Audit the Fed and LOL Currency Swaps

So apparently the best and brightest Audit the Fed bill got slaughtered out in the open recently - as if this is significant. Auditing the Fed - at least my interpretation of it - is futile for a multitude of reasons so if we wanted to do something else to the Fed like poke at or pinch or otherwise fuck with them then I wish we would have disclaimed this outright when we went busting in there with a bill. HR 5345, Fuck with the Fed, I would have been totally cool with that.

I love the subject and can't stop discussing it.

Oh noes, audit the Fed has been gutted! Guess what, it was useless all along! Breaking news, motherfuckers, trust the person who understands how audits work. A Fed audit! LMFAO!

Representative Melvin Luther Watt has revealed his hand and is undoubtedly on the side of the big banks and could care less about the American people and trillions of taxpayer money. In his Congressional capacity as the Chairman of the Subcommittee on Domestic Monetary Policy and Technology, he has single-handedly destroyed American's ability to eventually audit the Federal Reserve Bank by gutting Congressman Ron Paul's Audit the Fed Bill.

Representative Watt hails from the 12th District of North Carolina, which has been criticized as a "gerrymandered" district with a 64% black majority. The district was thrown out as unconstitutional in 1996 and has been redrawn several times. It has been described as "political pornography" and Supreme Court Justice Sandra Day O'Connor called it "bizarre." Watt's 12th District includes Charlotte, headquarters of Bank of America Corps.

In 2003 Watt vehemently opposed efforts by the administration and Congress to increase regulatory oversight of Fannie Mae (FNM) and Freddie Mac (FRE), saying "the process would weaken the bargaining power of poorer families and their ability to get affordable housing."

In 2004 Ralph Nader attended a meeting with the Congressional Black Caucus, where he alleges that Representative Watt twice uttered an "obscene racial epithet": towards him. It was alleged that Watt said: "You're just another arrogant white man - telling us what we can do - it's all about your ego - another f--king arrogant white man."

The Audit the Fed Bill with 308 co-sponsors has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks and monetary policy deliberations. Congressman Paul said "there's nothing left, it's been gutted. This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that."

Cussing + audit the Fed!? Who does that?!

I'm done looking for where the bodies are buried, they are lying all around. I have better things to do.

Let me save you an audit: the Fed needs to save its ass because there is a dollar crisis, not a liquidity crisis (there never was one) and if it reveals all of those central bank swaps, things will suddenly look just as bad as they are at the moment.

Here's your transparency so don't go complaining that they don't tell you what they are up to, you just have to go look for it:

On December 12, 2007, the FOMC announced that it had authorized dollar liquidity swap lines with the European Central Bank and the Swiss National Bank to provide liquidity in U.S. dollars to overseas markets, and subsequently authorized dollar liquidity swap lines with additional central banks. The FOMC has authorized through February 1, 2010, the arrangements between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank.

They even give you an entire easy-to-understand explanation about what the fuck they are up to - what more do you want?

These swaps involve two transactions. When a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate. The Federal Reserve holds the foreign currency in an account at the foreign central bank. The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the Federal Reserve Bank of New York. At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate. The second transaction unwinds the first. At the conclusion of the second transaction, the foreign central bank pays interest, at a market-based rate, to the Federal Reserve.

When the foreign central bank lends the dollars it obtained by drawing on its swap line to institutions in its jurisdiction, the dollars are transferred from the foreign central bank's account at the Federal Reserve to the account of the bank that the borrowing institution uses to clear its dollar transactions. The foreign central bank remains obligated to return the dollars to the Federal Reserve under the terms of the agreement, and the Federal Reserve is not a counterparty to the loan extended by the foreign central bank. The foreign central bank bears the credit risk associated with the loans it makes to institutions in its jurisdiction.

The foreign currency that the Federal Reserve acquires is an asset on the Federal Reserve's balance sheet. In tables 1, 9, and 10 of the H.4.1 statistical release [it's ok, I hear even people who work for the Fed don't know where to find the balance sheet, there it is you lazy fucks], the dollar value of amounts that the foreign central banks have drawn but not yet repaid is reported in the line "Central bank liquidity swaps." Because the swap will be unwound at the same exchange rate that was used in the initial draw, the dollar value of the asset is not affected by changes in the market exchange rate. The dollar funds deposited in the accounts that foreign central banks maintain at the Federal Reserve Bank of New York are a Federal Reserve liability. In principle, draws would initially appear in tables 1, 9, and 10 in the line "foreign and official" deposits. However, the foreign central banks generally lend the dollars shortly after drawing on the swap line. At that point, the funds shift to the line "deposits of depository institutions."

Can anyone fucking explain that?

Yes, actually, Chris Martenson makes it really simple:

Some pretty big news came out on Thursday (9/24/09) regarding a seemingly obscure program to end what were called "currency infusions."

In fact, these are "currency swaps," and you might want to pay attention to them, because of their high degree of correlation with the rise and fall of the dollar. Currency swaps also offer the perfect vehicle for central banks to engage in currency intervention and manipulation, especially if one of the parties (*cough*US*cough) has a massive trade imbalance and lacks sufficient FOREX reserves to use in daily market intervention activities.

That should clear that up.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


B said...

I'm very annoyed at all this. Are we unable to fix anything?

cl5v5r said...

Have to totally agree with your assessment on liquidity. Speaking strictly as a person familiar with the matter.

thanks for the support, cl5v5r. Knew you'd back me up on that one.

Ubu said...

Great article, love the Rep Watt backstory. You're right, the best place to hide everything is in plain sight, who would bother to look for it?