As the Federal Reserve came under increasing scrutiny by outraged lawmakers and the public in recent years, it hired a lobbyist to defend its controversial secrecy and produced propaganda-filled comic books aimed at young children. It even sought to develop a tool to spy on concerned citizens over the Internet.
As scrutiny of the Federal Reserve System and public outrage over its actions continue to build, lawmakers on both sides of the aisle are working on proposals that would supposedly rein in the Fed or at least change the way it operates. And a new measure aims to tackle some of the issues head on.
In the face of escalating sanctions imposed by the European Union and the U.S. government, supposedly related to the Iranian nuclear program, officials in Iran announced that the nation would accept gold and currencies other than the dollar in international trade. China, Russia, India, and other major economies have continued to do business with the Islamic Republic despite the growing Western pressure.
In a moment of unexpected and unsettling candor, Federal Reserve chairman Ben Bernanke, in his testimony on Tuesday before the House Financial Services Committee, said that he really doesn’t know what’s happening to the economy. In his best professorial manner and without blinking an eye, the chairman said, "In light of somewhat different signals received recently from the labor market than from indicators of final demand and production…it will be especially important to evaluate incoming information to assess the underlying pace of the economic recovery."
Lawmakers in the Wyoming House of Representatives approved a bill on Monday for the second time to explore how the state might respond to a possible “doomsday” scenario such as the economic or political collapse of America. Some of the potential responses to be considered include the issuance of an alternative currency in the event of a dollar meltdown or how the state might deal with a “constitutional crisis.”
The Group of 20 meeting in Mexico City over the weekend decided that the best course of action was inaction, putting off making any decisions on how to “rescue” the European Union from its financial and economic difficulties until next month at the earliest. The statement justifying kicking the can down the road for another month or so was breathtaking in its obfuscation: putting off any decisions, it said, “will provide an essential input in our ongoing consideration to mobilize resources…” This is how finance ministers and world economic experts explain that, after two days of meetings, the best thing to do was nothing at all.
With the publishing of a “white paper” about the housing market, Fed Chairman Ben Bernanke has rankled some Republicans that suggestions made appear to have transgressed some line of propriety that separates monetary policy, fiscal policy, and the Fed’s “independence.”
Writer Bruno Waterfield’s claim that Germany has drawn up plans to deal with the inevitable Greek default was published in the British newspaper The Telegraph a little after 8 p.m. Saturday night. Within hours his claim was confirmed separately by blogger John Ward with times, dates, and consequences all spelled out by those drawing up the plans.
The creditors’ committee representing what’s left of Lehman Brothers asked bankruptcy Judge James Peck last week to force Timothy Geithner — currently Obama’s Treasury Secretary but President of the New York Fed at the time of the Lehman Brothers’ bankruptcy — to answer some questions. The original subpoena issued by the committee to Geithner to appear last August was ignored and so the committee appealed to Judge Peck.
Federal Reserve Chairman Ben Bernanke told lawmakers this week that the government’s borrowing was at “clearly unsustainable” levels, warning that its wild budget deficits increase the possibility of a sudden fiscal crisis which is creeping “ever closer.” The central bank chief also said Washington’s exploding debts would crowd out private-sector investment with damaging consequences for the economy.