Deja Vu FEDERAL RESERVE DOES IT AGAIN (Remember the Savings and Loan Credit Unions when Failing Government taketh away)
Republished from the podcast TheAmerican Enterprise Manifesto, Volume Two of the American Enterprise Swing Vote Party, Spotify, Google Play, Apple Play.
The Federal Reserve banking system is famous for causing recessions, and finally the depression of 2007 that was blamed on Wall Street’s bundling sub prime mortgages into trounces that were rated by Standard Pours to be rated as A, low risk, B, medium risk, C high risk, then using the same rating system for the B’s and C’s so each had A’s, B’s, and C’s. Wait a minute that dilutes the risk on risky sub prime mortgages doesn’t it?
All Wall Street did was take advantage of that blunder … but then enters the new Federal Reserve Chairman Ben “helicopter” Bernanke to replace Greenspan, who for 19 years had managed the discount rate to member banks religiously on a conservative basis … let the markets create the demand the banks the supply of debt capital … not using inflation as his prime rate driver.
Bernanke and his board immediately upped the discount rate to the member banks by 200% on the first move and another 250% on the second move causing the subprime mortgages to be in default thus collapsing the housing markets, and the 401k accounts and each home owners’ equity to the tune of $30 trillion.
A depression not a recession ensued for which Bernanke and Bush passed a $600 million dollar TARP package of borrowed money, to save General Motors and selected brokerage houses and large banking institutions. Who approved such a thing? Congress no, the Secretary of Treasury Paulson (of Goldman Sachs fame) yes, the President George W. Bush yes. Of course the next was Barack Obama whose adviser was Volcker the Keynesian interest king who was advising President Carter when the prime rate was 23%.
What does he do but bail out the large banks and investment houses with a $700 million, borrowed money, stimulus package while Bernanke heated up the Fed’s printing presses to support loans (Treasuries with fixed rates and long term pay outs) to the Federal Government. All and all this cost enterprising American taxpayers their home values, pay raises (while Goldman Sachs execs got millions) and the US GDP $50 trillion. I reiterate “Failing Government Taketh Away” (the title of my other book on the demise of the great American Enterprise Swing Vote Party, 2022).
Mrach 15, 2023 … Deja Vu FEDERAL RESERVE DOES IT AGAIN: Kills the economy to save their member banks. Short sighted in a teetering economy fraught with debt and political gridlock.
The Federal Reserve isn’t a regulatory agency of the US federal government … it is a tacit regulator of its member banks, and generates profits from the currency exchange rates and the positive yield curve for U.S. Treasuries. Their priorities aren’t for reducing the cost of capital for the benefit of the American Enterprise investors.
Read The American Enterprise Party Trilogy Volume Two, American Enterprise Manifesto, 2022, See Article four of quasi-reorganization plan, for the impact of the Federal Reserve, increasing the discount rate to member banks to penalize Wall Street for the subprime mortgage arbitrage.
And how they caused the depression of 2007 with inordinate increases in the discount rate, they charge member banks for capital. It then rippled through international monetary system with 12% LIBOR rates bankrupting many of the smaller businesses and economies around the world.
Example of Deja Vu all over again. In the early 80’s the Federal Reserve and Carter Administration blamed low mortgage rates on Saving & Loans banks, and punished them with 23% prime rates thereby destroying the Savings & Loans banking system that had mortgages in circulation at rates of 6%, that would default all their existing fixed rate mortgages, and put the so called 745 thrift banks out of business, and convicted its principal owner of fraud.
Causing thousands of small businesses to file for bankruptcy.
Big Brother rides again with the 2007 Arbitrage Depression destroying $30 trillion in home owners’ equity, and investors in stocks, and their 401.k savings balances.
For the record, in 2005 after Greenspan’s retirement, a complacent President Bush, and his Treasury Secretary Paulson allowed Fed Chairman Bernanke to raise the discount rate to member banks by 550% in 2005 to 2007, causing the housing depression that swept worldwide, and sunk the American housing market for a decade. Then blamed the housing market and Wall Street for the Great Recession (really a depression).
The aftermath was a $30 trillion hit on Americans equity in housing values that plummeted. And the stock market tanked and American retirement 401.k savings accounts bottomed out. (See Exhibit A the demise of the American liquidity and Article 4 Pop Goes the Monetary Balloon).
Now in 2023 it with big spender President Robinhood Biden, it is Silicon Valley, Signature Bank, North American, big banks avoiding runs on their big investor accounts … then smaller banks, small businesses, government bailouts … potentially another depression, not recession.
Under President Trump we had a Fed, with Janet Yellen, President Biden’s Secretary of the Treasury, as its chairman, sustaining the lowering of the Fed rates to 1%, and on occasion a negative rate for the first time in memory. This stimulated the use of borrowed capital, and more small business startups, reducing unemployment, improving wages, increasing employment of minorities, and stimulating the economy as demonstrated by the Dow Jones exceeding 30,000 for the first time ever.
How in the world could Trump lose the 2020 reelection by 8 million votes to Joseph Robinhood Biden, last in his class attorney who flunked third grade. Leaving us in the hands of an incompetent, 79 year old, 47 years in the Senate, former Vice President, with no entrepreneurial skills, as President … Who, if left unabated running the country with a teleprompter, and former Speaker of the House Nancy Pelosi, Chuck Schumer leader in Senate, and, an Obama speech writer, will finally sink the Great American Enterprise Ship.
As result, under Biden’s leadership, the Democrats plan to transform America into a Socialist State, by opening our borders, promoting the Green New Deal implementing the destruction of the fossil fuel energy production, with more social reforms, and big business Pandemic stimulus. rather than infusing wealthy Big Unions, Big Media, Big Box, and Big Tech capital into small business creativity.
According to Senate Leader Schumer, and former Speaker Pelosi, open borders and America’s wealth chest, are to populate an imperialist America with a brown census to pick the crops, and have more diverse babies and offset white imperialist controls,
More realistically, we no longer can just stand down on free enterprise; we need to invest in the human capital in the ethical, patriotism of American worker, as we did in the 1940s to win a war on our very way of life and economic principles.
We now need them to defeat China, and its consortium that are buying our imports at the rate of $1 trillion less than our exports to 30 countries, plus decline in exchange rates for the dollar used in global trade. Losing profits and cash flow resulting inf $32 trillion in US Treasuries debt.
And now, we need to protect the entitlements that help our elderly and needy by investing money saved, in the stock market, by reducing, and eliminating the new entitlements that strap our great free enterprise model. The war on debt in the 2020 to 2030 decade is the same type of war. A global trade war arsenal, that is funding communism and Putin’s takeback of the USSR.
It’s to save the USA’s, national standard of living, and allowing all of the people (assisting the have-nots to learn to earn and skill to bill contributing to national GDP) to have an opportunity to succeed …not just the elite (the haves) who can afford higher education, with jobs already secured in the private sector.
To win that trade and Ukraine war, (while stymieing the charges that the White Imperialist government should pay reparation to the “Black Lives Matter” campaign, and cancel our culture related to slavery and black injustices. To counter this the inner cities, have to be rebuilt using small business loans, and big money capital.
The BLM must lead by example, in this project, not by protests that unravel into uncivil riots, and carnage of the very businesses that will provide the opportunity (reparation) they demand. But thehy spendt their political funds raised on buyiing trinkets and homes.
This is called poetic justice:
Read The American Enterprise Party Trilogy, Volumes One, Swing Vote, Volume Two, Manifesto, and Volume Three, Restore Work Ethic and Patriotism, 2022, bY Jerry L. Rhoads, CPA, Founder, CEO, and Consultant to insolvent Governments.
