“As disclosed on the Federal Reserve’s balance sheet, published weekly and audited annually by independent auditors, total credit outstanding under the liquidity programs was never more than about $1.5 trillion; that was the peak reached in December 2008.”

 “As reported in the Annual Report of the Board of Governors, alongside the Board's audited financial statements, the emergency lending programs have generated an estimated $20 billion in interest income for the Treasury.  Moreover, in 2009 and 2010, the Federal Reserve returned to the taxpayers over $125 billion in excess earnings on its operations, including emergency lending.”

Ben Bernanke, Chairman of the Federal Reserve

Letter to the US Congressional Committee on Financial Services

December 6, 2011

The above quotes are from a letter that the Fed Chairman penned on 12/6/11 which was meant to show the extent of the bailout programs in 2008 and 2009, and also how well those programs worked.  The only problem is that the letter highlights something else – the grand scale of theft going on as the Fed takes money from individuals, lends it to banks, and eventually gifts it to the US government.

The bailouts to the financial industry, which totaled $1.5 trillion at their highest point of use as noted above, came by way of the Federal Reserve printing new money out of thin air.  Every time the Fed does this it makes all dollars in existence worth just a little bit less, which is an un-voted, involuntary tax on everyone who holds dollars, like savers.  The way this action shows itself is by creating a rise in prices (which is simply the reaction to lower dollar values), which is a not-so-hidden tax on everyone who buys stuff, particularly on those with fixed incomes, like retirees.  Keep in mind that this $1.5 trillion was then lent to banks that had been reckless in their borrowing and lending practices.

As the funds are paid back, the Fed Chairman notes that they are “returned to taxpayers” in the form of “excess earnings on its operations,” and totaled $125 billion in 2009 and 2010.  Unfortunately, nothing of the sort happens.

I am a US taxpayer.  My accumulated US dollars were devalued by the Federal Reserve when they printed more US dollars to loan to the likes of Citi, Goldman, etc.  In response to these activities the prices of commodities shot higher, which caused the prices I pay for food and other goods to move higher.  Yet, when the Federal Reserved received in $125 billion in “excess earnings,” I was not sent a check for my proportionate share.  You weren’t either. 

When the Federal Reserve books revenue into its “excess earnings from operations” it does not return the money to taxpayers, it sends the money to the US Treasury to spend as it sees fit.  Every extra dollar received in at the Fed eventually goes to the US Treasury. 

So if we follow the money trail, it begins with the Fed printing more US dollars, which devalues the ones we have in our bank accounts and pockets.  Then the Fed lends the dollars to whomever – back in 2008 it was big US banks, last week and this week it is the European Central Bank so that they can lend them to private European banks.  When the money is repaid it is then sent to the US Treasury, the same entity that receives our Federal Income Tax payments. 

That doesn’t sound like a winning program for US taxpayers.

Posted in : Federal Reserve 

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