Recently, the Federal Reserve was ordered to disclose documents that specifically identify financial institutions that might have collapsed without aid from the 2008 bailout program.
The order, issued by the U.S. Court of Appeals in Manhattan, marks a new development in the ongoing legal battle between Bloomberg and the Federal Reserve. This ruling upheld a previous order from August 2009 that ordered that the information be released.
This unusual legal struggle began on November 7, 2008 when Bloomberg filed a lawsuit under the Freedom of Information act against the Federal Reserve Board of Governors, demanding that the Fed release the names of private financial institutions that received public bailout money.
Of course, the Federal Reserve has long claimed that it is a transparent agency and that it has nothing to hide. However, when confronted with this request for information regarding the recipients of the financial aid, the Federal Reserve immediately recoiled and began making statements about how such disclosure would do “irreparable harm” to the financial institutions that needed the Fed’s emergency loans during the biggest government bailout in U.S. history.
As it became clear that the information would have to be released to the public, the Fed began issuing threats that revealing such information would endanger the entire economic order of the United States. Additionally, the Fed claimed that its functions should be vigilantly shielded from public and political scrutiny to avoid the institution from being rendered impotent in its monetary policy efforts.
While there may be some validity that politicizing monetary policies may not be a positive development, the Federal Reserve appears to be forgetting one very important point. The money that they print and secretly hand out to whomever they deem worthy is not theirs. It belongs to the people. This money is the people’s money. And the money that the Federal Reserve lends out must be paid back, not by the Fed, but rather by the American people. With the recent bailout, the Federal Reserve has printed and handed out nearly $2 trillion of U.S. currency to unknown entities. And the bill for these loans has been sent to the American people – plus interest – to be made payable to the Federal Reserve. For an organization that is dedicated to “transparency,” the decision should be clear. Hand over the documents and allow those who have to pay the bill to know who they are paying the bill to. If the reputations of those financial institutions suffer as a result, that is unfortunate. But what is even more unfortunate is that the American people - and their unborn - are now on the proverbial hook for trillions of dollars to financial institutions that should have been allowed to fail through the natural forces of the free-market.
The tragedy lies herein. Our Federal government took a dangerous turn when its first priority became – not protecting the American people from future crisis – but instead to prevent any crisis at all. President Bush summed up the Federal government’s problem well when he stated during a December 2008 interview that he had "abandoned free-market principles to save the free-market system."
The Federal government’s current fixation on preventing any financial pain will instead lead to more economic complexities in the future. The Federal Reserve’s lack of transparency, and further insistence upon protecting the identities of the financial institutions that needed emergency loans, is further proof of the intention at the Federal level to maintain the illusion of prosperity regarding America’s fiscal house of cards.
The Federal Reserve should be audited and its financial activities should be exposed. The fact that the Federal government does not have the political foresight, or the internal fortitude, to demand that the Federal Reserve reveal its financial records is just another demonstration of how far our nation has gotten off track from its original founding.
In the early 1800’s President Andrew Jackson, cognizant of the danger posed by central banking systems, stated regarding America’s central bank: "You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, I will rout you out." Political conviction of this sort is mocked today by the historically uninformed, yet it is needed now than ever.
Bloomberg’s demand for genuine transparency at the Federal Reserve should be applauded. So should the recent ruling by the Federal courts. But our public officials who are complicit with the Federal Reserve should be disgraced. Through their actions, and their inactions, they have led those that they have been entrusted to shepherd to the edge of the cliff.
Jerry Robinson is an economist, published author, columnist, and international conference speaker. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week's economic and geopolitical news.
Robinson has appeared on numerous TV and radio programs, including FoxNews, to discuss global economic topics. Robinson is also the best-selling author of the book, "Bankruptcy Of Our Nation: 12 Key Strategies For Protecting Your Finances In These Uncertain Times." (New Leaf Press, 2009)
His writings and radio show can be found online at http://www.ftmdaily.com