4/28/17

The Fed is Corrupt & Incompetent


The US Federal Reserve is incompetent and corrupt. In the past, I have focused on incompetence: The Fed's mistakes played a central role in creating the 1930s Depression, stagflation in the 1970s, and the recent housing crises. 

In this post, I focus on the corruption of the Fed in three parts. 

1. Leaks by Federal Reserve President Jeffrey Lacker
2. Fed Chairman Ben Bernanke's giving millions to Goldman Sachs
3. Fed Chairmen Bernanke's making millions for himself

The U.S. Federal Reserve is Corrupt




~~ Corrupt. Having or showing a willingness to act dishonestly in return for money or personal gain.


1. Federal Reserve President Jeffrey Lacker

Jeffrey Lacker was one of the most powerful people in the US Federal Reserve. He began work at the Fed in 1989. Most recently he was the president of the Federal Reserve Bank of Richmond. He was forced to resign on April 4, 2017. 

Here are highlights of Jeffrey Lacker's behavior that led to his forced resignation. (read more here). 


  • Jeffrey Lacker leaked information to an analyst about secret Federal Reserve decisions. The analyst sold the information to clients. 
  • Jeffrey Lacker did not disclose his actions voluntarily. 
  • When asked by investigators, Jeffrey Lacker did not "provide a full account" of his actions. 
  • Under pressure from the FBI, and years later, Jeffrey Lacker told the truth.
  • The law allows a person to go to prison for these actions.
  • The case is closed, and Jeffrey Lacker will face no legal action, no fine, and no prison time. 

In summary, Jeffrey Lacker leaked valuable confidential information, hid his behavior, lied about his behavior, eventually confessed to the FBI, and faced no fine or prison time.


Jeffrey Lacker was treated better than Martha Stewart


2. Former Fed Chairman Ben Bernanke's actions in the Fed.

Fed Chairman Ben Bernanke also disclosed valuable information while he was chairman. Here are some of the highlights of this story (full Wall Street Journal article here): 

Chairman Ben Bernanke regularly met with prominent financial executives including Goldman Sachs CEO Lloyd Blankfein. In these meetings, he discussed possible future Federal Reserve actions. In contrast to Jeffrey Lacker's case, there is no evidence that Ben Bernanke's conversations were illegal. 

While apparently not illegal, these conversations allowed the "friends of Ben" to make tens of millions of dollars. As documented by the Wall Street Journal, Chairman Bernanke disclosed the future bond buying plans of the Federal Reserve. 

People who received this information in advance were able to "front-run" the Fed, by buying the bonds from unsuspecting suckers, increasing the price of those bonds, and reselling them to the Fed at marked up prices some weeks later. 



Goldman Sachs CEO Blankfein got valuable secrets from Ben Bernanke

3. Federal Reserve Chairman Bernanke has become rich.

Since leaving the Fed, Chairman Bernanke has earned millions of dollars. He has done this by consulting for powerful financial firms and by charging up to $400,000 for an hour-long speech (also to powerful financial entities and sometimes to enemies of America). Here are some of the articles:

NY Times: $400K for speeches in Asia

Wall Street Journal: PIMCO Lands Former Fed Head Ben Bernanke as Adviser

The Atlantic : Hedge fund Citadel Hires Bernanke for "Inside information"

Ben Bernanke has earned millions since leaving the Fed

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The Fed is the definition of corrupt. The people at the Federal Reserve further their own gains at the expense of the citizens. They play by their own rules, give money to their powerful friends who hire them after they leave the Fed. When Fed officials are caught they lie, and yet are not punished. Finally, they collect millions from selling information. 


The Fed is feeding off you




1 comment :

  1. A lot of declarative statements with no clear function to your conclusions. This is why your chicken little fund underperformed the Dow Jones for the month of may most likely. Of course the fed is "corrupt", all structural governmental institutions in world history have been corrupt, so to point this out like it is somehow a surprise provides a window into your world perspective, and hence im taking my money elsewhere

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