Friday, October 8, 2010

On the Limits of Central Banks...

As most of you are aware, the Federal Reserve has been granted an enormous amount of power and resources to pursue the recovery of the American economy. Under the Bush and Obama administrations they have spent trillions of dollars with little to show. In theory, a powerful central bank could be exercised for the benefit of the people, but like most examples of having the state seek to command the economy, it is limited by the competency and corruption of its administrators. Nowhere is this better demonstrated than in a public hearing in which the federal reserve inspector general is questioned where trillions of dollars spent by the federal reserve have gone:

Federal Reserve Cannot Account For $9 Trillion

By Gold Investments on May 14, 2009

Rep. Alan Grayson talks to the Federal Reserve Inspector General Elizabeth Coleman of the Federal Reserve, asking her questions regarding trillions of dollars that came from the Fed’s expanded balance sheet and what the losses on its $2 trillion portfolio are.

The Inspector General does not have the answers Grayson is looking for.

Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not.

“What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked.

“We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.”

Translation: Nobody at the Fed knows where the money went.

Do you know what who got the $1 trillion or more in the Fed’s expansion of its balance, Grayson pressed.

“I do not know. We have not looked at this specific area at the particular point on that specific review,” Coleman answer.

What about the trillions of off-balance transactions since last September, Grayson asked.

Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve.

Grayson pointed out that it was the inspector general’s job to audit such spending and asked again if the office had done any investigation at all.

Coleman’s answer: Not enough yet to even respond. “We are in not a position to say if there losses.”

Grayson concluded, “I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this.”

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