The Fed has Failed!

Last week, the Federal Reserve announced that it was not starting a third round of money printing (QE3).  (Don’t worry, it is only a matter of time before the money printing will begin again in earnest.)  Fed Chief Ben Bernanke put that thought out after the much awaited Fed meeting in Jackson Hole, Wyoming, wrapped up.  I say QE3 already started when the Fed locked in 0% interest rates for the next two years.  The economy is in the tank, and the Fed admitted it is guaranteed to stay there.  

One writer’ who has been way ahead of the curve on the economy, is Jim Willie.  In the last 5 years since I have been reading his work over at, Mr. Willie has made many correct calls and predictions.  Mr. Willie holds a Ph.D in statistics from Carnegie Mellon University.  Few people can crunch the numbers and come to the correct conclusions before him.  His latest post is called “Illusion of Stable Currency Vortex.”  Please read his work below to get his take on how desperate and powerless the Federal Reserve has become.  According to Mr. Willie, world economies are in a very bad place, and they are NOT going to a better place anytime soon.  Please enjoy the post.–Greg Hunter–


Illusion of Stable Currency Vortex

By Jim Willie

The Jackson Hole Conference was a dud. To the astute student observer, something happened never seen before. The US central bank chief admitted failure, if only people could properly interpret and translate his words of helplessness and disappointment. A more apt description was that USFed Chairman Bernanke used the forum to announce on stage that the central bank failed and is powerless to react to the current lapse into recession. Many watchers no longer believe that a Quantitative Easing chapter #3 will be announced. Surely it will come sooner or  later. Watch the USTreasury auctions for the best clue. The QE2 program was about prevention of auction failure, not economic stimulus. A quick review of monetary policy and its effect is horrifying for its utter complete failure. The FedFunds rate has been under 0.5% for three years, yet neither the USEconomy nor the US housing market have recovered. That is a first in history. The USFed gobbled up over $1 trillion in toxic mortgage bonds and related derivatives, also with no resulting rebound in the housing or mortgage finance markets. The QE2 debt monetization program averted USTreasury auction failures, but the bold monetary inflation gesture sustained for several months did cause a backfire. It lifted the entire cost structure to the USEconomy in painful fashion. The profit margin squeeze and household spending squeeze have been radically evident and deeply damaging.

Chairman Bernanke admitted on stage before his peers, in full admiration of his failure and lost leadership, that the USFed has no more tools at its disposal, and that the USEconomy must recover on its own. For the first time he mentioned tools at his disposal without delineation what they were. He has none. His heavy doses of liquidity to treat insolvency have not succeeded in achieving anything except higher costs without job growth. He even attempted to point the finger of responsibility to the USGovt for its budget extravagance and intractable deficit. Big Ben has crashed his helicopter without any cash drops on citizen homes. Worse, he has shown all on stage that he has nothing under the hood, and that the bulge below is nothing but a massive paperwad in his pocket. The USFed is impotent. Its board members are in open dispute on the chosen path for QE3, even the scored success of QE2. The US Federal Reserve is a failure, its franchise system a failure, its monetary policy a failure, its balance sheet a failure, its analysis chronically incorrect, its initiatives in backfire, its toolbag empty. Perhaps it is time for the USFed to resign its contract with the USCongress. The crowning blow should have been the $16 trillion in unauthorized loans to global banks, given cloud cover by the TARP Fund and its confusion. This is a syndicate fortress with its own agenda, nothing more.  (Click here to read the complete and well written post from Mr. Willie.  You will be happy you did!)

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    “My reading of history convinces me that most bad governemt has grown out of too much government.” Thomas Jefferson

    I prefer the government performs only its most basic functions: foreign policy, protect its borders, … Over the last decade I have begun to feel as though those preferences put me in a minority.

    I expected the banks to fail, Bernanke to fail, federal reserve to fail.. When you send our jobs and sell our National Forest and other items that protect our infrastructure like Companys, Corporations, Factory’s, Battle Ships, Weapons, Patents, etc to China and India, The american people will have no employment left and we will produce noting of substance except an internet economy run by business owned by foreighn corporations to enslave american workers. This is being done intensionaly to Destroy America! Prosecute Federal Reserve and Politicians with the Bankers and make an example of them!

  2. robert israel

    the link for jim Willie at the end does not work—

    • Greg

      robert israel and Uncle Joe,
      I fixed it. So sorry for the SNAFU. They moved the article but it is there now.

  3. UncleJoe


    Thought you would like to know, the link at the end of the post doesn’t work.

  4. Steve A.


    George Carlin had a routiene where he meets a friend that looks and feels terrible, Carlin ask him if he’s sick and the guy answers no man I think I’m coming down with something. Carlin said screw that I wanna be sick cause I’ve hit bottom and on my way to being well.

    Mr. Willie states under Two Basic Recovery Requirements the following:

    “The irony is that with each major bank bailout or bond buy program or organized regulatory lapse or blessed accounting fiction, a new deeper crash bottom potential in the abyss is defined.”

    I cannot remember the source but in early ’09 200 economist penned a petition stating we, as a country, would be better off letting it crash, no bailots for banks too big to fail, no tarp, no QE, no ‘cash for clunkers, no saving AIG, no gov’t money for start up green industries etc, etc. just let it fail. The strong will prevail and the weak will fail. Their feeling was the sooner it crashed the sooner the recovery would begin.

    I’ve warned my friends and family a crash was coming and I pray they have taken heed. It’s not going to be pretty but it is obvious.

    • Greg

      Steve A.
      I am pretty much in the same camp as the 200 economists you speak of. The powers have made it much worse for us all and have prolonged the misery.

  5. Jan

    Interesting article from Red State, DOJ to Gibson Guitar – move your jobs overseas and all your problems go away. Our government is out of control in many areas.

    Remember this when listening to Obama’s jobs speech next week.

    Someone posted most of the workers are African-American – this administration has done more harm to this community with their failure on illegal workers being allowed to take away their jobs and now they tell a company to move their jobs overseas? Maybe they could stay if they hired illegal workers? Don;t hire Americans seems to be the theme song.

  6. Charles Allen

    Hi Greg,

    “The FED”; what the h… is the FED? It is an excuse for our congress to point a finger at another organization and say “it’s their fault.” Well the truth of the matter is it is OUR FAULT, We the People! We have allowed our government to slowly degenerate and steal the wealth of our great country, from us a little at time.

    However, the Bush and Obama administrations have stolen more in the last decade than all previous administrations put together. And, no one seems to really care! Who is being held accountable? Bush? Obama? Boehner? Bernanke? Why is there no screaming outcry and protests to this blatant robbery? Why has not one single person been accused of treason?

    Just the name “Federal Reserve” leads many to believe it is part of our government when IT IS NOT! THE FED is a tool of international bankers. It is a legal way to steal money. It was granted full financial powers outside of the constitution, by our congress in 1913. It, along with the other world banks, are systematically placing the global population into a non-payable debt situation – slavery.

    We the People need to take back full control of our government and vote out every elected representative; at every level in federal, state, and local offices. Then We the People need to be CONTINUOUSLY DILIGENT and NOT RE-ELECT any person to a second term!

    • Greg

      Good stuff Charles,
      Thank you!

  7. Phil Fleming

    I just read on Drudge that The White House is pushing for Americans to take advantage of a program called ” We the People”: Announcing White House Petitions & How They Work. The idea is to demonize the Congress to deflect from the Presidents failures. I believe this will be one of the Presidents main objectives to save his Presidency, Deflection. Racial tensions being promoted from members of the Black Caucus and the blame Bush game are just a couple of programs now in use.
    Why don’t we just turn this one around on the administration. This program compels citizens to take advantage of our constitutional rights in this quote
    “Our Constitution guarantees your right to petition our government. Now, with We the People, we’re offering a new way to submit an online petition on a range of issues — and get an official response”.
    Let’s use this program to petition for the resignation of President Obama. i am sure there are a number of reasons we can think of. My personal is the lies told to the American people that we would have 72 hours to review any bill before it is voted on. It’s called Sunlight before signing and here’s how it works.

    Sunlight Before Signing: Too often bills are rushed through Congress and to the president before the public has the opportunity to review them. As president, Obama will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days.

    This has not been the case. Obama care was voted on and became law before any of the Congress had an opportunity to read it’s 2700 pages of Bull. Find you own reasons to petition and get your citizenry behind you. What better way to defeat this jerk than with his own tools. Phillip Fleming

  8. iknowbetter

    More and more, the Fed is becoming irrelavent. It needs to be abolished.

    Central banking is both the stimulant and the depressant. Constantly pushing the string and pulling it back serves nobody except the banks.


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