MONETARY POLICIES
banking crisis. “Small businesses and state and local governments are having serious difficulty obtaining necessary
financing from debt
markets,” Obama said. He proposed that the Fed buy municipal bonds to cut their rising borrowing costs.
The proposed municipal bond
facility would have been based on the Fed program to buy c o mm e r c i a l paper, which had almost single-handedly propped up the market for short-term c or p ora t e b o r row i n g . I n v es t o rs welcomed the muni bond proposal as a first step toward supporting market.
the The Federal Reserve
But Bernanke rejected the proposal. Why? It could hardly be argued that the Fed didn’t have
that would Act was Bernanke’s reasoning in saying no
trillion in liquidity and $9 trillion in short-term loans and other financial arrangements to banks, multinational corporations, and foreign financial institutions following the credit crisis of 2008. Later revelations pushed the sum up to $16 trillion or more.
FX
The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their
interests. It is their
own private club, and its legal structure keeps all non-members out. A century after the Fed’s creation, a sober look at its history leads to the conclusion that it is a privately controlled institution w hose c or p ora t e owners use it to direct our entire economy for their own ends, without de mo c r a t ic influence or accountability. S ubs t a n t ia l changes are needed to t ran sf or m the Fed, and these will only come with massive public pressure.
drafted
by bankers to create a banker’s bank
serve their interests the money.
The collective budget deficit of the states for 2011 was projected at $140 billion, a drop in the bucket compared to the sums the Fed had managed to come up with to bail out the banks. According to data released in 2011, the central bank had provided roughly $3.3
to the muni bond facility was that he lacked the statutory tools. The Fed is limited by statute to buying municipal government debt with maturities of six months or
less
that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market.
Congress has the power to amend the Fed – just as
it did in 1934, 1958 and 2010. For the central bank to satisfy its mandate to promote full employment and to become an institution that serves all the people, not just the 1%, the Fed needs fundamental reform.
Ellen Brown FX TRADER MAGAZINE January - March 2014 23
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