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Tuesday, March 24, 2009

AIG a gold standard for fiascoes

Palm Beach Post Staff Writer

Friday, March 20, 2009

Treasury Secretary Timothy Geithner may have the "complete confidence" of President Obama, but he doesn't have mine. Ditto for Federal Reserve Chairman Ben Bernanke.

In fact, American International Group's $165 million bonus fiasco is one of the many blunders the U.S. government has made in handling the worst economic crisis of my lifetime, which has me giving serious consideration to the so-called conspiracy theorists.

My friend Norman, who studies conspiracies like a college senior cramming for a must-pass final exam, last year introduced me to the documentary America: Freedom to Fascism, late director Aaron Russo's exposé of the illegal and unconstitutional income tax and the Federal Reserve that is not federal and has no reserves.

It's a fascinating film that certainly got me thinking, if only for a while. Then the economy collapsed. The so-called experts can't fix it. And now my income tax dollars, which I'm not convinced I should be paying, are lining the pockets of the suits who got us in this mess.

Are Mr. Russo, G. Edward Griffin, author of The Creature from Jekyll Island: A Second Look at the Federal Reserve, and U.S. Rep. Ron Paul, R-Texas, right? They maintain that the Fed is an illegal, private banking cartel created surreptitiously by the richest and most powerful bankers in the world during a secret meeting on Jekyll Island, Ga. The Fed is not a part of the U.S. government, they say, but in cahoots - I mean partnership - with it. The Fed controls our monetary system - with no oversight from our government - and its profits are shared with financial interests around the world.

It sounds pretty far-fetched until you learn that AIG used some of its $170 billion in taxpayer bailouts to send $11.9 billion to France's Societe Generale, $11.8 billion to Deutsche Bank of Germany, and $8.5 billion to Barclays of Britain. Then you hear that Mr. Bernanke will save the day with a $1.2 trillion effort to lower mortgage rates and other consumer debt to spur spending and revive the economy. But he's doing it by spending $300 billion on government bonds and $750'billion on mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

I'm no math whiz, but how can Fannie and Freddie guarantee anything when the U.S. government - itself broke - just bailed them out? Sounds to me like we're just printing worthless paper on top of worthless paper and spreading around the debt. In other words, fiat money, irredeemable paper currency.

It's just what Franklin Roosevelt promised wasn't happening during the Great Depression in 1933 when he ordered private citizens to turn in their gold to the Federal Reserve in exchange for pieces of paper. "We do not want and will not have another epidemic of bank failures," President Roosevelt said. "This currency is not fiat currency."

Wrong! Seems to me that if we'd stuck with gold and hadn't turned over control of the nation's money to an entity our government doesn't control, we wouldn't be in this mess.

Consider this response from former Fed Chairman Alan Greenspan to a question by NewsHour's Jim Lehrer about the kind of relationship the Fed chair should have with a U.S. president. "The Federal Reserve is an independent agency, and that means basically that there is no other agency of government which can overrule actions that we take," Mr. Greenspan said. "So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't frankly matter."

In other words, don't question the agency that Mr. Bernanke admitted in 2002 caused the Great Depression. That's nerve!

Maybe it's time we stop bailing out the AIGs of the world, shut down the Fed and start over.

Conspiracy theory or not, that's change I can believe in.

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