News & Analysis
Pot Calls Kettle Black! Dallas Fed Claims Banks Too Big
From Big State a Call for Small Banks ... An annual report from a regional Federal Reserve bank is typically a collection of banalities and clichés with some pictures of local worthies who serve on the board. And so it is with this year's annual report from the Federal Reserve Bank of Dallas, whose pages are graced by the smiling, stolid portraits of board members who run local companies like Whataburger Restaurants. But the text is something else entirely. It's a radical indictment of the nation's financial system. The lead essay, which is endorsed by the president of the Dallas Fed, contends that despite the great crisis of 2008, a cartel of megabanks is still hindering the economic recovery and the institutions remain too big to fail. The country's biggest banks look much as they did before the 2008 financial crisis -- only bigger. They have "increased oligopoly power" and "remain difficult to control because they have the lawyers and the money to resist the pressures of federal regulation," Harvey Rosenblum, the head of the Dallas Fed's research department, wrote in the essay. – ProPublica
Dominant Social Theme: We, the Fed, the most powerful monopoly on the planet, are concerned about the "increased oligopoly power" of our distribution system.
Free-Market Analysis: The excerpt above is taken from a column that "monitors" financial markets in order to hold "companies, executives and government officials accountable for their actions."
OK. It's a well-written column, but it misses a main point, in our humble view. The Federal Reserve is a mercantilist (quasi public) facility apparently controlled by dynastic families out of the City of London and elsewhere. For an entity within this larger monstrosity to call parts of the US banking system "too big to fail," is rich, to put it mildly.
This is actually part of a larger elite dominant social theme, that central banks are a public good and that the quasi-private banking system beneath them is where the problems reside.
This simply isn't true. As we've often pointed out, the current Western banking system is nothing but a distribution channel for the elite's monopoly fiat money. That's why the world is so overbanked.
If the Dallas Fed honchos had written the following, it would be closer to the truth: "Go to any large city on the planet and observe that the largest skyscrapers are filled with headquarters of obscure banks you've never heard of. Travel to any country and observe that banking is a primary occupation ...
"Banking is the world's biggest bubble. We distribute our printed and digital money-from-nothing through large commercial banks and thus they are never allowed to go out of business. They are part of us and we would no more remove them from the body politic than we would cease to purvey our endless tidal wave of currency."
In other words, it's hypocritical for the Dallas Fed to complain about the size of American central banks. To use another metaphor, it's kind of like an obese person pointing to his stomach and claiming that it ought to shrink. Sure, a big stomach is a problem, but it's not the WHOLE problem by any means. Here's some more from the article:
Having seen the biggest banks make risky bets, crush the economy and get rewarded leaves "a residue of distrust for the government, the banking system, the Fed and capitalism itself," Mr. Rosenblum wrote. It's one thing for the Occupy movement to point out how bailing out the biggest banks -- with little cost to their executives or shareholders and creditors -- has demolished credibility. It's quite another for top officials in the Federal Reserve system to put it in an annual report.
"We know under the current structure that the government would be called on once again," the president of the Dallas Fed, Richard W. Fisher, told me. He has been giving a series of speeches about the continuing problem of "too big to fail." ...
Unfortunately for our banking regulation system, critics in the regional Federal Reserve banks haven't had much influence on regulatory policy ... Mr. Fisher, the Dallas Fed president, has been one of the fiercest inflation hawks. He has dissented against the Fed's efforts to buy longer-term assets, known as quantitative easing, which was an effort to stimulate the economy. (He has been less worried about inflation more recently, arguing that unemployment is the top problem for the economy.)
"Sound money and sound structure go hand in glove," Mr. Fisher said ... The top bank regulators at the Fed, meanwhile, have embraced unorthodox monetary policies, but have also had scant courage and originality in challenging the current structure of the country's financial system. Not so with the Dallas Fed. Its report champions "the ultimate solution for TBTF -- breaking up the nation's biggest banks into smaller units."
The elite's central banking promotion is an endless one. We are constantly transported to the Church of Paper Money where a group of good, gray men administer the creation of trillions of dollars at the push of a button.
After creating a random trillion here and there, these same individuals saunter out to the platform (or stage) and address the waiting "financial reporters." They explain they are very worried about "inflation," never hinting that they'd just primed their digital printing presses with another trillion that very morning.
In truth, central banks are inflation factories. The inflation is aimed at the money supply and price inflation is the inevitable result when the money finally begins to circulate. The confusion between inflation and price inflation is purposeful as well. It is another sub dominant social theme: "inflation" has to do with prices. It does not, of course. It has to do with the amount of money in circulation.
There were very few central banks 100 years ago. Today there are 150, and most of them are quasi-public entities, controlled behind the scenes by the top dynastic families, it seems, that want to create world government and use the proceeds of monopoly money to do so.
The trouble with the elite's control of central banking in the modern era is that what we call the Internet Reformation has thoroughly exposed it. As we have pointed out in many articles, the Internet is like the Gutenberg Press before it. It is a magnifying glass, exposing questionable realities that went unnoticed in the 20th century when the elites controlled virtually all forms of formal communication.
Today, the average man – struggling to keep his home, family and job – is well aware that there are a few people who regularly distribute trillions to their cronies while his region withers from the ruin that results from an overabundance of ever-more debased money.
It is this MORAL revelation – a revelation of immorality actually – that is likely going to do in the central banking system. The top central bankers like Fisher are deliberately trying to take a moral position about the modern money system but it may already be too late.
The idea is to whip up resentment against the putatively private sector – to pretend that central banking itself is above the fray and that the problems of the financial world have to do with the structure and immorality of Wall Street and "too-big-to-fail" banks.
For this reason, we have predicted that eventually there will be neo-Pecora hearings in Washington, DC that will then set the tone for the rest of the Western world as well. The previous Pecora hearings back in the 1930s blamed the Depression on Wall Street greed and corruption and set up the SEC, NASD etc.
The new Pecora hearings, which are even now being planned, will deal a full death blow to what is left of the private capital-raising mechanism of the US. There is no question that Wall Street is thoroughly contemptible and corrupted, but after these new hearings take place, there will be nothing left of market capitalism in the US.
The country will have fulfilled the mandate of possible Rothschild agent Alexander Hamilton who wanted to ensure that the US system mimicked the dirigiste European system where people born into one class could never migrate to another.
But there is the Internet ... Finally, there is the Internet. These neo-Pecora hearings – if and when they come – will not take place in a vacuum. The powers that be can do all they want to pretend that the problems of Western society come from "big banks" but the evident and obvious truth is that the problems faced by the Western world come from the money system itself.
The world is drowning in money and banks. This plethora of monetary agents has been propounded by the elites themselves to create recessions, depressions and eventually wars – the building blocks of the coming world government. Out of chaos ... order.
It will not do anymore for the elites to pretend that central banks are the disinterested solution to the "larger" problems of private-sector cronyism and corruption. In fact, fiat-money monopoly printing IS the problem. The biggest of the too-big-to-fail banks are the central banks themselves.
Conclusion: If the honchos of the Dallas Fed want to break up banks, they should start with their own.
Posted by W.Palmer on 04/01/12 02:48 PM
It is the carnal greed of the money cartels and it's masters that will inevitably destroy the very system they are trying to build. It is then the task of governments to reinforce the crumbling edifices with nonsensical and discriminating regulations to make it stay in place.
Both parties are beneficiaries to it therefore will acquiesce to whatever nonsense facilitates it whether it serves the common good or not..
Posted by wildchild on 04/01/12 10:34 AM
This is a good book to understand the true history and the beginnings of what is our Monetary system today… I am reading it now from a downloaded version and just tripped across it on line in paperback; it's a bit dry, but full of FACT and understanding from Congressional records…
The Coming Battle
By M.W. Walbert
First published in 1899, republished for the first time in 100 years! The Coming Battle documents from congressional records, newspaper reports and writings by the founding fathers and others, a chronology
of events long forgotten that shaped our fledgling nation from 1776 to 1899. Read about the manipulation of our money and its supply, the intentional creation of recessions, depressions and panics. The manipulation of the stock markets. The demonetization of silver.
Read excerpts from all the chapters
A breathtaking history told in the words of a contemporary witness to these events.The complete early history of the creation of the Federal Reserve. This masterpiece reveals how the banking money power and corporate interests, partnering with government, set up a framework to exploit American workers.
Lost for 100 years!
You can buy it here:
Click to view link
Reply from The Daily Bell
Thanks for pointing it out. We've the read the book and can attest that its description of how the powers-that-be battled against silver is eye opening.
Posted by Wrusssr on 03/31/12 01:39 PM
Outstanding article, DB. Dead-on.
People are onto their elected criminals and Wall Street crooks racing to banks with trillions of 'taxpayer' dollars falling out of their pockets.
They understand now the lie when these same thieves and scam artists say if they don't give this money to their bank buddies and confederates, '. . . the whole world's financial structure will shut down.'
Since when do we have to bailout out criminal bankers with our money?
Do banks bail out bank robbers with their money?
Am I missing something?
The trillions lavished on Wall Street-what's left over from executive bonuses and sweetheart deals-have been hoarded by their international and domestic buddy banks to balance their ice-berged, derivative-laden, CDS-soaked balance sheets.
Bank-sponsored legislation helped them set up the scam so they could pull the real estate plug on America; qualifying people a loan shark wouldn't touch for billions of dollars to buy millions of homes they couldn't afford.
The Street then mixed, bundled, certified, and insured these loans with what buyers thought were reputable ratings past corrupt regulatory agencies and sold and resold this worthless paper to thousands and thousands of banks, money trusts, retirement funds-you name it-worldwide. Who in turn sliced, diced, and resold the bundles to others. . .
Not only did they do this with worthless mortgages, they did it with all manner of things financial.
Called them 'derivatives.'
$600 trillion fictitious dollars worth by one estimate. Over a quadrillion by the BIS's estimate.
All 'toxic' (worthless) paper backed with no assets brought about by 'moral hazard' (theft, greed, fraud, lies.
The world's GDP is only around $71 trillion, I think.
All the money in the world comes short of $600 trillion.
And they want me, you, and the world's taxpayers to go the financial bail for these lying, thieving, con-artist-criminal-stump-jumping-shuck-and-jive-the-sky-is-falling financial scammers? The ones who knowingly and deliberately set this $600 trillion giganticus raticus farcicus loose on the rest of us?
Americans watched in disbelief as these thieves and their confederates and enablers-our elected flim-flammers (through deliberate legislation)-went public with their scam; throwing taxpayer 'bailout' money around the world like confetti at a V-Day parade.
And when they ran out of tax dollars they printed trillions more and continued the orgy; telling us it would save institutions '. . . too big to fail . . .' as well as the world's economy so.
Publications like the DB have put sunlight into their dark ship-o-state's hold and it's shining intently on these bilge rats.
London and their Washington, and Wall Street criminal financial confederates have no intention of bailing the world out.
No, they want the crash and the chaos. They're banking they have deep enough pockets to fund their mercenaries and themselves to emerge on the other side of the chaos as the only alternative to take charge of their world currency and appointed world government.
They've secretly determined-because of their wealth-they're more suited to run the world and the planet's resources. Own it all. Food, fiber, water, minerals, money, jobs, people, hope.
Air if they could sell it.
Shades of the old British empire, eh?
Meanwhile, we're out here with our noses pressed against the bank window watching a bunch of financial criminals running around inside looting our money while they destroy the Republic; pausing occasionally to flip us off.
I was wondering. . .are there no honest men and women left in America willing to put these thieves, liars, and con-artists in federal penitentiaries?
Like they did the Enron crooks?
Reply from The Daily Bell
A clear explanation. Thanks.
Posted by Danny B on 03/30/12 10:36 PM
Step back and look at the complete picture.
We are spending $ trillions on consumption. There is NO possibility of repayment.
NO amount of austerity will free up enough capital for repayment. It's plain to see that austerity reduces the economy to where, debt-to-GDP is increased by austerity, NOT reduced.
If the U.S. forges ahead with crashing austerity, it will diminish tax receipts and GDP. The debt will never be reduced.
Brernanke hopes to inflate away the debt but, he can't win. The rate at which the dollar is being dumped is faster than the rate at which it is being inflated.
The computer gives instant information that gives instant currency values and instant base-commodity values. FOREX trading has climbed from an average of
$ 3 trillion a day to numbers as high as $ 7 trillion a day. Bernanke is shuffling
chump-change while trying to affect money markets. He had to buy 61% of treasury debt.
Because of the all-pervasive information on currency and commodities, the R.O.W. can easily sidestep the dollar. There is no need for a single reserve currency. The R.O.W. can easily create an index of worldwide; energy resources, commodities and human capital AND sovereign debt. This will allow any country to value any other country's currency.
In the information age, any country's currency can be based on it's resources, both tangible and intangible. EVERY country with resources would automatically reject something like the SDRs from the IMF. Bernanke and the funny-money people will try to continue to "finesse" away the resources of the countries that have surpluses. They have surpluses because they don't gorge multitudinous parasites.
America has 850 military bases and a food surplus that it will try to leverage to drain the R.O.W.
With investors deserting Western banks, Western bonds and Western currencies, the Western parasites will implode from lack of capital. You can be certain that America has a gun to the head of Saudi Arabia but, that won't be enough to save the edifice of parasites.
America has very little GDP. The EU is even worse.
Here is a partial breakdown of GDP in USA.
19% from FED printing
11% from manufacturing
24% from GOV spending
??% from GOV wages being counted a second time after they are counted once for spending
9% for finance and insurance that includes a lot of smoke & mirrors.
About half of the GDP is debt spending and debt printing or bank fees from derivatives that will eventually blow all to hell.
While U.S. GOV debt is the least ugly sister, that won't matter when the SHTF.
Fukushima is taking a serious turn for the worse. Japanese debt is 300% of GDP. When investors take a serious aversion to the Yen, the contagion will take out all the over-leveraged markets.
Since everything is being spent on consumption, default is unavoidable. That will make quite a mess of the banks.
This is a fascinating vid of a sad event.
Click to view link
Posted by seanmPWH on 03/30/12 08:38 PM
You are either a Fed operative or you have just fallen into the trap.
Posted by NAPpy on 03/30/12 06:20 PM
Freedom is to be encouraged, except for this one time, and as long as the negative freedom doesn't affect me...
Posted by nithsdale on 03/30/12 06:15 PM
The Fed knows it is going out of business and its personnel are looking for other places to find employment. What is left when the big banks takeover their world duties as regional Central Banks in our Global Society? Surely you read that the Global "elites" have already selected the banks to prosper under the new regime. They announced them last year!
The new global set-uo does not want The Fed's people around second guessing everything. So what are these well trained persons to do? They have to go to the smaller banks just to continue to be what they are.
Also I imagine that the old Fed would like to have inside info re the small bank operations in the USA because as we grow so will they and perhaps the Fed will morph into a new entity and have another mission corraling them as they did the large banks now moving higher in the hierarchy.
The answers to the many questions you pose do have simple answers from time to time, and right out in the open, not even clandestine!
Posted by Abu Aardvark on 03/30/12 06:13 PM
DB: 'In truth, central banks are inflation factories. The inflation is aimed at the money supply and price inflation is the inevitable result when the money finally begins to circulate. The confusion between inflation and price inflation is purposeful as well. It is another sub dominant social theme: "inflation" has to do with prices. It does not, of course. It has to do with the amount of money in circulation.'
Here we go:
'Printing money does not lead to inflation, argues Argentine central bank president (... ) The banker added that 'it is totally false to say that printing more money generates inflation, price increases are generated by other phenomena like supply and external sector's behaviour'.
Click to view link
Posted by Hoss on 03/30/12 02:03 PM
Off topic, please excuse me.
Bionic Mosquito has an article published on Lew Rockwell's site today. Congratulations!
Click to view link
Reply from The Daily Bell
Is not the first one ...
Posted by terrang on 03/30/12 01:11 PM
Several factors are pushing commodity prices higher. One being the huge tidal wave of fiat money created at China's central bank, which is used to buy commoditions on the global market to build empty cities. Likewise, India has a rising motorized class which is pushing up demand.
While freedom is to be encouraged our complex society and the overall need for balance and fairness calls for busting up the banks into smaller units so that no one bank can bring down the system with roguish behavior.
Posted by Tazio2013 on 03/30/12 11:56 AM
The Accelerating Economic Death Spiral
March 30, 2012 by Bob Livingston
Why are commodity prices rising? Because of inflation created by the Federal Reserve's money printing. According to an opinion piece in The Wall Street Journal, the Fed bought 61 percent of the total debt issued by the Treasury Department last year.
'The Fed is in effect subsidizing U.S. government spending and borrowing via expansion of its balance sheet and massive purchases of Treasury bonds. This keeps Treasury interest rates abnormally low, camouflaging the true size of the budget deficit,' former Treasury official Lawrence Goodman wrote.
Click to view link
Posted by seer on 03/30/12 11:51 AM
Fisher is correct. Historical evidence points at short sighted actions perpetrated for short sighted gains leaving a wake of economic destruction in its path. Simon Johnson has been calling for a break up of the banks for qiute some time. This is nothing new. Read the Baseline Scenario.
ump to: navigation, search
Simon Johnson Nationality British American
Field political economy, development economics
Alma mater MIT (Ph.D.)
University of Manchester (M.A.)
University of Oxford (B.A.)
Information at IDEAS/RePEc
Simon Johnson (1963) is a British American economist. He is the 'Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He has held a wide variety of academic and policy-related positions, including Professor of Economics at Duke University's Fuqua School of Business. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetary Fund.
He is author, with James Kwak, of the 2010 book 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (ISBN 978-0307379054), with whom he has also co-founded and regularly contributes to the economics blog The Baseline Scenario.
Posted by Danny B on 03/30/12 11:07 AM
Oh Great Bell, while I agree with you on the evil of central banks, there is a more pressing problem. Growth has stalled. Not having a "plan B", we are treading water and spending all our capital on consumption. Capital spent on consumption is never repaid.
Click to view link
While, I do not espouse growth for the sake of growth, our entire system is directed at growth and can't easily reconfigure.
Also, I'm not advocating the proffered "sustainable" solutions appearing on the horizon. TOO gruesome.
The Western birthrate is quite low and it wouldn't be impossible to reconfigure. The current M.O. of spending our saved-up capital for consumption isn't going to go on much longer. GOV knows this and has introduced some draconian laws to try to control the situation. Controlling the populace and reconfiguring the system are 2 different things.
We are approaching some serious problems but, I don't see serious proposals on reconfiguring.
Click to view link
We need to reconfigure without losing freedoms. We just need to lose the parasites.