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Bernanke Leaves Fed with Record Balance Sheet

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Photo Credit: AP Photo/Pablo Martinez MonsivaisRetiring Federal Reserve Chairman Ben Bernanke, who was replaced by Janet Yellen as of today, is leaving the Federal Reserve with an unprecedented $4,102,138,000,000 in total assets on its balance sheet, up 391 percent from the $834,663,000,000 in total assets the Fed showed on its balance sheet when Bernanke took over as chairman in February 2006.

Much of the increase in the Fed’s assets has come in the form of U.S. Treasury securities and Freddie Mac and Fannie Mae mortgage-backed securities that the Fed purchased over the last five years in its attempts to stimulate the economy.

As of Feb. 1, 2006, when Bernanke took over as chairman, the Fed’s balance sheet indicated it owned $748,840,000,000 in U.S. Treasury securities. At that time, the balance sheet listed no mortgage-backed securities. As of Jan. 29, 2013, the balance sheet indicated the Fed owned $2,243,176,000,000 in U.S. Treasury securities and $1,532,224,000,000 in mortgage-backed securities.

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DOJ Seeks to Block Bernanke Testimony

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ben-bernanke2WASHINGTON — The government is trying to block questioning of Federal Reserve Chairman Ben Bernanke in a lawsuit by the former head of American International Group Inc.

The Justice Department told a federal appeals court Friday that high-ranking officials should not have to testify except in extraordinary circumstances.

Former AIG CEO Hank Greenberg sued the government over the $182 billion bailout of the insurance giant that has since been repaid.

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Bernanke Out by August, QE Ends, Rates Up; Prepare for Crash Now Because Easy Money Will Dry Up

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Photo Credit: Getty ImagesHis clue? Consumer sentiment: “Harris estimates that in the next five years, catch-up consumption will boost annual consumer spending growth by a half point to above 3% from about 2%.”

Reassuring? No, wishful thinking. Be very skeptical. As Robert Kuttner, author of the new “Debtors’ Prison: The Politics of Austerity Versus Prosperity” once wrote in BusinessWeek, “What do you call an economist with a prediction? Wrong.”

Harris is bucking the headwinds of history. As Jeremy Grantham, chief strategist of the $100 billion GMO money managers, recently told InvestmentNews, the newspaper of record for America’s 90,000 professional investment advisers, “3% annual GDP growth is history.”

Here’s why you better be preparing today for a crash dead ahead. As Pimco’s Bill Gross warned in his recent newsletter: “You’re going to lose money investing … because the central banks say so.” That’s right, this is a Fed-driven rally. Soon the Fed will be forced to stop printing cheap money.

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How Porn Links and Ben Bernanke Snuck Into Bitcoin’s Code

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Photo Credit: CNN MoneyHere’s a little-known quirk of cyber currency Bitcoin: There are coded messages hidden in the ledger that track bitcoin transactions. Most are innocuous, but this week, the discovery of a malicious transmission filled with porn links set the Bitcoin community abuzz.

Bitcoin, a four-year-old digital currency developed by a hacker who still remains anonymous, is a favorite plaything of libertarians and cryptography geeks. It burst into the mainstream this year when investors took note of its wild price swings. One bitcoin is now worth around $112, down from a record high of $266 last month, but up from $5 a year ago.

At the core of the bitcoin network is a database recording every single transaction.

Bitcoin enthusiasts have long known about a technical loophole that allows people to inject coded messages into the database. The trick is typically used for pranks or harmless notes, but Bitcoin discussion boards lit up on Monday with the news that someone took advantage of it for a nastier purpose: adding encoded links that claim to lead to porn sites, some featuring children.

A technical analysis posted on BitcoinTalk.org delves into the details. There doesn’t seem to be much danger for the casual bitcoin user. The porn links are concealed in hexadecimal code, and a decoder is needed to translate them into English. In other words, you’d really have to be looking for it.

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Bernanke: ‘Too Big To Fail’ Remains A Problem

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Photo Credit: Gerald R. Ford School of Public Policy

Federal Reserve Chairman Ben Bernanke said Wednesday that he still views “too big to fail” banks as a “major issue” that must be addressed.

Bernanke told reporters that the lingering concern about whether the nation’s biggest financial institutions are perceived as enjoying a government lifeline is still a challenge for regulators. He added that while new tools created by the Dodd-Frank financial reform law are aimed at addressing the issue, further action may be needed to put the matter fully to bed.

“I don’t think ‘too big to fail’ is solved now. We’re doing a number of things which I think will help,” he said. “If we don’t achieve the goal, I think we’ll have to do additional steps … it’s not just something we can forget about.”

Bernanke and other regulators have been pressed by lawmakers in both parties about whether big banks still enjoy the implicit backing of the U.S. government since the financial crisis. And while regulators and Dodd-Frank backers insist the law provides the tools to prevent future bailouts, Bernanke acknowledged that the perception has persisted to some degree.

“Too big to fail was a major source of the crisis, and we will not have successfully responded to the crisis if we do not address that issue successfully,” he said.

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Bernanke, the Wizard Behind Obama’s Sham Economy

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On July 11, The Center for Vision & Values posted my article decrying the insulting name-calling directed toward Federal Reserve Board Chairman Ben Bernanke. The very next day, Bernanke made me question my forbearance by telling Congress that a third round of “quantitative easing,” or “QE3,” could be a near-term option.

Now it’s my turn to call Bernanke a name, but I’ll use a clinical label, not a crude one. He is an inflationist, although he may prefer the label “anti-deflationist.” He so fears a deflationary spiral that he will create however many dollars he believes necessary to avert deflation.

Bernanke’s repeated attempts to patch over the nation’s economic weakness, rottenness, and dead wood with newly created dollars remind me of the “Potemkin village” ruse. The Soviet communists duped foreign visitors into thinking that communism was a viable and prosperous system by steering them to sham factories, stores, villages, etc., which appeared to be productive, bustling, and attractive. In reality, Potemkin villages were like movie sets, built to disguise the widespread poverty and backwardness that characterized life in the “workers’ paradise.”

Official statistics insist that the Great Recession ended two years ago. Yet unemployment is creeping up, record numbers of workers are remaining unemployed for record lengths of time, income is down for small proprietors, and millions of people feel as though the recession never ended.

It is proverbial that statistics lie. One such statistic is the gross domestic product. GDP has risen modestly the last two years, supposedly indicating growth rather than recession. Here is the flaw in GDP: By definition, GDP=C+I+G. In other words, GDP equals the sum of consumer spending, private investment, and government spending. (There is also a problematical addendum of net exports, reflecting the mystical mercantilist notion that a country is richer if foreigners obtain more goods and services than domestic residents do, but let’s omit that here.)

Read More at Floyd Reports By Mark W. Hendrickson, Floyd Reports

Gold Isn’t Money? Say What?

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Gold isn’t money? How could America get to this point we asked in astonishment upon hearing the Chairman of the Federal Reserve proclaim, “Gold isn’t Money.”

No wonder our leaders in Washington misspend our money. They don’t even understand what it is.

For those of you without a dictionary nearby, let’s start with the Webster’s definition, which says money is “something generally accepted as a medium of exchange, a measure of value, or a means of payment.”

The Webster’s definition even though inadequate still captures the essence. Money is a store of value that was created to facilitate barter or trade. It was a store of value because a farmer would accept it in exchange for his potatoes today, and next week he could spend an equivalent value to buy a pair of overalls.

If anyone reading this column doesn’t believe that gold is a good store of value, we will happily exchange your gold for some of Ben Bernanke’s Federal Reserve Notes. And that is exactly what owners of Federal Reserve Notes have been doing the world over. As a result, since 2001 the cost of Gold in Federal Reserve Notes has exploded from 300 notes per ounce of Gold to 1500 notes per ounce of Gold. That is a five times increase in ten years.

Read More at Floyd Reports By Floyd and Mary Beth Brown, Floyd Reports