Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

[a447513372]

I don't know if you've been following the news, but the House of Representatives (US) has just voted in favor 333-92 for the Federal Reserve Transparency Act, aka Audit The Fed. I created a Government petition:
http://wh.gov/iiFlu

Please, if we can get 100k signatures, then we may be able to get the white house to force a vote in the senate! Please share

The white house has zero control over what the senate votes on. This is determined by senate leadership which happens to include Harry Reid, who will not bring any bills that do not fit liberal policy to vote

[visdude]

http://www.youtube.com/watch?v=lu_VqX6J93k

[xavier]

In fact, national debt is a very very good thing. All of those debts that add up to 17 trillion dollars have hard-set timetables for completion, no, China cannot "call it in" and ask for all of their money back.

National debt is a good thing because it means that other countries are happy to loan to the United States, and they are confident that they will get their investment back and more. Confidence is the driver of economies in a virtuous cycle, so as long as other countries keep loaning money to the United States, the US economy will be healthy. The day the US stops borrowing money is the day that the economy crashes worse than ever before.

Oh dear. This comment is symbolic of something, but I'm not sure what. A sign of the times I guess.

[a447513372]

National debt is a good thing because it means that other countries are happy to loan to the United States, and they are confident that they will get their investment back and more. Confidence is the driver of economies in a virtuous cycle, so as long as other countries keep loaning money to the United States, the US economy will be healthy. The day the US stops borrowing money is the day that the economy crashes worse than ever before.

That's some broken logic there.

Our ability to borrow is what makes other countries confident. The actual borrowing reduces our ability to borrow, so the more debt the U.S. has the less confident other countries are. Less borrowing is better. The day that the US is unable to borrow is the day the dollar collapses.

This is true. Additionally the more we borrow, the more we have to tax our citizens, which depresses our economy.

[tabnloz]

National debt is a good thing because it means that other countries are happy to loan to the United States, and they are confident that they will get their investment back and more. Confidence is the driver of economies in a virtuous cycle, so as long as other countries keep loaning money to the United States, the US economy will be healthy. The day the US stops borrowing money is the day that the economy crashes worse than ever before.

That's some broken logic there.

Our ability to borrow is what makes other countries confident. The actual borrowing reduces our ability to borrow, so the more debt the U.S. has the less confident other countries are. Less borrowing is better. The day that the US is unable to borrow is the day the dollar collapses.

This is true. Additionally the more we borrow, the more we have to tax our citizens, which depresses our economy.

And the more that is borrowed, the more that needs to be paid back. Which is why IR's cannot be anyhthing other than in the 0% range. If they go up, then it's insolvency, prevented only by the ability to print.

[rugrats]

National debt is not the same as personal debt. In fact, national debt is a very very good thing. All of those debts that add up to 17 trillion dollars have hard-set timetables for completion, no, China cannot "call it in" and ask for all of their money back.

National debt is a good thing because it means that other countries are happy to loan to the United States, and they are confident that they will get their investment back and more. Confidence is the driver of economies in a virtuous cycle, so as long as other countries keep loaning money to the United States, the US economy will be healthy. The day the US stops borrowing money is the day that the economy crashes worse than ever before.

Oh my, what a bold and explosive statement you have there.

National debts come into existence when governments spend more than what they earn.
These deficits are funded by direct loans from financial institutions, national trusts, bonds, LGs and other monetary instruments.
These loans have to be paid back, with interests, usually through tax increases, draconian spending cuts or, more loans.
National debt is never a good thing, especially one caused by chronic budget deficits, because it usually screams of incompetence, at the very least.

[DieJohnny]

Economists and Libertarians both must be scratching their heads at this type of information.

Bottom line is that it is a complete mystery that these loans haven't created more than just a yawn in the global economy.

Either:

1. It is only a matter of time before these new dollars have the classic negative impacts that we expect when a government basically prints money by the truck load.

OR

2. Every economist and Libertarian needs to adjust their views on fiat money, printing and the like.

I think #2 is more likely as I don't see a global collapse of value. It just hasn't happened. Doubling my gas and milk prices in 7 years is not enough for me to buy into an economic collapse around the world.

Can't we agree, there are certainly some new economics in play here that we don't have our heads wrapped around yet?....

[bcmine]

BS.

Thats the amount which was lend. The EU made the same. Thats providing the banks with money. Its normal process. Its like mining Bitcoins, Morons.

[polynesia]

Oh my, what a bold and explosive statement you have there.

National debts come into existence when governments spend more than what they earn.
These deficits are funded by direct loans from financial institutions, national trusts, bonds, LGs and other monetary instruments.
These loans have to be paid back, with interests, usually through tax increases, draconian spending cuts or, more loans.
National debt is never a good thing, especially one caused by chronic budget deficits, because it usually screams of incompetence, at the very least.

Totally agree. When the national debt keeps increasing as a proportion of GDP, you know you are in trouble. Any external shock, which impacts GDP growth, could result in the debt becoming unserviceable. This is the reasons why some countries have a fiscal responsibility law.

[santaClause]

Oh my, what a bold and explosive statement you have there.

National debts come into existence when governments spend more than what they earn.
These deficits are funded by direct loans from financial institutions, national trusts, bonds, LGs and other monetary instruments.
These loans have to be paid back, with interests, usually through tax increases, draconian spending cuts or, more loans.
National debt is never a good thing, especially one caused by chronic budget deficits, because it usually screams of incompetence, at the very least.

Totally agree. When the national debt keeps increasing as a proportion of GDP, you know you are in trouble. Any external shock, which impacts GDP growth, could result in the debt becoming unserviceable. This is the reasons why some countries have a fiscal responsibility law.

The ability of a government to service it's debt depends on the "market's" faith in a  country's ability to repay their debts. As soon as the "market" starts to believe that the country is not going to be able to repay their debt the country will effectively lose access to capital markets and will incur a debt crisis.

[Midwestbitcoiner]

Can we get a bailout on the money we have lost the last few months in btc?

[panju1]

Can we get a bailout on the money we have lost the last few months in btc?

Yes, if it was other people's money and you are "systemically important".

[money420weed]

Can we get a bailout on the money we have lost the last few months in btc?

Yes, if it was other people's money and you are "systemically important".

LOL, the answer to his question is no. Period. When the banks were "bailed out" they were not given any money at all; they were lent money (sometimes under favorable conditions) which they had to repay. It is really not accurate to say that banks were given a $16 trillion bailout as this is not the value that banks received from these loans

[DhaniBoy]

who is responsible for this? I think there are many parties involved in the action of this bailout, all blame each other for sure, no one wants to be responsible, there must have been enjoying this bailout action, hopefully The federal reserve can find people who is responsible for the actions of this bailout ... 

[panju1]

who is responsible for this? I think there are many parties involved in the action of this bailout, all blame each other for sure, no one wants to be responsible, there must have been enjoying this bailout action, hopefully The federal reserve can find people who is responsible for the actions of this bailout ... 

Bailout does not equate to corruption.

[redHeadBlunder]

Can we get a bailout on the money we have lost the last few months in btc?

Yes, if it was other people's money and you are "systemically important".

LOL, the answer to his question is no. Period. When the banks were "bailed out" they were not given any money at all; they were lent money (sometimes under favorable conditions) which they had to repay. It is really not accurate to say that banks were given a $16 trillion bailout as this is not the value that banks received from these loans

The Federal Reserve also bought toxic assets from banks at inflated values. This was a direct transfer of money to the banks.

The federal reserve actually made money on bonds sold by AIG to the tune of several billion dollars, earning a very good ROI. The prices on bonds that the fed purchased were also artificially deflated and did not reflect the NPV value of the bonds in question. The banks were essentially forced to sell because they were facing a liquidity crisis and would have made more money if they had held onto the bonds

[panju1]

Can we get a bailout on the money we have lost the last few months in btc?

Yes, if it was other people's money and you are "systemically important".

LOL, the answer to his question is no. Period. When the banks were "bailed out" they were not given any money at all; they were lent money (sometimes under favorable conditions) which they had to repay. It is really not accurate to say that banks were given a $16 trillion bailout as this is not the value that banks received from these loans

The Federal Reserve also bought toxic assets from banks at inflated values. This was a direct transfer of money to the banks.

The federal reserve actually made money on bonds sold by AIG to the tune of several billion dollars, earning a very good ROI. The prices on bonds that the fed purchased were also artificially deflated and did not reflect the NPV value of the bonds in question. The banks were essentially forced to sell because they were facing a liquidity crisis and would have made more money if they had held onto the bonds

Just because the market turned doesn't mean that the Fed paid a fair value for those bonds at that time. If the Fed hadn't stepped in, banks would have sold those assets at a much lower value (which would have been the market price).

[RoadTrain]

Economists and Libertarians both must be scratching their heads at this type of information.

Bottom line is that it is a complete mystery that these loans haven't created more than just a yawn in the global economy.

Either:

1. It is only a matter of time before these new dollars have the classic negative impacts that we expect when a government basically prints money by the truck load.

OR

2. Every economist and Libertarian needs to adjust their views on fiat money, printing and the like.

I think #2 is more likely as I don't see a global collapse of value. It just hasn't happened. Doubling my gas and milk prices in 7 years is not enough for me to buy into an economic collapse around the world.

Can't we agree, there are certainly some new economics in play here that we don't have our heads wrapped around yet?....

These "new economics" has been in play since 1971, the year Bretton-Woods collapsed.
The fiat money economics that's in play today is a good example of market-driven money creation (money is created by lending). These QE's by Fed are meaningless as they can't change the amount of money in the economy unless the private sector is willing to borrow. That's why they fail to induce any significant inflation.

The same thing is with government debt. It's in there because domestic private and foreign sectors are willing to save. There are no any shenanigans in this, sectoral balancing is a simple thing that anyone can manage understand.

Why the private sector is willing to save and unwilling to borrow is a different question. The reasons can be cyclical or structural. E.g. in Japan it's structural, while in the U.S. it turns out to be cyclical.

[botany]

The same thing is with government debt. It's in there because domestic private and foreign sectors are willing to save. There are no any shenanigans in this, sectoral balancing is a simple thing that anyone can manage understand.

The day foreign countries like China decide they have enough USD, the government may find it difficult to manage its high debt levels.

[RoadTrain]

The same thing is with government debt. It's in there because domestic private and foreign sectors are willing to save. There are no any shenanigans in this, sectoral balancing is a simple thing that anyone can manage understand.

The day foreign countries like China decide they have enough USD, the government may find it difficult to manage its high debt levels.

The day they decide so, the current account will finally be in balance, and there will be no need for additional foreign funds.

Either way, the system will rebalance, but it doesn't imply there will be default.