Empty Your Cup, It’s Conspiracy Theory Thursday!

Empty Your Cup, It’s Conspiracy Theory Thursday!

It’s not Aloha Friday yet, sigh, but it IS Conspiracy Theory Thursday!

Today, we’re going to follow up on our conspiracy theory topic from last week, as we have received some timely updates from none other than the U.S. “Government Accountability Office (GAO)” and Ron Paul, U.S. Senator and presidential candidate. So let’s get right to it!

First, Ron Paul today published an outstanding editorial in the Wall Street Journal entitled, “Ron Paul: Blame the Fed for the Financial Crisis“. I urge you to read it as it is a terrific and clear description of money and the Fed. He states:

To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.(emphasis mine)

You can read the entire article here (it is currently open to non-subscribers), and I hope you will. He goes on to discuss how the Fed has caused every single other boom and bust in the United States since it was created in 1913, touches on Austrian versus Keynesian economics, and compares the thinking of the Federal Reserve to the former Soviet Union (which of course eventually collapsed). It’s a great read, and agree or disagree, you certainly won’t wonder where he stands.

And to add more fuel to the conspiracy theory fire, coincidentally and also today, Senator Bernie Sanders (Independent from VT) published his report on the results of the recent second audit of the Federal Reserve by the Government Accountability Office (GAO).

His report is entitled “Report on the GAO Audit on Major Conflicts of Interest at the Federal Reserve” and is a brief, 3-page summary of the conflicts of interest at the Fed. You can read his entire summary here, but some of the more interesting (and incriminating) points are:

  • The affiliations of the Federal Reserve’s board of directors with financial firms continue to pose “reputational risks” to the Federal Reserve System.
  • The policy of the Federal Reserve to give members of the banking industry the power to both elect and serve on the Federal Reserve’s board of directors creates “an appearance of a conflict of interest.”
  • The GAO identified 18 former and current members of the Federal Reserve’s board affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis including General Electric, JP Morgan Chase, and Lehman Brothers.
  • Many of the Federal Reserve’s board of directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. These board members oversee the Federal Reserve’s operations including salary and personnel decisions.
  • While Congress has mandated that the Federal Reserve’s board of directors consist of experts in labor, consumer protection, agriculture, commerce, and industry, only 11 of the 202 members of the Federal Reserve’s board of directors represented labor and consumer interests from 2006-2010.
  • When choosing who will serve on its board of directors, the Federal Reserve generally focuses its search on senior executives, usually CEOs or presidents in the financial industry. Of the 108 Federal Reserve board directors, 82 were the President or CEO of their company.
  • And much, much more….you should definitely read the summary.

In addition, the summary also lays out some specific examples of conflicts of interest, including Stephen Friedman, former chairman of the NY Fed’s Board of Directors who also sat on Goldman Sachs’ Board of Directors and owned Goldman stock at the same time; and of course, Jamie Dimon, CEO of JP Morgan Chase, who served on the Board of Directors for the NY Fed at the same time as his bank received emergency loans and $29 BILLION in financing to acquire Bear Stearns.

I wish someone would grant ME $29 BILLION in financing to buy a business!

If you’re a glutton for punishment and would like to read the full GAO reports, you can find them here:

In closing, there is a saying in kung fu called “Empty Your Cup”, which comes from the following story:

A student visited a Zen master to inquire about Zen. As the master was speaking the student kept interrupting with his own opinions. So the master served some tea. He overfilled the cup and tea went everywhere. The student shouted “the cup is full, there is no room for more tea!” The master replied, “like this cup, your mind is so full of its own opinions, there is no room for anything new; in order to taste my tea, you must first empty your cup.”

I hope you are enjoying these “conspiracy theory Thursdays” and are having fun emptying your cup and opening your mind to new possibilities!

As always, thank you for reading and please let me know what you think on the blog comments!

To your financial success,

— Kung Fu Girl

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