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Federal Reserve Cannot Account for $9 Trillion

Momentum is building with 179 co-sponsors for Congressman Ron Paul’s bill in the U.S. House of Representatives to audit the Federal Reserve System (Federal Reserve Transparency Act of 2009) not just because of the growing unrest over the Fed’s gigantic and reckless expansion of trillions of dollars in credit during the past eight months but because of the increasing awareness that the Fed itself is unable to account for where this money has gone. According to a report from Bloomberg News on February 9th:

The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. . . .

Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. Recipients’ names have not been disclosed. . . .

Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

At a hearing in early May, Federal Reserve Inspector General Elizabeth Coleman was asked by Congressman Alan Grayson (D-FL) to account for the $9 trillion in off-balance sheet transactions ($30,000 for each man, woman and child in the U.S.) plus a $1 trillion expansion of the Fed’s balance sheet since last September. Her answer is that no one at the Fed knows or is keeping track of where the money has gone.

For books on the need to end the Federal Reserve’s monopoly over money and banking in the U.S., please see the following:

Money and the Nation State: The Financial Revolution, Government and the World Monetary System, edited by Kevin Dowd and Richard H. Timberlake, Jr.

Depression, War, and Cold War: Challenging the Myths of Conflict and Prosperity, by Robert Higgs

David J. Theroux is Founder, President and Chief Executive Officer of the Independent Institute.
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