WEBVTT

NOTE How Bernanke Is Using the Printing Press to Win Friends and Influence People

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Our next speaker is an adjunct scholar with the Mises Institute. He's been a faculty member at Mises University.

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He's really one of our young guns, if you will. Bachelor of Arts in Economics from Hillsdale College, PhD at NYU.

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He used to work for Arthur Laffer for whatever reason.

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He runs a blog called Free Advice, and that's the only place you can get anything free from him.

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He's written a number of books, Politically Incorrect Guide to Capitalism.

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He's written our study guides for Man Economy and State and Human Action.

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And his latest book is The Politically Incorrect Guide to the Great Depression and the New Deal.

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It's a wonderful book, and it's out front.

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and please consider buying it. He's working on two very exciting projects for the Mises Institute that I want to mention.

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First is a curriculum, an economics curriculum for homeschoolers or, well, I'm not sure any public schools are going to pick this up, but you know, hope springs eternal, right?

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But it's not only an economics textbook for young people, but also a teacher's guide and supplementary materials.

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And we're very close to having this out. And he's the guy that's been authoring this.

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Also on Monday, he has our first internet class through the Mises Academy.

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And this is terribly exciting. It's on the Austrian business cycle theory.

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and believe it or not we've had I believe it's over 150 people sign up to take this class and we were doing a run through the other day and this is very interactive so people are online with us and one of the gentlemen said gee there's a little bit of delay in the sound and picture and we said gee I wonder what that is well the guy was in China so we have people in China taking on

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and online courses from the Mises Academy, from our next speaker.

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If anyone knows where a hot karaoke bar is tonight, he's going to be looking, so please track him down.

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He's going to be talking about how Bernanke is using the printing press to win friends and influence people.

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Please help me welcome Mr. Bob Murphy.

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Thanks for that kind introduction, Doug. I'm glad to follow Jeff Tucker there. A lot of

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times people think the Mises Institute is very doom and gloom, but if I understood Jeff's

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message, he was saying that yes, fascism is coming to America, but at least we'll all

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be very well dressed. So whenever someone says we're all just pessimism, that's not

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Okay, I'm going to talk, this talk is going to be, technical is a strong word, I don't

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want to scare you, but I really want you to understand what I'm trying to get across in

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this talk and to see what Ben Bernanke has managed to do for himself and for all future

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Fed chairmen or chairwomen as the case may be eventually, that it's not merely the fact

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that, oh gee, there's going to be, prices are going to rise at some point, which many

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Many of us think is going to happen with all the things that Bernanke has done since the

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crisis ensued. I'm sure many of you have seen these charts just showing things called

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excess reserves or what the monetary base that literally some of these charts you'll

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see if you know starting in 1913 when the feds found they come down here and then they

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just go up like that. I'm not exaggerating some of these charts to show the sort of extraordinary

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interventions that Bernanke has done. But a lot of times we're just focused on, again,

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The possibility of future price inflation or that we're saying it's screwing up the economy,

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that this is the same type of thing that Greenspan did after the dot com crash, right, that Greenspan

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brought rates down, pumped in a lot of money, and that gave us a soft landing.

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And for a while everyone was saying Greenspan was the maestro, because gee, we managed to

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get through what should have been a really bad recession after the dot com blew up, and

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yet it wasn't so bad, and wow, house prices have gone up through the recession, which

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which is kind of unusual.

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As everyone thought, Greenspan was a wizard and managed to guide us through that.

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But of course, in retrospect, lots of people, not just the Austrians, but more and more

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regular financial commentators and other economists are thinking, gee, maybe in retrospect, Greenspan

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didn't do the right thing.

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Maybe he just sort of kicked the can down the road and we're going to have, and that's

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why we had the huge housing bubble and bust.

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And so Bernanke is outdoing Greenspan, right?

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And that's all true that I think and many others in the Austrian School think that everything

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The same thing Bernanke has been doing, it's not undoing the mistakes of the housing boom years, by printing up new money, you don't change the fact that too many real resources went into housing, or that too many mathematician PhDs went into quantitative finance and worked on hedge funds in Wall Street, you don't undo all those mistakes just by Bernanke writing up checks that are drawn on thin air. So that's a truism and that's real, that's a true fact. But what I want to talk about today and the rest of my time is that,

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Just to isolate the, you could call it the political economy, if you will, just to look

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at the, as George Bush might say, the strategy behind what it is that Bernanke has done for

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himself.

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So just to give you an analogy, remember, you know, think of it in terms of U.S. presidents

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and how, you know, who are the presidents that we revere, and I say we meaning like

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the, as you grow up in America and what you learn, I mean, the ones you like, like Abraham

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Lincoln is probably the greatest president, right, because he saved the Union and freed the slaves, and you like FDR, and you just go through and list all the great presidents, Woodrow Wilson.

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And what you find in common is it's basically, you know, who's killed the most people, right? I mean, think about that. Who's grown the size of government the most?

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Who has expanded the power of the state? Who has made the presidency closer to, you know, a king or an emperor, right?

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And again, that's not what they officially say, but if you just think through the pattern, the pattern is there.

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And if, of course, you go get the book, the Reassessing the Presidency, if you make your contribution today,

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you can get that and look at it, and you'll see that spelled out in more detail.

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But I think if you just, you know, if you haven't thought about that before, and I'm just telling you,

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you just go through and think about it, that's really, that goes hand in hand.

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The great presidents are the ones who have expanded the power of the presidency,

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Whereas the ones that you never hear about and the ones that historians would say all those, they were bad presidents,

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it's because they didn't do anything novel or innovative or revolutionary.

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You know, they just sat back and didn't do anything because they didn't want, they just not wanted to help people, right?

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If you want to help somebody, you got to get more powerful.

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Okay, so what I'm saying is I think that's partly why people revere Bernanke so much,

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it's not pure cynicism or that I think a lot of these people who are lauding Bernanke actually believe it and it's because there's just this this respect or worship for power and Bernanke has really expanded the power of the Fed you can see that in the language people use when they describe what he's done you're talking about unprecedented things and and he's real creative and thinks outside the box and wasn't going to be tied down by tradition or what the textbook said and so I mean those are all various ways of saying Bernanke has been doing things that the Fed

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never did before. So a lot of what the government has done, you'll see it like the news accounts

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will say, not since the Great Depression has the government intervened in the banking sector

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this much or has it done such and such or run deficits that are this big, not since World

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War II, that kind of thing. But with the Fed, it literally is unprecedented. Even during

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the Great Depression, the Federal Reserve did nothing compared to what Bernanke has

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is done now in response to this crisis.

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All right, so I think future Fed chair people

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will look back at Bernanke really

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as like one of their leading lights

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and one of their heroes for expanding

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what power the Fed chairman has.

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So let me, in order to get you to see what he has done

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and why what he's done is qualitatively different

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from past Fed operations,

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I'm gonna just walk you through Fed operations.

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Now, part of the whole mystique of central banking is that it's incredibly dry and boring, right?

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That, I mean, this was a thing when I used to teach at Hillsdale College, the introductory macro classes.

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I mean, this was the one where I had to tell the janitors,

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lock the windows because otherwise kids are jumping out, right, when I'm doing this.

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And we were only on the second floor, so it wouldn't even have killed them.

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They just would have been injured.

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This would have been, you know, you don't want the parents are all mad. It's awful.

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So, again, if you get lost, I have written up the first half of what I'm going to talk about at Mises.org, it's one of the daily articles, I think the title is The Fed is Giant Counterfeiter, alright, so if you are liking what I'm saying here but you get a little bit lost and you want to go read it in more detail, go look that up, it was within the last few months was the article, so that's what I'm going to talk about and just explain to you the standard story, the thing you would get in a regular introductory class in college,

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But I'll put a little spin on it and show you why it's a very corrupt system and why it happens to be like that, that it's not just some accident, that that's the way our banking system is designed.

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But then I want to, after that, show you how things have changed and what Bernanke is doing now that's different, that's qualitatively both more perverse or corrupt, but yet at the same time you see how now the Fed Chairman and all of Bernanke's successors

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are going to have almost infinitely more discretionary power and ability to, as I put in the title, win friends and influence people.

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I really do think that Ben Bernanke is one of the most powerful people on the planet.

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A lot of people think that Obama is the most powerful guy, but I don't think he is to the extent that you want to look at the amount of power they have in terms of their official capacities.

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There's many respects in which the US Fed Chairman right now is incredibly powerful.

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Bernanke, like I said, has really done a lot to expand that.

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So let's very briefly go through, you know, the standard arrangement.

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How did the Fed used to do things?

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And let me just walk you through that and then understand why the government benefits

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from it and why the powerful bankers benefit from it.

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So you can understand why back in 1913 this happened, that the Federal Reserve was created.

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So because it certainly was not, I don't want to burst anyone's bubbles or ruin your

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It was not that there were a bunch of progressive academics sitting around who were concerned about the welfare of the nation and that's where the Federal Reserve came from.

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That's not what happened. This is well documented in biographies from the people who were involved in other accounts.

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This isn't just a conspiracy theory that it was very powerful banking interests, Morgan's, Rockefeller's, things like that, in conjunction with certain senators who were tied in,

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and, you know, heavily funded by the banking interests that push through the central bank,

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the Federal Reserve.

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Okay?

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So that's the history.

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So I want to just try to get you to see why that makes sense, why that's a plausible story

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to understand how these people benefit from it.

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So in the standard, what's called an open market operation, well, let me just back up

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a second.

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So the government, why does the government benefit from the existence of a central bank?

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Because it's a way of financing its operations, as Tom and others have been talking about.

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So specifically what happens is the government wants to spend money because that's popular

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to do but if it taxes people too much they get upset and then if it borrows just from

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people in the private sector or other governments then again there's a limit to how much you

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can do because the more you borrow the interest rate goes up and then if you get too indebted

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you know people might just stop lending to you because they're not sure you're going

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to be able to repay.

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So what happens is the, let me just walk you through an example, so the treasury wants

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The Fed wants to spend a million dollars more than it has, right, given its taxes and everything else, so it sells a million dollars worth of new bonds in an auction.

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So somebody in the private sector has savings, lends it to the Treasury.

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So okay, the government's happy there, it can go spend a million dollars more than would have, had this not been available.

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But then this person now in the private sector who has a million dollars worth of bonds, what can happen to those?

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If the Fed engages in what the textbooks call an open market operation, the Fed can come

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in and buy those bonds from the person who lent the money to the Treasury, right?

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And how does the Fed buy a bond?

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It writes a check drawn on the Federal Reserve for a million dollars and hands it to the

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person.

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So now those bonds that the Treasury issued end up on the balance sheet of the Fed, okay?

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And you say, oh, okay, so now this guy who lent his million to the government just got

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That paid back the million from the Fed and you say, well, where did that million dollars

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come from?

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Was it because Bernanke has been cutting lawns and babysitting and saving up money and now

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he has a million dollars?

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No, he just writes a check drawn on thin air.

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There's not some pile of money that whenever Bernanke spends, it draws it down and, uh-oh,

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we better slow our open market operations because we're going to run out of money.

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No, it's just numbers on an account.

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It's electronic at this point.

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They don't even need to use the resources of paper and ink, it's just all electronic, or a lot of it's electronic, okay?

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So that's right there, a million new dollars has been created, and so that's inflationary, right?

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That the million dollars of that individual in the private sector saved and lent to the government, the government spent it, so that's pushing up prices.

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But this guy now, he doesn't have to reduce his spending because Bernanke wrote him a check for a million, and that money's good too, right?

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That's equivalent to any other money that's in our system.

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If it comes from the Fed, that's high-powered money.

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That's good stuff, right?

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That's legal tender.

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So he can now go out and spend as well.

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So there's a million more dollars in the economy already

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in this story.

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Now, you say, OK, well, so already we see,

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why does the government benefit?

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Why do they like having a central bank around?

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Because the interest rate that they get charged on lending

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or borrowing money is lower than if we didn't have the Fed.

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And just so you know, in my mind, I'm picturing the Feds over here, the Treasuries here, and this guy in the private sector's here, right?

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I don't know why, that's just where they ended up.

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I actually don't like it because now the government and the Fed are right behind me, it's sort of scary.

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So, the Treasury, they benefit because the interest rate is lower than otherwise would be.

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And why is that? Because the Fed is waiting in the wings to be a big buyer of the Treasury's debt.

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So just for an analogy, imagine you're a car producer and you make a very particular type of car,

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are some obscure model that's got a small market, but occasionally the Federal Reserve will come in and go to car dealers and they will just write checks and buy your type of car from these dealers.

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Well, knowing that that's a possibility, dealers are going to be more likely to buy your cars as the producer of them and they're going to pay you higher prices because they know they can unload it to the Fed.

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So it's the same thing with the government's bonds or the government's debt that people at the auctions, when the Treasury has an auction and needs to raise money, people in the private sector pay them more for their bonds, meaning the yield is lower, right?

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That they insist on a lower interest rate because they know they can sell them to the Fed.

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or another way of putting it is the prices on government debt are bid up

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because there's a big demand or the person of the Fed and so higher prices

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on bonds is the flip side of a lower yield okay so right off the bat we see

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the government benefits because interest rates are lower but there's another

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reason the government benefits that even when the Treasury pays interest on the

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on its debt you know so someone buys a bond and they pay a certain amount and

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And then, you know, if it's a long-term, 10, 20-year instrument or security, the Treasury makes periodic interest payments.

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Well, to the extent that the Treasury is making its interest payments to bonds that are on the Federal Reserve's balance sheet,

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so that money goes out the Treasury's front door and it goes into the Fed.

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So the Fed, you know, in terms of its bookkeeping, it has earnings, as I forget which one of the speakers mentioned that,

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but it was something like 50-something billion, was that right, this past year?

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Okay, so it doesn't cost that much money to run the Fed, you know, they have their electric bill, they got to cut the lawn, they got to, you know, pay the janitors, clean the floors, but that, it doesn't cost that much money, so what do they do with it, after they've paid everyone off and they, you know, fund the research for Fed economists and so on, who just so happen to write research papers glorifying the Fed, you know, they're getting paid by, after they, you know, they pay all their bills, they have a bunch of money left over because they have all these assets on their balance sheet that they bought writing money on thin air, and what do

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What they do with the excess earnings, they, what's called, remit them to the Treasury.

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So and you can go look up, you know, and that's in the article I mentioned, I show you the

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link to the official government site showing last year how much the Fed transferred to

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the Treasury.

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So in terms of the federal government's books, you know, they have tax revenue, they have

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all their sources of income.

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One source of income is, I forget what they call it, but earnings remitted from the Federal

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Reserve.

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So the interest that the Fed or the Treasury pays out on its borrowings to the extent that it goes to the debt held by the Fed comes right back in the back door.

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So that's another reason the government benefits that the interest rate is lower and a lot of the payment going out comes right back in.

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OK, so it'd be like if you bought if you borrowed money from your parents within a contractual interest rate and they charge you a low rate because, you know, they're your parents.

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But then, the amount they would give you on your birthday was higher because any money you paid them in interest, they just would give you back as a birthday present, alright?

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And that way, you could see it would be pretty painless to borrow money from your parents if that were the arrangement, and it's the same thing here.

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Okay, so that's why the government's happy.

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And, but what's perverse now is the story doesn't end there because, let me just check the time here, okay.

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Because what happens is the money now, that check that the Fed wrote to this guy, he goes and deposits it in his commercial bank.

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So now his bank has a million dollars more in what's called reserves.

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And this is going to get technical, I'm just going to cut to the chase here.

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And so that bank now has a million dollars more in reserves.

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And the way the banking system is set up, the legal requirements and so forth for banking in the US,

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You have to have roughly 10% set aside to back up your outstanding deposits.

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So that particular bank now, because they saw their reserves go up by a million,

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they can go out and make a new loan of $900,000 roughly.

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So someone who wants to buy a house for $900,000, this bank now can give them a mortgage for $900,000.

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They can say, sure, sign some papers and now open up a new checking account for this person in the amount of $900,000 and just put it on their books.

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So when you ask, well where did that $900,000 come from, it was just a bookkeeping entry, it didn't come from anywhere.

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It's the magic of fractional reserve banking.

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And so that's a part that it really, I mean we're just kind of used to it and even I taught it, it didn't really sink in with me just how messed up that is, that's crazy, right?

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That bank, so that's not even, you know, we understand when Bernanke writes a check for a million, oh he just created money out of thin air, but so does that bank, that bank also just created $900,000 out of thin air.

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It's a pure bookkeeper. Now, the book's balance, on the commercial bank's balance sheet, you know, they have a $900,000 liability in the new checking account that that guy's going to then, you know, on the civil fund, but he's going to go pay to buy the house, and on, you know, their asset side, they have the mortgage that's, you know, at the moment of creation is valued at $900,000. Okay, so I mean, the book's balance, but when you say how did both sides of the balance sheet go up by the same, it's because they just did it, you know, for the magic of fractional reserve banking.

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Okay, so, nice, and then that process multiplies, of course, and that's ultimately by creating that new injection of a million dollars that the Fed did when it bought the government bonds.

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It allows banks, as it cascades through the system, banks eventually can lend out up to a new nine million dollars.

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Okay, so now there's a total of ten million dollars of new money floating around.

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In a sense, the government got a million of it, and the private banking system got nine million.

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Okay, so when you try to think through inflation and the consequences, the way our system is set up right now,

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actually, and again, just rounding off and dumbing things down a little bit, but

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in a sense, of all the new money and credit that's created,

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10% of it the government gets and the private bankers get 90%,

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the ones who are really, you know, the first line to receive things from the Federal Reserve's injections.

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Okay, so you can understand now why this is an incredibly lucrative arrangement and it's a win-win as far as they're concerned and why, you know, the big bankers really like this system.

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And so if they got somebody like Ron Paul shooting his mouth off talking about end the Fed, they don't like that.

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And so it's not a coincidence that all, you know, the major media are depicting him as such a kook because, you know, they got a good thing going here and get someone to shut this guy up, right?

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You don't want people talking about this stuff.

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Okay, so that's the way things stood for a while, but let me now very briefly explain how are things even worse.

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What has Bernanke done that's just qualitatively different?

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It's what he's done is suppose, so that's a great system, but now you would think how could you possibly lose money being a banker with the thing rigged in your fit?

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Well, you can, all right?

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It takes a special sort of man to be able to lose money with this arrangement, and what do they do?

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What do they do? They make so many bad loans, right, that they run into a problem of capital constraints.

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And again, I don't want to get too technical here, and also Doug French is in the audience, who was a former banker,

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so if I try to get too technical, I'll make a mistake, so I'm going to stay away from it.

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But basically, the idea is, let's say that $900,000 mortgage they gave to the borrower,

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who goes and buys a house and pays $900,000 for it, turns out how the real estate market collapsed.

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Now that house is only worth $500,000. If the person had to sell it, it would only fetch $500,000.

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So the bank, if it were being honest and wanted to, you know, mark its books down, it knows this guy is going to default on his mortgage.

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He's probably going to walk away. And we're going to be stuck with this house that was the collateral.

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And if we value it at market prices, you know, we're going to have to knock down our capital by $400,000, right?

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That right now in our books, we have an asset in this guy's mortgage that we're pricing at $900,000.

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but really true market valuation it would be 500,000 so our books we have to write down our capital by 400 grand and if the bank made lots of bad loans like this it could be insolvent right the the shareholders equity could go below zero if they did it right there so the banks in trouble and just the original thing of providing a new way for them to make new loans which is the standard way that the Fed helps the banks that doesn't help them get out of that particular pickle right because you know you if you're

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You're insolvent, you're insolvent, you can't get out of that just by making new loans if you have no capital.

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Okay, so what has changed in this crisis is Bernanke has now, what he has done is not merely said,

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okay, I will allow you, you know, I'll write checks to people and then when you get new reserves,

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you can go make new loans pyramided on top of that.

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But in addition, if you've got things on your balance sheet as a bank that if you had to value them at the right market price,

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and Solvent, we as the Federal come in and we'll buy that stuff from you and we'll pay

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par for it.

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So you have this mortgage that really ought to be worth $500,000, I'll write you a check

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for $900,000 and there you go, you give me that mortgage, we'll take the bad mortgage

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off of your hands.

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So now the bank is whole, its books are fine, it doesn't have to write down its capital

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and everything's great as far as that banker is concerned.

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And so that's partly how Bernanke rescued the economy is by buying up all these so-called

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and through all sorts of other really complicated things.

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So when you step back and say, well, did he really fix things? Is that possible?

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Well, no. I mean, they still made the bad loan. That doesn't undo the fact that the loan was a mistake,

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that they shouldn't have given a $900,000 mortgage to that person,

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or he shouldn't have been able to pay that much for a house when really that price was inflated.

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But yet, you get through the immediate storm that that bank would have failed,

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The world would have gone out of business head, they had to value the asset at the true price but now the Fed takes it out of its balance sheet and for some reason if the Fed does that and everyone kind of thinks, well by definition they just pay that much for it so that's what it's worth.

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And people say, you know, what's the economy like right now? I didn't make this analogy up. I think it's a good one.

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I think the U.S. economy since Bernanke has been doing all this stuff is sort of like in the old road owner cartoons when Wile E. Coyote runs off the cliff.

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You know, so he's going and he runs off the cliff, but until he looks down, it's fine.

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But then once he looks down, he starts going. And I think it's the same thing here that everyone kind of knows.

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We're in limbo. Like this, what does it mean? Interest rates have been basically zero for this long.

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and we've seen all these banks should have failed and yet Bernanke somehow magically

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seems to have cured it all just by buying up all these assets and I think because people

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they don't really believe in economics the way a lot of the Austrians do, I think a lot

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of people don't really believe in truth as it were, they don't really believe in laws

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of economics and so they kind of think, well look nothing's happened so far so let's just

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keep going along and maybe it'll just all blow over and as an Austrian economist we

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We know that, no, that can't be true, that the mistakes really were made during the bubble years and the reckoning will come.

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All that's really happened is that Bernanke has transferred a lot of those bad assets onto the Fed's balance sheet.

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So, in terms of the qualitative difference there, you know, how are things different now than they were?

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Before, all the Fed could really do is just provide a general sort of, you know, euphoria.

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The Theory of Money and Credit

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In practice, it would only buy government debt. That was the majority of the stuff on the Fed's balance sheet was debt issued by the federal government.

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There are some other things too, but that was basically the story. Whereas now, Bernanke can say, you know what, I'm worried about the housing sector, so I'm going to come in and I'm going to buy one and a half trillion dollars worth of bonds issued by Fannie and Freddie.

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or, you know, I want to rescue them. This particular investment bank is too big to fail, right? If it went down, it would take the economy with it, so I'm going to come in and buy some of its toxicant, or this bank over here is going to fail, we need to rescue it, we're getting a private rescue agent to come in, but there's a lot of bad stuff on this bank's balance sheet, so to make the deal go through, we'll get some of it off its books, and we'll pay, you know, a hundred cents to the dollar for it. And that's what would happen. And let me, to just show you, this isn't merely theoretical, let me read to you

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April 1st, New York Fed Reveals What Bailout Billions Bought

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After two years of secrecy, the Federal Reserve Bank of New York is disclosing key details

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about billions of dollars of risky investments it has bought while rescuing insurance giant

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AIG and supporting the sale of failed investment bank Bear Stearns.

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The Fed said on Wednesday what the investments were held by these three companies that created.

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Wednesday's closure marks a sharp reversal for the Fed, which has long refused to disclose many key details about the bailouts, including what assets it holds in these companies and what assets it accepts as collateral in making these low-cost loans to banks.

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When Bear Stearns teetered in March of 2008, the New York Fed brokered the company's sale to JP Morgan.

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The New York Fed created Maiden Lane to buy $30 billion of investments that JP Morgan wasn't willing to take over.

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Okay, so just to talk you through that, what does that mean?

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So, you know, Bear Stearns was in trouble in March 2008, and it was going to go down, and that would have been awful, right?

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And it's uncomfortable, the Fed has to do something.

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And so what they did, they didn't directly take over that bank, right?

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In the common parlance, you listen to people on CNBC, they don't say that the Fed took over Bear Stearns.

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A lot of them would say, well, no, it was J.P. Morgan took it over.

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That was the one that assumed it, and so it's a private thing, and free market people should be happy here.

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The way they got the deal to go through was the Fed came and bought $30 billion worth of stuff that J.P. Morgan didn't want, that Bear Stearns had.

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okay so you see that that's an indirect way again what's happening so what's

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happened is Bernanke now instead of just writing checks and sort of causing this

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general inflation that the banks all participate in sort of indirectly by

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creating new loans now Bernanke has found a way under the cover of this

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crisis to justifiably you know and in terms of the conventional media

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treatment he can now go up to banks and literally you know buy 30 billion

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dollars worth of stuff in a single you know single deal from them bad

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Investments they've made. So that would have been inconceivable before this crisis, that

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the Fed could just go up to some private investment bank and just write a check for $30 billion

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and then that bank could hand stuff that's really not worth $30 billion. Because that

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would clearly be creating money out of thin air and just handing it over to private bankers

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just to rescue them from their dumb mistakes. That would have been inconceivable 10 years

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ago that he could do it so nakedly and yet they're doing it now. Just to give you an

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So to give you an idea of how deceptive and secret all this is, and this is the impetus for the audit, the Fed movement, and so on,

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Congress called Bernanke before, and this was in December of 2008, so after all this major rescue operation stuff had been going on,

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and Congress wasn't saying, we want you to stop, or we're going to second-guess what you're doing, they just said, tell us who you're giving all these billions of dollars to.

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Bernanke said no, because if I were to tell you, that would defeat the purpose of the program.

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So just think through that, that now Bernanke has established for himself not only that he has the ability to write checks for billions of dollars and hand them out to individual investment banks to buy their bad assets,

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but he doesn't even have to tell anyone, even Congress, who he's writing the checks to and for how much.

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I mean, that's just mind boggling when you think about it, right, that before, like if, you know, if a king had a printing press under his command and was going out and spending stuff, but at least if you could see what he was buying, you would have some idea of what was going on, but the Fed now, I mean, they are, you have the ability to create this money and you don't even know, except in terms of the Fed's reports, you can look and see like what the gross totals are, assuming those are correct, but you don't even know where the money is going. So in terms of just the corruption,

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and the ability of the Fed Chairman to influence events.

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I mean, that's just mind boggling.

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And that's why I think, if you remember when Bernanke's renomination came up,

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there was at the last minute a little scare.

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And a few key people were, I think, because they knew the public was mad about the bailouts.

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And the whole alleged purpose of all this was to get lending, extend lending to, you know, small businesses.

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But what's ironic is if you go look at the actual data, commercial lending and so forth,

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Roth was at an all-time high in October of 2008, and then it falls off like a stone.

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So it doesn't prove anything, and maybe it would have fallen even faster had the Fed

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done nothing.

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But the point is, the conventional narrative of why they had to do all this stuff, you

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would think that lending was falling off, and then it zoomed back up when Bernanke intervened.

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No, it's the mirror image of that.

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So all these people are mad.

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These progressive, you know, Democrat with a capital D activists are mad about the bank,

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the central bank.

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And so there was this run against Bernanke, and everyone rushed to his defense, all these

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big guns.

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I think part of it is because he literally gave billions of dollars to some of the world's most powerful people.

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So they owed him a big favor.

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Same thing with Tim Geithner, who was the chair of the New York Fed when all this stuff was happening.

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All this stuff on his tax evasion, you would think normally he would have had to fall on the sword,

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but for some reason he came through unscathed.

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Again, because he had a lot of powerful friends.

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Let me just close with my favorite quote in this story.

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The Fed has said its secrecy was necessary to help rebuild confidence in the financial

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sector and stabilize the banking system. Critics argue for more transparency given that the

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bailouts could have cost taxpayers tens of billions of dollars. But identifying these

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assets quote, would compromise the New York Fed's ability to maximize value for the taxpayer

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in the long run, said New York Fed President William Dudley.

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So again, the Fed, they're saying we need to be able to write checks for billions of

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dollars to these investment bankers, and don't force us to tell you who's getting this money

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because then that would screw up our ability to maximize value for you taxpayers, you ungrateful

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wretches.

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Just trust us with this money and stop asking questions, otherwise you're going to screw

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up everything and lose money.

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So you might get a little bit suspicious, you know.

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So, anyway, that's the happy thought there and thank you very much.