How the Fed Keeps Hiding the Truth
The Fed has been criticized - even more so lately - for "lack of transparency." That's a fancy way of saying that they don't say what they really mean, or, even worse, that they're hiding something. So Fed Chairman Bernanke just announced that in the future the Fed will "clearly" communicate its intentions to raise or lower interest rates over time. It sounds like they're addressing their critics and that their operations will be more transparent, doesn't it?
Not so fast. Even while they're talking transparency, the Fed has established and arrangement with the European Central Bank that is, well, hiding something. An Op-ed in the Wall Street Journal by Gerald O'Driscoll provides details.
What they're doing is hiding the fact that the Fed bailing out European banks and European governments. Repeat: the Federal Reserve Bank of the United States is now bailing out European banks and European governments.
Oh, that's right, they did this in 2008. And the details were only recently released - three years later. Then they did it directly by lending money. They hid the details by refusing to disclose to whom they loaned money at the time. So did they just do it again, even after being criticized for doing it then?
Nope. They didn't want to loan the money because, for one thing, they knew they would be subject to another round of criticism. O'Driscoll gives details of how they're doing it this time, using what's called a "swap" arrangement. If you read the article, you'll see that there's no other reason for them to be doing this except to hide what they're really doing - bailing out European banks and governments.
Meanwhile, the ever-astute U.S. media hasn't reported what's going on. The European press has, but not the U.S. The only one I've seen talking about this has been O'Driscoll, who previously wrote about it. That's how I learned about it.
So, interestingly, as the Fed is hiding their bail-out activities, Bernanke announces how they're going to be more transparent. O'Driscoll gives Bernanke credit for this. I think O'Driscoll is being too kind. After all, their new "transparency" is nothing more than letting us in on their current "thinking." It doesn't mean they're going to actually do what they're thinking they might do in the future. As conditions change, they can change their minds. Big deal.
I read some comments by the usual Wall Street sources that claim this will help to calm and stabilize markets. It will remove the element of uncertainty of wondering what the Fed is going to do regarding interest rates. But what kind of sense does that make? In fact, all they'll be doing is talking about what they think they might do in the future. They're not making any commitments. They can still change their minds, even turn on a dime, anytime they want.
Isn't it odd that they'd be talking "transparency" while they're engaging in yet another round of deception by using a swap arrangement to distract people from understanding that they're bailing out European banks again? And in case you think I'm being cynical here, this quote from the O'Driscoll article shows that they're not only hiding their European bail-out, but Bernanke already has said that such a bailout would be illegal! Check this out:
"Bernanke himself said the Fed did not have "the intention or the authority" to bail out Europe. The week Mr. Bernanke promised no bailout, however, the size of the swap lines to the ECB ballooned by around $52 billion."
Get it?
Not so fast. Even while they're talking transparency, the Fed has established and arrangement with the European Central Bank that is, well, hiding something. An Op-ed in the Wall Street Journal by Gerald O'Driscoll provides details.
What they're doing is hiding the fact that the Fed bailing out European banks and European governments. Repeat: the Federal Reserve Bank of the United States is now bailing out European banks and European governments.
Oh, that's right, they did this in 2008. And the details were only recently released - three years later. Then they did it directly by lending money. They hid the details by refusing to disclose to whom they loaned money at the time. So did they just do it again, even after being criticized for doing it then?
Nope. They didn't want to loan the money because, for one thing, they knew they would be subject to another round of criticism. O'Driscoll gives details of how they're doing it this time, using what's called a "swap" arrangement. If you read the article, you'll see that there's no other reason for them to be doing this except to hide what they're really doing - bailing out European banks and governments.
Meanwhile, the ever-astute U.S. media hasn't reported what's going on. The European press has, but not the U.S. The only one I've seen talking about this has been O'Driscoll, who previously wrote about it. That's how I learned about it.
So, interestingly, as the Fed is hiding their bail-out activities, Bernanke announces how they're going to be more transparent. O'Driscoll gives Bernanke credit for this. I think O'Driscoll is being too kind. After all, their new "transparency" is nothing more than letting us in on their current "thinking." It doesn't mean they're going to actually do what they're thinking they might do in the future. As conditions change, they can change their minds. Big deal.
I read some comments by the usual Wall Street sources that claim this will help to calm and stabilize markets. It will remove the element of uncertainty of wondering what the Fed is going to do regarding interest rates. But what kind of sense does that make? In fact, all they'll be doing is talking about what they think they might do in the future. They're not making any commitments. They can still change their minds, even turn on a dime, anytime they want.
Isn't it odd that they'd be talking "transparency" while they're engaging in yet another round of deception by using a swap arrangement to distract people from understanding that they're bailing out European banks again? And in case you think I'm being cynical here, this quote from the O'Driscoll article shows that they're not only hiding their European bail-out, but Bernanke already has said that such a bailout would be illegal! Check this out:
"Bernanke himself said the Fed did not have "the intention or the authority" to bail out Europe. The week Mr. Bernanke promised no bailout, however, the size of the swap lines to the ECB ballooned by around $52 billion."
Get it?
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