Last week’s Bloomberg News report that the Federal Reserve had pledged/backed up/loaned $7.6 trillion — yes, that is trillion — to shore up our faltering national economy, opened a whole new set of previously unanswered questions:
How much money does the Fed have?Where is it?What backs it up? Gold? Treasury bills? Where does it come from? These are not tax dollars appropriated by the Congress, so where do these massive funds — equal to half the annual GDP — come from?Who controls these funds? Do we, the American people, have any direct say in what happens to these funds?Is there any hands-on oversight by our elected officials over the people who run and control these funds?Are there any checks and balances — the ruling governmental principle of our system — over the mysterious people who run this equally secretive and apparently more-massive-than-any-of-us-knew system?If it is trillions and trillions, then why the big fight last September for a mere $750 billion for the TARP program that Paulson, Barney Frank, and Chris Dodd cobbled together and threatened Congress into passing? Why use public tax dollars for this when the Fed apparently has this inexhaustible supply of money?Is the truth that the Fed just prints whatever they need, and they keep that fact secret from us? (I have read that they stopped publishing the money supply numbers a while ago.) And if that is true, won’t that lead to terrible inflation, perhaps the single most destructive economic ill of them all?Ask any two people, even knowledgeable, educated, financial types, and you will not get the same answers to these questions.
Many have claimed for years that the Fed was bad news for our economy, responsible for inducing the boom-and-bust cycles that have enriched and impoverished so many.
Our staggering national debt, which is now about $11.5 trillion and sure to increase because of the ongoing financial meltdown, is a huge drag on our economy. Plus, the interest payment is the second largest item in our federal budget — over $500 billion annually. Can these Fed funds be used in any way to alleviate this burden?
The media has done a horrible job translating this Federal Reserve system into understandable English for all of us. Clearly they do not understand it either. But they need to be asking these questions of our elected and appointed officials — from Bush and Obama to Paulson and Geithner and to the leading members of Congress.
We have to wonder if most of them know any more about this than the average guy.
Our economy is teetering on the abyss of collapse and yet none of us knows what we need to know as citizens about our own government and our own financial system. Why? Because the system itself is secretive, “off-the books” and so complicated as to go over the head of almost everyone.
This has to change — and soon.
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