http://westernstandard.blogs.com/…

The US Federal Reserve and other central banks have been in the headlines recently.  First there were the various expansions of power that allowed the Fed a greater role in the economy and then there was yesterday’s coordinated interest rate cut by 6 of the world’s central banks, including the Fed and the Bank of Canada. A month ago few Canadians knew who Federal Reserve chairman Ben Bernanke was, now they’ve seen him testifying before Congress clamoring for a bailout, but they still may be unsure exactly what he does. Here Australia’s answer to Jon Stewart, Shaun Micallef interviewing the Reserve Bank of Australia’s Tony Froth (remember then Fed Chair Alan Greenspan’s July 2005 comment that “the apparent froth in the housing markets appears to have interacted with evolving practices in mortgage markets”) trying to get to the bottom of it:

http://money.cnn.com/…

The Federal Reserve, working in coordination with other central banks worldwide, enacted an emergency interest rate cut on Wednesday.

The Fed lowered its fed funds rate by half of a percentage point to 1.5%. This rate is the central bank’s key tool to affect the economy. Lowering the rate pumps money into the economy by reducing the borrowing cost on a broad range of loans, including credit cards, home equity lines and many business loans.

The moves were made in coordination with other central banks around the world including the European Central Bank and Bank of England.

The Bank of Canada, the Bank of England, the European Central Bank, Sveriges Riksbank, the Swiss National Bank, and the Bank of China all all in this too with the Bank of Japan providing moral support. CNN happened to be interview the president of the Council on Foreign Relations, a globalist / neo-merchantilist organization sponsored by Wall Street, when the story broke. He was saying how great it was that all the banks worked together to lower rates. When the topic turned to the presidential debate from last night and Barack Obama’s outright claim of unilateral attack in Pakistan to get Osama bin Laden he was again singing praise.

The Fed keeps pushing and pushing. This inflation is going to catch up with us sooner or later and we will be in a world of hurt.

Here is the statement by the Federal Reserve regarding the cut.

The discount rate was dropped to 1.75%

http://www.marketwatch.com/…

The U.S. Federal Reserve is reportedly looking at getting into unsecured lending, an extreme step that could allow it to directly purchase commercial paper, according to a report in the Financial Times. The report said the Fed had never done so in its history, but doing so could allow it to participate in the frozen inter-bank money market and the contracting commercial paper market. The Fed doesn’t believe it has the legal mandate to make unsecured loans, so it would need the Treasury to guarantee any losses. The Fed had said in a statement on Monday that “the Federal Reserve and the Treasury Department are consulting with market participants on ways to provide additional support for term unsecured funding markets.”

This charade is sad at times. They are grasping at straws… either because they think they have to or because they don’t know any better. Unfortunately for us their mistakes are our hard times.

The paper they refer to can be found here: modern_money_mechanics.pdf or here as HTML.

http://www.bloomberg.com/…

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed’s expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

“Today’s blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, “the Fed’s balance sheet is about to explode.”

Is that hyperinflation I hear? Who needs Congress when you already have the power to bailout these institutions in other ways?

All the money in the world wouldn’t help this… why do they continue to try?

firstdraft.pdf

http://money.cnn.com/…

Among the provisions of the draft bill:

• The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury’s use.

• Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, the bill would limit golden parachutes to executives at companies that participate; they will not be able to deduct the salary they pay to executives above $500,000.

• An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.

• Treasury is allowed the option to take ownership stakes in participating companies under certain circumstances.

• Treasury may establish an insurance program - with risk-based premiums paid by the industry - to guarantee companies’ troubled assets, including mortgage-backed securities, purchased before March 18, 2008.

I’m going to look through it tonight. See what they have snuck in. Some at DailyPaul.com have taken chunks of the bill to scan it quicker.

UPDATE from LewRockwell.com/blog:

New debt limit: $11,315,000,000,000.

That’s $38,000 per capita.

Update: Michael Hall writes:

Section 128 changes effective date from Oct 1 2011 to Oct 1 2008 for this section of current law:

SEC. 202. INCREASED FLEXIBILITY FOR THE FEDERAL RESERVE BOARD TO ESTABLISH RESERVE REQUIREMENTS.
Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended–
(1) in clause (i), by striking `the ratio of 3 per centum’ and inserting `a ratio of not greater than 3 percent (and which may be zero)’; and

(2) in clause (ii), by striking `and not less than 8 per centum,’ and inserting `(and which may be zero),’.

TITLE 12 > CHAPTER 3 > SUBCHAPTER XIV > § 461
Amendment of Subsections (b) and (c)
Pub. L. 109–351, title II, §§ 201–203, Oct. 13, 2006, §§ 201–203, 120 Stat. 1968, provided that, effective Oct. 1, 2011, this section is amended— (1) in subsection (b)(2)(A), by striking “the ratio of 3 per centum” and inserting “a ratio of not greater than 3 percent (and which may be zero)” in clause (i) and by striking “and not less than 8 per centum,” and inserting “(and which may be zero),” in clause (ii); (2) in subsection (b)

This will allow banks to hold zero reserves if the fed says so.