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Fed Audit's Initial Report Reveals Trillions in Secret Loans

timothy posted more than 2 years ago | from the go-ahead-have-a-cabal dept.

Government 499

An anonymous reader writes "The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression."

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Ron Paul 2012 (4, Funny)

rcb1974 (654474) | more than 2 years ago | (#36838242)

nuff said.

Re:Ron Paul 2012 (3, Insightful)

Anonymous Coward | more than 2 years ago | (#36838288)

Dennis Kucinich is the left-wing equivalent. Both Kucinich and Paul are vocal about the Fed and its parasitic relationship to national economies. It is for that reason that I know they can be trusted.

Re:Ron Paul 2012 (4, Insightful)

Kenja (541830) | more than 2 years ago | (#36838296)

True, reverting to the gold standard would greatly excelerate our fall into third world nation status. But I just dont see why that's a desirable thing.

Re:Ron Paul 2012 (1)

Anonymous Coward | more than 2 years ago | (#36838332)

Specifically how?

Re:Ron Paul 2012 (3, Insightful)

Anonymous Coward | more than 2 years ago | (#36838402)

Well, let's see, gold was trading for around $350 an ounce not too long ago, and it's now well over $1,000 per ounce. Basically, that would have us living with what, 200% inflation? Why would you peg your entire economy to some random mineral? Remember when two clowns in Texas came very close to virtually cornering the global silver market? If some one creates a way to artifically produce gold on a vast scale, then what? It's already happened with diamonds, but there's no cartel to protect gold prices.

Re:Ron Paul 2012 (4, Insightful)

Noughmad (1044096) | more than 2 years ago | (#36838502)

Well, let's see, gold was trading for around $350 an ounce not too long ago, and it's now well over $1,000 per ounce. Basically, that would have us living with what, 200% inflation?

No, it's the other way round. If a commodity that used to cost $350 now costs $1.000, that means that dollars had 200% inflation in that time period.

Re:Ron Paul 2012 (1, Insightful)

Anonymous Coward | more than 2 years ago | (#36838680)

Except other currencies have been relatively stable with the dollar.

And before you start saying "well, they had 200% inflation too!", they didn't, because the prices of non-gold commodities didn't go up by the same amount. Gold is in a bubble.

Re:Ron Paul 2012 (0)

smelch (1988698) | more than 2 years ago | (#36838512)

Our currency more than doubling in value is what you consider inflation? Are you... oh... you're posting AC. Nevermind. If filling out a registration form is too taxing for you, which-number-is-biggeristics is way too advanced. Knowing when to properly apply the concept is even harder than that. No, even economics 101 is out of your reach.

Re:Ron Paul 2012 (1)

Oxford_Comma_Lover (1679530) | more than 2 years ago | (#36838756)

Our currency more than doubling in value is what you consider inflation? Are you... oh... you're posting AC. Nevermind. If filling out a registration form is too taxing for you, which-number-is-biggeristics is way too advanced. Knowing when to properly apply the concept is even harder than that. No, even economics 101 is out of your reach.

Don't be mean; the guy just used the wrong sign in his head.

Re:Ron Paul 2012 (1)

Anonymous Coward | more than 2 years ago | (#36838536)

To support this post above, using a gold standard will cause Deflation. Which unlike Inflation, is much harder to control. I realize that Wikipedia isn't the best source to educate yourself, but it is a start. http://en.wikipedia.org/wiki/Deflation

Inflation v Deflation (1)

Oxford_Comma_Lover (1679530) | more than 2 years ago | (#36838836)

Good point.

Effectively, the problem is that given inflation, inventories earn more than they cost, so there is profit. In deflation, inventories cost more than they earn, so there is loss. *technically* that isn't exactly true--the value of the dollar is changing--but it certainly messes a lot of things up, like our whole national tax infrastructure.

Deflation also makes it more expensive to borrow... unless you adjust for the time value of money in the borrowing, which frankly is more complex and probably more expensive (transaction costs are higher for more complexity).

Re:Ron Paul 2012 (1)

Nadaka (224565) | more than 2 years ago | (#36838578)

Alchemy does not exist. Producing gold with a nuclear reaction is not feasible, and definitely not profitable considering the energy states required.

Re:Ron Paul 2012 (1)

msauve (701917) | more than 2 years ago | (#36838586)

"Well, let's see, gold was trading for around $350 an ounce not too long ago, and it's now well over $1,000 per ounce. Basically, that would have us living with what, 200% inflation? "

If you had an ounce of gold (or the equivalent in gold backed currency) "not too long ago," it bought 350 loaves of bread, now it would buy over 1000. You don't know what inflation is.

Re:Ron Paul 2012 (3, Informative)

newcastlejon (1483695) | more than 2 years ago | (#36838632)

If some one creates a way to artifically produce gold on a vast scale, then what? It's already happened with diamonds, but there's no cartel to protect gold prices.

For accuracy's sake I should say that artificial gold is a practical impossibility until we have cheap transmutation; diamonds are just a form of common carbon, while gold is made of precious gold. To answer your specific question of what might happen when we have the technology to cheaply create synthetic gold, I can only imagine: our economies might well have moved past physical scarcity by that point in time.

Perhaps you should have been thinking about cheaply extracting the gold that already exists on Earth. Getting it from seawater is an idea that I've heard mentioned a few times and if that were possible then the price of what is basically just an expensive commodity would plummet, so naturally basing a currency on it would be a Bad Thing. Until that happens I've no idea why the gold standard is bad but then again I don't know how to cast the bones like an economist.

Re:Ron Paul 2012 (1)

es330td (964170) | more than 2 years ago | (#36838886)

Getting it from seawater is an idea that I've heard mentioned a few times and if that were possible

Hartson Brant figured this out back in 1947. (Just checking to see how many people know this reference.)

Re:Ron Paul 2012 (2)

KhabaLox (1906148) | more than 2 years ago | (#36838888)

our economies might well have moved past physical scarcity by that point in time.

Umm... they already have with fiat currency.

Or do you mean our economy as a whole, i.e. the trading of goods and services, would move beyond scarcity? I don't see how that is possible. Value is intrinsically linked to scarcity.

Re:Ron Paul 2012 (1)

Jeremiah Cornelius (137) | more than 2 years ago | (#36838736)

Ahh.

You fear an economy that could be ruined by the dreams of the mediaeval alchemyste.

Bravo.

Re:Ron Paul 2012 (1)

Artifakt (700173) | more than 2 years ago | (#36838858)

What economy couldn't be ruined by the dreams of the mediaeval alchemyste? You think the EU or China are in any better position to weather the changes resulting from Eternal Youth? Maybe the Hopi...

Re:Ron Paul 2012 (2, Funny)

rubycodez (864176) | more than 2 years ago | (#36838342)

We became a superpower while on the gold standard; your statement is absurd.

Re:Ron Paul 2012 (0)

Anonymous Coward | more than 2 years ago | (#36838442)

hahahahaha...no we didn't actually...our super status was not really sealed until after WWII. We all know that we began to move off of the gold standard under Roosevelt, but still had some of our money supply backed up by gold reserves. Moving off of the gold standard was what allowed our economy to grow exponentially after WW2. This is a simplistic explanation as it is much more involved than that. We were a player on the world stage, but not really what you would deem a super power.

Re:Ron Paul 2012 (2, Informative)

Anonymous Coward | more than 2 years ago | (#36838672)

hahahahaha...no we didn't actually...our super status was not really sealed until after WWII. We all know that we began to move off of the gold standard under Roosevelt, but still had some of our money supply backed up by gold reserves. Moving off of the gold standard was what allowed our economy to grow exponentially after WW2. This is a simplistic explanation as it is much more involved than that. We were a player on the world stage, but not really what you would deem a super power.

It had nothing to do with us and everything to do with the rest of the industrialized world being leveled during WWII while our factories were still operational. In it's superior productivity position, the US basically strong-armed implementation of the Bretton Woods system that essentially set international trade pegged to the dollar, part of which was swallowed because it was pegged to gold, which the US was holding onto since, during the war, wealthy nations during the war had shipped it there for safe keeping.

Essentially, the US stole the world's gold reserves by exchanging it for dollars and under the Bretton Woods formed World Bank, pegged all trade to the US dollar by pegging all foreign currencies to the US dollar. Then we changed the ounces of gold per dollar. Then we eliminated all pretext and made the dollar pure fiat... now that vital commodities like oil were traded in, yep, US dollars.

The superpower status of the US was as much a scam as the USSR's superpower status, except we actually managed to steal much of the world's wealth while the USSR was too deluded by the communism illusion to admit they had nothing.

Re:Ron Paul 2012 (4, Informative)

2muchcoffeeman (573484) | more than 2 years ago | (#36838472)

The gold standard is overrated. The longer a country stayed on the gold standard during the Great Depression, the longer it took that country to get out of the Great Depression.
 
As this article [econbrowser.com] notes,

... 13 other countries besides the U.K. had decided to abandon their currencies' gold parity in 1931. Bernanke and James' data for the average growth rate of industrial production for these countries (plotted in the top panel above) was positive in every year from 1932 on. Countries that stayed on gold, by contrast, experienced an average output decline of 15% in 1932. The U.S. abandoned gold in 1933, after which its dramatic recovery immediately began. The same happened after Italy dropped the gold standard in 1934, and for Belgium when it went off in 1935. On the other hand, the three countries that stuck with gold through 1936 (France, Netherlands, and Poland) saw a 6% drop in industrial production in 1935, while the rest of the world was experiencing solid growth.

A gold standard only works when everybody believes in the overall fiscal and monetary responsibility of the major world governments and the relative price of gold is fairly stable.

Enough with the gold standard nonsense already.

Re:Ron Paul 2012 (3, Informative)

rubycodez (864176) | more than 2 years ago | (#36838744)

no nonsense, U.S. went off the gold standard in 1973. The Depression had everything to do with self-referential paper pyramid scams, same as recession of now. Quit being a shill for the banking cartel parasites who have been draining our wealth.

Re:Ron Paul 2012 (1)

Anonymous Coward | more than 2 years ago | (#36838860)

Yes, better to let the federal reserve continue to inflate your hard-earned dollars until you whine about how gas is $10/gallon and blame it all on the evil oil companies and speculators.

Re:Ron Paul 2012 (0)

Anonymous Coward | more than 2 years ago | (#36838900)

Is that adjusted for inflation? The fiat currency supplies would have gone up while gold stayed the same. So if production goes up, the fiat currencies can maintain a 1:1 of widgets to dollars, whereas that ratio would drop for widgets to gold. Without factoring the currency and gold supplies, I don't think you can claim the gold economies shrunk.

Re:Ron Paul 2012 (1)

GooberToo (74388) | more than 2 years ago | (#36838664)

Got news for you, before WWII, our solders pointed broomsticks at cars ("tanks") and said, "eh, eh, eh, eh, eh, eh", to simulate firing an imaginary weapon. During WWI, gunners trained by using their finger and pointing at imaginary targets while spinning in a swivel chair. The US absolutely did NOT become a super power until after the close of WWII. And in large part, that was thanks to the Germans (including Nazis) absorbed by the US.

Re:Ron Paul 2012 (1)

rubycodez (864176) | more than 2 years ago | (#36838876)

Since we went off the gold standard in 1973, your little fun history lesson of increased manufacturing capacity in WW II is pointless.

Re:Ron Paul 2012 (1)

Anonymous Coward | more than 2 years ago | (#36838370)

True, reverting to the gold standard would greatly excelerate our fall into third world nation status. But I just dont see why that's a desirable thing.

Pros and cons of a gold standard aside I just don't understand this argument.

The US was, to a certain extent, on the gold standard until the early 1970s

Are you telling me that a 3rd World country landed men on the moon?!

Re:Ron Paul 2012 (1, Interesting)

rcb1974 (654474) | more than 2 years ago | (#36838456)

What we need is a fiat monetary system (not the gold standard, which will just make the depression worse due to natural scarcity of gold) where the amount of currency in the system (and hence its value) is controlled by a computer. The computer simply raises the tax rate in order to "destroy" currency and prevent inflation, or issues new currency in order to prevent deflation. The computer could simply use an HONEST CPI value that is continously measured in order to decide whether or not to create or destroy currency. Fiat currency could be "destroyed" (removed from the system) through taxation, which would raise money for the government, and then the government could spend it to pay for its expenses and also to prevent deflation.

It should be forbidden in our constitution to BORROW money that is created out of thin air by a privately held organization such as the Federal Reserve Bank (which pays no taxes BTW!). That is simply insane. Woodrow Wilson was incredibly naive and foolish to sign the Federal Reserve Act of 1913.

Re:Ron Paul 2012 (0)

Anonymous Coward | more than 2 years ago | (#36838640)

Woodrow Wilson was incredibly naive and foolish to sign the Federal Reserve Act of 1913.
Yaaaaa I'm sure it was an act of ignorance and foolishness that passed the act. You think that was an accident?

Re:Ron Paul 2012 (1)

rickb928 (945187) | more than 2 years ago | (#36838648)

You touch on my fundamental objection to returning to the gold standard. SInce gold is a finite commodity, with both a finite amount available at any time and a finite amount EVER available, it is a significantly limiting factor to economic growth. Scarcity leads to inflation, and collapse doesn't solve anything regarding the currency.

The solution isn't to tie currency to something, it's to control the Fractional Reserve [wikipedia.org]

Not that you would stop spreading disinformation.. (2)

PaulBu (473180) | more than 2 years ago | (#36838478)

But Ron Paul does not advocate return to pure gold standard, he advocates allowing competing currencies, some backed by gold, other by silver, third by "trust in US Government", and letting people/markets decide which one do they prefer.

And, as others have said, US was technically on the gold standard until 70s, this is how dollar became reserve currency of the world...

Paul B.

Re:Not that you would stop spreading disinformatio (5, Informative)

Lunix Nutcase (1092239) | more than 2 years ago | (#36838544)

But Ron Paul does not advocate return to pure gold standard, he advocates allowing competing currencies, some backed by gold, other by silver, third by "trust in US Government", and letting people/markets decide which one do they prefer.

Because multiple competing currencies worked so great during the Articles of Confederation days, right? Oh wait, it was an abysmal failure.

Re:Ron Paul 2012 (0, Troll)

cpu6502 (1960974) | more than 2 years ago | (#36838504)

Our present paper-based system has devalued by grandfather's savings by 1/100th its previous buying power. i.e. A wool suit that cost $5 in 1920 costs $500 today.

I'd rather have the solidity of a Gold system that can not destroy people's savings via rampant running of the printing presses. Ownership of half an ounce of gold will buy 1 suit, whether its 2010 or 1910 or 1810. Gold has a fixed value. Paper does not.

Re:Ron Paul 2012 (1)

Lunix Nutcase (1092239) | more than 2 years ago | (#36838582)

I'd rather have the solidity of a Gold system that can not destroy people's savings via rampant running of the printing presses.

How would it stop that? The Government can just change the exchange rate of their currency to gold whenever they feel. Which is what governments on gold standards have done.

Ownership of half an ounce of gold will buy 1 suit, whether its 2010 or 1910 or 1810. Gold has a fixed value. Paper does not.

Fixed value? Since when? Gold has had numerous booms and busts in its value.

Re:Ron Paul 2012 (4, Insightful)

h4rr4r (612664) | more than 2 years ago | (#36838594)

Your grandfather should have invested that money not hoarded it.
Inflation is good in that it encourages spending.

Re:Ron Paul 2012 (1)

shoehornjob (1632387) | more than 2 years ago | (#36838612)

True, reverting to the gold standard would greatly excelerate our fall into third world nation status. But I just dont see why that's a desirable thing.

I believe reverting to the gold standard is not how you fix the mess we are in. First we have to clean house and start building industry and jobs first. There are a lot of people out there that WANT to work. We also need to determine a better way to give incentives to bring back all those jobs that were outsourced. You can't just give tax cuts without a clearly defined goal of returning more people to the workforce. This is the first thing Obama should have done instead of the health care bill that most voters didn't even see a benefit from. Once you bring industry back and get people working you can start to make a dent in the deficit (trade and fiscal). Only then should we contemplate going back on the gold standard. No one wins if we go broke because we can't pay our bills. Both parties have to drop thier idealism and get back to work.

Re:Ron Paul 2012 (0)

Anonymous Coward | more than 2 years ago | (#36838776)

How????

The simple math is that a gold standard would boost the dollars value. People would trust dollars in all countries knowing that they could be traded in for gold. Right now, our economy is strong because we have an Oil Standard. Not a government guarantee but the oil market is traded in US Dollars. Don't worry their only a lot of talk about switch to ether Euros or some sort of shared reserve currency and the administration being internationalists has nothing against this threat to US Economy. Gold would kill the Federal Reserve, since they could not issue new money without actual obtaining more gold. The Federal reserve issues new money without even print it. It has to in-order to fuck interest rates. Investor return on interest rates needs to beat inflation by about 1% to 2%. In a country with "easy money" you have lots of "easy waste." Loans are given to people who can't repay them, Businesses are given loans for projects that won't return more value.

Runs are banks are only a problem when banks do not a have sane reservers along with some sort of Goverment Insurence on people's deposites. Yes, it would slow down the US Econemy to not have "easy money" but the truth is that it would really only slow down the bubbles, all those get rich quick wall street guy might have to find real jobs or just be happy with a small but steady return. The next step to a stable econemy is to slowly pull back the safty nets Not remove them but make it unpleseant to relie on. At the same time one needs to almost enforce saving, put an end to this spend your whole paycheck every month montalety, People need to build their own safty nets. Right now people don't know where to put their money, a bank doesn't want it. (the interset on CDs are a joke.) WallStreet is over valued. You should be able buy at P/E ratio that a company might actually justife one day. Right now, if some asks me how to save, I'll tell them it doesn't pay unless you have enough saved to go with good mutal fund. We need to correct this or it will correct it self in the long run.

Re:Ron Paul 2012 (1)

Palpatine_li (1547707) | more than 2 years ago | (#36838878)

I wish someone would give you a troll mod. Hard assertion without shit to back it up.

Re:Ron Paul 2012 (4, Informative)

Anonymous Coward | more than 2 years ago | (#36838356)

You do realize that it was Bernie Sanders, not Paul, who ordered this audit, right? You know, Sanders (S-VT), where "S" is the Socialist Party of Vermont?

A one liner solution would be great (2)

Marrow (195242) | more than 2 years ago | (#36838376)

But I am unsure how the the powers of the Executive Branch can force a change.
1. He only gets to sign or veto bills written by other people.
2. He has no control over the airwaves that would be saturated by very desperate people who want to keep things the same.
3. He will want to get re-elected.

Re:A one liner solution would be great (1)

peragrin (659227) | more than 2 years ago | (#36838754)

shhhh!!! the president is all powerful and can do whatever they like, stop limiting delusions os fools by showing them reality.

Seriously any one who wants to be president should never be allowed to have the job. The president gets all the blame, very little glory, and once your there your done, I am what can you do afterwards except talk about what you did do.

Personally we should everyone's name in a hat and randomly pick a person like the lottery. you play power ball you could win X millions of dollars and you stand a one in a 10 million chance of being president too.

Re:Ron Paul 2012 (2)

Oh Gawwd Peak Oil (1000227) | more than 2 years ago | (#36838386)

Or, say, Bernie Sanders, who ordered this audit.

Re:Ron Paul 2012 (1)

h4rr4r (612664) | more than 2 years ago | (#36838420)

Or maybe the guy who actually did this?
You know Bernie Sanders, or as Paulites would refer to him "teh ebil Socialist."

Ron Paul gets a lot of credit for doing a whole lot of nothing.

Re:Ron Paul 2012 (0, Troll)

NevarMore (248971) | more than 2 years ago | (#36838488)

Ron Paul gets a lot of credit for doing a whole lot of nothing.

Its because he's doing exactly what most of us want him, our legislators, and government to do.

Re:Ron Paul 2012 (1)

h4rr4r (612664) | more than 2 years ago | (#36838522)

You mean let whatever goes on around him just happen?

By doing nothing I do not mean preventing laws from passing or making sure the government does nothing. I mean just lets the rest of his party do whatever they want.

Re:Ron Paul 2012 (2)

Lunix Nutcase (1092239) | more than 2 years ago | (#36838610)

And by "most of us" you mean a small minority of right-wing whackjobs, right? Because most of us don't want a government that does nothing.

Re:Ron Paul 2012 (5, Informative)

dkleinsc (563838) | more than 2 years ago | (#36838694)

Here's the deal on this: Ron Paul is one of the minority in Congress who actually believes what he's saying and isn't for sale. It's actually not unusual for him to ally himself with the likes of Bernie Sanders (S-VT) and Dennis Kucinich (D-OH), because he will come to the same conclusions they do for completely different reasons. For instance, Kucinich and Paul have worked together trying to stop the war in Libya. Dennis is against it for typical liberal peacenik reasons like thinking it immoral to bomb people who present no threat to the United States. Ron is against it because he thinks of big military spending as tax-and-spend big government.

Now, Paul has been pushing "audit the Fed" from a conservative angle for years. Sanders, on the other hand, actually managed to get it into law. Kudos to both of them for making the right decision.

Re:Ron Paul 2012 (2)

vajrabum (688509) | more than 2 years ago | (#36838718)

Fascinating that you didn't seem to notice that this came from Bernie Sanders who's the only self described democratic socialist in the national legislature. Unlike Ron Paul there's no indication at all that Bernie Sanders is a racist (http://www.realchange.org/ronpaul.htm).

Isn't this illegal? (1)

Anonymous Coward | more than 2 years ago | (#36838310)

"Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said."

So the quote says no agency *should* be able to do this, but I thought it was actually illegal. Is this not the case since the Federal Reserve is actually a private entity?

Re:Isn't this illegal? (2)

Ruie (30480) | more than 2 years ago | (#36838358)

I do not see $16T in the actual document - is this an integrate number (i.e. the sum of all loans provided over the time period) ? Everybody should keep in mind that Fed provides overnight loans which have to be returned the next day. If the bank needs more money they do it again so the figure multiplies quickly.

The quick look at plots shows that the maximum amount (in 2008) was below $1T.

Re:Isn't this illegal? (0)

Anonymous Coward | more than 2 years ago | (#36838438)

Are these outstanding loans right now or have they been paid back yet? If so who cares?

Re:Isn't this illegal? (4, Insightful)

Hatta (162192) | more than 2 years ago | (#36838466)

It's not illegal if no one enforces the law against it.

Re:Isn't this illegal? (1)

cpu6502 (1960974) | more than 2 years ago | (#36838574)

I honestly don't know why anybody's surprised.

The Federal Reserve is a private bank and a monopoly. It is no different than your local electric or cable or utility monopoly. Naturally these private corporate monopolies serve (a) themselves and (b) their fellow corporate colleagues while (c) not giving a damn about the citizens.

So a Private Central Bank bailed out other private banks, and did nothing for the citizens. Color me unsurprised.

Re:Isn't this illegal? (1)

GooberToo (74388) | more than 2 years ago | (#36838716)

Its worth mentioning that Goldman Sachs pulls most of the strings at the US Federal Reserve.

Re:Isn't this illegal? (0)

Anonymous Coward | more than 2 years ago | (#36838624)

Is this not the case since the Federal Reserve is actually a private entity?

You've provided your own answer:

the Federal Reserve is actually a private entity

The Federal Reserve is not an agency of the United States government .

Pity people don't seem to understand that. Oh well, we didn't need a strong currency or sound fiscal policy anyway.

Re:Isn't this illegal? (1)

Bartles (1198017) | more than 2 years ago | (#36838806)

That's a whole lot of BS. The Federal Reserve is most certainly an agency of the US government. It's board members are appointed by the president and confirmed by the senate for limited terms. Salaries are set by legislation. They can be removed for ethical and criminal acts by impeachment by the senate. You are confusing private with independent. You cannot buy shares in the Fed. No private individual owns the Fed. Go to the federal reserve's website. www.federalreserve.GOV

Re:Isn't this illegal? (1)

Bartles (1198017) | more than 2 years ago | (#36838832)

Although in the present day, I could just as well be describing General Motors, which used to be a private company.

Let me be the first to say 'oh cock'. (0)

Anonymous Coward | more than 2 years ago | (#36838314)

Holy fuck. I'm not voting for anybody of my federal representatives that are currently in office in the next election. Fuck'em all. Only a select few in congress have earned my trust. The rest need to go.

Re:Let me be the first to say 'oh cock'. (1)

paiute (550198) | more than 2 years ago | (#36838768)

Holy fuck. I'm not voting for anybody of my federal representatives that are currently in office in the next election. Fuck'em all. Only a select few in congress have earned my trust. The rest need to go.

You only get to vote for a maximum of two congresspeople at any one election. It doesn't matter if Representatives or Senators from other voting areas have earned your trust or not. You don't get to vote for them. Besides, remember the old truism: My guy's okay, but the rest of those pols are crooks.

Surprise! (1)

jimmerz28 (1928616) | more than 2 years ago | (#36838318)

I wish I had a surprise face for this, but things like this just don't seem to surprise me anymore.

They're almost expected?

16 trillion? A typo? (2)

Guspaz (556486) | more than 2 years ago | (#36838372)

I don't see how the federal reserve could have given out 16 trillion in secret loans when that represents more than five times the total assets of the federal reserve... Am I missing something? The GAO's report never mentions this figure.

Re:16 trillion? A typo? (1)

Jeng (926980) | more than 2 years ago | (#36838414)

As someone else mentioned the Federal Reserve does overnight loans for banks and that if they are not paid back that day then there is a new overnight loan the next day, and the next, and the next, etc. Which really makes the totals add up quick even if the amount borrowed was not much initially.

And these are Loans, not gifts, they get paid back.

Re:16 trillion? A typo? (1)

jimmerz28 (1928616) | more than 2 years ago | (#36838496)

Search the GAO PDF for "trillion" and you'll find several instances.

Look at the CitiGroup bailout, they were worth "Citigroup was the second largest banking organization in the United States, with total consolidated assets of approximately $2 trillion."

Re:16 trillion? A typo? (5, Informative)

i kan reed (749298) | more than 2 years ago | (#36838550)

As a poster suggested above, these were overnight loans that were almost immediately repaid.

Re:16 trillion? A typo? (4, Informative)

MrQuacker (1938262) | more than 2 years ago | (#36838564)

Thats total, not at once. Lend out $100 Billion to someone on Monday night, they pay it back Tuesday morning, and borrow it again Tuesday night to pay back Wednesday morning. Do that for a week and you just lent out a Trillion.

Re:16 trillion? A typo? (1)

MikeyC01 (231948) | more than 2 years ago | (#36838678)

Thats total, not at once. Lend out $100 Billion to someone on Monday night, they pay it back Tuesday morning, and borrow it again Tuesday night to pay back Wednesday morning. Do that for a week and you just lent out a Trillion.

Or $700 billion but what's a few billion between friends :)

Bravo! (0)

steelfood (895457) | more than 2 years ago | (#36838392)

Now let's put these criminals who've stolen trillions from the American people behind bars.

Oh wait.

Re:Bravo! (4, Insightful)

h4rr4r (612664) | more than 2 years ago | (#36838450)

Stolen?
They made overnight loans on which the Fed profited. Meaning they reduced the amount the American people owe.

Re:Bravo! (0)

Anonymous Coward | more than 2 years ago | (#36838516)

Where do you see trillions stolen ?
It's loans for god sakes and futhermore probably loans with very short echeances.
I would not even be surprised if the totally of it has already been repaid interest added.

Re:Bravo! (2, Funny)

Anonymous Coward | more than 2 years ago | (#36838534)

Now let's put these criminals who've stolen trillions from the American people behind bars.

Oh wait.

They're already behind bars... of gold.

This is well known (5, Informative)

sgent (874402) | more than 2 years ago | (#36838394)

Its not some sort of secret, it has been disclosed by the Fed in their annual reports as required by law.

FORTUNE -- The bailout of the financial system is roughly as popular as Wall Street bonuses, the federal budget deficit, or LeBron James in a Cleveland sports bar. You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn't really need it, it didn't work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it.

But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are coming out ahead on it -- by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3% represented by the massively unpopular Troubled Asset Relief Program. Yes, that's right -- TARP is only about 3% of the bailout, even though it gets about 97% of the attention.

http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/ [cnn.com] Fortune Magazine Article

Re:This is well known (1)

Anonymous Coward | more than 2 years ago | (#36838692)

Great, profit for those who put the US in the position of having to bail them out in the first place.

Re:This is well known (2)

rcb1974 (654474) | more than 2 years ago | (#36838730)

When you claim that the bailout worked, do you factor into your conclusion that 2011 dollars are worth about 20% less than 2008 dollars, due to inflation? Oh, and don't believe the CPI values that the government comes up with -- those are manipulated lower so that the government doesn't have to increase Social Security payouts.

Facts please (0)

Anonymous Coward | more than 2 years ago | (#36838766)

[Citation needed]

And the sheeps will go on with their lives (0)

Anonymous Coward | more than 2 years ago | (#36838408)

There will be no uprise, there will be no pause
There will be no protest or justice call

Seriously, this level of corruption in the government should hold serious consequences (meaning federal imprisonment) but the most that will happen is that the perpetrators will get a slap on the wrist and this issues will get swept under the rug.

Great job Federal Reserve! (0)

Anonymous Coward | more than 2 years ago | (#36838426)

This is all very interesting, but doesn't look like much new. Hopefully next time around, you'll get a leader who will arrange some laws for your financial markets, not just say that he will. And after that, we hope that the other side does not vote it down. Though I'm not sure if Obama's regulation efforts needed any shooting down by republicans.

Did they pay it back? (5, Insightful)

jfengel (409917) | more than 2 years ago | (#36838436)

OK, so they loaned out a truly epic amount of money. A reasonable thing to do during a crisis: you borrow money to get through the bad times, then you pay it back when times are better.

The questions are:

* Did they pay it back?
* Did they pay interest?
* How much?

I don't really care about the absolute dollar figure: this was an international crisis and the dollar figures are going to be proportional to the size of economies, which will measure in the trillions. As long as the net result was that the economy survived (which it did), that it didn't blow up inflation rates (which it didn't; inflation was negative for a while), and that in the end the books balance (thus my questions).

It may well be that the interest rates were so low as to be questionable, especially given that the banks have been giving nonexistent interest to depositors and have been very chary about turning that money around to investment. But I'm not going to wring my hands over the size of it. I'm more concerned about the terms.

Re:Did they pay it back? (1)

Anonymous Coward | more than 2 years ago | (#36838636)

Please don't turn around in a year or so and tell me that you've got a problem with wealth inequality or the top 0.1% owning the assets. Because that is exactly what this king of bullshit is helping to perpetuate. The financial institutions "saved" (in quotes because they are still totally insolvent but we hid that after FASB 157) are robbing pension funds, savers, and the elderly of hundreds of billions in interest income every year to cover up the insolvency.

The economy did not "survive" and inflation did in fact "blow up." I guess you don't go to the gas station or grocery store. The US has devalued it's currency (pull up a chart of DXY) to prop up Too-Big-To-Fail financial institutions and fuck the American people. We now have real-negative interest rates to help Bank of America, Citi, and the rest of the insolvent bunch pay out record bonuses.

Re:Did they pay it back? (4, Interesting)

Fishbulb (32296) | more than 2 years ago | (#36838638)

* Did they pay their taxes to support such an institution?

Re:Did they pay it back? (1)

lkcl (517947) | more than 2 years ago | (#36838760)

no, the economy didn't "survive": basic economic rules were completely ignored (repeatedly, dating back some 80+ years), and a policy of hyperinflation put in its place. you need to read senator ron paul's book, "end the fed" to fully grasp what's going on, here.

but, to give you an idea, and a good comparison: the policy of taking the brakes off of the U.S. Federal Reserve - allowing them, beginning in 2006, a license quite literally to print money - is very similar to what the hitler government did in between the 1st and 2nd world war. the reichmark was *massively* hyper-inflated (ironically allowing them to completely pay off the 1st world war "reparations") so much so that they had in the end to abandon that currency and come out with the "deutchsmark" instead.

unfortunately in this case, the currency being hyperinflated is the one that is used world-wide as a "Reserve Currency" for international trade. thus, it becomes necessary not just for the U.S.A. to hyerinflate their currency, but also for all currencies pegged to the USD to do the same. this is why there have been 19 "favoured countries" who have received sickeningly-large amounts of money in order to bail them out.

as the major currencies hyper inflate (all at the same rate) everything all looks peachy, but the reality is that if this hyperinflation policy were to be stopped, the concept of money - in every major country - would collapse. this is the only thing that ron paul has, in my opinion, wrong. ron paul advocates returning to the "Gold Standard", to bite the bullet and to allow market forces to take their course in the buying up of remaining valued assets as numerous corrupt, big-bonus-paying banks collapse. unfortunately, i believe that the whole system is so far gone in its level of corruption and hyperinflation that it's far too late for that, and it just has to be sustained through further continued hyperinflation until even that is just blindingly obviously not working.

in the meantime: buy gold. not "gold certificates": those are a scam, as the ratio required to be held by the bond issuer of actual gold to the quantity of bonds issued is: 100 to 1. buy actual real gold.

Re:Did they pay it back? (1)

Anonymous Coward | more than 2 years ago | (#36838786)

According to cnn/fortune, yes, they did (in general) pay it back, with interest.

They are claiming that the US government is currently running a $40 billion profit on the bailout loans, and when it's all done, should have over $100 billion profit. http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/

16 friggin trillion? (1)

sl4shd0rk (755837) | more than 2 years ago | (#36838440)

I Betcha' that's just the tip of the iceberg.

Meanwhile... (0)

Anonymous Coward | more than 2 years ago | (#36838458)

In Soviet Russia secret loans audit you, top-to-bottom.

How Much is a Trillion? (4, Interesting)

Grizzley9 (1407005) | more than 2 years ago | (#36838460)

I thought this site explains what a trillion dollars is fairly well.

www.wtfnoway.com [wtfnoway.com]

Re:How Much is a Trillion? (3, Interesting)

Jeng (926980) | more than 2 years ago | (#36838568)

Here is what a Trillion looks like.

http://www.pagetutor.com/trillion/index.html [pagetutor.com]

Re:How Much is a Trillion? (1)

Grizzley9 (1407005) | more than 2 years ago | (#36838674)

Here is what a Trillion looks like.

http://www.pagetutor.com/trillion/index.html [pagetutor.com]

You didn't even look at my link did you? It's roughly the same thing except yours has worse graphics and not as much in comparison.

This is more money than the Federal Public Debt (2)

cervesaebraciator (2352888) | more than 2 years ago | (#36838484)

The Fed and the Treasury keep swearing that they're not going to monetize the debt. But my goodness, this amount of money is greater than what we owe [wikipedia.org] . For that matter, it's greater than our GDP [wikipedia.org] . This is why we should all laugh when they say they won't be monetizing the debt, try to prepare for heavy inflation, and vote for someone who has a record of not being a mere R or D. The Fed supplied status quo, built on endless wars and unsustainable entitlement programs, will end because it will destroy our currency.

Incorrect (3, Informative)

geekoid (135745) | more than 2 years ago | (#36838566)

Lets say I have 5 dollars.

I lend you 5 dollars, the next day you pay me back 5 dollars and 5 cents.
The I lend that 5 dollars to someone else and they paid me backs 5 dollars an 5 cents.

I lent out 10 dollars during those 2 days, but I never lent more then I had. And I ended with 10 cent more then I started.

Get it?

Listening to most slashdotters talk about finance is like listening to accounts talk about a computer. simple painful.

ok (5, Informative)

geekoid (135745) | more than 2 years ago | (#36838526)

A) These are loans, almost all of which get paid back.
B) this is not a secret. Just because something goes on you didn't know about, doesn't mean it was a secret. It just means you where ignorant.
C) This benefits the US. The US MADE money from this.

I just had to get that out there, I know it wont stop the frothing lunatics.

Senator Sander, you know better. (3, Informative)

panda (10044) | more than 2 years ago | (#36838538)

"No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

Since when is the Federal Reserve an agency of the United States government? Last time that I checked it was and still is a privately owned corporation.

Re:Senator Sander, you know better. (1)

geekoid (135745) | more than 2 years ago | (#36838784)

Congress controls the federal reserve. Yes, banks sit on it's board.

Bureaus would be closer then agency.

Re:Senator Sander, you know better. (1)

Bartles (1198017) | more than 2 years ago | (#36838896)

Since the Federal Reserve Act created it. It's an Independent Governmental Agency. If it's privately owned, who owns it, and where can I go to short sell shares?

This is Why (2)

gubers33 (1302099) | more than 2 years ago | (#36838546)

No one from any banks or investment firms should be allowed to serve on any government boards. The corruption is absolutely absurd, they have the interests of the companies they are boards on not of the people. Like what this country was founded on a government of the people, by the people and for the people. But this country has become ruled by the corporations and it just saddening.

Re:This is Why (1)

h4rr4r (612664) | more than 2 years ago | (#36838748)

Before then it was owned by the privately wealthy and robber barons. This country was never "of the people, by the people and for the people". The USA is not unique in that either.

1998: Long term capital management, $3.6B (1)

vinn01 (178295) | more than 2 years ago | (#36838662)

Secret bailouts are not new, http://en.wikipedia.org/wiki/Long-Term_Capital_Management [wikipedia.org]

On the face of it, it appeared that private banks provided the bailout money, but many suspected that they were all backed by secret government loans.

Re:1998: Long term capital management, $3.6B (1)

vinn01 (178295) | more than 2 years ago | (#36838738)

Replying to my own post about the LTCM bailout, let me add ...

"Some industry officials said that Federal Reserve Bank of New York involvement in the rescue, however benign, would encourage large financial institutions to assume more risk, in the belief that the Federal Reserve would intervene on their behalf in the event of trouble. "

End the Fed, really. (0)

Anonymous Coward | more than 2 years ago | (#36838712)

Wonder if the MSM will retract all those statements it's made about people wanting to "end the fed" being crazy?

Jefferson said it best.. (2)

gtmoose (1709814) | more than 2 years ago | (#36838726)

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -Thomas Jefferson It doesn't get anymore prophetic than that.

The real question (-1)

Anonymous Coward | more than 2 years ago | (#36838772)

The real question is, why is this on Slashdot?

It's not tech, sci-fi, or anything else slashdot-related, unless this site has been invaded by economics nerds.

If I wanted to read a discussion about this, I'd head over to the comments section on the Wall Street Journal.

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