Such alarmist judgments, of course, have a right to exist. True, more often they all are based on well-established delusions and myths that do not have an objective basis. For example, there is an opinion that the government regularly lowers macrostatistics in order not to give information about the real state of things to come to the surface. There is still a rumor that the stock market is fully controlled by the Federal Reserve. Similar storiesOf course, they get a big response, but the evidence base is not always enough to argue with confidence that this is the case.
Discussions about the Federal Reserve Law and about the establishment of the Fed itself existed even before its adoption. Some of the questions that are being discussed are: whether Congress has the constitutional power to delegate its authority to money in a coin form or to issue paper money, whether the Fed is a cartel of private banks founded to protect the interests of several powerful financiers, whether the Fed has directed the increase in the severity (severity) of the Great Depression in 1930-x and the World Financial Crisis 2008-2011 through manipulation of discount rates.
The fact is that the Fed's discount rate has a strong influence on the US and world economy, mainly on the stock market. The decrease in the discount rate affects the bank reserves similarly to purchases of federal government securities on the open market, causing a multiplicative expansion of deposits.
Naturally, the increase in interest rates causes the opposite phenomena in the economic system to come to life, reducing the volume of loans and reserve deposits.
This is how Alan Greenspan explains the historical interest rate change at the start of 2000's:
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The housing boom saved the economy by hiding the problem of manipulating budgetary procedures. Having played enough on the stock market, the Americans staged an orgy on the real estate market. Of course, any boom creates soap bubbles. Several million American citizens, having overestimated their capabilities, began to buy houses on credit, and then they could not pay for them. As a result, the stock market collapsed, avalanche defaults on consumer loans and mortgages flooded, old bank houses colorfully collapsed, the American auto industry staggered, and on the horizon stagnation of the economy, curtailment of production, a radical revision of existing international trade relations and inflation of the global system-forming currency loomed.
However, after this, the next reasonable question inevitably arises, why did such a volume of obligations arise? And here more and more critics blame banking companies that have taken control of the state treasury. Unfortunately, enlightenment comes only when the arrow on the “barometer” of public debt passes into the “red zone” and these countries no longer have the opportunity to get out on their own.
At the end of June 2012, the American media actively began to discuss the initiative of the Congressman-Republican Ron Paul to understand the situation with the Fed and the US national debt.
Frankly a conservative Republican, a member of the tea party movement, Ron Paul has been accusing the central bank of many of the country's fundamental economic problems for many years. Throughout his congressman’s career, the former presidential candidate has advocated taking measures to limit the Fed’s influence and increase its transparency.
Despite the fact that Paul is confident in reducing the purchasing power of the dollar in the long term as a result of inflation and due to the insecurity of the national currency, he does not call for a return to the gold standard - many times in the past attributed to him by the government - by proposing to abolish the law on payment instruments in return and remove the tax on the sale of gold and silver, so that the market can decide for itself which monetary systems to use.
25 July 2012 - the day of sensational voting by the House of Representatives in support of the Federal Reserve Audit Act (Audit the Fed Bill): 327 congressmen voted in favor, 98 opposed. And although the politician expects the law to surely die in the Senate, despite the expected support of more than 270 senators, he has hope that this will not be the death of his initiative.
According to the law of the Federal Reserve, the Fed's annual report to the US House of Representatives of the Congress twice a year - before the Banking Committee of the US Congress. The activities of the Fed's banks at least once a year undergo an audit of the United States Accounts Chamber (Government Accounting Office), or large independent audit firms at the national level. Ron Paul is not satisfied that there is no audit of central bank policy decisions. Congressional voting extends the financial audit of the Fed to political.
Since 1999, Paul has consistently submitted to Congress a bill to eliminate the federal reserve system for twelve months. The Federal Reserve Act states that “the term of the charter is set by the maximum allowable law”. The law provides for the maximum period allowed for any lease only for 99 years! And this provision, illuminated by the precedent, cannot annul any Congress by any decision of its own. According to the Law, the Federal Reserve System can also be liquidated ahead of time by the decision of Congress in the event that the Fed violates the law.
The basis of the romano-German law at the heart of any court decision is "written law." At the heart of the Anglo-Saxon common law, which America inherited from Britain, is stare decisis, which is nearly a thousand years old (since the reign of Henry II). Stare decisis is a legal provision that obliges judges to follow the precedent set by the verdicts of past periods. Once the precedent achieves the supreme court level (in the US - Federal Court) and is supported on it, it becomes binding on all courts without exception and can not be canceled, modified or bypassed. As in business practice period of 99 years is considered to be the maximum allowed for any lease (including the state), it automatically applies to charter the Fed! What is the basis of this statement? On the precedents that were confirmed at the highest - federal - level countless times in court decisions in the XIX century!
The idea that the great and mighty Federal Reserve, which serves as the Central Bank of the United States of America, is in fact, in form, and in terms of legal content, a private company, did not want to fit into the heads of ordinary people. How many have written, how many have tried to bring home to the public the wildness and the enormity of the situation with the Federal Reserve honest politicians, journalists and academics - all in an empty! The people completely refused to believe in the possibility of the impossible: after all, the US Constitution says in black and white: the inalienable right to print money belongs only to the people and the Congress chosen by it, but it turns out that 99 years ago this right was usurped and leased to a private company.
It seems that today we have come close to the moment of truth. It is clear:
- first, the situation with the national debt finally and irrevocably out of control,
- secondly, the possibilities of the Federal Reserve for the financial regulation of the economy through the manipulation of interest rate and quantitative easing have been fully exhausted;
- Thirdly, 21 December expires on the 99-year chart and to extend the powers of the Fed will require a majority of votes in Congress, the Senate, plus three quarters of the votes from the legislators of each of the 50 states.
Is it possible for Bernanke and the company to receive such support in the legislative bodies of America in a situation where the country has brought the Fed to complete bankruptcy?
The demarche of Ron Paul is all the more incredible because the facts of the unprecedented violation of all conceivable and inconceivable constitutional norms by the Fed have accumulated an uncountable amount of history, but all of them always remained not without punishment, but without proper investigation.
Here, for example, the facts from the freshest dossier: for three years, the news agency Bloomberg News waged a fierce struggle, demanding to give publicity to secret transactions of the Federal Reserve in the framework of the so-called “discount window”. Bloomberg appealed to the Freedom of Information Act and did it: in the spring of 2011, the court ordered the Federal Reserve to make public the documents related to the provision of concessional loans.
The information released in the spring of 2011 had the potential of a bomb: The Federal Reserve, using a special “discount window” mechanism, developed and approved as early as 1914 (was it not for this mechanism that the monster was created first?) unimaginable amounts of money.
What happened in the more remote periods of history is still unknown, because at the request of the court, the Federal Reserve published only lending documents within the “discount window” in the period from August 2007 to March 2010. However, there were enough of them (29 scored thousands of pages!) For a general idea of the activities of the private American Central Bank: in just one week in October 2008 was distributed concessional loans (read - free subsidies!) Worth 110,7 billion dollars, and 70 percent money transferred to foreign banks! In other words, the Federal Reserve with money belonging to the American people saved foreign financial structures from ruin!
However, this is for the American people, European banks are foreign, and for the Federal Reserve - the most that neither is native. Bernanke's generous hand quietly made Belgian Dexia SA (33,5 billion dollars), Irish Depfa Bank Plc (24,5 billion), the financial division of the Japanese fishing cooperative ... And what? Business private!
The scandal with the "discount window", which is already more than a year old, in America itself was quickly muffled and negated. And suddenly - a bomb exploded! One year later. Almost out of the blue.
Ben Bernanke, on the eve of a congressional vote on the adoption of the Federal Reserve Audit Law, attempted to intimidate with the “nightmare scenario”, which is supposedly fraught with congressional interference with monetary policy decisions. Did not help! “I can’t understand why anyone should oppose transparency,” Ron Paul quipped at the debate on the adoption of the law, “the American people deserve to know the details of the Federal Reserve’s activities aimed at saving and supporting foreign central banks. Americans are already fed up with (they're sick and tired) to watch beylautami, after which the wealthy are saved and the poor are losing their jobs and lose their homes. "
An audit of the Fed’s decision to provide assistance to foreign banks and central banks once again will allow gathering evidence of violations of the Fed’s laws, which technically should lead to an early revocation of the charter.
I must say that honest lawmakers on Capitol Hill have repeatedly tried to overthrow the credit yoke of the Federal Reserve throughout the history of this office. Alas, to no avail, and also with sad consequences (recall the fate of John F. Kennedy, who ventured to print dollar bills with the correct inscription - United States Note - instead of profaning the Federal Reserve Note).
By the way, about the inscriptions. The theme of deprivation Fed Charter is much more productive discussion of the terms of its Charter in action aspect is what will happen to the US currency, a miracle happened and the Fed moved away from the printing press! All existing dollars are exactly that “Federal Reserve Note”.
There will be no Fed, there will be no obligations.
But until that happens, the Fed is likely to start the next round of monetary stimulus in the first two weeks of September, the head of the world's largest investment fund PIMCO Bill Gross. However, the launch of the printing press will not improve the situation on the labor market. “Until 7% unemployment is reached within a few quarters, you can wait for QE. Monetary policy has exhausted its potential,” Gross said. “As soon as rates drop to zero, not many tools will remain to stimulate the economy.”