This article outlines a proposed mission statement/theme for the new "Batman and Robin" Fed/Treasury dynamic duo, and concludes with a "20/200/2000" recommendation to Treasury Secretary Paulson and Fed Chairman Bernanke regarding tomorrow's G7 Finance and Central Banker Meeting.

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The recent Bear Stearns fiasco will legacy itself as a watershed event in the history of U.S. government inter-agency relations, transforming at least one key heretofore non-existent official affiliation and related operation/execution models. That positive byproduct in the form of a completely new Fed and Treasury relationship and intervention model, that will not only help the U.S. financial system and economy over the long term, but more importantly in doing so, be of great value in helping thwart Commulism and its ever tightening grip on the global economy.  

This article therefore outlines a proposed mission statement/theme for the new "Batman and Robin" Fed/Treasury dynamic duo, and concludes with a “20/200/2000” recommendation to Treasury Secretary Paulson and Fed Chairman Bernanke regarding tomorrow’s G7 Finance and Central Banker Meeting. 

In short, the old mantra of "the Fed does this and the Treasury does that" separate and reactionary approach to market forces was conducive to fueling an insidious Commulism gameplan. On the other hand, a pro-active, synergistic, combined Fed/Treasury approach to pre-emptive financial market intervention, provides what Commulist nations (e.g. China and Russia) fear most - a stronger and more legitimate “financial superpower” foe. Combine that with an integrated monetary/fiscal and intervention policy/approach with U.S. allies equivalent Fed/Treasury organizations, provides the foundation for a powerful anti-Commulism financial power counter, and therefore boost to U.S. national security. 

Historically, and no pun intended, the Fed and Treasury have traditionally maintained a disparate, Chinese Wall-like separation. In fact, no direct working relationship. And intentionally so, to maintain the Fed’s desired governmental “independence” appearance.  

Both had been tasked with support of the financial markets in more or less a "reactive", yet separate and non-integrated manner. The recent pivotal landmark Bear Stearns debacle has however, forever transformed that paradigm into a new model going forward - that being a relationship and execution model built upon being not only pro-active, but powerfully now, integrated. 

The Analyst highlighted the specific March 14, 2008 Bear Stearns crisis situation, which transformed the Fed from historically a crisis creator to going forward, solution generator, in the following two articles. 

Commulism and the Bear Stearns Fiasco: Cancel the Stimulus Package and Backstop the Credit/Confidence Crisis (dated 17 March 2008): 

http://www.opednews.com/articles/opedne_brock_no_080317_commulism_and_the_be.htm New

Cabinet Post: Czar of Prudent Judgment (dated April 4 2008): 

http://www.opednews.com/articles/opedne_brock_no_080404_new_cabinet_post_3a__22c.htm  

The case now to be made to thematically link the new Fed and Treasury "joint, pro-active intervention" model under a new integrated mission statement or theme as follows:

                          “Stabilization and Punishment” 

That is, the two will now pro-actively (pre-emptively), “collectively and collaboratively” intervene as necessary to "stabilize" financial markets and then be given (TBD) the authority to "punish" the individual entities and or individuals that created the respective "confidence crisis" and necessitated their intervention.

Indeed the dawning of a new age of accountability on free willing financial market institutions engaging in renegade and risky "cowboy finance" activities. 

And that sage, age old "Don't Fight the Fed" advice will too evolve to a new advisory diet - "Don't Fight the FaT (Fed and Treasury)". 

Interestingly as if a harbinger of the Bear Stearns paradigm changing event on March 14, 2008, the Analyst proposed this non-traditional teaming up of the Fed and Treasury “before” it occurred, evidence his article titled: 

"Commulism Series" - Part 6 (dated Feb. 5, 2008): 

http://www.opednews.com/articles/opedne_brock_no_080205__22commulism_series_22__.htm  Specific

Excerpt:

“This effort will require rethinking and new ways of conducting business by all parties. It will be based on an understanding that the way to succeed against Commulist economic policies is to focus on the collective inflation and growth aspects/effects of the “group” (U.S. and WEAST collectively), rather than country by country’s “individual” situation. This is based on the principle that when it comes to competing with Commulism “in the long run”, what’s good for the whole is better for the individual parts (countries). 

A quick comment specifically as respects the U.S. contribution to CCMP (Counter-Commulism Monetary Policy). The longstanding separation between “church and state” (i.e. the Fed and Treasury) no longer makes sense. They must each change behavior and work collaboratively together against a common external threat which undermines both growth and inflation. This broader CCMP blueprint will adapt and align the policies of all U.S. agencies as well as it would do the same for WEAST government agencies, using China and the “Commulist” Block as the new threat basis, just as the military will do with its “to be developed” Flex-Plex integrated Cold War II doctrine, reflecting both superpower v superpower and superpower v terror sub-doctrines.”  

Of note too, that Fed/Treasury collaboration recommendation was then subsequently officially embraced by the Treasury, evidence the March 29, 2008 New York Times article titled "Treasury Plan Would Give Fed Wide New Powers". 

Specific excerpt: 

“Treasury Secretary Paulson is proposing to overhaul the government’s fragmented system for regulating financial institutions. The long term plan…would establish 3 agencies with separate objectives: 

Market Stability Regulator (one of three): 

Expands the role of the Federal Reserve to allow it to gather information and examine books of any financial institution, not just banks, that might pose a risk to the stability of the nation’s financial markets.” 

Analyst Note: While not specifically stated in the article, it is clear these new agencies would work closely with and fall either directly or indirectly under the Treasury’s department oversight umbrella. 

Then too the Analyst's proposal for a broader Advanced Monetary Policy (AMP) or rather Counter-Commulism Monetary Policy (CCMP) by the U.S. and WEAST (U.S. West and EAST allies) evidence too in the same "Commulism Series” - Part 6 (dated Feb. 5, 2008) article linked above:   

Excerpt as follows: 

“Create a joint and integrated (collusionary) U.S./WEAST “Advanced Monetary Policy (AMP)”. Alternatively call it the “Counter-Commulism Monetary Policy (CCMP)”.  

The key here is that in the emerging Cold War II, the U.S. and WEAST will have much more defensive (and offensive) leverage working collectively in tandem together, rather than each acting on their own. Commulism would prefer the latter in sympathy with the benefits it derives from its adversarial “divide and conquer” approach. 

CCMP/AMP Policy Making Board - The mechanism to create that coordinated, actionable monetary policy will be a policy making committee structured not unlike the UN Security Council with the CCMP governing board initially comprising senior policy making officials from the Big 3 - Federal Reserve, European Central Bank (ECB) and the Japanese Central Bank. Then build out the rest of the committee (council) infrastructure with remaining WEAST constituents. 

In effect, CCMP becomes the next evolution of G7 (G8 ex Russia), as G7 moves from 7 individual entities to one integrated one, at least as respects monetary policy.  

This effort will require rethinking and new ways of conducting business by all parties. It will be based on an understanding that the way to succeed against Commulist economic policies is to focus on the collective inflation and growth aspects/effects of the “group” (U.S. and WEAST collectively), rather than country by country’s “individual” situation. This is based on the principle that when it comes to competing with Commulism “in the long run”, what’s good for the whole is better for the individual parts (countries).” 

In support of the Analyst’s Feb. 5, 2008 proposed integrated U.S./WEAST CCMP theme, he then too notes the April 5, 2008 Reuters article titled:

“G7 Leaders May Demand Overhaul of Bank Model” 

Excerpt:

“Some banks will have to adapt their business models under policy recommendations to be made to global financial leaders at the G7 meeting next week, Dutch central bank chief Nout Wellink said on Saturday…The Group of Seven industrialized powers meets in Washington on April 11 to discuss a regulatory response to an eight-month old credit crunch that is crimping global economic growth...which is part of the Financial Stability Forum that coordinates the G7 regulatory response…These underpinnings should be strengthened…recommendations to the G7 -- the United States, Japan, Germany, Britain, France, Italy and Canada -- will also look at how to improve transparency in financial markets…About a dozen leaders, brought together by Prime Minister Gordon Brown, issued a communique urging the International Monetary Fund to help develop an effective early warning system to guard against financial risks to the global economy.”

The gist of the Reuters article being an embryo move by the G7 and other U.S. allies to act in concert, rather than individually, with regards to all facets of finance, fiscal and monetary policy. 

In summary, the new and growing complexities of the financial markets and linkage to economic success and failure, warrant a relationship overhaul - a completely different approach going forward from both the Fed and Treasury. In the future, their respective role is to not separately wait, see and "maybe” react. Rather, it will be taking a collaborative "front and center” role, and acting in concert to perform two integrally linked actions: 

1) Ensure/Achieve Market Stabilization and 2) Deliver Punishment. 

With that new theme a catalyst for desired action and results, the prospect for a similar credit or other major financial market crisis in the future is severely mitigated. In doing so, the resultant inertia toward an advanced or integrated monetary policy between the U.S. and WEAST will provide improved immunity against an ever more creeping economic cancer - Commulism. 

And with that too comes an interesting irony. To think that Bear Stearns, a company in the process of arranging a "$1 billion access swap” with the Commulist Chinese Government (i.e. Citic), is the entity at the center of the firestorm that triggered the crisis which transformed these two separate, distinct and often dysfunctional unilateral government and/or quasi governmental entities now into a most potent integrated, bilateral Commulism fighting force.  

Their “1 plus 1 equal 4” synergistic partnership coupled with its (Analyst recommended) unity theme and mission statement of “Stabilization and Punishment” provides a key underpinning of support to the U.S. and global economies to help remain a strong counter to Commulism. 

Indeed, the common law partnership between the Fed and Treasury yields a couple that is "Perfect Together"; perfect to help bolster the U.S. economy and in doing so, U.S. national security too.

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Closing Thought:

Tomorrow, April 11, 2008, Treasury Secretary Paulson meets with the G7 Finance Ministers and Central Bank Governors in an important and timely meeting given the many swirling crisis in the financial markets and economy. The following is the announcement excerpt from the Treasury website, concluding with an Analyst recommendation to Mssrs. Paulson and Bernanke:

April 9, 2008
HP-915

Prepared Statement by Treasury Under Secretary David H. McCormick
in Advance of G-7 Finance Ministers and Central Bank Governors Meeting

Washington − Good afternoon. The G-7 Finance Ministers and Central Bank Governors will hold their next meeting here at the Treasury Department on April 11, against the backdrop of the IMF and World Bank Spring meetings. A good part of the G-7 meeting will be devoted to current economic conditions, financial market developments, and the policy response to recent financial market turmoil. They will also discuss progress on the reform of the International Monetary Fund among other topics.

Our G-7 colleagues will be keenly interested in hearing first hand about the U.S. economic outlook, and Secretary Paulson will tell them that the housing correction, financial market turmoil, and high energy prices are weighing on U.S. economic growth. There are significant downside risks to the outlook, and we are taking action to support the economy as we work through these challenges.

Analyst Recommendation to Treasury Secretary Henry Paulson (and Fed Chairman Ben Bernanke):

Call it the “20 times 1, 10 and 100” or “the 20, 200, 2000” pitch:

While both the Fed and Treasury have brilliantly together, crushed the credit crisis, there still remains the issue of the dollar crisis which if not halted too can lead to economic collapse. The dollar has been orphaned and totally routed the last few years, now approaching 1.6 dollars to the Euro, almost double what it was just 5 or so years ago. A similar situation with the other major currency, the Japanese yen, hovering now at 100 yen to the dollar.

This G7 meeting would serve a perfect forum, akin to the Bear Stearns opportunity to halt the credit crisis, to now jointly announce that the Treasury (and Fed) will now after 6-7 years of dollar neglect and resultant freefall, now aggressively “defend the dollar”. That statement this weekend would send shock waves through the global finance and economic communities, sending a message that the U.S. is back and will reassume its currency leadership position, and the place for capital to flow into.

The immediate impact off that statement coming this Monday with oil dropping $20 per barrel, gold plummeting $200 an ounce, and the Dow Industrials soaring 2000 points.

Hen (Hank) and Ben, the ball is now in your court - again. Do the right thing - again. 

Authors Bio:

The cleverest of all, is the man who calls himself a fool at least once a month

- Fyodor Dostoyevsky

It is a curious fact that people are never so trivial as when they take themselves seriously...Some cause happiness wherever they go; others whenever they go

- Oscar Wilde

The situation is what it is...so deal with it...and then as General Patton inspiringly told his tankers...ADVANCE!!

- Brock Novak