Wednesday, June 10, 2009

End the Fed

The Federal Reserve, by taking entering into swaps/repos for trash assets (primarily MBS & CMBS) is exposed to some major risk should any of the counterparties fail. Hence the bailout of major banks. They do not have to worry about this unless they get audited by congress which means you should e-mail your representatives in congress to support HR 1207, the Audit the Fed bill introduced by Ron Paul and co-sponsored by 200+ reps.

Fed would be Undercapitalized if Audited

My guess is that the Federal Reserve will be shut down if the Audit the Fed bill passes since it would probably show the Fed is insolvent. The Treasury will have to take over its control of the currency (A good thing!) and there will be some return to fiscal responsibility.

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