And The Fed Does What?

[cbk]

Most of us have heard about the Fed but we're not quite sure what they do there. And that's understandable because they don't exactly go out of their way to explain what it is they do. I make no claim to be an expert but I have been paying attention lately. Tonight, on the Glen Beck show I think I heard the best explanation of the Fed's workings that I've ever heard. And this includes the talk from a representative of the Fed who came to Kiwanis and tried to explain their function. One thing they do very well is to muck about with our economy. How do they do this. Well, remember when AIG needed a loan? They got the loan. Most of us probably thought some clerk wrote them a check for millions of dollars which they deposited in their account. They used it for their expenses. Well, part of that is correct and part is very UNcorrect. They went to a bank, who went to the Fed and said, We need money to loan to AIG. The Fed took their magic computer and added some 000000 to the account of the bank at the Fed. Now this wasn't real money. It came out of thin air. But the bank used that funny money like it was real. They loaned it to AIG who in turn spent it. When AIG goes to pay back the money they are supposed to pay back REAL money. And all of these slide of hand tricks devalue the money you and I have and spend. So our money is worth less and then the unions start their cry of, we need higher wages. It goes round and round and the upshot is that if you have a savings account it's worth less than when you put the money in there.
You know, I don't think Bernie Madoff is the only one who can pull a Ponzi Scheme.

[Tommy Thompson]

this "slight of hand" that they pull is why I've been trying to explain that the growth in the GDP (Gross Domestic Products) of 3.5% was a joke. Of course they've corrected that down to 2.8%. There's been no growth in the GDP. It's the same ponzi sceme being pulled with the GDP. All the banks are declaring amazing profits....how??? Ain't nobody doing anything....the housing market is in the tank, construction is non-existent. Nobody is producing anything and nobody can borrow a dime. So how did they make such record breaking profits???

This imaginary creative financing reminds me of a brother in law years ago:

On payday, Jeff (who worked for me) collected $300. for the week however he claimed that he actually made $400. Here was his reasoning. He was going to buy a tire for his truck but his twin brother gave him one instead. That saved me $60. said Jeff. Then he said he had planned to spend $40. on a new radio for his truck but changed his mind. Therefore that was $100. he didn't have to spend that week making his total net income for the week....$400.......all we could do is shake our heads and we've been giving him a hard time about it for 20 years now.

I never thought I'd see actual government experts applying the exact same logic as Jeff. I need to call him and ask if Obama has been calling him for financial advice. Tommy

[cbk]

You know, my Dad was a CPA for all of his working life. He was doing the books for my company until he was almost 90. He was also CFO for Coppertone Suntan Lotion (when it was a separate company) He brought the company out of receivership and into such profitability that the makers of St. Joseph Aspirin bought the company. So I think we can say that the man knew something about finance and money. The MBA programs and degrees used to drive him nuts. He said that the Universities were teaching kids how NOT to keep honest accounts. I'm sure that all of this "funny money", and the slide of hand accounting of the Federal Government would have had his blood pressure boiling. He kept telling me that we had a false economy and it was going to go bust. Looks as if old Dad knew what he was talking about.

If you're looking down from heaven, Dad, you can say, "I told you so!"

[gloria]

Chris, your dad was a wise man.

[cbk]

Thank you Gloria. I always thought so, but then I'm a little prejudice. He was honest too. Said I shouldn't be let anywhere near a checkbook. Used to make me do inventory of every nut, screw, and bolt my repair company had. ;D