The Federal Reserve: A Common Enemy

I originally wrote this piece for RevoluTimes on December 3, 2011

The recent discovery that prior to the TARP bailouts of 2008 (which authorized $700 billion in purchased assets), the Federal Reserve secretly doled out $7.7 trillion to foreign banks has caught the attention of pundits across the political spectrum. And it should. The TARP program originally authorized what was thought to be an unprecedented but allegedly necessary purchase of “troubled assets” by the Department of the Treasury in an attempt to save the participating institutions from further losses by improving the liquidity of these assets. Most of the American people haven’t been convinced such measures were truly necessary. In response to the bailouts emerged the Tea Party; a band of conservatives, libertarians, disenchanted liberals and independents who believe the size of government has grown too large and its influence (particularly in the economy), should be greatly limited. Not satisfied with these sentiments and desperate for a reenergized base, many left-liberals have joined ranks with the growing Occupy Wall Street demonstrations (OWS), that feels the power and influence of corporations has corrupted the government and sold the people to elite bankers. While it’s true there are stark differences between the dominant philosophies of these two movements, to a degree they’re saying the same thing in different languages. The latest reports from Bloomberg News suggest the Federal Reserve may be the missing link between the two populist movements.

Reported Bloomberg:

“A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.”

The report continues to note that not only did the Federal Reserve secretly print this money, but they gave the loans at below market interest rates. How low exactly? 0.01%! As the always hilarious Jon Stewart opined,

“0.01%? I got news for ya, that’s not below market-that’s free!”

The report went on to note that the free loans were then loaned back out by the receiving banks. It’s estimated the banks receiving the secret bailout gained a profit of $13 billion.

According The New American’s Thomas Eddlam,

“The Bloomberg report noted that top Wall Street banks benefited most from the deal. ‘The big six — JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group Inc., and Morgan Stanley — took 63 percent of the Fed’s emergency-loan money as measured by peak daily borrowing,” the San Francisco Chronicle observed November 29 of the Bloomberg data.’”

Added Eddlam,

“The evidence also reveals that Federal Reserve intervention in the market helped the ‘too big to fail’ banks get bigger still. ‘Records shows that during the past five years, total assets at the largest six banks increased by almost 40% and executive compensation rose by 20% — more than $146 billion in compensation last year alone,’ USA Today reported November 28.’”

The lack of transparency and unaccountability of the Federal Reserve has created some rather strange bedfellows. Lifelong critic of the Fed and 2012 Republican presidential candidate, Congressman Ron Paul has joined with Democratic Congressman Dennis Kucinich numerous times in pushing for an audit of the Federal Reserve. Paul is well-known for his advocacy of a market-based currency and allowing for competition of currency. Kucinich has not gone that far but he has created a new bill, (the NEED Act) to drastically limit the power of the Fed.
In his latest “Kucinich Report”, he outlines the necessity of bringing accountability to the Federal Reserve saying,

“Ten million homes are in jeopardy. Fourteen million people out of work. Fifty million without health care. Endless wars. The Fed creates money out of nothing, gives it to banks, banks keep it on deposit, gain interest, pay high bonuses — fat city — while the rest of America falls apart. The Fed creates money out of nothing for the banks. Meanwhile, the rest of us have to be stuck in a debt-based economic system? I don’t think so…now do you understand ‘Occupy Wall Street’?”

There’s no denying genuine progressives such as Congressman Kucinich and much of OWS aren’t going to find complete agreement with libertarians like Congressman Paul and many among the Tea Party; however, such pressing issues can bring together coalitions of individuals across the spectrum to work towards common goals without sacrificing principle. Whether you view the “1%” as those with most of the money or as those with most of the guns, if we abandon the fictional narrative contrived of vitriol and platitudes by the establishment we may find that we have more in common with each other than we do with politicians or talking heads.

The Tea Party's Identity Crisis

I originally published this article at RevoluTimes on December 1, 2011

The political circus being played by the GOP must leave one wondering if the Tea Party has all but abandoned its goals of fiscal restraint and smaller government. Rick Perry, Herman Cain and now Newt Gingrich have all been declared the frontrunner at some point throughout the presidential race despite their support for Big Government programs and government spending. Mitt Romney continues to poll well throughout the country but many conservative activists have refused to warm up to the former Massachusetts governor due to his many inconsistencies on the campaign trail.

This strong trend of searching for the Anti-Romney (similar sentiments were held during his presidential bid in 2008 as well) is rather puzzling considering the embrace given to the aforementioned candidates by much of the Republican Party and Tea Party supporters. The Tea Party and conservative activists across the country pride themselves on being defenders of capitalism, lower taxes and cuts to federal spending; but their propensity to latch onto whomever the Republican Party and conservative media is promoting at the moment makes this claim questionable at best.

The schizophrenia of right wing voters began with Rick Perry. As I’ve documented elsewhere, the Texas governor has a laundry list of tax hikes, corporate welfare and even a government mandate for young girls to purchase and be submitted to an HPV vaccine. As if this wasn’t enough to eradicate any rumors of Perry’s fiscal conservatism, Perry staunchly supported the springboard for the Tea Party movement: TARP. Indeed, not only did Perry support the bailout, he co-authored a letter with then president of the Democratic Governors Association, Joe Manchin saying,

“…There is a time for partisanship and there is a time for getting things done…and now is not the time to assign blame. It is time for D.C. to step up and be responsible and do what’s in the best interest of American taxpayers and our economy…It’s time for leadership. Congress needs to act now.”

Perry’s well-known history of pandering to special interests and unimpressive debate performances led many within the Tea Party to look towards Atlanta businessman Herman Cain. Cain’s candidacy had been an afterthought for several weeks due to his lack of name recognition; but his apparent outsider demeanor made him far more attractive as voters looked for an anti-establishment candidate. Yet again the so-called conservative media and grassroots organizers touted the latest frontrunner as a stalwart defender of free markets and fiscal responsibility. Little did most Republicans know, (and most still don’t know), Cain oncecondemned a national sales tax only to propose his own, vehemently opposes the notion of ending the Fed and restoring sound money and the coup de grâce of course was Cain’s op-ed in strong support of TARP saying,

“…Wake up people! Owning a part of the major banks in America is not a bad thing. We could make a profit while solving a problem. But the mainstream media and thefree market purists want you to believe that this is the end of capitalism as we know it. It is not for several reasons that they have conveniently not explained…” (emphasis added)

It seems Mr. Cain believed the stealing of your wealth was just a wise investment the State was obliged to make for you. But despite his tarnished record and brand of political whimsy, the former CEO of Godfather’s Pizza held strong until allegations regarding his personal life were made public recently.

At this point the conservative masses were more than happy to offer the musical chair to former House Speaker Newt Gingrich. It’s not surprising to see the Georgia native rising in the polls as he’s very well known for his debate skills. It is baffling however that anyone with a straight face could claim Newt Gingrich believes in the free market or fiscal responsibility in any form. Not only did Gingrich support TARP, he staunchly supported the creation of the unconstitutional Department of Education, (and continues to push for its expansion) NAFTA and GATT, various federal subsidies, flip-flopped on Climate Change, received nearly $2 million from Freddie Mac and has repeatedly expressed his support for a federal mandate to purchase health insurance in some manner. And just to illustrate how little concern he has for actually cutting spending, Gingrich referred to the rather modest cuts presented earlier this year by Congressman Paul Ryan as “right wing social engineering”, only to once again change his mind later.

If the Tea Party and its supporters truly wish to be an agent of change and usher in a new age of free markets, sound money and fiscal restraint, they have a very strange way of showing it. As of right now, their choices in a presidential candidate will only result in them becoming a silenced wing of the Republican Party with little influence, and even less credibility. I’d suggest they return to their roots.