Page 2 of 2 Bernanke's neck on the line
By Julian Delasantellis
The people boiled down the Fed role in the financial crisis very simply - they,
the people, clearly had something to do with it, and the Fed was certainly
spreading a lot of money around, but Mr and Mrs Joe Sixpack didn't seem to be
getting a penny of it, so something had to be wrong here.
Like a mechanical nincompoop asking a car dealer to pop the hood on a
complicated new car engine even though he has no idea what is going on under
it, a populist reaction is developing around a concept that what must be done
is to perform an "audit" of the Federal Reserve System; the logic being that if
all that money is going out from the Fed and not becoming Middle America's
walking money, the enraged and activated populace must track it all down to get
it back.
At www.auditthefed.com, the sponsors of congressional bills that
would mandate the Federal Reserve audits, House Resolution 1207 and Senate
Resolution 604, explain their view of the need of the guys and girls with the
proverbial green eyeshades taking on Bernanke:
During the current
economic crisis, Congress, the Treasury, and the Fed have put us on the hook
for over $12 trillion in bailouts and loans. This is in addition to our almost
$12 trillion national debt. When testifying before Congress, Fed Chairman Ben
Bernanke has refused to disclose which institutions have received trillions of
dollars in these bailouts and loans or to give our representatives details
about what deals are being made with foreign banks ... The crucial issue of
Federal Reserve transparency requires an analysis of 31 USC 714, the section of
US Code which establishes that the Federal Reserve may be audited by the
Government Accountability Office (GAO), but which simultaneously severely
restricts what the GAO may in fact audit.
Essentially, the GAO is only allowed to audit check-processing, currency
storage and shipments, and some regulatory and bank examination functions, etc.
The most important matters, which directly affect the strength of the dollar
and the health of the financial system, are immune from oversight. ... HR 1207,
The Federal Reserve Transparency Act, and S 604, The Federal Reserve Sunshine
Act, would eliminate these restrictions and mandate a GAO audit of the Fed to
be completed by the end of 2010, finally delivering answers to the American
people about how our money is being spent.
Once again, here is
shown the average American's frequently displayed belief that if the national
welfare is being threatened, it must be foreigners, specifically, those wily,
foxy foreigners who, with their rancid and repulsive repurchase agreements,
have apparently just pulled the wool over the few patriotic Fed officials, who
probably do not include Bernanke, looking out for the interests of people of
the American heartland rather than the international banking elite.
In a time when powerful interests have learned to grow and cultivate American
public opinion in a focus group laboratory like Soylent Green, the "audit the
Fed movement" is clearly the real deal - a genuine, bottom-up, popular
political movement. A question about auditing the Fed was prominent at the
anti-Obama healthcare reform "town hall" I attended in August (see
US healthcare debate sick to the heart Asia Times Online, August 19,
2009).
But like the proverbial French police chief who, on seeing the revolution of
1848 march by his cafe table, got up and exclaimed, "I must follow them, for I
am their leader," US politicians are head-over-heels glomming onto the Fed
audit movement. It should be no surprise that leading this charge is Ron Paul.
Paul's ultimate ambition for the Fed lies more along the lines of its abolition
or emasculation rather than just its audit. Still, he answered the call of the
bugles of the zeitgeist with a new book, End the Fed, published in late
September, and already number two on Amazon.com's
"Books>Non-fiction-Government>Federal Government" sales list.
"What is the Fed and what does it do?" Paul asks. "... after all is said and
done, the Fed has one power unique to it alone; it enables the creation of
money out of thin air. Sometimes ... it makes vast new amounts. Sometimes it
makes lesser amounts. The money takes a variety of forms and enters the system
in various ways. Given that money is half of every transaction ,and that whole
civilizations literally rise and fall based on the quality of their money, we
are talking about an awesome power, one that flies under the cover of night. It
is the power to weave illusions that appear real as long as they last. This is
the very core of the Fed's power."
Paul espousing anti-Federal Reserve views is nothing very much new on the US
political spectrum. What is new is how these views are now becoming the
dominant ideological paradigm across the entirety of the US political spectrum.
On November 20, the US House Financial Services Committee, over the objections
of its powerful chairman, Barney Frank, passed the Paul/Grayson amendment
(co-sponsored by Democrat Alan Grayson, representing the Florida 8th district),
freeing the government's General Accounting Office from restrictions that
previously prevented it from performing a full audit on the Federal Reserve.
Should the bill make it to the full House of Representatives floor for debate,
its 307 co-sponsors should assure its passage; with only 30 co-sponsors in the
100-member patrician senate, its fate there is more uncertain.
On one level, these first, initial victories of Paul/Grayson represent a unity
of the American political extremes against the political center; Grayson made a
name for himself as a rhetorical bomb-thrower during the recent healthcare
debate (on one occasion, famously commenting, "The Republican healthcare plan
is this: Don't get sick, and if you do get sick, die quickly"). In another
sense, Paul/Grayson could be looked at as a discrediting of the very concept of
the political center itself, now looked at with suspicion as a prime suspect in
the government's enabling of the bad actors on Wall Street who gave America the
financial crisis.
For the Republicans, public opposition to the Federal Reserve goes a long way
towards completing the journey they commenced last year, when they started the
journey away from being Bush's Big Government/Big Business/Big Jesus party to
where they are now, a political movement advocating a smaller government that
is driving the tea party crowd wildly onto the streets, then maybe to the
ballot boxes, with joy. On the conservative "FreeRepublic" blogsite, a poster
noted, "Much of the support is coming from ordinary people who have become
aware of the fact that the Federal Reserve has created trillions of dollars
literally out of nothing."
In other words, it's acted precisely like a modern central bank.
But the support is also heavy on the left. They're tired of the Republican
charge that it was only liberal programs and initiatives to help put the poor
and minorities into their own homes that caused the financial crisis, and
they're not at all happy about the dead end to which the Obama/Geithner/Larry
Summers economic team has led them into this past year, namely, to become the
fawning washroom attendants of Goldman Sachs and the rest of big capital. On
the "firedoglake" blog, left wing sentiment is expressed in this manner:
[Blogger]
Dean Baker laughs at the idea that the Fed is "independent" when phone records
for Timothy Geithner during his time at the NY Fed show that he was in constant
contact with bankers. What we effectively have is a system where the private
banks conduct monetary policy for their own benefit away from the prying eyes
of the public. But it's clear that there is going to be an incredibly strong
full-court press by the banks, by Timothy Geithner and [director of Obama's
National Economic Council] Larry Summers and by the Fed itself to undo this ...
It was an incredible defeat for the banks, who have been able to write their
own ticket by orchestrating the bailouts, controlling the Federal Reserve and
demanding their divine right to profiteer while the unemployment rate
skyrockets. We're proud of the role we played in this effort. It's time we stop
bailing out Wall Street and start investing in Main Street.
To
me, the most remarkable thing about all this is its continuing demonstration of
American's obsession to hunt for and root out a culprit for the financial
crisis other than the one clearly visible when they look in the mirror. Sure,
the Alan Greenspan Federal Reserve kept interest rates too low for too long,
and that was a major factor in spurring the ultimately catastrophic real estate
boom; but in this, all they were doing was precisely what the American people
wanted them to do - keep alive a debt-fueled real-estate spike that, from sea
to shining sea, was firing the dreams of those dissatisfied with their life's
destinies.
From veteran high school math teachers who looked on the prospect of another
year in the classroom the way a death row inmate would look at another year on
the green mile, to lawyers out on the street chasing ambulances so as not to
have to spend another day in their office smelling all those dammed
leather-bound lawbooks, that not-so-long-ago real estate boom was looked at as
America's magic carpet, ever ready, ever beckoning to take yet one more
passenger to the land of the palaces of gold and rubies, always just over the
horizon.
On December 3, Bernanke will appear before congress to commence the hearings
for his nomination for a second four-year term as head of the Fed. Up until
recently, many observers had expected these hearings to be mundane and
perfunctory; many pundits cosseted within the Washington Beltway's high walls
may still think they will be.
These sentiments may turn out to be spectacularly wrong. Bernanke may be, in
the words of fishing boat captain Linda Greenlaw (Mary Ellen Mastrantonio) to
her fellow captain Billy Tyne (George Clooney) in the 2000 movie The Perfect
Storm, "headed right for the middle of the monster", the ogre being the
public's rage over the economic devastation caused by the financial crisis.
Instead of the customary way these matters are usually handled, with the solons
pledging eternal fealty and generally prostrating themselves before their
masters in finance capital, these hearings may turn out to be far different,
something more along the lines of the arrest, trial by the mob, and execution
of Louis XVI by the National Convention in 1793.
As la Guillotine's lips kissed Louis' sweet neck, legend has it that an
observer said she was sitting so close she could hear "the whisper of the axe".
Turn up your TV, sit in front of the speaker, maybe you can too.
The alien oppressors will thus be defeated; the people will be overjoyed, they
will dance in the street. Such celebrations should be temporary - the script
can, and ultimately will, inevitably be updated in the future for another
performance.
Julian Delasantellis is a management consultant, private investor and
educator in international business in the US state of Washington. He can be
reached at juliandelasantellis@yahoo.com.
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