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I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.

 
Iconoclastics
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12/19/2011 05:41 AM

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I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
After painstakingly reviewing the report it seems that the Federal Reserve itself only officially loaned out about 1.3 trillion dollars (nearly a third of which went to European banks). That money was then used by parent companies like BofA, Citi, and RBS to loan out an additional 15 trillion in "liquidity" (whatever the hell that means, it's become one of those words...) via various "relief programs" to the many subsidiaries and conglomerates.

So the question remains, who or what is underwriting these newly created assets, especially should another "interbank lending crisis" arrive? What was the backstop during the '08 crisis? The Federal Reserve if I'm not mistaken.

Banks come and go (so do governments for that matter) but when a currency goes, it's gone. We could cut our losses, let the banks crash as they should in a free market, take a big hit but salvage the dollar and try restructuring. Or we can continue using financial alchemy, hoping our neighbors to the East don't call bullshit on our currency debasement and pray the dollar doesn't spiral into oblivion.

Either way it appears our choices suck and obviously no one knows what will actually happen but I figure it doesn't make a whole lot of sense to keep trudging down the same old road that got us here in the first place. Particularly with the wealth of historical precedence underlining how catastrophic that decision could be, even more so than braving another great depression.

It took me, all told, about 30 to 40 hours to really read through it all and understand at least half of it.

God, that report pisses me off... economics is perhaps the least entertaining scholastic discipline to study and it is particularly offensive when demonstrating how the country was financially raped and assaulted.

So anyway, got any questions? I sure do...

Last Edited by Iconoclastics on 12/19/2011 06:16 PM
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

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12/19/2011 06:16 AM
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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
15 trillion in "liquidity" = leveraged fiat money loaned out at zero interest for a day or weekend at a time. The paying back of which is never recorded or a short trim loan is used to pay for the short trim loan.. yada yada yada yada
Iconoclastics (OP)

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12/19/2011 06:54 AM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
15 trillion in "liquidity" = leveraged fiat money loaned out at zero interest for a day or weekend at a time. The paying back of which is never recorded or a short trim loan is used to pay for the short trim loan.. yada yada yada yada
 Quoting: Anonymous Coward 7370967


So is it just supposed to magically work itself out?
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics
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12/19/2011 06:56 AM
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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
did ya see page 72.....WOW!
Iconoclastics (OP)

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12/19/2011 07:05 AM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
did ya see page 72.....WOW!
 Quoting: Anonymous Coward 1353884


I saw every page but there's no way in hell I can remember what was on it without referring back... but judging by your response I don't believe you have anything in mind at all, except to play. That's cool.
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics
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12/19/2011 08:00 AM
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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
kind of off topic but a question I have is, When we pay the the fed back with interest where does that money go? Or where is it supposed to go? What: is the point to pay interest?
Iconoclastics (OP)

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12/19/2011 04:39 PM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
kind of off topic but a question I have is, When we pay the the fed back with interest where does that money go? Or where is it supposed to go? What: is the point to pay interest?
 Quoting: Anonymous Coward 7371340



Interest provides incentive for people with assets to make those assets available for others, in pursuit of more assets.

So let's say I have $100,000 and you need a loan to start a new business. I will loan you $20,000 at 5% annual interest. So basically in one year you will repay the principal amount $20,000 plus the accrued interest which would be $1,000.

You get your business up and running with my loan and I get a little profit for my troubles... win-win is the idea.

However this business of interest gets a lot more tricky once an entity like the Fed, not the marketplace, is able to not only modulate the value of the dollar itself but to control the actual supply, i.e. "printing money" (although it should be understood that the Fed doesn't print money at all, the treasury does. The fed enters data into computers).

The honest answer to where the Fed interest payments actually go to is that no one truly knows. But here are two prevailing viewpoints.

A. The interest payments get circulated back into the Treasury, once salaries and operating costs are considered

B. The interest payments get siphoned off via Fed member banks

Because we cannot get a look at the Federal Reserve bookkeeping, and especially because there are rumors they have TWO different sets of books, it would be nearly impossible to give a factual, accounting answer to your question.

My personal opinion is that both A and B are true.

Last Edited by Iconoclastics on 12/19/2011 06:18 PM
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics
Iconoclastics (OP)

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12/19/2011 04:58 PM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
bump
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics
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12/19/2011 05:14 PM
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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
Check out the 2009 SIGTARP report. At that time the full liability was...get this...$24 Trillion.
Iconoclastics (OP)

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12/19/2011 05:43 PM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
Check out the 2009 SIGTARP report. At that time the full liability was...get this...$24 Trillion.
 Quoting: Anonymous Coward 3052744


So does that mean that the 16 trillion dollar figure in the GAO report is just mostly liability? Or was that the actual amount loaned out, via outsourced relief programs, with a liability of up to 24 trillion?

In other words what are your thoughts on the relationship and/or significance between the SIGTARP and GAO reports?
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics
Iconoclastics (OP)

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12/19/2011 06:13 PM

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Re: I just got finished going through the entire GAO report on the Fed audit, it took me many hours... ask me a question.
So does that mean that the 16 trillion dollar figure in the GAO report is just mostly liability? Or was that the actual amount loaned out, via outsourced relief programs, with a liability of up to 24 trillion?

In other words what are your thoughts on the relationship and/or significance between the SIGTARP and GAO reports?
 Quoting: Iconoclastics



Anyone else have thoughts on this?
"The person who is in love with their vision of community will destroy community. But the person who loves the people around them will create community everywhere they go." ~ Dietrich Bonhoeffer

"Doubt is not a pleasant condition but certainty is absurd" ~ Voltaire

"The World is my country, all mankind are my brethren, and to do good is my religion." ~ Thomas Paine




On Twitter @Iconoclastics