Arjay, it seems to me that you are taking a simplistic approach
to all of this, because you are looking for one smoking gun and
blaming the fed. It just ain't that simple.

The present situation has many causes, many people got it wrong,
but the present situation is forcing them all to come to a head
at once.

I think you will find that Greenspan has admitted that he got some
things wrong. US interest rates were far too low, for too long,
credit was far too easy to obtain in the US and here too, for
that matter.

But Harvey Cox, the regulator at the SEC, who did not believe
in regulation, was a Bush appointment. Bush/Cheney did not believe
in regulation either. The complete failure of the SEC is a huge
part of the problem and has nothing to do with the Fed.

The collapse of the US MV industry, Chrysler/GM has been
evident for a while, this recession is simply forcing the boil
to finally burst and the mess to be finally sorted out.

The collapse of Fanny and Freddie were in large part to do with
bad legislation, blame Congress for that. If you force banks
to only allow jingle mail on housing loans, if housing prices drop,
you will land up with a disaster, for people will simply send
back the keys en-masse.

Bernanke spent his life studying why the 30s recession turned into
a depression and how the same could be avoided once again in future.
Had he done nothing in September, when Lehmans collapsed, the global
banking system could have gone down like a pack of dominoes.

For how many days could you feed yourself, if your bank's doors closed
tomorrow? You have to think through some of the consequences of
the actions that you are proposing.

But I know, its easier just to blame it all on that smoking gun,
rather then try to understand the complexity of the present situation.

When Hitler came to power,Germany was hopelessly broke.The Treaty of Versailles imposed crushing reparations on the German people.A wheelbarrow of 100 billimarks could not buy a loaf of bread.People were starving.Nothing like this had happened before.Total destruction of people's businesses and savings.Then came the Great Depression and Germany succumbed to the debt slavery of the international bankers until Hitler came to power.

Hitler began a national credit program,and created his own currency building infrastructure and thus enabling Germany to become an exteremely powerful nation.The banks even tried to stop Germany trading with other nations,but Hitler used a bartering system and the money changers lost their power.Presently Venezuela is trading by bartering and they have oil.The Banksters backed by the US Govt are trying to intimidate Hugo Chavez into succumbing to their debt enslavement system.

In the Weimar republic it was believed that the Reich Bank was a Govt owned bank reponsible for printing this hyper inflationary money.In 1967 Hjalmar Schardt [an agent the Rothschilds]in his book "The Magic Money'revealled that the Reich Bank was a privately owned bank just like the US Fed,that was reponsible for this hyper-inflation.Contrary to pop opinion Schardt was never a member of the Nazi party.

The moral of the story is that you do not let a private group of banks own your currency,nor should you borrow from them when the money needed for economic activity can be created at home.Kevin Rudd need not go into debt,just borrow from our own RBA.

There is an old adage, Arjay, that says that once you realise you are at the bottom of a big hole, stop digging.

It's clear that you are not interested in facts, only sloganeering. And that's twice you've invoked dear old Godwin, most people get the message the first time and cringe away in embarrassment.

But you obviously adore showing off, and it is, after all, an opportunity to plant a few seeds of awareness, so I'll soldier on.

First, you need to understand that picking heroes is almost as tough as picking economic theories. The ones that seem most attractive to an inveterate iconoclast like yourself are not always the smartest choice in the long run.

Congressman Ron Paul is a classic example.

You are of course aware that he is a serial self-publicist machine? So far, he has sponsored 397 bills, only a handful of which even made it to committee.

And none has ever been passed.

He advocates the restoration of the gold standard. He promotes the repeal of Federal Income Tax. He proposes the abolition of the FBI. He wants to see the end of all social security, and is opposed to universal health care. He is in favour of the decriminalization of marijuana, and wants the Drug Enforcement Agency abolished.

If he had any intelligent plans to replace all the institutions he wants destroyed, he might be hailed as a visionary reformer. Unfortunately, he only manages to get half-way; abolish something that is not perfect in all respects, but offer nothing in its place.

You are following the same path, Arjay.

Plenty of slogans. A bucketful of self-righteousness. A constant sneer at institutions that - while not perfect - function for the benefit of society.

Destruction is fun, Arjay. As any kid who has knocked over another kid's sandcastle will tell you, it can be extremely satisfying.

But at some point, that kid has to grow up.

Incidentally, back on the topic of picking heroes, I'd be careful of Mr Chavez if I were you.

http://www.economist.com/displayStory.cfm?story_id=13640166

http://www.economist.com/world/americas/displaystory.cfm?story_id=13611592

He's a bit of a rascal, you know.

*Kevin Rudd need not go into debt,just borrow from our own RBA.*

I seem to recall Mugabe of Zimbabwe, thought just like you did.
It did not work too well in the real world lol.

Arjay, do you even understand the structure of the Fed?
Fed profits are in fact paid back to the US treasury. Do your
homework, read why Congress set it up in the first place and
why the Prez still appoints the Board of Governors. The member
banks simply carry out the orders of the Board.

As a matter of interest, most of Australia's borrowings originate
from China, Japan and the Gulf. The present scandal on Wall St
means that Australian banks are now increasingly going directly
to these sources, rather then through NY or London.

If Australian banks were not borrowing overseas, then the RBA
would have to borrow overseas, to pay our annual current account
deficit. Our current account deficit is high, not because our trade
deficit is high, but because we don't save much and prefer
to live for today. So when you drink your XXXX beer, or Berri
fruit juice, or Pura milk, or Schweppes soft drink, profits have
to be paid to Japan. If Australians owned those companies due to
their savings having purchased them, profits would stay here.

But I think that all this is way beyond your head because you
refuse to understand the basics. Just blame the Fed for being
the smoking gun. Its a bit like runner telling us that god can
solve everything. Quite simple, but without substantiated evidence.

The US Fed is now coming under closer scrutiny.Ron paul now has 41% of Congress [179 Congressmen] supporting his bill to Audit it.

So both Yabby and Pericles think that all these people in Govt are fools? It is beyond belief that you both support such a vile ,injust corrupt system of wealth distribution.

Reward those who produce and not the parasites of the financial system.

Actually Arjay, if you manage to ever tune in to Bloomberg, quite
alot of those members of Congress appear, when they have enquiries
which are broadcast. Let me tell you, a great many are no Rhodes
scholars.

But if an audit of the Fed is what will placate peoples minds, fair
enough, its only a few million $, so hardly matters in the bigger
scheme of things.

The financial services industry is of course critical to the function
of society as we know it, without it everything stops. So it
in fact produces a critical service, without which you could
not function. But keep following your conspiracy theories lol.