 07/26/11 04:49 PM
A clock is correct twice a day.
Shaw may have observed accurately. What solutions and remedies he proposed are another matter.
Shaw and Graves are NOT the only ones who touched on lunacy. Gurdjieff wrote much about the lunar influence on people as shown by their mechanical emotional reactions. In fact, markets tend to support their contention.
Posted by cat writer on 07/26/11 04:42 PM
Actually, society is like golf or any other game. There have to be boundaries, else it is not a game but a war.
I may have mentioned this previously: I do not forgive unless the offender admits his error and resolves correction of his behavior or to repair the damage. I can count on one hand when I forgave someone.
Door #1 is simple: Forgiveness. That means all debts go away. The good news is that we retain our capital: our bodies, our goods, and our minds with our experiences. The bad news is that we lose our "money" or cash and trust. Our society may well collapse, but if done consciously and with resolve not to walk the sinister path again, we have a chance to live on and recover.
Door #2 is simple: The markets, or "Universe" does it for us. We collectively learn nothing and run the biggest tantrum ever. We lose ourselves and our capital holding on to the American delusion. It could be a thousand years for a civilization to re-emerge in North America, which would be fine for not a few people.
This is the crisis we face.
Posted by injun1 on 07/26/11 04:30 PM
memehunter I agree with most of what you dictate. The drug addict you describe cannot survive without his dose. It is called yield. The general public and governments around the world demand yield. And generally speaking both don't care where or how it is gained. They simply want yield and they both need it. We must as individuals, take some of the responsibility.
The average "Joe" will work 40 hours a week. He now equates overtime as a pay raise. He created his own "utopia" marketplace when he started treating his home as an investment and not as shelter. By doing so it created another false market that did not exist without inflation. (real or not)
Wall Street sells stuff. When it doesn't have "stuff" to sell it will create stuff. Always has and always will. When paper stuff is invented so are hypothetical yields.(CMO's for example) It has the ability to make honest men crooks. If you won't loan me money, I simply hike the interest rates up till the greed demands acquisition of the paper.
Yield is the drug and we all partake of the harvest. Which along the way turned into a slaughter. I mentioned earlier and got some rebuke about "orderly default". Orderly default with direct participation is the preferred method of sanity. It is the only reasonable choice we have.
We must quench the thirst for yield by reducing the need, by controlling government, but it takes strong and willing participation from people. It does not work without it.
If default by market occurs, the only guy that gets killed is the "average Joe". Yes like a good rain, it will clear the air but his surroundings will be completely destroyed. For example, will a market default hurt me? It will be bothersome but it really won't hurt me. Will it provide me more freedom? Perhaps.
My marketplace unlike the "average Joe" doesn't wait for Friday to pick up a check but permits me to move assets and money around the world in micro seconds, where I can find safety from the fallout. Generally speaking, there is no place for the "average Joe" to protect himself. He is simply caught in the devastation. Market default may happen, it may have to happen, but I prefer orderly default for the sake all of us. If for no other reason but to weather the storm together and when the smoke clears throw the all those SOB's in jail!
Posted by memehunter on 07/26/11 02:55 PM
Thanks. I got a half-decent translation with Google Translate (at least it made sense for the most part).
Posted by bob on 07/26/11 02:42 PM
Click to view link
but it is in Russian
Posted by memehunter on 07/26/11 02:35 PM
On a unrelated topic, but still relevant given the ideas promoted here:
Minority Rules: Scientists Discover Tipping Point for the Spread of Ideas
"Scientists at Rensselaer Polytechnic Institute have found that when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society."
Click to view link
OK, it's a computer model, but it is still interesting...
Another quote from the article, which may help put this work in perspective:
"The research has broad implications for understanding how opinion spreads. 'There are clearly situations in which it helps to know how to efficiently spread some opinion or how to suppress a developing opinion,' said Associate Professor of Physics and co-author of the paper Gyorgy Korniss."