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Bernanke makes ridiculous claims about (a) private liquidity and (b) credit to the financial system (we assume he means "banks")From: click here
Chairman Ben S. Bernanke
Federal Reserve's exit strategy
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
February 10, 2010
In the second paragraph from the 2/10/2010 announcement from the Federal Reserve (Fed.), Fed. Chairman Ben S. Bernanke made this ridiculous claim, " ... during the past 2-1/2 years ... The pulling back of private liquidity ... threatened the stability of major financial institutions and markets and severely disrupted normal channels of credit. " (bold emphasis added by mrc).
The second paragraph is reproduced below in italic type. The quote referenced above is in bold italic type in this reproduction.
"Broadly speaking, the Federal Reserve's response to the crisis and the recession can be divided into two parts. First, our financial system during the past 2-1/2 years has experienced periods of intense panic and dysfunction, during which private short-term funding became difficult or impossible to obtain for many borrowers. The pulling back of private liquidity at times threatened the stability of major financial institutions and markets and severely disrupted normal channels of credit. [See note #1 by Martin R. Carbone (mrc)] In its role as liquidity provider of last resort, [See note #2 by (mrc)] the Federal Reserve developed a number of programs to provide well-secured, mostly short-term credit to the financial system. [See note #3 by (mrc)] These programs, which imposed no cost on the taxpayer, were a critical part of the government's efforts to stabilize the financial system and restart the flow of credit. ..."
Note #1 by mrc to Bernanke -- on "private liquidity"
It is not up to private people and institutions to provide "private liquidity" (easily available money) to our Money and Banking System. Creating money to keep our Money and Banking system running smoothly is clearly the job of the Federal Reserve System and local banks, of which you are the Chairman. That job was outsourced by Congress to the Fed. under the Federal reserve Act in 1913 -- (before you were born). Originally, The Federal Constitution gave the job of "creating money" -- to Congress, but Congress evidently thought of that job as a "hot potato" and passed it to the Fed, as we said, in 1913. Didn't anyone ever tell you?
End of NOTE #1 by mrc.
Note #2 by mrc to Bernanke -- on "liquidity provider of last resort"
The Federal Reserve and/or its member banks are NOT the "liquidity providers of last resort" -- they are the ONLY liquidity providers to our Sovereign Money and Banking System -- in accordance with the role assigned to them in the Fractional Reserve Act of 1913 by Congress to "create money".
End of NOTE #2 by mrc.
Note #3 by mrc to Bernanke -- on "the Federal Reserve developed a number of programs to provide well-secured, mostly short-term credit to the financial system."
Neither Federal Reserve Banks nor the "financial system" needs any sort of credit. BANKS DO NOT NEED CREDIT -- they have the right and obligation, as part of the Federal Reserve Banking System, who got that right from Congress -- to CREATE whatever money they need to keep the Money and Banking System running smoothly. Creating money is the bank's primary reason for existing. Read Wright Patman's book, "A Primer on Money" which is available from our website where he clearly explains that is what banks are for. See #4 at
http://www.primeronmoney.com/moneyfacts.html
End of NOTE #3 by mrc.
How could Bernanke not be aware of the fact that local Federal Reserve banks were primarily set up to create money for lending to local people and businesses?
In my humble opinion, Bernanke should be fired as Chairman of the Fed. for incompetence and lack of knowledge about Fed. operations.
Martin R. Carbone / 5123 Don Rodolfo Drive / Carlsbad, CA 92010 / martycarbone@yahoo.com
Website: http://www.primeronmoney.com
