How Federal Reserve's Corruption Has Swung US From Crisis to Crisis
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President Trump and Jerome Powell are embroiled in another feud, with Trump accusing the Fed chairman of triggering and failing to fix the inflation crisis amid his refusal to cut interest rates.The Fed hasn’t hesitated to manipulate rates to help banks and Wall Street against the little guy in the past. Here's what to know from its sordid history.
Causing Full-On Crises:
The Fed dropped rates to near zero and did massive quantitative easing (money printing) in 2008 as banks and corporations got multi-trillion-dollar bailouts during the financial crisis, triggering a distressed asset buyup as tens of millions of ordinary Americans were thrust into poverty.
It reduced interest to 0% in 2020, injecting $4 trln+ into the economy, helping stock and housing speculators as small businesses and savers faced crushing lockdowns.
Rates were hiked to 20% in 1981, crashing the economy, collapsing stock and housing markets, facilitating another asset buyup by big banks and other wealthy interests.
Sparking and Manipulating Smaller Calamities
Raising rates from 0-5% in 2022-2023 crashed the stock, housing and crypto markets after the Fed ignored inflation warnings for a year, with hedge funds benefiting in the end.
Another big hike in 2018, despite low inflation, crashed the market and prompted Trump to allege deliberate sabotage.
Six straight rate increases in 1999-2000 burst the dot-com bubble. Big investors shorted tech stocks in time, leaving small investors holding worthless paper.
Six surprise hikes in 1994 crashed the bond market, ruining small investors as banks profited.
27 November 2024, 22:28 GMT
Corrupt to the Core
Besides rate cuts and hikes helping banks and big business, the Fed has been accused of a litany of other crimes:
Facilitating a ‘revolving door’ of Wall Street and cushy bank exec jobs for ex-Fed officials.
Insider trading, like the 2021-2022 scandals that forced Dallas and Boston Fed bosses Robert Kaplan and Eric Rosengren to resign, and later pushed out Fed Vice Chair Richard Clarida.
Bailouts for the boys, uncovered by a 2011 Government Accountability Office audit which found $16 trln in secret loans to banks like Goldman Sachs, Citi and JPMorgan in 2008, plus trillions more for Deutsche Bank, Barclays and UBS.
Regulatory capture, as revealed by whistleblower Carmen Segarra in 2012.
14 November 2024, 13:27 GMT
