Bernanke Testifies Before the House Panel

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Aaron M's picture
Aaron M
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Joined: Oct 22 2008
Posts: 2373
Bernanke Testifies Before the House Panel

So, Barney Frank talks right over Ron Paul for a half minute, then cuts him off mid-sentance.
Apart from this "surprising" act, has anyone taken any useful information out of this discussion?

What the hell is the 13-3 Act that Ben refered to, talking about "powers" that will ultimately need to be removed from the FED's toolbox?

Is/Did anyone watch this?

They've admitted we were on the precipice of a serious, Global financial depression, and that we're "safely" away from the edge of the cliff... I somehow doubt the veracity of this claim, though I am not knowledgable enough to say for sure.

Input or comments?
I'd love to hear some thoughts!




strabes's picture
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Re: Bernanke Testifies Before the House Panel

Yes we were on the edge of a cliff.  To continue with their metaphor: now we've been pulled back from the edge a bit, but the slope toward the cliff just got steeper so we can't avoid eventually falling over, and the height of the cliff has gotten a lot bigger due to this absurd Keynesian onslaught and Fed leveraging...the fall will be that much more painful.  

Can't go into the whole story here, but the bottom line is we got in this situation due to excessive debt/credit inflation.  The govt is leveraging up even more debt and trying to prevent the deflation that simply must happen.  So these yeyhoos in Congress and Bernanke have no clue what they're talking about by saying this policy is helping.

The real problem is that debt/credit inflation is a guaranteed result of our debt-based money system run by the Fed.  We will never avoid inflation/deflation cycles as long as our slavery to the Fed continues.  THAT is what Congress needs to be talking about.  It's what Ron Paul wants to talk about.  It's why Frank prevented him from talking...the powers that be must be telling their allies in Congress to start shutting Paul up since he's getting a lot of traction with average voters nowadays.  Shameful.

As I understand it, 13(3) is basically what gives the Fed powers to serve as bank of last can do whatever it wants in emergency to ensure liquidity and the continued flow of credit.  But that's precisely what's wrong!!  They caused this entire problem by engaging 13(3) stuff in the when they saved Long Term Capital Management in 99.  That created the largest moral hazard in the history of the world and gave Wall St the message to do whatever it wants because the Fed will save them.  And here we are 10 years later...


Farmer Brown's picture
Farmer Brown
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Posts: 1503
Re: Bernanke Testifies Before the House Panel

Here it is:   (translation: we can lend when we want, to who we want, for whatever amount we want, without asking anyone else for permission)

3. Discounts for Individuals, Partnerships, and Corporations

unusual and exigent circumstances, the Board of Governors of the
Federal Reserve System, by the affirmative vote of not less than five
members, may authorize any Federal reserve bank, during such periods as
the said board may determine, at rates established in accordance with
the provisions of section 14, subdivision (d), of this Act, to discount
for any individual, partnership, or corporation, notes, drafts, and
bills of exchange when such notes, drafts, and bills of exchange are
indorsed or otherwise secured to the satisfaction of the Federal
Reserve bank: Provided, That before discounting any such
note, draft, or bill of exchange for an individual, partnership, or
corporation the Federal reserve bank shall obtain evidence that such
individual, partnership, or corporation is unable to secure adequate
credit accommodations from other banking institutions. All such
discounts for individuals, partnerships, or corporations shall be
subject to such limitations, restrictions, and regulations as the Board
of Governors of the Federal Reserve System may prescribe.

[12 USC 343. As added by act of July 21, 1932 (47
Stat. 715); and amended by acts of Aug. 23, 1935 (49 Stat. 714) and
Dec. 19, 1991 (105 Stat. 2386.]


Aaron M's picture
Aaron M
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2373
Re: Bernanke Testifies Before the House Panel


Thanks guys... very interesting. Not in a good way, but interesting all the same.

This whole mess is starting to look like an explosion and more like a controlled detonation.



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