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Ron Paul was right, and the Fed audit proves it
from Braincrave Second Life staff
Jul 22, 2011
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The printing press: what a great invention... It fostered a rapid development in and dissemination of art and science through the production of books. But one wonders if Johannes Gutenberg would be as proud of his technology knowing what else it is used for.

The Federal Reserve gave $16 trillion in emergency loans over a 2.5 year period. The big banks got half. Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion. You do the math.

It's as if George Constanza from Seinfeld is running the Federal Reserve: everything George does is wrong and he just needs to start doing the opposite. Perhaps Ben Bernanke is George Constanza in disguise. For some time - call it the last 30 years - Ron Paul has been asserting that the Federal Reserve "is the chief culprit behind the economic crisis. Its unchecked power to create endless amounts of money out of thin air brought us the boom and bust cycle and causes one financial bubble after another."

While Bernanke was advocating for "easy money" as a way to stimulate the economy, Ron Paul was claiming the Fed's policies would lead to a worldwide economic crisis, and that we would be the ones to suffer. So it goes. He has said it is one of the primary reasons why our civil liberties are being destroyed. So it goes. He has said the Fed is playing games with our money and the big banks. Does playing games include banks paying back TARP funds to the Treasury by borrowing more money from the Treasury? He has claimed that the dollar has lost 95% of its purchasing power in the last century (even as salaries rise, and which some have called a "stupid argument") due to the Fed policies. Yup. (Plug in $1 in 1913 and you'll see it has the same buying power as $22.80 in 2011 dollars.) Perhaps it's time we start paying more attention to the so-called "fringe."

How many reasons do you need to know that the Fed is bad? If debt is the problem, why do we want more of it? Ron Paul is running on a presidential campaign where one of his top priorities - other than bringing home most all military troops from around the world - is getting rid of the Federal Reserve. Do you agree with his top priorities? What other presidential candidate wants to limit or eliminate the Fed's power? What other presidential candidate wants to end the wars and bring the troops home?
The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government's first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion...

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.
Audit: Fed gave $16 trillion in emergency loans

GAO Fed Investigation


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