Quantitative Easing & The Corruption Of The Fed Exposed

By | November 19, 2013

quA banker named Andrew Huszar that helped manage the Federal Reserve’s quantitative easing program during 2009 and 2010 is publicly confessing for what he has done. He says that quantitative easing has taken care of next to nothing for the common person on the street. Alternatively, he says that it has been “the greatest backdoor Wall Street bailout of all time.” And of course the cold, challenging economic numbers support what Huszar is saying. The rate of working age Americans with a job has not improved at all during the quantitative easing era, and median household earnings has in fact steadily declined during that time frame. Meanwhile, U.S. stock prices have doubled overall, and the stock prices of the big Wall Street banks have tripled. So who benefits from quantitative easing? It doesn’t take a wizard to figure it out, and now Andrew Huszar is blowing the whistle on the entire thing.

From 2009 to 2010, Huszar was responsible for operating the Fed’s purchase of roughly $1.25 trillion worth of mortgage-backed securities. At the time, he thought that it was a dream job, but now he is apologizing to the rest of the country for what transpired …

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank remains to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

When the first round of quantitative easing wrapped up, Huszar says that it was unbelievably obvious that QE had done very little to benefit average Americans but that it had been “an absolute coup for Wall Street”…

Trading for the first round of QE ended on March 31, 2010. The final results validated that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They ‘d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

You ‘d think the Fed would have eventually discontinued to question the wisdom of QE. Think again. Only a few months later– after a 14 % drop in the U.S. stock market and renewed weakening in the banking sector– the Fed announced a new round of bond buying: QE2. Germany’s finance minister, Wolfgang Schäuble, immediately called the decision “clueless.”.

That was when I realized the Fed had lost any remaining ability to think separately from Wall Street.

Of course the fact that the Fed can not think independently from Wall Street should not be a surprise to any of my regular readers. As I have written about frequently, the Federal Reserve was created by the Wall Street bankers for the benefit of the Wall Street bankers. When the Federal Reserve serves the interests of Wall Street, it is simply doing what it was designed to do. And according to Huszar, quantitative easing has been one giant “subsidy” for Wall Street banks …

Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2 % of them now control more than 70 % of the U.S. bank assets.

But Huszar is certainly not the only one on Wall Street that accepts these things. For example, just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing …

“This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.”.

“Who owns assets– the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”.

Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs– essentially betting on “trickle-down economics.”.

“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”.

And Donald Trump said essentially the same thing when he made the following statement on CNBC about quantitative easing …

“People like me will benefit from this.”.

The American people are still being told that quantitative easing is “economic stimulus” which will make the lives of average Americans better.

That is a flat out lie and the folks over at the Federal Reserve know this.

In fact, a very interesting study administered for the Bank of England shows that quantitative easing actually increases the gap between the wealthy and the poor …

It said that the Bank of England’s policies of quantitative easing– similar to the Fed’s– had benefited mainly the wealthy.

Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.

Many said the BOE’s easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it.”.

And this is exactly what has happened in the United States as well.

U.S. stocks have risen 108 % while Barack Obama has been in the White House.

And who owns stocks?

The wealthy do. In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

Meanwhile, things have continued to get even more challenging for ordinary Americans.

While Obama has been in the White House, the percentage of working age Americans with a job has diminished from 60.6 % to 58.3 %, median household income has declined for five years in a row, and poverty has been positively bursting.

But the fact that it has been very good for Wall Street while doing practically nothing for ordinary Americans is not the biggest problem with quantitative easing.

The biggest problem with quantitative easing is that it is destroying worldwide faith in the U.S. dollar and in the U.S. monetary system.

At this point, most global trade involves US dollars. The rest of the world has their eyes on us and beginning to openly wonder why there is so much faith in our financial system. If these countries lose complete faith in our dollar, we are going to see devastating effects in the US and around the world that we might not ever been able to revive ourselves from.

Hopefully this article wakes people up and puts more pressure on the Fed to quit playing games with the American people. They will win until we demand them to stop. And they don’t believe you have the guts to do it. So the cycle continues.

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