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Why are we still listening to this guy?

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October 14, 2009 – Comments (13) | RELATED TICKERS: JPM , GS

During his questioning of Federal Reserve Chairman Ben Shalom Bernanke before the House Financial Services Committee, U.S. congressman Alan Grayson (D), representing Florida's 8th congressional district (Orlando, Ocala, Eustis), burst out laughing at Bernanke's hubris.

(21 July 2009) Grayson's questioning focused on the Fed's handouts to FOREIGN central banks in Europe and other countries. These "Central Bank Liquidity Swaps" rose from a total of $24 billion at the end of 2007, to over $553 billion by the end of 2008. Grayson: "So who got the money?" Bernanke: "Financial institutions in Europe and other counries."

Grayson: "Which ones?" Bernanke: "I don't know." Gryson: "Half a trillion dollars and you don't know who got the money?"

It gets even better. 3:02 - Grayson: "Well, look at the next page [in Bernanke's written report], the very next page has the U.S. dollar nominal exchange rate, which shows a 20 percent increase in the U.S. dollar nominal exchange rate at exactly the same time that you were handing out half a trillion dollars. You think that's a coincidence?"

Bernanke: "Yes." Grayson: "hah-hah-hah-hah!" And really, can Ben Bernanke possibly be so ignorant of the history of the institution that he heads not to know what year the Federal Reserve Act was passed (under very shady circumstances) by the U.S. congress?

Anyone who is interested in the nefarious origins of the Federal Reserve must read the great book by G. Edward Griffin, "The Creature from Jeckyll Island." You can watch the entire hearing on the C-SPAN web site:

http://c-span.org/Watch/Media/2009/07... You can contact Rep. Grayson and tell him "thanks" at http://www.youtube.com/user/RepAlanGr...

 

13 Comments – Post Your Own

#1) On October 14, 2009 at 12:19 PM, kdakota630 (29.85) wrote:

Good find with that first clip.

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#2) On October 14, 2009 at 12:28 PM, PeteysTired (< 20) wrote:

I would be nervous if I was Grayson.  A half a trillion is serious change and he maybe getting a little too close to the real power brokers of this world.

I would love to see the audit the Fed bill passed and hopefully we find out WHO is getting the money.  I wouldn't bet on it. 

It seems fairly obvious determinine WHO will lead to a paper trail.  Power brokers don't want a paper trail.  As long as the Fed states that they provided liquidity to Europe we will never no WHO.

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#3) On October 14, 2009 at 12:34 PM, leohaas (32.65) wrote:

One rec for abitare! Who could ever imagine a Libertarian using a liberal Democrat to make his case...

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#4) On October 14, 2009 at 12:53 PM, brickcityman (< 20) wrote:

Man watching this as the DOW flirts with 10,000 again is just plain weird... 

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#5) On October 14, 2009 at 12:57 PM, AdirondackFund (< 20) wrote:

Good question.  Why anyone would listen to anything coming from our Central Bankers or Treasury Officials in light of what has already occurred would be sheer stupidity.  That the media continues to report the words of these characters can only be due to the fact that they are the only game in town.  Hence the old market saw at times like this "Either we all hang together, or surely we will all hang separately".  What could the marketeers themselves be referring to?  A treasonous crime against The People?     

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#6) On October 14, 2009 at 1:37 PM, ocsurf (< 20) wrote:

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#7) On October 14, 2009 at 5:05 PM, APJ4RealHoldings (33.40) wrote:

Wow, that was a very awesome line of questioning to the Fed Reserve Chairman.

Thanks for sharing Abitare.

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#8) On October 14, 2009 at 6:44 PM, FailTuringTest (33.97) wrote:

I'm not sure I see the problem here.  The Federal Reserve did not "hand out money to foreigners" as Grayson said; it exchanged dollars for euros, with a binding contract to trade back again within a few months at the same exchange rate, and charged the Europeans interest on the transaction. And I don't see why anyone should expect Bernanke to know precisely what the European Central Bank did with the dollars it bought, i.e. who the ECB lent dollars to.

Here's how it works, as I understand it: companies (or banks) in Europe want to borrow dollars, so the Fed trades the ECB some dollars in exchange for euros, the ECB lends the dollars to European banks, and they lend the dollars to European companies.  After a few months, the Fed gets its dollars back plus interest, and gives the euros back to the ECB.  This increases money circulation, the Fed makes profit on the deal (they collect interest from the Europeans), and the Fed avoids the hassle and risk of dealing with smaller banks and companies since it lends only to the ECB, which takes the risk and is very safe.  What's the problem?  Am I missing something?

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#9) On October 14, 2009 at 6:57 PM, brickcityman (< 20) wrote:

@ FailTuringTest

 

Doesn't this just serve to temporarily remove Euro's from circulation and thus make them more valuable, especially since a short time later they cost more (in terms of dollars) to buy back?  If thats not defacto debasing of a currency then I don't know what is.

 

Furthermore what would be harm in having the banks in question procure their desired currency through normal means?  Why create dark pools and preferred channels of money?

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#10) On October 14, 2009 at 7:06 PM, ElevatorDown (< 20) wrote:

if this whole F'n "crisis" isn't just one great fleecing of U.S. citizens, everything is all better now! Goldman giving 23 BILLION in bonuses, give me a break. I can't wait to see the excuses when everything falls apart shortly.

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#11) On October 14, 2009 at 11:40 PM, StatsGeek (29.39) wrote:

End the Fed

Good book by Ron Paul.  If you care about America, you should read the book.

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#12) On October 14, 2009 at 11:48 PM, booyahh (< 20) wrote:

Yeah, Bernanke should have let all the banks go under. He shoulda let Europe go under.

That Ben shoulda just let us head into another Great Depression.

Lehman? C'mon, he shoulda let Goldman, Morgan, Chase, Citi, and State Street all go under. He shoulda let them all go bankrupt.

Cuz we all know that when the banks go bankrupt it's no big deal. Just the 1930s all over again. No big deal.

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#13) On October 15, 2009 at 5:19 PM, FailTuringTest (33.97) wrote:

@brickcityman:

Well, part of the credit swap deal is that the Fed and the other central banks agree to swap currencies at the prevailing commercial exchange rate, and to swap them back again at exactly the same exchange rate as the original transaction, regardless of whether the market exchange rate has changed in the meantime.  So there's no currency exchange loss on the transaction.

You may have a point about temporarily raising the value of the euro if all the Fed does is sit on its euros.  But the USA benefits by having the US dollar in use as a de facto global currency.  First, if people around the world can't get their hands on dollars, they might start using euros, or yen, or yuan, as the standard currency for trading commodities like oil and metals, and then the value of the dollar, the US trade balance, and the US economy would be in real trouble.  And second, overseas customers need to be able to get their hands on dollars in order to purchase American products and services -- which is of course in the interest of the USA.  (Either that or American businesses selling overseas have to accept euros in payment, then they need to convert euros to dollars, which means eventually giving the euros to a European bank and getting dollars, but where did the European bank get its dollars from?  The Fed.)  So either way, it is certainly in the USA's interests to ensure that foreigners can borrow dollars. 

The harm in having people procure currency through normal means is that during the crisis, normal means weren't working.  Banks of all sizes were failing, businesses were going bankrupt, so lenders got so skittish that they simply weren't lending.  This scheme enabled people who needed dollars, either to trade in dollar-denominated commodities or to buy American goods and services, to borrow dollars with the risk being borne by the central banks rather than by potentially dodgy commercial banks.  (During the height of the crisis, nobody knew how solid any bank was.  Maybe we still don't.)

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