It suddenly occurs to me that this whole tax cut boondoogle is one big red herring:

[BigBearJohn]

Only meant to divert our attention away from the
news revealing that the Fed Reserve gave away over

$12 TRILLION

of our money to the banks.

[Syrinx]

1. and the incoming chairman of the House Financial Services Committee has an interesting comment...

"In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks," he said.

http://blog.al.com/sweethome/2010/12/spencer_bachus_finally_gets_hi.html

[StarsInHerHair]

2. I hit recc and it jumped from 6 to 14

wow............what's $12 trillion divided by 300,000,000?

[Tunkamerica]

9. 40,000? did i get the zeros right?

[Taitertots]

14. Everyone gets an overnight loan of $20, everynight for 4 years

And the government will BUY $10,000 worth of stuff from you over the next two years.

[Bigmack]

20. $38,961.039 Google told me so...

I found this neat thing about google...

Just key the math problem into the search box...

12 trillion divided by 308 million

and hit return.

Great for math related to the Brazillions and Skungillions of dollars used in government.

(Yes, I know you young whippersnappers knew this a long time ago, but us old farts just re-discovered it.)

[madmax]

34. Thank you ----

from another old fart :hippie:

[StarsInHerHair]

37. so per person in the US vs. the Banksters, we'd gotten that much each

huh, not too bad at all.

[DeltaLitProf]

3. Federal reserve money is not our money

It does not add to the federal deficit or the national debt.

[Hydra]

22. The Federal Reserve may not be "our money"

But they expect us to pay it back. Neat trick, since they can "order" money to be made with no backing.

[laughingliberal]

24. Funny. Dallas Federal Reserve President Richard Fisher thinks it's our money.

"That's what we are paid to do," he said. "We took an enormous amount of risk with the people's money," he acknowledged. But the crisis lending programs are now all closed, he said, "and we didn't lose a dime, and in fact we made money on every one of them."

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120106870_2.html?sid=ST2010120106876

He defends their decisions but he clearly thinks it was the people's money.

You'd think these guys should be required to know whose money they're playing with. :shrug:

[girl gone mad]

26. Where on earth did you get that idea?

It's not monopoly money, dear. They're playing for real and every move they make effects the value of your labor and the worth of the paper in your pocket and any other assets you own.

Federal Reserve Loses $2.4 Billion In Taxpayer Money In Most Recent QE2 POMO Interval

Tyler Durden
http://www.zerohedge.com">Zero Hedge
Dec 11, 2010

With the Federal Reserve now actively participating in capital markets, it should be noted that just like every other asset manager, the Fed has to be held accountable for its trading efficacy. After all, the Treasury takes every opportunity to remind the US public how courtesy of record amounts of new government debt, it has managed to make “profits” on its assorted investments, which are merely transfers of risk from one entity to another, and the “another” being the US taxpayer, although not directly, but indirectly via the now ludicrous amount of US debt which will never be repaid. Which is why the US taxpayer may want to know that in just the most recent POMO schedule – that from early November to December - the Federal Reserve has lost $2.4 billion in taxpayer capital by its mistimed market operations, primarily due to the recent rise in interest rates. This is $2.4 billion that has not evaporated, but instead has been transferred to Primary Dealers under the “profit on trade” category. This is also money that will be used to determine, and fund, banker bonuses.

John Lohman breaks down the specifics of the P&L calculation:

Announced par purchases: $106,300,000,000

Actual Market Value Paid: $116,457,219,800

Market Value 12/10/10 : $114,032,149,219

Taxpayer Profit/(Loss): ($2,425,070,661)

The money transfer continues, but much more concerning, the Fed continues to assume ridiculous amounts of interest rate risk on behalf of taxpayers with absolutely no Plan B should it lose control of the situation.

As Zero Hedge readers known by know, the DV01 on the Fed’s total rate holdings was recently estimated at about $1 billion. This number refers to a Fed balance sheet as of April 2010: extending the calculation for the Fed’s current ballooning holdings, means that the DV01, or the P&L impact from every basis point move up or down, is now about $1.5 billion. In simple terms, a 1% move in rates will result in a $150 billion loss to taxpayers! And so on: 2% – $300 billion, 3% – $450, although technically not in a linear fashion, as by then the convexity impact will make losses progressively larger. And that’s not all – by the time QE2 is over, and the Fed’s balance sheet is about $3.5 trillion, DV01 will be just under $3 billion!

Basically what this confirms is that should the Fed lose control of interest rates, the losses to Americans will be in the hundreds of billions, if not trillions, wiping out any imaginary profit from TARP repayments and other marginal optical illusions.

[Scruffy1]

47. Ours when its a loss theirs when there's a profit.

I think the real problem is that we are guaranteeing trillions in questionable paper for he banks. The whole thing looks like bidding on a mystery box at an auction except the taxpayers are betting on top dollar. Hardly likely that banks would need guarantees on good stuff.

[Celebration]

42. you are right

It is "funny money." And it is all we have, because all other currencies are outlawed in this country. If my life savings has to be in Federal Reserve Notes, I sure don't want Federal Reserve Notes to be given away or loaned free to the banks, especially FOREIGN BANKS.

[DeltaLitProf]

4. From the Federal Reserve FAQ site

How is the Federal Reserve funded?

The Federal Reserve's income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions (the rate on which is the so-called discount rate). After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm

[Celebration]

44. fine and dandy

So, the Fed gets interest on government securities, gives its owners a six percent dividend (oh and try auditing THAT sometime) and we pay taxes to pay the interest on our debt. So, we fund the Federal Reserve. They have a total monopoly on money, by law. We have to do business in Federal Reserve Notes. When the Fed expands their balance sheet by that much, they are putting our entire monetary system at risk. Foreign corporations are being bailed out with Federal Reserve Notes that have the same value as the ones that I worked hard to earn. It makes a bit of sense that we might not be too keen about this.

[Taitertots]

5. No one gave $12 trillion to the banks

Stop repeating obvious lies.

[earth mom]

6. You're right-those fuckers actually STOLE OUR MONEY. Let's call it what it is.

:grr:

[Taitertots]

7. That is even further from the truth

I let my buddy spend a week at my house. I gave him $350,000.

[amborin]

35. you're right, it wasn't $12 Trillion; the banks got $14 Trilllion!

[bhikkhu]

49. Its well worthwhile to read the article that comes from

http://motherjones.com/politics/2009/12/behind-real-size-bailout

It does give a pretty hair-raising picture of the size of the whole mess, but the explanation is better than the graphic, and much less misleading.

[tkmorris]

12. I've noticed that every time this gets mentioned, you show up

Why is that? I get bothered when I think something is being exaggerated, or reported incorrectly, but I deal with such threads as I see them. I miss more than I see. And yet you catch EVERY thread which mentions this 12 trillion. That's curious, don't you think?

[Taitertots]

16. When the same lie gets repeated, someone has to say something

As long as nothing happens at work, I've got all night to read and post. Being interested in economics I'm drawn to the threads that discuss economic events.

[BzaDem]

18. Wouldn't correcting false statements MORE of the time be a good thing?

Not sure why you think that's suspicious.

As has been mentioned numerous times, if I lend you thousand dollars every day, and you pay it back at the end of the day, and then I relend you the same thousand tomorrow and every day for the rest of your life, under this "12 trillion" metric, I would have lent you tens of millions. But that's false, since I really only lent you a thousand at a time.

[TBF]

40. How are you missing those threads if you are there? You're accusing

your correspondent of showing up every time this is mentioned, but you would only know that if you were there as well.

:shrug:

[Klingon]

50. I also see him everytime I look at threads about Fed

And he keeps repeating the same things without backing them up with sources.

Like the one about Fed's lending being transparent and covered by the news at the time.

[Tunkamerica]

59. 6?

[FrenchieCat]

8. Do you have any verifyable sources on these,

or did you just pull it out of you know where?

[Tunkamerica]

10. source #1:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9757252&mesg_id=9757252

[Taitertots]

11. The problem is that this poster has no idea what they are talking about

$12 trillion only occurs when the numbers are totaled in the most dishonest way possible. 3 Trillion was used to directly purchase assets. The remaining 9 Trillion is the same overnight loans double counted every day.

[tkmorris]

15. It hardly matters does it?

That money was your money. It was my money. That is taxpayer dollars, incredible sums of it. And it was spent without my knowledge. Even those I elected to represent me had no idea that money was spent; they were never consulted. Does that seem cool with you?

[Taitertots]

17. The only reason you didn't know was because you choose not to know

The Fed regularly publishes what it is doing and why it is doing it.

The people who get elected certainly do control the actions of the Fed. The mandate of the Fed is explicit. Stable prices, moderate interest rates, and long term stability in production and employment. Congress doesn't micro manage their actions, but you can't pretend that they are not ultimately responsible to congress.

"That money was your money. It was my money. That is taxpayer dollars, incredible sums of it"
No it isn't. The Fed is self funded and actually pays the treasury. If anything it was your grandparents money, or the bankers money.

[girl gone mad]

27. That's totally false.

A journalist, with the suport of Bloomberg news, had to sue to get this information. Bernie Sanders sped up the process by sneaking a provision into FinReg.

[Taitertots]

57. Nope, you are wrong

Read the post tree. The content of your post doesn't match the content of the post tree.

[laughingliberal]

29. Huh. This guy says it's the people's money:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9757252&mesg_id=9760357

[Taitertots]

52. Too bad no one asked him

His opinion isn't going to put that money into the treasury or cause it to come from taxation.

[druidity33]

33. then why the heck

did they fight tooth and nail against an audit?

:shrug:

[Taitertots]

55. Because an audit is a bad idea

Every large firm would take that data and use it to make insane amounts of money while undermining any stability the Fed could restore. It would neuter the Fed and make insane profits for large firms.

[defendandprotect]

46. No ... Sen. Bernie Sanders demanded the info on what was lent to banks...

PLUS I don't think we still know the rates of interest they were given at --

and further we do not have a full AUDIT of the FED as requested by Grayson ....

never has happened, right?

[Taitertots]

54. Everyone who wanted to know, knew about discount lending rates

The only thing revealed was the exact quantity each firm got. This was concealed to avoid running these firms into the ground by showing that they borrowed from the discount window.

"PLUS I don't think we still know the rates of interest they were given at"
If you cared to know, you would know. It is right around 1%. It is regularly published.

An audit of the Fed is a stupid idea, because it lets outside firms copy cat the Fed. The fastest way to screw up an investment strategy is to tell everyone what you are doing.

[defendandprotect]

60. You're saying you know the interest rates and Sen. Bernie Sanders doesn't ....

actually, I think you're so busy alibing that you've lost all reason.

An audit of the FED is a "stupid idea" .... ?

You're a waste of everyone's time and you're on ignore --


:eyes:

[Warren DeMontague]

13. To be fair, that giant owl at the bohemian grove eats some very expensive satan chow.

Booooo! Boooooo!!!

[CrispyQ]

19. Here's what a trillion dollars looks like:

http://www.pagetutor.com/trillion/index.html

It's boggling!

[BigBearJohn]

56. That is TOTALLY boggling (and humbling). Now I know why it seems

hopeless to fight the mega-rich. Who can stand up to the trillions of dollars?
Who?

[madinmaryland]

21. Technically speaking the Fed provided over $13 trillion in short term

overnight loans to the biggest banks, in order to keep things running. All $13 trillion was repaid with interest.

[leftstreet]

23. Repaid with interest? SWeET! Now we can finance a Jobs Bill

AND single payer healthcare !!

[laughingliberal]

25. +1 nt

[girl gone mad]

28. How did these insolvent banks get the money to pay back Fed loans..

at the same time they were paying out hundreds of billions in bonuses and virtually halting all lending?

[laughingliberal]

30. Interesting. nt

[girl gone mad]

32. I'd like to see one of these "the loans were payed back with interest" posters..

answer the question.

I know the answer, but I'd like to hear one of the apologists explain how banks that were completely broke were able to pay back the Fed's multi-trillion dollar backstops while increasing executive compensation. It wasn't from money they earned through lending to the private sector and it wasn't through a recovery in toxic assets.

[GeorgeGist]

31. Chicken feed ...

for the unemployed. That's Our President.

[amborin]

36. $14 trillion was the total size of the bailout:

The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the tip of the iceberg of money paid out or set aside by the Treasury Department and Federal Reserve. In her book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street, Nomi Prins uncovers the hush-hush programs and crunches the hidden numbers to calculate the shocking actual size of the bailout: $14.4 trillion and counting.

http://motherjones.com/politics/2010/01/real-size-bailout-treasury-fed


and, don't forget those Maiden Lane bailouts that were under the radar, thanks to Timmy, while head of hte N.Y. Fed.....

[sendero]

38. Not really..

... Amercians don't understand the implications of it all and they already have plenty of distractions.

This whole thing is going down right under the noses of every American and 99% don't know and don't care.

[avaistheone1]

45. That part scares me too.

This is going to be another NAFTA. People were not paying close attention when NAFTA was voted on in Congress.

They did not realize the damage from NAFTA until many years after it passed.

I feel the same thing is going to happen with this extension of the tax cuts.

[Enthusiast]

39. We are awash in red herrings. nt

[bhikkhu]

48. Exactly.

When you suspect a red herring, the best approach is to read up about it. I mean actual information - not just youtube videos and internet forum echo-chamber stuff where a few dozen people who know nothing reaffirm each other's suspicions.

Ignorance combined with a desperate need to direct one's energies somewhere is a dangerous combination. We only need to do something about the first part.

[russspeakeasy]

41. Yes it has occurred to quite a few of us.

Anytime something hits the headlines, look elsewhere.

[caseymoz]

43. Not a red herring . . .

. . . more like a convergence of related events. The wealthy are digging their hands deep into our treasury, cutting themselves off from any social responsibility, and are cutting public funded programs that don't benefit them.

The $12 trillion is a big story, but it's related very much to their sinking of Social Security.

They're communists, committed to proving that Marx was right after all.

[bhikkhu]

51. Education is our friend, and our best tool in this case

If you take the time to actually focus on the problem - read up on the financial crisis from more than one source and more than one perspective, sort through what actually happened, take the time to peruse through what part of that 12 trillion was money, what part was potential money, what part was contingency promises, what part was approval to make promises if necessary, what part had to do with banks, with insurance companies, with the manufacturing sector, etc....

...then the first thing you would realize is that neither the fed nor anyone else gave away 12 trillion of our money to the banks.

If you take your anger and apply it to educate yourself on the issue, you may well still be angry about what happened, and probably justifiably so, but you will also be able to address the issue effectively. That is one ability that "our side" has customarily held as an advantage over the other.

[Imagevision]

53. And Obama insists we must help those millionaires/billionaires with their tax relief

as my house continues to be worth less each month...!

[Raine]

58. Yes they put a "shiny object" in front of us

to distract us while they are doing the very worst kind of crap behind the scenes. x(

[Horse with no Name]

61. Nowadays, the bright isn't so bright and the shiny isn't so shiny

It's food and unemployment insurance to keep us distracted.

We're getting easier to control. Conversion to fascism almost complete.