Congress Threatens to Axe the New York Fed, Wall Street's Dirty Money Printer
Senate Banking Leader proposes major Fed overhaul, possible elimination of all Fed Regional Banks, as JP Morgan & Citibank face Russian 'Lehman moment'
As Milton Friedman suggested decades ago, some “greed is good” in free markets, but only if market participants play by the rules. Greed is fucking horrible when markets are centrally planned by corrupt government officials for the benefit of corrupt, ultra-rich plutocrats, as is sadly the case in America now. The Great Financial Crisis in 2008 was a wakeup call, but not in the way you may think. No one on Wall Street was upset about corruption and excess. They were mad they got caught, and that some firms like Lehman Brothers were allowed to fail (even though zero of the banksters responsible for the GFC were ever held accountable or punished).
So, when Donald Trump named ex-Wall Street lawyer and private equity vulture at Carlyle Group, Jerome Powell, our Federal Reserve Chair in 2018, Wall Street rejoiced. The Street literally ran an article: Jerome Powell: Our man in Washington” — which has since been scrubbed from the internet:
Wall Street drooled at the prospect of getting a “private equity insider” from the shadowy Carlyle Group who would use the Fed as “his own private investment firm in Washington DC.” Wait a bloody second! The Fed supposedly serves the public interest, not Wall Street private equity vultures. Sadly, Fed Chair Powell was the final piece of the puzzle for Wall Street and the ultra-rich to corrupt the entire American financial system and destroy the last of the American middle class. If President Biden and the U.S. Senate get their way, Powell’s about to get 4 more years to finish the job with 15-20%+ year over year inflation.
As we first exposed last month, Powell himself brazenly violated multiple FOMC trading blackouts, while presiding over a huge insider trading scandal that took down his Vice Chair and several Fed Regional Bank presidents. As we explained last week, Powell orchestrated a clandestine, pre-COVID $20 Trillion megabank repo bailout that “broke the law” according to industry experts. And then Powell really went wild when COVID hit — hiring BlackRock to more than double the Fed’s balance sheet to $9 Trillion with QE asset purchases, even buying corporate debt (Apple no less!) and muni bonds (that he personally owned and had always been off limits). The Fed also dropped interest rates for megabanks back to zero and shockingly converted our financial system to ZERO RESERVE BANKING - a move they still haven’t reversed to this day! (No wonder Reverse Repos nearly hit $2 Trillion — we shudder to think what would happen in a #USBankRun.)
Powell and his cronies on Wall Street got too greedy like always. In their hubris, they not only inflated an unsustainable and dangerous everything bubble, but they also unleashed the “inflation genie” of the 1970s. Fed Chair Paul Volcker only managed to contain it after raising interest rates to 20%! While the Fed uses bogus stats from the Bureau of Labor Statistics (BLS) to suggest inflation is 7.5% (nearly quadruple their 2% price stability target), it is clear that inflation is running around 15-20% using prior methodology that the BLS constantly manipulates. Unless they really fudge it, the next #CPLie release on Thursday will be even higher.
Powell and his cronies continue to lie to the public that parabolic US inflation is due to supply chain disruption from the pandemic, and that inflation around the world is just as bad. Bullshit. Even based on the bogus CPI, the US has the top 5 worst inflation of any G20 country. We’re currently in league with the likes of Argentina, Turkey, Brazil and Russia. Let that sink in.
Now they’re blaming the war in Ukraine for all this pesky inflation. But the price of oil had already massively increased year over year. They want to piss on us and call it rain — when we all know the Fed’s $9 Trillion balance sheet is insane (and around the GDPs of France, the UK and Germany combined!):
What Do BlackRock, Caryle Group and the World Economic Forum Have In Common — Control of the U.S. Federal Reserve through Jay Powell
After profiting off the biggest Fed bailout and intervention in history under the guise of pandemic relief, Wall Street, the ultra-rich and Fed officials like Powell (est. $100M+ net worth) don’t give a shit if their inflation destroys 99% of their fellow Americans. They could care less about people having to choose between filling their gas tank or filling their kids’ stomachs. They’re very open about their long-term goal for American plebians — they want you to “own nothing and be happy about it.”
The global “elites” don’t even try to hide their contempt for the American people and the last of our relative freedoms compared to say, Communist Russia or China. The head of the World Economic Forum, Klaus Schwab, once told Al Jazeera news: “Capitalism, in its current form, has no place in the world around us.” Instead, Schwab advocates for a “Great Reset” from traditional American capitalism to a totalitarian form of what he calls “stakeholder capitalism” or “‘capitalism with Chinese characteristics’ — a two-tiered economy, with profitable monopolies and the state on top and socialism for the majority below.”
More recently, Schwab bragged to a group of Harvard students that the WEF is “penetrating the cabinets” of governments around the world, including Russia, Germany and Canada. Well, if you don’t think they’ve “penetrated” America yet, you’re wrong. It’s no coincidence that Fed Chair Powell’s old boss at Carlyle - David Rubenstein - and his apparent current boss at BlackRock - Larry Fink - both sit on the World Economic Forum Board. (You can read more about BlackRock’s WEF ties and its tentacles in the US Government here.)
The plans for America that Rubenstein and Fink devised with Schwab in Davos seem like economic treason to us. Despite the WEF gleefully declaring “America’s dominance is over,” they still want the Fed to bail out the top 1% around the world. It’s no doubt a key reason Powell’s Fed doled out $3.7 Trillion in repo loan bailouts to Japan’s Nomura and $1.4 Trillion to Germany’s Deutsche Bank, even as it stood on the brink of bankruptcy. And why Powell just set up a permanent repo facility for bailing out the central banks of foreign governments (WTF?!). They’ll happily run the American middle and working class into the ground if nobody stops them.
Congress Confronts Lawless, Unchecked Fed over Oil and Inflation
So who will hold the Fed accountable? Maybe Congress? They certainly have the duty to oversee the Fed after creating the Fed in 1913 and outsourcing monetary policy to it. Unfortunately, most of our elected politicians are either too stupid or too corrupt to exercise any oversight as long as they continue personally benefiting from insider trading and collecting campaign contributions from Wall Street. But there are limits.
First, the Fed’s inflation is only a problem for Congress (and the President) when it starts to threaten their ability to get reelected, i.e. keep riding the gravy train. Second, the Fed’s corruption is only a problem for Congress when the Fed starts playing politics by picking winners and losers, and big donors (like big oil) lose. At long last, the Fed is pissing off Congress at the very moment its systemic corruption and reckless monetary policy are all coming to a head.
As we explained before, the GOP derailed Biden’s slate of five Fed Board nominees because Sarah Bloom Raskin made it clear one of her top priorities at the Fed is fighting climate change, e.g. by pressuring banks to stop lending to big oil companies and pumping money into companies Wall Street anoints ESG (having good environmental, social and corporate governance) like Apple, which likes to lobby the government to keep letting it use forced labor in China. We’re not so naive to believe any Senators really care about how unethical Raskin’s revolving door, influence peddling is (which Occupy The Fed Movement was first to highlight). If that were the case, they certainly wouldn’t be supporting a Fed Chair who presided over and was directly implicated in a massive insider trading scandal.
Yet, Republican Senators aren’t about to roll over and let a refashioned Federal Reserve use its vast monetary powers to wipe out the American oil & gas industry. And Senators who want to get reelected also need to score points complaining about the inflation crisis that the Fed has inflicted on voters. It was in this awkward context that Chair Powell had to testify before Congress for the Fed’s semi-annual monetary policy update last week.
Between all the softballs, Powell got thrown a few real heaters. Foremost among them, Sen. Pat Toomey, leading GOP member of the Senate Banking Committee, came hard at Powell and proposed massive reforms to the Federal Reserve System. Hearing Toomey utter such things would have been unimaginable just six months ago.
Sen. Toomey started by laying into Powell for letting inflation reach a “forty-year high” and “doing real damage to ordinary Americans.” Sen. Toomey then took objection to the Federal Reserve Regional Banks (FRBs) taking political action outside its mandate on things like the environment. Sen. Toomey said Reserve Banks had “stonewalled” his info requests and that “everyone passes the buck” at the Fed Board.
Then Sen. Toomey said “we need to think seriously about reforming the structure of the Fed” —
“First, unlike the main Fed Board, the Reserve Banks are not subject to FOIA. Well, that should change.”
“Second, we should consider whether or not to subject Federal Reserve Bank heads … to Presidential appointment and Senate confirmation.”
“Third, we ought to examine the historical 12 Reserve Bank structure … Maybe we should eliminate the Reserve Banks entirely…”
Sen. Toomey noted he “did not present these ideas lightly. The Fed was given independence to insulate monetary policy from politics. And Congress has an obligation to ensure that the Fed does not become a political actor.”
When pressed on it, Powell claimed the FRBs helped prevent “groupthink” and suggested it was a “feature, not a bug” (truly laughable when FOMC members virtually never vote differently). He then sheepishly admitted that whatever the FRBs do “needs to be clearly linked in ways that people understand to our mandate” or it hurts the Fed’s argument for independence.
The New York Fed Is Antithetical to the Fed’s Primary Mandate And Should Be Eliminated As Proposed
Congress gave the Fed a dual mandate of price stability and full employment. These two mandates are not specifically defined. But the Fed generally recognizes price stability means inflation that does not exceed 2% (even the bogus CPI is currently 7.5% and rising). The Fed refuses to define full employment. But the current unemployment rate is 3.8% (far below its historical average of roughly 5.7%). The problem is no new jobs are being created because of radical Fed policy.
Before the GFC in 2008, the Fed always recognized price stability as its primary mandate. This makes good sense because price stability is a necessary prerequisite to maximum employment:
Fed Chair Volcker, February 1986: “We are convinced that sustained growth in the United States—and much more—is dependent upon maintaining progress toward price stability over time. And given our weight in the world, that same stability must be one of the foundation stones of a prosperous and integrated global economy.”
Fed Chair Greenspan, July 2000: “Maximum sustainable growth, as history so amply demonstrates, requires price stability.”
Fed Chair Bernanke, February 2006: “Inflation prospects are important, not just because price stability is in itself desirable and part of the Federal Reserve’s mandate from the Congress, but also because price stability is essential for strong and stable growth of output and employment.”
So what changed after the GFC? Wall Street’s reckless bets on opaque derivatives were so bad, they required the Fed to take increasingly radical monetary intervention that destroys America’s real economy. Christopher Leonard’s new book “The Lords of Easy Money” explains this brilliantly. He even got a quote from the CFO of a Fortune 500 company admitting that whenever the Fed holds rates at zero, he won’t use cheap loans “to create a single job.”
The same is true for the trillions in “Quantitative Easing” purchases that the Fed executes via the New York Fed and BlackRock. The main purpose of those purchases is to bail out Wall Street and artificially inflate their mortgage-backed securities, corporate junk bonds, and other shitty financial derivatives. The NY Fed is literally owned by 5 of the largest megabanks on Wall Street: JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, and BNY Mellon. Every American who cares about their future of their country should take a few minutes to learn more about the NY Fed from the brilliant investigative journalists at Wall Street on Parade.
Without the NY Fed, how would Jamie Dimon be able to swing by its President’s office for 20 minutes after blowing up the overnight lending market to demand the Fed dole out more than $2.5 Trillion in emergency repo loan bailouts to his five-time felon megabank? (See also “A Strange Timeline at JP Morgan Chase”) How would the NY Fed leak inside information about FOMC policy decisions to NY megabanks as suggested by a comprehensive 2018 study of NYC taxicab data?
And make no mistake — even after lavishing its executives with the biggest bonuses in history, Wall Street will be violently shaking the money tree before the Fed’s balance sheet even starts shrinking. Indeed, the Russian invasion of Ukraine and resulting sanctions may be the trigger for another “Lehman moment” according to repo expert Zoltan Pozsar. Citigroup surprised analysts by announcing at least $10 billion in exposure to Russia. A JP Morgan analyst admitted: “Most banks do not give net exposures, and do not provide granularity around the gross exposures.”
Even as they make risky bets “pouncing” on “cheap” Russian assets, we’d venture to guess other megabanks like JP Morgan have massive exposure to Russia too. In June 2021, JP Morgan said it planned to double the size of the Russia desk in its Swiss office. And that was after apparently getting caught laundering more than a billion dollars for Russia’s mafia and oligarchs.
The banksters will no doubt hold urgent meetings with the unholy “Troika” of Powell, NY Fed’s Williams and the Vice Chair (Brainard, if approved, now that Clarida was pushed out early over the trading scandal). And the Fed will continue to find new and horrible ways to shit all over its price stability mandate. It’s not just time to eliminate the Fed Regional Banks. It’s time to #EndTheFed entirely. The future of our country and the world depends on it.
-#OccupyTheFed
Thank you for this. It's reached such levels of absurdity. What makes it even more difficult is we face a broader public that's not only desensitized to controversy, but exhausted by it. The Fed needs to be reined in so that we can preserve any hope of the US being economically competitive moving forward. Short term economic priorities for the few need to be replaced with what stands to benefit even future generations. I'm with you and working to raise awareness on an individual level.
Could you write an essay which probes into the internals of the FED regarding its status as a privately owned Central Bank? If I've understood my private correspondance with Dr. Paul Craig Roberts correct, there are privatley owned banks who are secret stockholders. He said that the books written by American investigators regarding the true nature of the FED are essentially correct but he didn't want to endeorse a particular book.
I suspect he was thinking of Griffin's "Creture from Jekyll Island" and Mullins "Federal Reserve Bank" which both say that the FED is a privately owned Central Bank.
There needs to be more light shed upon the privately owned status.