On the Brink of Hyperinflation
20 03 2010Bernanke footnote: Fed wants end to ‘minimum reserve requirements’Stephen C Webster | RawStory.com
In the footnotes of a speech U.S. Federal Reserve Bank Chairman Ben Bernanke would have given to the House Financial Services Committee on Feb. 10, lies a unique and startling disclosure. Hosted on the Federal Reserve’s own servers, the written testimony of the bank’s chairman explains in plain text what expanding the Fed’s powers will do. “The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system,” footnote number nine, at the bottom of the page, explains without additional qualification. Sen. Chris Dodd (D-CT), who is not running for reelection, is currently pushing a financial reform bill that would grant the Fed unprecedented new powers to regulate financial markets, including insurance companies and small lenders, under the auspice of forcing such firms to lessen their exposure to risky investments. “[The] Federal Reserve had regulators in place inside of Lehman Brothers following the collapse of Bear Stearns. These in-house regulators did not realize that Lehman’s management was rebuking market demands for reduced risk and covering up its rebuke with accounting sleight-of-hand. When Lehman actually came looking for a bailout, officials were reportedly surprised at how bad things were at the firm. A similar situation unfolded at Merrill Lynch. The regulators proved inadequate to the task.” Yet, by the Federal Reserve’s stated assumption, that it will one day be able to eliminate the requirement forcing financial institutions maintain even a fraction of their depositors’ assets, it’s proposed mass-regulation of the financial sector sustains a brand of logic, however skewed. Unhinging banks from even basic deposit standards would essentially create a class above the daily requirements of capitalism, resting atop a pool of funds with infinite depth, removing the need for what’s currently known as “fractional reserve banking.” Such a system is described by Investopedia as such: “A banking system in which only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties. Most countries operate under this type of system.” What Bernanke is flatly stating is the need for that fraction, representing the actual wealth by which the bank’s capital multiplies, could soon be eliminated for the U.S. Federal Reserve, making free-floating, infinitely self-replicating capital a pervasive reality.
Categories : Federal Reserve, Featured
At time of writing, a bill that would see the Federal Reserve bank audited for the first time in 59 years has 207 cosponsers in the House and is gaining traction with every single day.







Recent Comments