By Pam Martens: November 26, 2013 Unless you’ve been lost at sea since 2008, you’ve likely heard time and again that the Federal Reserve is creating money out of thin air. Type the words “Federal Reserve creates money AND thin air” into the Google search engine and you’ll find about 2.4 million people weighing in on the subject, including folks at PBS. There’s no reason for the debate. The Federal Reserve has put out its very own video explaining how it creates money. It prefers the phrase “newly created electronic funds” to the colloquial “out of thin air.” The video is narrated by Steve Meyer, a Senior Advisor to the Federal Reserve Board of Governors, who explains how the Fed has been paying for those trillions in bond purchases since the 2008 crash. Meyer says on the video: “You may wonder how the Federal Reserve pays for the securities it … Continue reading →

By Pam Martens: November 25, 2013 For more than two decades, financial columnist John Crudele has been hypothesizing on whether the Federal Reserve has its fingers in the stock market – directly or indirectly. Tampering with stocks is off limits to the Federal Reserve, as far as the public is aware. Its stated function is to serve as the central bank of the United States, focusing on achieving monetary policy through its open market activities in the bond markets and foreign exchange area. But the New York Fed itself is helping to fuel suspicions about what’s going on within its cloistered walls at 33 Liberty Street in lower Manhattan. Of the 12 regional Federal Reserve Banks, the New York Fed is the only institution with a trading floor and highly sophisticated trading platforms. But despite multiple requests, the New York Fed will not provide a photo of the full trading … Continue reading →

By Pam Martens: November 21, 2013 Just when it seemed one could no longer be shocked by the corruption, hubris and lack of accountability in the American financial system, along comes yesterday’s release of the Federal Reserve’s minutes for the October 29-30 meeting of its Federal Open Market Committee (FOMC). While mainstream media focuses on what the minutes revealed about when the Fed might begin to reduce its monthly $85 billion in bond purchases, receiving scant attention is a brazen power grab boldly stated on page two of the eleven pages of minutes. Back on October 31, wire services reported that the temporary dollar and foreign currency swap lines that had been put in place between central banks on a temporary basis during the financial crisis had been turned into standing arrangements. The Associated Press explained the action as follows: “Six of the world’s leading central banks, including the U.S. … Continue reading →

By Pam Martens: November 20, 2013 This time around, Republican members of the U.S. Senate Banking Committee want to go on record that they not only see a train wreck coming from the Fed’s easy money policy, but have described it in unmistakable terms to Janet Yellen, the President’s nominee to lead the Federal Reserve. During the recent Senate Banking confirmation hearing of Yellen, three Republican Senators were particularly outspoken about the dangers lurking in the Fed’s policy of pumping $85 billion a month, a whopping $1.02 trillion a year, into Wall Street coffers via bond purchases from the Street. The policy is known in Wall Street jargon as QE3, shorthand for Quantitative Easing, round 3. By preventing a surplus of bonds on the Street, the Fed is keeping interest rates artificially low in hopes of stimulating economic recovery. The flip side of that effort, however, is to flood Wall … Continue reading →

By Pam Martens: November 19, 2013 This morning’s Wall Street Journal headline reads: “J.P. Morgan, U.S. Reach Historic Settlement.” Call me old fashioned, but when I think of the word “historic,” it invariably conjures up good things: the August 18, 1920 ratification of the 19th Amendment giving American women the right to vote – a scant 144 years after the Nation’s founding. Historic is also appropriate to describe the November 4, 2008 Presidential election where Barack Obama became the first African American to secure the Presidential nomination of a major political party and the first to win the Presidential post – a mere 232 years after our great democracy was founded. A Wall Street firm throwing billions at its regulators to preempt its executives going to jail is anything but “historic.” It’s now the rubric on Wall Street and in Washington. The model is so revolting that a sitting Federal … Continue reading →

By Pam Martens: November 18, 2013 Last week was a lesson in obscene wealth breeding abject stupidity. The brands of JPMorgan Chase and Bloomberg News took a self-inflicted beating from preposterously dumb ideas from top management. In both instances, the companies reflected a haughty contempt and insular assessment of public sensibilities. Congress has spent the better part of the year worrying about too big to fail, too big to jail, and too big to prosecute mega banks on Wall Street. JPMorgan seemed to prove last week that these behemoths are even too big to think rationally. In the midst of eight high profile criminal or civil investigations by the U.S. Justice Department involving the fleecing of the little guy’s pocket, JPMorgan decided to effectively take the pulse beat of public sentiment toward its brand. It decided to do this not in a closed-door focus group but in the most public … Continue reading →

By Pam Martens: November 14, 2013 Prior to her testimony before the U.S. Senate Banking Committee today, Janet Yellen, President Obama’s nominee to Chair the Federal Reserve Board of Governors, was asked to take an oath to tell the truth, the whole truth and nothing but the truth. But nine months ago, when Jack Lew went before the U.S. Senate Finance Committee for his confirmation hearing for U.S. Treasury Secretary, no such hand went in the air and no oath to tell the truth was taken. Why the disparity? The Fed Chairman directs monetary policy for the country. The U.S. Treasury Secretary pays the nation’s bills, prints its currency, oversees the collection of its taxes, and since the passage of the Dodd-Frank financial reform legislation, chairs the Financial Stability Oversight Council (F-SOC). This is not some slouch job. Lew came to his confirmation hearing with enough conflicts of interest to … Continue reading →

By Pam Martens: November 14, 2013 The Federal Reserve system turns 100 this coming December 23. Today, for the first time, a woman will undergo a Senate confirmation hearing to lead the Fed – an historic first. But gender is the last thing on anyone’s mind today when it comes to the new Fed Chairman. The Republicans are simmering over what they feel are “easy money” policies at the Fed. Wall Street will be measuring every syllable for a hint of when the Fed’s cash punchbowl of $85 billion a month in bond purchases might end. A few Democrats will delicately quiz Yellen on her views on ending too big to fail banks. What is very unlikely to emerge amid the theatrics in the Senate Banking confirmation hearing this morning, is the most basic question of all: how did a 100-year old institution created to implement independent monetary policy in … Continue reading →

By Pam Martens: November 13, 2013 Four seminal events occurred yesterday which carry dramatic overtones for next year’s midterm elections and the Presidential race in 2016. U.S. Senator Elizabeth Warren delivered a speech warning her Congressional colleagues in strident tones that Wall Street is now more dangerous than it was five years ago when it crashed. Warren, again, called for the restoration of the Glass-Steagall Act to prevent another financial calamity. Gallup released a poll showing the approval rating of Congress had fallen to nine percent, the lowest reading in the 39 years the firm has been asking the question. A Quinnipiac University poll reported President Obama’s popularity has fallen to the lowest point of his presidency, with a majority of Americans, 54 percent, now disapproving of his performance. And, finally, Americans for Financial Reform together with the Roosevelt Institute issued a 126-page report in conjunction with the speech by … Continue reading →

By Pam Martens: November 12, 2013 President Obama is about to do it again – appoint one of those revolving door Wall Street lawyers to head a critical top post at one of Wall Street’s key regulators. This time it’s the Chair of the Commodity Futures Trading Commission (CFTC). According to multiple leaks in the business press today, this afternoon the President will nominate Timothy Massad to head the CFTC – a man who spent 27 years at Cravath, Swaine & Moore, a core part of Wall Street’s legal muscle. Massad is not coming directly from Cravath this time around. On June 30, 2011, Massad was confirmed by the U.S. Senate to serve as the Department of Treasury’s Assistant Secretary for Financial Stability. If confirmed to head the CFTC, Massad will play a critical role in the regulation of derivatives, an area that has received heavy pushback from his former … Continue reading →