Feed: Bailing Out Obama: The Federal Reserve’s New Mandate - AggScore: 12.8

Bailing Out Obama: The Federal Reserve’s New Mandate

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img srchttpwww.personalliberty.comwpcontentthemesredesignimagesfederalreserveimage.jpg altBailing Out Obama The Federal Reserves New Mandate hspace5 vspace5 alignright emQuis custodiet ipsos custodesem Who watches the watchmenThe Federal Reserve is a traitor to the American people and the nation it has sworn to protect. Recently, the Fed has acted less like a central bank and more like President Barack Obamas personal piggybank. The Fed seems hellbent on reelecting Obama for a second term regardless of what it costs.How is the Fed doing this By creating trillions of new dollars to reflate a U.S. economy that is fundamentally flawed by the unprecedented spending of a President and Congress.The Federal Reserves recklessnessorchestrated by Chairman Ben Bernankeis putting at risk the savings of every American. His actions are straightforwardto create trillions in new aggregate dollars, making each existing dollar able to purchase less.The central aim of Americas central bank seems simple Hold together the economy until Obama is reelected in November 2012. This month the Fed began a second round of quantitative easing, or QE2. This second round of cash creation is meant to jumpstart the economy and silence Obamas critics who complain he hasnt engineered his promised recovery.In December the Fed exceeded its authority for the first time when it began purchasing 600 billion in U.S. Treasury securities. Besides flooding the world with fresh money, Bernanke announced in January that he wants to keep interest rates low so the fledgling recovery can fly.According to emForbesem, the Feds actions have drawn opposition around the world.blockquoteemChina, Russia, Brazil, Germany and the U.K. all believe that it will seriously weaken the dollar, possibly forcing other countries to devalue their own currencies and impose more trade restrictions against the U.S. Brazil and other emerging economies also fear that by loosening credit, the Fed could cause new destabilizing asset bubbles abroad. emblockquoteemForbesem doesnt point out that none of this is in the Feds charter. Instead the job of the Federal Reserve is to faithfully manage the economy and create stability for world markets.I stumbled upon one of my old textbooks which said One of the statutory goals of the Federal Reserve System is to ensure stable prices. This goal can only be achieved if the public believes that the Federal Reserve is taking effective measures to ensure them.That is how the Fed is supposed to operate. Created in 1913, the Federal Reserve System had two prime directives The dollar over the President the economy over the Party.And for nearly a century the Federal Reserve followed that code of conduct. It was through such actions that the Fed helped establish American economic dominance.Even after President Franklin D. Roosevelt made it so citizens could not redeem dollars for gold, there have been extended periods when Americans trusted in the dollar more than they trusted gold. Consider President Ronald Reagans two terms and the decade that followed. During most of those years, Paul Volcker was Chairman of the Federal Reserve. The result was that between January 1980 and June 1999, the price of gold fell from 850 per ounce to 253 per ounce.But that was a different era. Today the Federal Reserve and its Chairman no longer hold sacred protecting the purchasing power of the dollar. The onceindependent Fed now seems intent on serving the President and promoting his economic policies.Of course, Bernanke has been a loyal public servant to two Presidents. He was first appointed by President George W. Bush in the winter of 2006. Then Obama reappointed him. Over those five years Bernanke has used every power at the Feds disposal to pump up the U.S. economy, even though it has delivered a devastating bear market for the greenback.In a short statement given in Marthas Vineyard in August 2009 with Bernanke at his side, Obama lauded the Fed chiefs temperament, courage and creativity. It was these personal characteristics, said Obama, that had helped Bernanke navigate America out of a Great Depression.President Obama left out the one characteristic that Bernanke seems to have in spadesloyalty. Only loyalty can explain why Bernanke has been playing fast and loose with interest rates while initiating monetary policies that have spawned hundreds of billions of dollars in fresh new money.Bernanke certainly has more than his share of critics. During his second Senate confirmation, 70 Senators voted in favor of Bernanke, but 30 voted against him. That was the narrowest margin by which a Fed chairman was ever won a nomination.Still, Obama and many members of his administration applaud Bernanke. As long as he can keep the Chinese lending and investors from balking on Big Board stocks, Bernanke can help Obama be reelected.But holding the economy together wont be easy. The Chinese and other foreign investors are growing restless about throwing money into U.S. Treasuriesthose pesky bonds Washington needs to keep selling every week just to stay in business. Meanwhile, people like Congressman Ron Paul RTexas are not turning a blind eye to Bernanke.According to Paul There is something fishy about the head of the worlds most powerful government bureaucracy, one that is involved in a fulltime counterfeiting operation to sustain monopolistic financial cartels, and the worlds most powerful central planner, who sets the price of money worldwide, proclaiming the glories of capitalism.And there is more to this than just Pauls opinion. There is hard evidence that the United Statesunder the leadership of Obama and his loyal lieutenant, Bernankeis headed for an inflationary maelstrom. Fueled by the Feds program of quantitative easing, MZM money supply has soared 475 billion in the past six months. This is the money the Fed lends to the banks which is then lent out at a multiple. That is why MZM is sometimes referred to as supermoney, and can be a catalyst in creating inflation.Another broad measure of money, M2, has also been rising at an alarming rate, as you can see in the chart below.p styletextalign centerimg classaligncenter srchttpwww.personalliberty.comwpcontentthemesredesignimageschart5.jpg alt width450 height289 pThat the Fed is pushing such rapid monetary growth may underscore just how frightened Federal Reserve Governors are that we will see a doubledip recession, perhaps even a fullfledged depression. But remember, the Fed is supposed to be worried about protecting the integrity of the dollar. It appears instead that the Fed wants to protect itself along with the rest of the Ruling Elite.More than 150 banks shut their doors last year. Fivehundred banks could close this year. The Federal Reserve will do whatever it takes to see that doesnt happen, the dollar be damned.One final thoughtit is probably premature to celebrate the eviction of Obama from the White House in two years as much as we might like to. There are a lot of powers at work, the Federal Reserve included, that will be working to ensure the status quo.Yours in good times and bad,emJohn MyersememMyers Energy and Gold Reportem