$2 Trillion False Flag Event at the U.S. Treasury, the Fedís Furtive Filching
by Barry M. Ferguson
dollars has been stolen from the US Treasury!! What happened? Who
did it? Did they get away with it?
A false flag event, the Federal Reserve, and yes.
The theft was
planned. It started with a false flag event in 2008.
Much like the false flag event of 2001 in which two
planes somehow imploded three buildings, the false flag event of
2008 was a game changer. As you remember, the big banks had bankrupted
themselves with derivative driven debt issuance that could not be
repaid. The financial system was in peril. Or, so we were led to
believe. We were told by the Treasury Secretary at the time that
toxic illiquid assets were clogging up the system and
preventing the lending process from working. They needed immediate
assistance and that assistance could only come from the Federal
Reserve. All we had to do was to surrender the Treasury. Our Congress
complied and the false flag ruse had worked again. The theft could
The Fed then
proceeded to buy the toxic illiquid assets from the
big banks. In all, it was about $1,250,000,000,000.00 in MBS (Mortgage
Backed Securities) paper give or take a few hundred billion. Where
did they get the money? The Treasury printed it by increasing the
debt by virtue of Treasury note issuance. Bear in mind that the
Federal Reserve is a for-profit privately owned bank. Now they own
a lot of bad paper. How did they complete the theft?
At this time,
let me bring in Mr. Brian Sack to the story. Mr. Sack is the executive
vice-president of the markets group at the Federal Reserve Bank
of New York. He is the manager of the System Open Market Account
(SOMA) for the FOMC. Basically, he manages the trading for the Fed.
Mr. Sack has a doctorate in economics from MIT. A word of foreshadow
and caution. As I have written in the past, it seems that everyone
that has served to screw up the economy has been spawned by MIT,
Harvard, or U. Cal. Berkeley. Im not hatin Im
just sayin! Anyway, Mr. Sack just gave a presentation to the
CFA Institute on October 4, 2010. Here
is the link if you want the whole speech.
Mr. Sack explains
the theft better than me.
initial decisions by the FOMC to expand the Federal Reserves
holdings of securities came at the height of the financial crisis.
Before that time, the Federal Reserve maintained a relatively
simple portfolio of between $700 billion and $800 billion of Treasury
securities an amount largely determined by the volume of
dollar currency that was in circulation. In late November 2008,
in the face of tightening financial conditions and a deep downturn
in economic activity, the Federal Reserve announced that it would
purchase up to $600 billion of agency debt and agency mortgage-backed
securities (MBS). In March 2009, it expanded the program to include
cumulative purchases of up to $1.75 trillion of agency debt, agency
MBS, and longer-term Treasury securities. The use of the balance
sheet in this manner was spurred in part by the inability to ease
further using the traditional policy instrument, as the federal
funds rate effectively reached the zero lower bound in late 2008.
What Mr. Sack
is telling us is the economy had deteriorated further and zero percent
interest rates werent helping. They saw a chance to help themselves
to a heap of money. Uh, I mean they offered to help us dopes out
of our mortgage debt nightmare. But then the Fed found itself with
a lot of garbage paper. It had no intention of taking a loss. Continuing:
that backdrop, an important policy decision regarding the Federal
Reserves portfolio was made at the August FOMC meeting,
when the Committee decided to halt this run-off and instead hold
the size of the SOMA portfolio steady. To achieve this, the FOMC
directed the Desk to purchase longer-term Treasury securities
as needed to offset any principal payments realized on our holdings
of agency debt and agency MBS.
toxic assets were rotting on the Feds balance sheet
and they werent about to take the losses. Mr. Sack offers
that the Fed acknowledges that by buying Treasuries, that action
serves to keep interest lower than they would be normally. Duh?
I told you he had a doctorate from MIT! He goes on to make this
point that the Fed wants to goose the stock market:
should in turn boost other asset prices, as those investors displaced
by the Feds purchases would likely seek to hold alternative
types of securities.
The Fed buys
Treasuries from the big banks. The big banks buy up stocks. Were
you wondering why the market rallied in September? Here is where
we get a tip that the garbage paper the Fed is holding is not maturing
through repayment but rather it is maturing through default. In
other words, a $100 million dollar traunch of MBS paper that experiences
a loan repayment would still leave the Fed with $100 million on
the balance sheet. A decline would imply default. Lets listen:
decline in the size of the Federal Reserves portfolio that
would have occurred in the absence of the reinvestment program
would have amounted to a passive tightening in the stance of monetary
policy, as the portfolio balance effect would have gradually reversed.
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