The Trump team wasted no time in telling Fed Chair Janet Yellen what is and is not acceptable.
Patrick McHenry, the vice chairman of the House financial services committee, sent Yellen a letter of admonishment regarding international negotiations the Fed conducts in secret, with no oversight.
One line stands out: “This is unacceptable”. The preceding paragraph tears into the Fed’s secret negotiations with foreign bureaucrats, “without transparency, accountability, or the authority to do so.”
McHenry Warns Yellen – Letter Excerpts
“I am writing regarding the Federal Reserve’s continued participation in international forums on financial regulation. Despite the clear message delivered by President Donald Trump in prioritizing America’s interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so.”
Moreover, the letter seeks a comprehensive review of past agreements with the Financial Stability Board, Basel, and the International Association of Insurance Supervisors that “unfairly penalized the American financial system”.
The letter blasts “secretive structures” and “opaque decision-making” processes of the Fed. The letter then finishes with a final warning:
“It is incumbent upon all regulators to support the U.S. economy, and scrutinize, international agreements that are killing American jobs. Accordingly, the Federal Reserve must cease all attempts to negotiate binding standards burdening American business until President Trump has had an opportunity to nominate and appoint officials that prioritize America’s best interests.”
Fed Independence is Over
The Fed’s ability to conduct secret deals just ended. An “audit the Fed” initiative is likely on deck.
I confidently predict Janet Yellen will not last four years.
Will Trump pressure the IMF or attack the World Bank? Recall this Tweet from years past.
Things can get rather interesting in a hurry, especially with Trump threatening to label Germany, China, and Japan “currency manipulators”.
For further discussion, please see Is Germany a Currency Manipulator? China? Arguably Yes, Under Bill Obama Signed: Full Blown Currency War on Deck.
Mike “Mish” Shedlock
I saw this commentary on Yellan, Trump & the FED today. Sounds like fireworks brewing!
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The 10th Man
Celebrity Deathmatch
By Jared Dillian
February 2, 2017
I read somewhere that MTV was bringing this back, the Claymation series where annoying celebrities would beat each other to a pulp in a wrestling ring. They have to do one for Yellen vs. Trump.
The FOMC meeting was yesterday—and we’ll get to that in a minute—but I want to talk about the backdrop to the meeting, Trump’s relationship with Yellen and Yellen’s relationship with Trump.
Trump hasn’t had much good to say about Yellen. He said that her interest rate decisions were politically motivated. Hey, I was saying the same thing at the time. No disagreement out of me. No rate hikes for years, and now that Trump is elected, the Federal Reserve is suddenly keen on hiking with renewed vigor.
But let me tell you—as much as Trump does not like Yellen, Yellen does not like Trump. You couldn’t find two more opposite extremes. Yellen is about as cautious and risk-averse as it gets. Trump is like a drunk at the poker table, playing every hand, losing a lot of small pots, then next thing you know you’re losing a big hand to him.
I’m not even sure they’ve been in the same room, and I don’t know what would happen if they were.
….
http://www.mauldineconomics.com/the-10th-man/celebrity-deathmatch
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People intuitively recognize an actual leader when they see one. They may not like him or agree with him, but they have zero doubts about who is in charge. Trump is a Generalissimo and everyone knows it.
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The smart thing for Yellen to do at this point is to resign. Trump either wants to cow her or get to her resign. I don’t think he cares much which way it goes. He’s having fun at the moment.
The problem with this leadership style is that once the dust settles and Trump has all of his minions at the controls, they will all be afraid to make a decision without him. He can’t be everywhere and the only person he trusts to do things right is himself. It is hard to run a country that way even if you do know what you are doing and the jury is still out on that one.
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I don’t think Trump has surrounded himself with syncophants. His cabinet has some pretty f@cking strong personalities in it. As long as his enemies are cowed, that will suffice.
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What Tim said – in spades!
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So the Fed doing secret negations with the International banking cabal is over. This is what happenes when we elect businessmen and not political shills. It feels like a win for America.
So much winning, I am almost getting sick of it.
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Half the Trump administration just a bunch of banksters. Trump himself could only afford to run on account of the banksterization of the US being centered around the somewhat sizeable backyard he happened to own.
Not that harassing the Fed is a bad thing. But unless it results in free market interest rate setting (meaning at least 5-7% real short term rates) and an end to printing (aka, fix to gold, at pre Fed creation rates), he is doing this at the “behest” of the banking cartels, not to spite them. Chances are, it will result in exactly the opposite. Even more printing, “infrastructure bonds”, and all manners of other drivel that makes arbitrarily spending children’s money on self promotion even easier than it already is. And that really does take some doing.
I hope I’m wrong. I do have an unbroken record going back to Jefferson of President N+1 leaving the government bigger and more intrusive than President N so, however unfortunately, I’m most likely right.
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Time someone brought the Fed to book. They have got away completely despite sleeping at the wheel and then throwing money to all their cronies and screwing savers, retirees and prudent people. They seem to have a free pass to do as they please (despite being wrong ALL THE TIME) and it is obvious only markets and the elite matter to the Fed though it is always presented as if it is for the Main street and economy. Let me see if it continues. If the Fed is brought to heel, wings clipped FOREVER, Including in a crisis and made accountable unlike the present moving goal post of the Fed or better still abolished, then Trump would have done the world a great service.
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It’s hilarious to think that Trump’s Goldman Sachs staff is going to do anything besides bend the Fed Reserve to the will of the big banks.
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Independence should be in quotes in the title…
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Fed negoatiations in secret without referral back to the democratically elected government of the home of the USD doesn’t sound healthy to me.
Too many opportunities for personal prejudice to impact the US behind closed doors.
This is the same problem as the IMF love affair with the EURO leading to excess damage to Greece.
It can only be considered acceptable when the organistion has a TRULY independnt arm capable of scrutinisng all negotiations, agreements and where that SCRUTINY is then made public.
Imagine a Fed where the upper echelons are infiltrated by people influenced by the likes of a Soros?
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This isn’t just a pop at the FED but possibly also the EURO if behind closed doors nods & winks have been used with the FED to support the European monetary union. IMF have come out and said they have been EURO biased.
A bright light shone into the corners might be just what is needed to highlight contortions and agendas.
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Trump is going to be the best president ever.
He is helping countries who don’t even know he is helping them.
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End the Fed, bring back the Gold Standard backed USA Dollar
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Check Bill Still’s take on that. You may change your mind.
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Be careful what you wish for, you may get it.
The transition from our existing fiat system to a gold standard would not be a smooth one.
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Yup. Transition will not be smooth. But at this late stage can we ever have a smooth transition. No. So the best thing probably is to go for a sound system (not necessarily gold standard) and live with the pain for some time. There is a distinct need for change.
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The fact that we can buy real products made with real labor and materials with imaginary digits that may never be redeemed is why we are rich. Just like the rich financiers have more wealth than the poor who have to borrow the fiat digits to live. If this system ends, we will all feel it. This system is backed by the war machine.
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Rome collecting taxes from the provinces to pay for the army to keep the provinces under Rome.
But it makes Rome fat, lazy and stupid. The end is ugly.
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President Trump had also better audit the gold reserves at Ft Knox! If he does it soon, he can then ask obama, “Where’s the Gold?”
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The Fed are not, and have never been independent as such, they are owned by private banks. If the US Government really wants a US Central Bank, it should close the Fed create one, with oversight, but free to carry out their mandate without political interference.
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Ditto.
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Financial markets are large enough that no central bank is necessary. Lend wisely or investors will shut off credit.
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Citizens should be able to use their Nation’s fiat in safe, convenient account form and not be limited to physical fiat, a.k.a. “cash.” So a central bank or equivalent is something every monetary sovereign should provide for its citizens, their businesses (including lend institutions), organization’s, etc.
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Any organization ‘created’ by the government is never going to be truly independent.
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“I confidently predict Janet Yellen will not last four years.”
If I’m not mistaken, her term is up Feb 1, 2017.
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That should be 2018
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why would you want a central bank?
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Prior to having the federal reserve bank, every few years there would be depressions as a result of cascading bank failures due, in large part, to fractional reserve lending and general fraud and theft among bank owners and managers.
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I remember there being a panic of 1907. After the FED was created in 1913, the largest quarterly drop in GDP on record, occurred not even 10 years later. Not 10 years after that, the greatest depression in U.S. history began.
Having a central bank didn’t really fix anything.
The banks were reckless in the 1920’s and Greenspan let them be reckless in the 2000’s.
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Central banks – like all government regulatory systems – are not about protecting the people.
They are about protecting the banks and those who own them.
Bad banks should be allowed to fail – and those who own them should be penniless when it’s over. Instead the bad banks are sheltered from their mistakes, mal-investments, and mishandling of their depositor’s funds. The banks are bailed out, the owners are made whole, and the “people” end up getting the short end of the stick.
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So the citizens can deal with their Nation’s fiat – same as the banks do – in convenient, inherently risk-free, ACCOUNT form and not be limited to unsafe, inconvenient physical fiat, a.k.a. “cash.”
Otherwise, citizens are forced to deal with private banks and that should NOT be.
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The only thing worse than dealing with a private bank is being forced to deal with a bank operated by government bureaucrats.
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The central bank should not make loans or otherwise create fiat EXCEPT for its monetary sovereign. That means there’d be very little need for human interaction.
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Human interaction’s got nothing to do with it, Fidel.
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You’re well named, Robs, if you oppose citizens being able to use their own Nation’s fiat the same way banks do.
Just how do you justify that? Are you a banker?
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Besides, private banks would still exist but without government privileges such as deposit insurance, lender of last resort, etc.
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Mish,
This letter looks like nothing more than grandstanding to me. McHenry is just a stooge for the worst banker lobbyists. He’ll only be happy with fully legalizing bank fraud.
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Trump needs to be careful here.. so far he’s all hot air, but labeling nations as currency manipulators and starting trade wars can very quickly get out of hand.
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Hot air? No, that’s not what the evidence says.
My advice still stands. Don’t try to front-run Trump.
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“Holly Mackerel”, it’s about time!
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Its about time the fed
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Trump needs to expose the feds actions in the past 8 years. All these currency swaps with the EU and Switzerland and magically they are buying US equities. How much toxic crap do they have on their balance sheet that they illegally purchased from the big banks. Expose the entire scam!
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End the Fed.. gold standard. Very nice. Nothing like this has been tried. Ever. and before it does, the current financial system would have to collapse, causing something much worse than a Depression– up to an including states like Calif wanting out of your new scheme. Its not like flipping a bedroom light on and off.
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Not to mention that inexpensive fiat is the ONLY ethical money form for government use else the taxation authority and power of government is misused to benefit private interests such as gold owners and money hoarders*.
*Risk-free savings beyond legitimate liquidity needs are an attempt to free-ride on the risk-taking of others and are thus anti-progress since progress requires some risk taking.
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So risk-free savings has nothing to do with money already earned by possibly having already taken risks? One must spend everything they earn? Is no one entitled to have earned something previously and store it without risk?
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So you want risk-free, FREE storage beyond, say, a $250,000 individual citizen limit?
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When I hear risk free I assume one is speaking bonds. What fucking moron keeps more than 250k in a savings account?
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Well, sovereign bonds are risk-free so AT MOST (for the longest maturities) they should yield 0% or else we have welfare proportional to wealth.
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Agree. And by my math they do.
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That is sovereign bonds should yield no than 0% NOMINALLY since those who can afford to save have no more right to be protected from price inflation than those who can’t afford to.
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So who will buy sovereign bonds yielding AT MOST 0% NOMINALLY? Hence the need for even more negative interest on “reserves” and restrictions on physical fiat, a.k.a. “cash”, as a means to avoid that negative interest. That, or as Bill Mitchell suggests, we stop issuing sovereign bonds altogether (overt monetization). I prefer the former.
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“End the Fed.. gold standard. Very nice. Nothing like this has been tried. Ever.”
What did the US have before 12/23/1913 then?
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These folks are sitting at the biggest poker table in the world and playing with my money and without my consent.
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I would assume your share is somewhere to the 47th decimal.
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Welcome to the
0.00000000000000000000000000000000000000000000001 %
and don’t pretend you aren’t the elite.
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When I read the comments section I realize it was by default.
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…and starting to send in chapters for editing… but lot’s more work to go.
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End the Fed, End Fractional Reserve Lending, End the World Bank and IMF. End TTP, NAFTA, NATO and break up the Euro. The End! Or am I missing anything?
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I think the world is just beginning to realize what Trump means by America First. The free lunch is over.
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Re-arranging the deck chairs on the Titanic.
The imbalances in the world will not be addressed democratically or rationally.
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Pure silliness in my view. The Fed acts as a regulator. Banks are global. Of course they need to coordinate capital standards with other regulators. If they don’t banks will simply either game the capital standards by shifting resources around the globe or be at a disadvantage against those in other countries. Also makes sense from a systemic risk standpoint. You need some similarity between the standards that apply to JP Morgan vs a Deutsche Bank. We’re not talking about regional s&l’s here.
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Yes, the dollar being a reserve currency and these institutions moving in and out of our markets on a daily basis add to said need.
Populist garbage. Plays well to the hoi polloi.
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I imagine there is a specific aim to this challenge, he basically questions the direction of international regulatory standards and the resulting framework as being a poor deal for the US. I don’t think he proposes only national/independent capital standards, though the US would be in a relatively better position in terms of its organisation were that the case. ICS for example is said to mean shifting US practice closer to EU Solvency II rather than the inverse.
Ultimately it is a question as well of whether you agree on global finance, or view that locally regulated markets where risk premium naturally increases outside of the sphere of influence is a worthy and needed constraint in a world that to some becomes more disconnected the more it is centrally managed. Regulatory standards are highways to management, management has become more and more concentrated globally as well, with no small contribution from Federal Reserve monetary policies aiding shape that reality.
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This is the important part only imho.
FOREIGN BUREAUCRATS. Reads like the EU. What actions taken in collusion with authorities in Europe to help Euro.
Of course there has to be domestic oversight and management but not work offshore in secret with other powers.
“The preceding paragraph tears into the Fed’s secret negotiations with foreign
bureaucrats, “without transparency, accountability, or the authority to do so.””
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The “Federal Reserve” is the largest “Insider Trading” racket in world history.
“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford
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The Fed was created by bankers with roots all over the US and europe, particularly the Rothschilds. It is hardly surprising the Fed would want to use the world’s richest nation as their piggy bank to stabilize their finances everywhere, and of course it must be done in secret. The American people would not appreciate how they are being used if they knew more about it.
Read “The Creature from Jekyll Island”.
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The Fed has been operating with the idea that freedom of international capital movement is fine and dandy but that freedom of domestic capital movement is a danger. I don’t know if Trump has the sense to effect the proper changes, but threatening these bozos is something they’ve never had to deal with in their entire bureaucratic lives.
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Interesting that Mr. Market seems to like this – DJI back over 20k again.
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YES! And have Ron and Rand Paul on the investigating team.
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And America is not a currency manipulator? lol.
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“…international negotiations the Fed conducts in secret, with no oversight.”
Every time the subject of auditing the Fed comes up, the Fed claims it needs to be independent when making economic policy decisions. However, auditing the Fed is not about their interest rate or even QE manipulations. It’s about what they are doing with central banks and large financial institutions.
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Let alone the fact that an audit has nothing to do with independence as every single business and the majority of citizens gets audited.
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Obviously the Fed is doing things they don’t want people to know about. Which is all the more reason The People should know what the banksters are doing.
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“End of Fed Independence!”
FED independence ended under Wilson. The government has been meddling with the FED ever since.
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The Fed creation bill was signed by Wilson. What are you talking about, Ron?
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Given the accumulated knowledge about the FED and it’s track record, it has well deserved to be brought under real oversight. I do not mean the occasional theatrical appearances in the congress. It has never been independent, and should really answer to the country where it belongs.
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If my understanding is correct and anyone may chime in here and please of. If the treasury department issues the money we would not be paying interest on it. I happen to like gold and have for almost 40 years now. I am not a gold bug like so many out there as I like it for insurance against financial problems. I tell my serious gold bug friends if the country really did have a SHFT moment and chaos around the country happened, I would prefer land that produce food. I tell them if they are starving you cannot eat gold but would indeed trade it for a sack of potatoes.
Gold was manipulated when we were under a gold standard. It is manipulated now. The real problem is the banks manipulating prices and getting caught never seem to end up in jail. Therein lies the real problem.
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You present an age old argument about gold, that unfortunately doesn’t make sense. In a SHTF situation, suppose you are the potato farmer and 3 men come to you to buy potatoes. One has a $100 bill, one has a silver coin, and one has a gold coin. Who do you think will be eating potatoes that evening? (not to mention the 4th option of the guy with a gun). Why people can’t understand this escapes me!
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You present a situation that is ridiculous.
No one is going to go to a potato farmer with only a silver coin, a gold coin, or a $100 bill.
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Thank God for Trump! The Charade of Criminality with the FED must End! I just pray nothing happens to him since he is following the very same foot steps of JFK!
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Pingback: End of FedRes Independence! House Financial Services Committee Sends Warning Letter to Yellen “This is Unacceptable” « Socio-Economics History Blog
BURN it DOWN!
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The purchasing power of the U.S. dollar has declined by 96% since the Fed came into being in 2013. Auditing the Fed is an essential first step in bringing to heel this most out-of-control arm of a federal government that is itself out of control.
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