The Fed Undermines Foreign Policy

http://paul.house.gov/index.php?option=com_content&view=article&id=1845:the-
fed-undermines-foreign-policy&catid=62:texas-straight-talk&Itemid=69

The Fed Undermines Foreign Policy
        
Last week I was both surprised and pleased when the Supreme Court upheld 
lower court decisions requiring the Federal Reserve Bank to comply with 
requests for information made by Bloomberg under the Freedom of Information 
Act ("FOIA"). Bloomberg simply wanted to know who received loans from the 
Fed's discount window in the aftermath of the 2008 financial market crisis, 
and how much each entity received.  Surely this is basic information that 
should be available to every American taxpayer.  But the Fed fought tooth and 
nail all the way to the Supreme Court to preserve their privileged secrecy.  
However, transparency and openness won the day.  There are some 29,000 pages 
to decipher, but a few points stand out initially.

The Fed lent huge sums of our money to foreign banks.  This in itself was not 
surprising, but the actual amount is staggering!  In one week at the height 
of the crisis, about 70% of the money doled out went to foreign banks.  We 
were told that bailing out banks was going to stave off a massive 
depression.  Depression for whom?  We now know that the Fed's bailout had 
nothing to do with helping the American people, who have gotten their 
depression anyway with continued job losses and foreclosures.  But now we 
learn that a good deal of the money did not even help American banks!

In light of recent world events, perhaps the most staggering revelation is 
that quite a bit of money went to the Arab Banking Corp., in which the Libyan 
Central Bank owned about a third of its stock.  This occurred while Libya, a 
declared state sponsor of terrorism, was under strict economic sanctions!  
How erratic the US must appear when we shower a dictator alternately with 
dollars and bombs!  Also, we must consider the possibility that those loans 
are inadvertently financing weapons Gaddaffi is using against his own people 
and western militaries.   This would not be the first time the covert 
activities of the Fed have undermined not only our economy and the value of 
the dollar, but our foreign policy as well.

Of course I can't say I'm surprised by the poor quality of the data provided 
by the Fed.  The category of each loan made, whether from the "Primary 
Discount Window", the "Secondary Discount Window," or "Other Extensions of 
Credit," is redacted.  Thus, we don't know with certainty how much discount 
window lending was provided to foreign banks and how much was merely "other 
extensions of credit".  Also, some of the numbers simply do not seem to add 
up.  We are of course still wading through the massive document dump, but it 
does seem as though several billions of dollars are unaccounted for.

As the world economy continues to falter in spite of - or rather because of - 
cheap money doled out by the Federal Reserve, its ability to deceive 
financial markets and American taxpayers is coming to an end.  People are 
beginning to realize that when the fed in effect doubles the worldwide supply 
of US dollars in a relatively short time, it has the effect of stealing half 
your money through reduced purchasing power.  Rapid inflation will continue 
as trillions in new money and credit recently created by the Fed flood into 
the commodity markets. 
 
It is becoming more and more obvious that the Fed operates for the benefit of 
a few privileged banks, banks that never suffer for bad decisions they make.  
Quite the opposite - as we have seen since October 2008, under our current 
monetary system politically-connected banks are paid to make bad decisions.

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