And So I Go: Yesterday, Today and Tomorrow

Posts Tagged ‘Federal Reserve

Why is the Price of Gold is Exploding While Inflation is Rising.

(Go to this site and listen to the videos)

Here’s some information I first ran in this newsletter more than FIVE years ago. The numbers have been updated, but the overall situation remains practically unchanged.

Have you always wondered why the price of gold has more than doubled recently (now about $1,600 per ounce), silver has tripled (now $40 per ounce) and your paycheck isn’t going as far as you need it to?

Inflation is rising! In case you didn’t realize it, there has been a 300 percent increase in inflation since the 1970s. If you have been curious about these issues, you will really enjoy watching the two videos above.

One is a short animation arguing for re-introduction of gold as money because of its independence. The other is a 45-minute video tutorial from one of my favorite economic teachers — the Ludwig von Mises Institute — that explains how the fractional reserve banking is debased. It also discusses the central bank and how the U.S. government transitioned into the Federal Reserve System that scrapped the gold standard in 1933 and established a global inflationary system.

In 1970, the price of gold was $37 an ounce. Now, 41 years later, it is setting records regularly and is over $1,700 an ounce. Nearly all of the over two dozen experts I follow in this area are universal in gold surpassing $2,000 sometime by the end of this year or close to it and with potential to rise to $5,000 to $10,000 per ounce. That is not as high as you might think, as it has already increased by 50X since 1970. That is less than five times increase. Silver is far more volatile and may actually increase ten times its current value or more.

Once you view the video, you will see the Federal Reserve System is actually the cause of inflation and one of the primary reasons why your financial future is uncertain.

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Obama and his minions have always and ever used distraction to push their more horrific project, and this debt ceiling distraction is a real winner for them.  See what has been going on in the background while we and TV news has been watching elsewhere.  Or maybe you have been like me and tuning it all out!  BB

On the floor: Meanwhile, the full House continues to debate the 2012 Interior and Environment appropriations bill, which Democrats say is the worst environmental bill to come before the House — ever. The bill contains 39 riders limiting the ability of the EPA to regulate; Democrats are attempting to strip out as many as possible.

Reviewing regulators: The Senate Banking Committee will be getting its vet on tomorrow, welcoming three nominees the White House wants to put at the center of the government’s financial regulation.

The trio scheduled to be on hand are: Martin Gruenberg, tapped to replace Sheila Bair at the top of the Federal Deposit Insurance Corporation; Thomas Curry, the choice for next comptroller of the currency; and Roy Woodall, the pick for insurance expert on the new Financial Stability Oversight Council. Financial regulatory nominees have had a rocky road in confirmation battles lately — here’s looking at you, Peter Diamond and Richard Cordray — so keep an eye open to see if these three fare better.

Consumption!: Mike Huckabee, the former Arkansas governor and GOP presidential candidate, is one of a deep bench — nine witnesses overall — talking consumption taxes at House Ways and Means tomorrow.

Huckabee and two others will discuss the Fair Tax, the idea of replacing federal taxes with a sizable national sales tax. The rest of the panelists will discuss the Value Added Tax, a consumption tax that has sparked skepticism from both the right and the left in this country. All that said, the VAT is quite popular in much of the rest of the industrialized world — where, perhaps not coincidentally, most countries also have a lower corporate tax rate.

If at first you don’t succeed …
Senate Finance is going back to the well for a hearing on deficit reduction, three weeks or so after the debate over the pending trade deals caused the postponement of a previously scheduled discussion. Peter Orszag, the former White House budget director, is not scheduled to testify this time around, but Finance will hear from liberal and conservative experts.

Speaking of which: The U.S. Chamber of Commerce is taking its case on those trade deals — with South Korea, Panama and Colombia — to Capitol Hill, holding a rally to help push for their passage. The agreements remained stalled due to disagreements over whether they should be linked to the Trade Adjustment Assistance program.

The briefing room: A more conservative group of congressional Republicans will be gathering tomorrow to unveil legislation that would tell the president what bills to pay if the government hits the debt ceiling. Under the bill, the administration would have to prioritize payments for debt service, Social Security and military pay before attending to other obligations. The RSC’s Jordan, Sen. Jim DeMint of South Carolina and others will be on hand to roll out EFFCUSPASSA — that’s the Ensuring the Full Faith and Credit of the United States and Protecting America’s Soldiers and Seniors Act, for those of you scoring at home.

Fed fulminating: Rep. Ron Paul (R-Texas) will return to the fertile grounds of Federal Reserve bashing on Tuesday, with his House Financial Services subcommittee exploring how the central bank’s monetary policy affects the economy.

Specifically, the panel will discuss inflation, unemployment and the potential for a third round of “quantitative easing.” The Fed has said it is prepared to pump more stimulus into the economy if needed, but Ben Bernanke, the Fed chairman, has emphasized that nothing is in the works immediately. Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City and no fan of the last QE experience, will be on hand to testify.

Risky renting: A second House Financial Services subcommittee will train its sights on the rent-to-own industry Tuesday, as lawmakers explore what regulators should or shouldn’t be doing as they monitor the agency.

Preparing for the floor: The House Rules Committee will meet to set up a bill that wades in to the spat between Boeing and the National Labor Relations Board over whether the aerospace giant shifted work to a South Carolina plant to punish union action in Washington state.

Last week, the House Education and the Workforce Committee marked up legislation sponsored by Rep. Tim Scott  (R-S.C.) that not only bars the NLRB from shifting Boeing work back to Washington, but prohibits “ordering any employer to close, relocate or transfer employment under any circumstance.”

Quick hits:

— Rep. Dennis Kucinich (D-Ohio) has a briefing of his own planned, titled “Eliminating the Debt and Creating Jobs without Raising Taxes.”

— Christine Lagarde, the new IMF chief, headlines an early morning Council on Foreign Relations conference call on the world economy.

— A Senate Judiciary subcommittee looks at the economic case for and against immigration reform.

— And dozens of religious figures head to the Hill for a prayer vigil on ensuring the poor don’t have to shoulder the burden of a debt deal.

Economic indicators:

— Standard & Poor’s is scheduled to release its Case–Shiller 20-city home price index for May.

— The Commerce Department is slated to circulate its report on new privately owned one-family houses sold and for sale in June, as the housing market struggles to show any improvement.

— And the Conference Board is set to drop its consumer confidence index for July, a way to examine potential spending habits of consumers, which represents 70 percent of the economy.

BREAKING MONDAY:

It’s not just in Washington: Concern about debt is everywhere. A new Associated Press/GfK poll found that one in five are worried about debt practically all the time, and more than one in three say they won’t be able to pay off their credit card bill.

And a break from the debt ceiling: Rep. Shelley Berkley (D-Nev.), Ways and Means member and Senate candidate, has introduced her own bill to allow U.S. multinationals to bring offshore profits home at a reduced tax rate, Bloomberg reports.

The lowest possible rate in the bill, 5.25 percent, matches the rate in a previous holiday and the one called for in another House proposal in this area. But a company’s rate could be as high as 25 percent under the plan, depending on its hiring practices.

WHAT YOU MIGHT HAVE MISSED:

On the Money’s Monday:

— Jim DeMint on Reid/Boehner plans: They’re both no good.

— IMF: The debt ceiling must be raised.

— The White House turns its head toward criminal syndicates.

— The IRS reverses course on its innocent-spouse policy.

— Joint Economic Committee: 32 states added private-sector jobs in June.

— House Oversight set to take a look at excess federal property.

— And audit finds the IRS needs to tighten up on homebuyer credit.

Feedback, etc., to bbecker@thehill.com

When Will America Face Its Fiscal Crisis? – Forbes.com

“Given that almost everyone now agrees that the national debt is on an unsustainable course, knowing exactly how and when that unsustainability will come to an end is critically important.Many doomsayers believe that our fiscal profligacy will end in a bang, as happened recently to Greece and previously to many other countries. However, it’s very unlikely that the U.S. would ever suffer the sort of abrupt inability to sell its bonds that triggered a fiscal crisis in other countries.

Well written article that explains our fiscal position without using too many  words that we laymen have to look up in a dictionary  to gain some understanding of what the author is saying.  It is 3 pages long but well worth the reading if for no other reason than as a brush up for those of you who have been following the actions of the federal government for the past  two decades and more specifically for the past 18 months.

WE are going down;everyone knows it and some of us even know why  because we know our history.  However those in power seem not to understand that the route they are taking us is the wrong way on a one way street.  Like lemming Congress is racing to the edge of the cliff and dragging  us with them no matter how hard we resist what they are doing and show them in every way possible that  We the People disagree with them.

This Congress and  President  Obama in the past 18 months have taken this nation into an additional almost $2 trillion  of NEW debt and they are not finished yet.  After the disaster of  a bail out that should not have been in a $874 billion TARP bill, they followed with a Stimulus Bill of equal  size then a budget  the size of every budget presented by Presidents  from Washington to Bush combined.  These bills and this money did nothing at all but nationalize  (buy)  three huge failing private companies:  Fannie Mae and Freddy Mac (the two largest mortgage companies in the country) and AIG a failing world wide insurance company riddled with debt.

This year the Congress and President loaded our great grandchildren with an impossible federal health care plan that all knew and admitted was unsustainable,   a  financial reform bill that nationalizes our banking system in all ways except by name and is a perpetual bail out for bankers and are now diligently working on a plan to spend another  $265 billion  bail outs for states who have failed to control their spending.  These states will receive  funding to pay their teachers, law officers and Medicaid.  The unemployed will receive what now amounts to an unbelieveable 196 weeks of unemployment benefits.  Since approximately 17% of our population is now unemployed due to the wrong headedness of the President and Congress  and these unemployed have almost 4 years of  the unemployment benefits “entitlement” then there is certainly no reason for many of them to rush out to find a job.

Yes we are on our way down the road to national bankruptcy and an end to our American way of life.    The once great United States of America will wallow in the doldrums of a third world country while our  natural resources are taken from us by a global government and  the “wealth is spread around”.  That is a good thing President Obama tells us.  BB

The Fed’s growing again, overseas – Sunlight Foundation Reporting Group

The United States Treasury is empty, broke, busted.  We the People’s federal government has a cent to pay our bills.  In fact our government is borrowing money to pay the interest on the money we had borrowed previously!  But with all that dear old Uncle Sam can again come to the aid of Europe.  Go top this article and see the amounts of money we have already given.  And while your at it do keep in mind that we the US tax payer will have to eventually pay the lender for all this cash.

The cash swaps are taking Euro for dollars when the Euro is about to become  worthless.  Then again maybe swapping one worthless money for another is an even trade.  Who knows.    BB

Earlier this week, the Federal Reserve reopened one of the special lending windows it created in January 2009 to ease the failing global economy. The move comes amid a weakening euro and after Greece, Spain and Portugal have all created austerity packages to help fix their struggling economies.

These currency swaps are a sign that the global economy is still far from stable two years after the financial meltdown of 2008.

The Fed has already infused five foreign central banks with $1.3 billion through a process called central bank liquidity swaps in order to reduce the possibility of any lending strains in Europe, Asia and Canada from spreading to the United States. The Fed restarted the swap process on Tuesday.

Updated with part two added below.

Well, well, well Dear Readers do we got news today.  The AIG big wigs, about 200 of them, are due to get $100 million in  bonuses this year.  Yes, the very same group that carried their company to the brink of bankruptcy so the tax payers had to give them $181 billion (BILLION) in a bail out that we will never get back.  The banks who got bail outs have paid the government back with interest and sometimes a severance type fee on top of it for paying back the bail out too soon.  AIG  on the other hand was one of those “too big to fail” conglomerates.  Of course the “too big to fail” stuff is nonsense since the parts would just be sold off and those that were worthless and not worth saving would be terminated.  (NOTHING is too big to fail,  and sadly that includes the United States Government which is right on the verge of failing with no one out there to bail us out or break up the parts and keep functioning. But that is another story which I have been pounding away at for over a year now.)

Anyhow the AIG bonuses are legal because due to the bail out AIG made a profit and it is in these peoples contracts which were signed well before the financial crisis and the contracts say they will get a bonus based on the profits, plus a bonus just for breathing.  The contracts can not be broken.

Some people are saying the contracts should be broken.  Think carefully on this one people.  If these contracts are broken than that leaves all contracts open to be broken and that is a slope we really don’t want to go down.  Some will argue that contracts are broken everyday and that too is true, but there are heavy penalties to be paid and can only be broken with an agreement (another contract) between the parties to the contract.

So to break the contracts with the 200 AIG wigs would cost a bundle and it is  just better to let them have the bonuses.

NOW read the following from Big Government Blog and see how this bit of info makes the bonus  bit look like fluff blowing in the wind:

Geithner and Bernanke: Laundering Money Through an Illegal Trust?

by Frank Gaffney This afternoon on Secure Freedom Radio we announced a breaking news story concerning the Administration’s ongoing cover-up of AIG financial wrong-doing.  In an interview with David Yerushalmi, senior litigator on the Murray v. Geithner et al lawsuit, we expose possible fraud, money-laundering and criminal activity.

tim-geithner-and-ben-bernanke

As Yerushalmi says in the interview, “So here’s what we find out in the midst of discovery when we depose the Treasury Department’s deponent and the Fed and get documents, here’s what we’ve learned: The Federal Reserve Bank of New York at the time that it structured the debt that it was going to give AIG insisted that not only did it get the debt, not only would it get principal and interest payments and collateral for that, it wanted 80% of AIG, precisely 77.9% of the shares and the voting rights.  But the Federal Reserve Bank and Geithner knew that it was illegal for the Fed system whether there’s a Fed or the Federal Reserve Bank of New York to own that, so what did they do….”

Read the rest – the  transcript and audio of the interview – at Secure Freedom Radio.    Come back for an update tomorrow involving Neil Barofsky, Special Inspector General for TARP….and an animated movie showing exactly how the AIG, Treasury and Federal Reserve scheme worked…

I copied the transcript here before Obama has it taken off.  this is being done all the time.  BB

aking News: Evidence of criminal wrongdoing in Treasury’s handling of AIG?

by admin on February 2, 2010

Today Secure Freedom Radio has breaking news from senior litigator David Yerushalmi, a major story uncovering evidence of criminal wrongdoing in the AIG matter.

Transcript

FRANK GAFFNEY: Congressman Darrell Issa, ranking member on House committee on Oversight and Goernment Reform, confronting Treasury Secretary Tim Geithner:

ISSA: In recent weeks, this committee, receiving these documents, have caused us to better underst the NY Fed pressured AIG to avoid negotiations designed to obtain the haircut, as its called, from its counterparties and to keep the details of the counterparties payments from appearing on the firms’ forms at the SEC.

David Yerushalmi, Securities specialist and senior litigator in Murray v. Geithner et al.

DAVID YERUSHALMI: In September of 2008 the US govt took over AIG, effectively over a period of months they invested $180 billion in AIG, collateralized all of its assets, and took 80% of its ownership through shares and voting rights.  They controlled AIG from top to bottom.  Part of that money that they gave to AIG.

When Mr. Geithner was serving prior to his current position as Secretary of Treasury, he was President of Federal Reserve Bank of New York.  They were the ones that originally gave AIG $85 billion of debt by opening up a discount window.  He went to AIG and said, we want you to pay off all of the financial institutions (our buddies on Wall St and even in Europe) because they’re demanding money from you for all these credit default swaps and toxic assets that everyone hears about.

So when AIG started talking to these financial institutions, what would you normally expect, that they would go to their creditors and say, we’re on the verge of bankruptcy they’d ask them to take less than 100% on the dollar – to “take a haircut.”  But the Federal Reserve Bank of New York and Mr. Geithner said no – you need to pay them 100 cents on the dollar because it would be wrong for the Federal Reserve Bank to use it’s clout to gain a better bargaining position.  Companies like Goldman Sachs, UBS, Societe Generale in Paris, etc. were involved as creditors.

GAFFNEY: Here’s the breaking news – what did you discover in the process of your lawsuit on behalf of this Iraq war veteran that sheds further light on this story and raises real concerns about not just peculiar and fiduciarily-challenged behavior but maybe even criminal activity?

YERUSHALMI: Keep in mind that the forcing of AIG to pay the counterparties to pay 100 cents on the dollar may have been stupid, or bad policy or bad business, but it wasn’t illegal.  But in our lawsuit, which we had brought against the Federal Reserve and Treasury when they acquired AIG, they acquired the world’s largest provider of Shariah-compliant insurance products.

GAFFNEY: Shariah, of course, a term we use all the time (people here are familiar with it at Secure Freedom Radio), namely the  theo-political-legal program– that oppressive, barbaric ideology– that the authorities of Islam claim is the true faith. And this is practiced by AIG through its insurance products.

YERUSHALMI: Not just practices, but promoted. Not just to Muslims but to the non-Muslim world…

GAFFNEY: … And we own them as taxpayers. and the lawsuit questions the constitutionality, given the Establishment clause regarding of separation of Church and State.  We’re running out of time, jump to the news that we have here.

YERUSHALMI: So here’s what we find out in the midst of discovery when we depose the Treasury Department’s deponent and the Fed and get documents, here’s what we’ve learned:

The Federal Reserve Bank of New York at the time that it structured the debt that it was going to give AIG insisted that not only did it get the debt, not only would it get principal and interest payments and collateral for that, it wanted 80% of AIG, precisely 77.9% of the shares and the voting rights.  But the Federal Reserve Bank and Geithner knew that it was illegal for the Fed system whether there’s a Fed or the Federal Reserve Bank of New York to own that, so what did they do?  They created this independent trust.

GAFFNEY: The same was true of Treasury right?

YERUSHALMI: Well that’s exactly right.  You would think that if they couldn’t own it maybe they could’ve got the Treasury Department.  But the Treasury Department had no legislative authority to take equity from AIG either.  So what did they do?  They came and opened up a discount window but created a so-called “independent trust” and they hired three trustees, and they insisted that these people were independent non-governmental actors, no conflicts of interests.  But in crafting the trust agreement they slipped in a barely noticed provision of the trust agreement which said “Oh by the way, the Fed controls the trust completely, its terms and effectively the trustees.”  Under anybody’s rendition of trust law this is not a valid trust, this is simply a ruse or an artifice for the Federal Reserve Bank.  The second–

GAFFNEY: Which makes the proposition- David we’re just about out of time.  Which makes what they did as I understand it from a technical, legal sense, money laundering.

YERUSHALMI: Exactly right, if you try to do something which is illegal, gaining control of ownership by the Federal Reserve Bank of AIG which was not authorized through a fraudulent artifice then you have violated- that’s a classic violation of money laundering.

GAFFNEY: You heard it here first at Secure Freedom Radio folks.  We have evidence of criminal activity on the part of the man who is now Secretary of the Treasury and the man who was just reconfirmed as Chairman of the Federal Reserve Board.  We will be pursuing this, David Yerushalmi, as I know you will be very closely.  Thank you for joining us here at Secure Freedom Radio.  We will be hopefully seeing some of these congressional auditors like Congressman Issa taking up this issue as well. Obviously this plot is continuing to thicken.

PART TWO:

Shariah Finance, Criminal Wrongdoing in the AIG Takeover: Will the Special Inspector General for the TARP Funds Investigate the Illegal Trust?

by Frank Gaffney Yesterday we broke the story of possible criminal wrongdoing in regards to the bailout of AIG by Treasury Secretary Tim Geithner, then Director of the New York Federal Reserve, and Federal Reserve Chairman Ben Bernanke.

Qaradawi

It appears that, through it’s 77.9% control of AIG’s equity and voting rights, the NYFed “sought to accomplish an illegal financial transaction through false means” by creating an “independent”: trust that was in fact not independent, placing it “in violation of federal anti-money laundering statutes (18 USC § 1956).” Here we elaborate a bit further, laying out the issue in the text of a letter submitted to Neil Barofsky, Special Inspector General for TARP (SIGTARP)– as the government takeover of AIG was accomplished using funds provided to the Troubled Asset Relief Program.

First, however, some context: Crucially, these facts were discovered while securities litigator David Yerushalmi and the Thomas More Law Center was representing Iraq War vet Kevin Murray in Murray vs. Geithner, et al. Mr. Murray is rightfully horrified that the very doctrines of the enemy he faced in combat would be promoted by the US government. Specifically, prior to the U.S. government’s takeover of the insurance giant AIG, the company was the world’s leading promoter of Shariah-compliant finance products and businesses. Bailing out and forcefully (and illegally) taking ownership of AIG put the American taxpayer in the position of advocating Shariah-compliant finance, which is troubling on many levels:

First, the Shariah authorities themselves tell us that Shariah is a holistic and indivisible whole and that you cannot carve out “business law Shariah” from any other of its constituent parts, like the law of jihad. And, you can see this in that part of Shariah called civil law or fiqh al-muamalat. According to Shariah, AIG cannot invest its takaful funds in a business that might rent space to a church, because that would violate the principle of not supporting any religion other than Allah’s. Further, AIG may invest its funds in a military armament factory for Muslim armies but not US or infidel armies. In other words, these laws which seemingly have nothing to do with business concerns or ethics but rather everything to do with theo-political concerns apply as forcefully to Shariah-compliant finance as the laws on interest. And, of course the reason for this we know because the Shariah authorities tell us: Shariah makes no distinction between religion, law, politics and war. It is all subsumed under Allah’s law called Shariah.

Second, the very Shariah authorities who have the legitimacy to be Shariah board members for such an international concern are themselves advocates of violent jihad or they are the students and disciples of such Shariah authorities. For example, AIG employs Mufti Imran Usmani, who is the son, student and disciple of Mufti Taqi Usmani, the very authority who sat on the Dow Jones Islamic Index Shariah advisory board for almost 10 years beginning in 1999 and who wrote a book and had it translated into English also in 1999 which called on western Muslims to rise up and engage in violent jihad against the West. Now, either Dow Jones was recklessly blind to this fact or willfully blind to it. Now, we see that AIG and the US Treasury have succumbed to the same reckless disregard of what are now quite obvious facts.

Shariah-compliant finance is the use of Shariah (Islamic law) to sell financial products that are approved by Shariah Islamic authorities. Principally this means that since interest is illegal under Shariah, interest payments are disguised as profits or payments for services rendered. While there is nothing wrong with the use of legal fictions, there is when the details of the guiding force—Shariah—is not disclosed to the investing public. Most problematic, is Shariah’s call for the murder of apostates and global jihad against the very infidels in the West buying these Shariah products. Among some financial institutions’ ‘Shariah advisors’  is Sheikh Yusuf al-Qaradawi (who moonlights as spiritual leader of the Muslim Brotherhood). He famously promoted Shariah-compliant finance as “jihad with money.”

For an in-depth look at Shariah-compliant finance, see David Yerushalmi’s Utah Law Review article, “Shariah’s ‘Black Box’: Civil Liability and Criminal Exposure Surrounding Shariah-Compliant Finance”. Look for a video tomorrow called, “Understanding the Takeover of AIG.”

The following is a letter sent by Mr. Yerushalmi to Neil Barofsky, Special Inspector General for TARP:

Dear Mr. Barofsky:

I am an attorney who has worked in the securities litigation arena for more than 25 years and I also serve as General Counsel to the Center for Security Policy, a highly-respected think tank in Washington, D.C., headed up by former Reagan administration official Frank Gaffney, which focuses on matters of national security. I have cc’d Mr. Gaffney on this email.

In this capacity, I am representing Kevin Murray in a First Amendment/Establishment Clause case against the Fed and the Sec. of the Treasury in his official capacity as head of the Treas. Dept. We have alleged that the takeover of AIG by the US Government encourages, promotes and indeed sustains AIG’s advocacy of Shariah-Islamic insurance products worldwide in violation of the First Amendment. The government filed a motion to dismiss which was denied. I have attached that opinion. Currently, we are in the throes of discovery and awaiting the court’s ruling on our motion to compel Secretary Geithner’s deposition, which was necessitated by the fact that the Fed and Treasury Rule 30(b)(6) deponents either testified inaccurately or feigned ignorance (no surprise to you I am sure). I have attached our Motion to Compel and our companion Response to the government’s Motion for Protective Order.

I write to you today because in the course of our discovery investigation, we effectively uncovered a fraudulent artifice which allowed the Fed/FRBNY and the Treasury (using TARP funds) to accomplish that which it could not accomplish legally at the time (pre-EESA)—the acquisition of 77.9% of AIG’s equity and voting rights. We discovered this because we were looking at “standing” issues relative to the Fed/FRBNY funds provided to AIG under the Credit Facility approved in the latter half of Sept. 2008. But, what we learned was quite simply astounding.

The FRBNY wanted more than just a standard debt deal; it wanted absolute control and ownership of AIG. But, it was illegal for the FRBNY to hold equity and the Treasury Dept. did not yet have the legislative authority, later granted under EESA, to do so. But this didn’t stop then-President Geithner or his general counsel Thomas Baxter. They crafted the AIG Trust to accomplish the same goal. But the Trust was transparently invalid and illegal for two fundamental reasons: One, the FED maintained absolute control over the Trust’s existence, its terms, and the Trustees through Section 1.03 of the Trust Agreement. This, as we explain in our Response papers attached, invalidates the trust; yet the government continues to speak about this as an “independent” Trust.

Two, the Fed/FRBNY could not take legal title to the equity but neither could the Treasury Department during this pre-EESA period. So, the FRBNY named the U.S. Treasury (in the Trust Agreement) as the beneficial owner. But again, as our Response papers point out, it is elemental trust law that a beneficiary must be a person or entity that can actually hold title. While the Treasury Department can hold title, the U.S. Treasury can no more hold title than a bank account – because that is what it is. You can deposit funds or assets into a depository account but the account cannot have “ownership” because it has no more authority to do so than a tree log. But, the FRBNY had to conceal the fact that this transaction was really for the benefit of the Treasury Department (something the Treasury Dept’s Rule 30(b)(6) deponent conceded under oath (also provided in our Response papers), because the Treasury department had no legal authority. And, even if it did, as under EESA a few months later, to grant the federal government voting rights would be to create a Gordian Knot of conflicts-of-interest, which is why presumably the legislation seeks to avoid the government from taking both the equity and exercising voting rights. But, at the time of the AIG Trust, there was absolutely no legislative authority for the Treas. Dept to take control of AIG. Yet, this is what the purportedly Trust accomplished.

In the world of finance, and you certainly know this as well as I, if you seek to accomplish an illegal financial transaction (“specified unlawful activity”) through false means (the Trust structure), you are in violation of federal anti-money laundering statutes (18 USC § 1956). I have attached a ppt presentation my office has prepared for oral argument in our case (although the criminal violation is not at issue insofar as we don’t have standing to raise it). Since this artifice included TARP funds, you, in your capacity as the SIGTARP, do. Please feel free to use this material as you deem best.

I will be in Washington, D.C. on Tuesday meeting with some Congressional leaders on this point, and would be more than willing to discuss this in greater detail.

Thank you.

David Yerushalmi. Esq.

It is ironic that We the People   may have a communist dictatorship to thank for saving us from our own President and Congress.

Our President, Barack Obama went hat in hand and on bended knee to our nation’s banker this past week to beg that our mortgage be extended and even that we be allowed to take out an additional mortgage.  The man who holds the post that has been considered the most powerful in the world  due to his policies seemed to see no shame in begging another country  to  bail out and continue to finance the profligate spending of  the nation he is supposed to be governing and he is, because of his policies and agenda, demanding.

And what did China leaders say?    China which now holds over $500 billion in US Treasury Notes and that much again in actual US properties  told President Obama that they are seriously  concerned about the irresponsible spending  of his administration and think that his proposed health care reform bill  is more than our nation can afford considering  the money to fund this monster would have to come from China and the Chinese people’s  thrift and savings and doing without what they can not afford.

I am appalled that I would live to see the greatest nation ever known come to this in only a few short decades !  I watched C-span Washington Journal – C-SPAN last night  and listened to two very astute ladies discuss our economy and what has happened and what they feel is going to happen.  The videos are below and are rather long but well worth listening to.

First is Judy Shelton whom most of you may be more familiar with as a Wall Street Journal contributing OPED columnist.  Ms. Shelton is careful not to criticize any current or even past  official, she merely states what she feels should have been done instead and gives guidance for the future.   When asked point-blank what current official she  thinks is acting correctly ” Bernanke , Geithener”  she avoided the question altogether and named one of her most admired Economist instead,  and in that way not only answered the question beyond a doubt  but also changed the topic. You might take that to mean a resounding Nay! vote on any of  the people currently making decisions which affect our lives.

The second interview was Nomi Prins discussing her book It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street (Wiley; September 22, 2009) with Vermont Senator Bernie Sanders (I).  Ms. Prins is quite frank and open in discussing her views and placing blame.  She agrees that Wall Street is greedy and grasping and interested in nothing but profits.  She agrees that  Wall Street did build the situation that led to the Bail Out 2008-9  by taking a handful of what came to be called toxic mortgages and created  what she called an upside down pyramid of speculation and profiteering  with derivatives.

If you will recall I once explained derivatives as bets on nothing substantial..  I think  Iused a  fight between two opponents as my basis (mortgage).  This was substance and real and had some value as such.  Subject A and subject B bet on  who would win the battle or the outcome of the fight by choosing sides.  Still some substance and value at this point and little risk of their bet (money).  Subject C and Subject D came along  with a created derivative and bet on  who would be right Subject A or Subject B.  The derivative was based on nothing substantial, nothing but air, nothing but the opinion of another subject in this case.  The risk was greater as  they could lose their money if one of any number of things occurred:  they could lose if any one or all of the two combatants or the Subjects A and/or B  simply walked away  and removed themselves from the action for one example.  Now usually with these transactions this didn’t happen but instead of just dropping out the subject would try to sell his stake to another subject (at a profit of course).  Imaging this then becoming a pyramid of bets on the bets or opinions of others being bought and sold and bought and sold and piled higher and higher.

It was this speculation and play with derivatives that Ms. Prins  explains and blames for the Financial Crisis 2008-9. And  she agrees that  Wall Street’s greed caused all  of this.  However, she explained that it was the Federal government’s (Congress)  insuring any losses that encouraged and enabled this reckless behavior. Wall Street was the animal doing what Wall Street does: churning the paper and making profits.  If the federal government had not encouraged and enabled this risk taking so that the risk was minimized then it would not have happened.

Now let us go back to these toxic mortgages, or mortgages given to people who could not by any prudent lending measures afford the mortgages they were given.  The Federal Government enabled this by almost forcing banks to give these loans and it started with President Carter, picked up again with President Clinton and continued to run amok with the  under the direction of Representative Barney Frank and Senator Chris Dodd  as they  failed to enforce any of the regulation on the Federal Reserve, Fannie Mae and Freddy Mac.

President George Bush again and again called for enforcement of the regulation.  Senator McCain and others called for enforcement.  But because the then privately owned Freddie Mac and Fannie Mae and the Wall Street bankers were making such good campaign donations the Congress overlooked what was going on and allowed the disaster to happen.  The Bail Out   paid off all the “bet” made in the example above and then bought Freddie Mac and Fannie Mae.  Yes, you the tax payer now own the two largest mortgage holders in the world  along with all the foreclosed homes and lost mortgage payments!  And, no one was blamed for the mess.  No one was found guilty or even had to say I’m sorry.

On the topic of “too big to fail”  Ms. Prins  answers that these institutions are too big NOT to fail. They must in her opinion be broken up immediately.  But instead of doing this the Congress with new laws are encouraging them to merge and merge again into larger and larger entities that will eventually become impossible to contain or control and regulate.

And Ms. Prins goes on to explain that regardless of all the noise coming out of Congress (Frank and Dodd) the games are being encouraged , enabled and smiled upon again which is leading to an even greater disaster sometime soon.

This was not news to me since if some of you may recall I have been blogging about this and throwing the belief out at every opportunity to help prepare my readers and myself to the coming deep depression, but it was nice to have two such intelligent renowned economist as these two ladies back my beliefs up.  That is, this beat up old lady with obsolete degrees in education, psychology and avocations in philosophy and history could see it coming so it must be apparent to our congressmen and women so why are they not doing something about it?  Why are they instead continuing on this path of spending, spending, spending?  Why?

And what are We the People going to do about it?

I don’t know the answer to that question.  Congress seems deaf to all the shouting of the Tea Parties, Town-halls, Marches on Washington and probably more town-halls during this Thanksgiving Holiday.  And the elections of 2010 is really going to be too late to do a whole lot  IMO. Besides, I do not trust the American people not to elected again the same thieves and criminals they have been electing.  Rep. Barney Frank will die in his office being elected by a tiny,. tiny group of people and yet holding life and death power over the rest of us.  Congress has the ability to police itself and rid itself of these Rep. Murthas but has rarely done so and is not about to do anything now as far as I can see.  So what is the answer?

Perhaps as I stated in the beginning:  Communist China as our banker has the power and just may use it to save our nation.  You see we are at this time China’s golden goose; we are the consumers of China’s goods so it behooves them to temporarily keep us afloat.  In other words the United States is too big to fail—RIGHT NOW!  The future may be another story and if we don’t get our act together as a nation then we will die as a nation at some later date you can be sure of this.  China is expanding its market area and also growing a more afluent society that will  support its own industry so the time will come very shortly when we are no longer important to China.  It is this time we need to be prepared for and have our house in order so that we can reasonably repay our debt.    Or am I dreaming?  BB

By the way you might want to put C-span Washington Journal – C-SPAN on your to watch list when there is nothing else on TV  or to check on line their video library for topics that interest you.  It will become the most comprehensive “click” on your  blog list I am sure.  C-span is a daily must for me.  I may begin using features programing to post on in conjunction with the usual media.  BB

Federal Reserve Scandal Bigger than ACORN

Dear Readers, I have cut this article into two post because frankly (pun intended)  I don’t see what the Federal Reserve has to do with ACORN or how one being bigger than the other justifies either regardless of what Rep. Barney Frank in his outrage thinks.  Dear Lord but that “thing” should just crawl away to his hole as any other  self respecting snake would!

Anyhow, now the Federal Reserve.  We Conservative regular Americans can pat ourselves on the back for all our efforts to  take our country back because we are finally seeing some results of the Tea party Rallies, the million person March on Washington Sept 12 and a gazillion emails and phones calls and faxes to Congressmen.  I guess FOXNEWS and Glenn Beck could come in for a pat or two also. 🙂

For the first time, a hearing is being held on Rep. Ron Paul’s Federal Reserve Transparency Act of 2009 (H.R. 1207) by the House Committee on Financial Services. Grass-roots pressure has been credited with forcing the hearing into what has happened to trillions of dollars supposedly spent by the Federal Reserve on the stabilization of the financial system.

In prepared testimony, Thomas E. Woods, Jr. of the Ludwig von Mises Institute offers his strong support for the bill and declares, “…if our monetary system were really as strong, robust, and beyond criticism as its cheerleaders claim, why does it need to rely so heavily on public ignorance? How can it be a sound banking system that depends on keeping the public in the dark about the condition of its financial institutions?”

In an exchange captured in a YouTube video, Grayson questioned Fed Vice Chair Donald Kohn about Federal Reserve officials distributing $1.2 trillion dollars since September 2008, without reporting where they lent the money. In another video, Grayson questioned Inspector General of the Federal Reserve Elizabeth Coleman about where the money has gone and whether anyone is overseeing the activities of the Federal Reserve.

While Grayson is a liberal Democrat, he decided to co-sponsor the bill sponsored by Republican Rep. Ron Paul, the Federal Reserve Transparency Act of 2009, which requires an audit of the Federal Reserve System, including its Board of Governors, and the Federal Reserve banks.

Paul had announced on July 15 that all 178 Republican members of the House had signed on as co-sponsors of his Federal Reserve Transparency Act.

The House Committee on Financial Services’ hearing on the bill on September 25 also features testimony from Scott Alvarez, General Counsel, Board of Governors of the Federal Reserve System, and comes seven months after the bill was introduced and referred to the committee.

The bill currently has 295 co-sponsors, meaning that 117 Democrats have also endorsed the measure.

On the Senate side, a similar bill, S. 604, sponsored by Sen. Bernie Sanders, has 28 co-sponsors. It was referred to the Senate Committee on Banking, Housing, and Urban Affairs on March 16 but no hearings have been held on the Senate side.

Though introduced by a self-declared socialist, most of the Senate co-sponsors are Republicans, demonstrating that concern about the activities of the Federal Reserve crosses ideological lines.


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