Rather Than Being Drained, the Swamp Is Draining the U.S. Treasury Via the New York Fed

Since December 2007, the Federal Reserve has simply written its own playbook, independent of the law that governs it.

By Pam Martens and Russ Martens of Wall Street on Parade.

The Federal Reserve’s role under the U.S. law that governs it (the Federal Reserve Act) is to function as the nation’s central bank and lender of last resort to deposit-taking commercial banks in a crisis and to set monetary policy to achieve the dual objectives of stable prices (preventing deflation as well as runaway inflation) while maximizing employment.

But since December 2007, the Federal Reserve has simply written its own playbook, independent of the law that governs it. The Fed has decided to outsource to one of its 12 regional Federal Reserve banks, the New York Fed, the role of propping up the swamp on Wall Street.

The New York Fed’s own playbook involves dangling a shiny object for mainstream media in a “look here but not there” operation. During the 2008 financial collapse on Wall Street that took down the U.S. economy in the worst crisis since the Great Depression, the shiny object was a four-letter acronym called TARP, short for Troubled Asset Relief Program.

TARP was a congressionally-approved taxpayer bailout of the Wall Street banks, including those that had brought on the crisis by turning their federally-insured banking unit into a derivatives casino. Mainstream media was all over TARP as it doled out chunks of $10 billion to $45 billion to the largest banks on Wall Street in the fall of 2008, as well as lesser amounts to smaller banks caught up in the panic.

But while the $700 billion TARP shiny object was all over the front pages of newspapers, the New York Fed, with nary a vote in Congress or even the awareness of Congress, was running a secret $29 trillion Wall Street bailout. The New York Fed was using its unlimited ability to create money out of thin air to ply Wall Street banks and trading houses, as well as global foreign banks and central banks, with the lion’s share of $29 trillion in revolving loans, at a fraction of the interest rate these financial firms would have been charged in the open market. Those revolving loans began secretly in December 2007 and ran through at least July 21, 2010.

So desperate was the Fed to keep that $29 trillion a secret from the American people that it battled in court for more than two years, arguing that the American people had no right to this information. It lost that battle.

This time around, the Fed and New York Fed have brazenly upped their game because they have a much bigger shiny object: a deadly pandemic that is dominating the news and effectively eliminating any network or newspaper coverage of what is happening behind the scenes at the New York Fed.

What is happening at the New York Fed is the same thing that happened during the financial crisis of 2007 to 2010. Average Americans are getting the short-end of the stick in the stimulus bill known as the CARES Act while Wall Street banks are getting astronomical sums from the New York Fed’s unlimited money spigot.

Even worse, in what is beginning to resemble a conspiracy of silence, no mainstream news outlet has reported on the more than $9 trillion in super cheap repo loans the New York Fed has pumped into Wall Street trading houses or the fact that those loans began on September 17, 2019 – four months before the first coronavirus case was reported in the United States and at a time when President Trump was bragging on TV about the unprecedented robustness of the U.S. economy

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