Suing the Federal Reserve

[RVonse]

George Gammon is suing the federal reserve because he feels they broke the federal reserve act when they bought millions of dollars of corporate bonds and junk debt in March. According to George, the federal reserve act should not allow them to do that. Also that the central management of the federal reserve has been directly hurting the lower and middle class at the expense of the upper rich 1 percent. This video goes into a lot of complicated detail and is long to watch but very informative. Apparently the unintended consequences of actions of the fed over the last 20 years is being blamed for causing the entire society to become speculators and has caused the rich to become richer while the whole of the US becomes a financing economy instead of a manufacturing economy. I have to admit after watching it all I am highly swayed by his arguments. If you do not already own assets in this economy you are basically screwed.

https://www.youtube.com/watch?v=6pnK7W4b0Ro

What also I find interesting is at the end of this video he makes the claim initial funds for the legal work ($100,000) was donated and secured within 48 hours. So apparently there are many others who share his point of view.

So should the fed be more transparent and held to the letter of the law? What say you?

 

[laughing dog]

George Gammon is suing the federal reserve because he feels they broke the federal reserve act when they bought millions of dollars of corporate bonds and junk debt in March. According to George, the federal reserve act should not allow them to do that. Also that the central management of the federal reserve has been directly hurting the lower and middle class at the expense of the upper rich 1 percent. This video goes into a lot of complicated detail and is long to watch but very informative. Apparently the unintended consequences of actions of the fed over the last 20 years is being blamed for causing the entire society to become speculators and has caused the rich to become richer while the whole of the US becomes a financing economy instead of a manufacturing economy. I have to admit after watching it all I am highly swayed by his arguments. If you do not already own assets in this economy you are basically screwed.

https://www.youtube.com/watch?v=6pnK7W4b0Ro

What also I find interesting is at the end of this video he makes the claim initial funds for the legal work ($100,000) was donated and secured within 48 hours. So apparently there are many others who share his point of view.

So should the fed be more transparent and held to the letter of the law? What say you?

At this point there is no evidence that the Fed has not been held to the letter of the law. As for transparency, I have no idea what Mr. Gammon or you think that means in the case of the Fed.

I say good luck to Mr. Gammon. In this day and age, there are enough suckers who are willing to part with their money.

I am not watching any 3 hour video - what specific portions of the Federal Reserve Act (or its amendments in later years) does Mr. Gammon allege have been violated.

 

[Swammerdami]

There are several different questions:
(a) Is what the Fed did (buying large quantities of corporate debt) illegal?
(b) Was it corrupt?
(c) Whether illegal or corrupt, did it in fact help rescue the economy?
(d) Did it, once again, effectively make the rich richer and the poor poorer?
(e) Is the Fed overturning the "free market"?
(f) If the Fed is to assume a "central planning" role, should it give greater emphasis to, e.g. green energy, rather than banks' solvency?
(g) How will the U.S. economy and financial parameters evolve over the next 3 years or so, and how was this affected by Fed behavior?
(h) How will world finance and governance evolve over the next decade or two?

I don't know the answers to these questions, but it's easy for the debate to get confused if we don't keep in mind that there are several different questions. I, for one, might look with favor on illegal actions which rescue the world economy; and look with disfavor on allowing the economy to collapse just to avoid any hint of illegality. Question (a) — did the Fed exceed its authority? — strikes me as the LEAST interesting of the questions. Does the YouTube focus just on that?

An interesting political aspect: Even if what the Fed did was illegal, it presumably would have been legal if done by Congress and the Executive branch. Is part of the problem that Congress is so dysfunctional that the independent Fed has to assume some powers that should belong to Congress?

Despite (or perhaps because of) not knowing the answers, I find these questions interesting and important. I might start the 3-hour video, but guess that there are much better, more scholarly, articles exploring these questions. Any links?

 

[Jimmy Higgins]

So, the OP’er is familiar with “standing” correct? And how “standing” will toss this lawsuit out?

 

[Jason Harvestdancer]

I'd get the popcorn and enjoy the show ... if I didn't think that this guy has no standing.

 

[Swammerdami]

... Despite (or perhaps because of) not knowing the answers, I find these questions interesting and important. I might start the 3-hour video, but guess that there are much better, more scholarly, articles exploring these questions. Any links?

The video starts with the usual babble: someone who put all his money in banknotes under his mattress 100 years ago would only have 97% of his spending power left. I clicked forward ten minutes and learned that printing money without an increase in production can cause inflation.

Anyone who wastes 20 minutes, let alone 3 hours, on that video needs his head examined. I feel embarrassed to have wasted the minutes I did.

 

[Jimmy Higgins]

... Despite (or perhaps because of) not knowing the answers, I find these questions interesting and important. I might start the 3-hour video, but guess that there are much better, more scholarly, articles exploring these questions. Any links?

The video starts with the usual babble: someone who put all his money in banknotes under his mattress 100 years ago would only have 97% of his spending power left. I clicked forward ten minutes and learned that printing money without an increase in production can cause inflation.

Anyone who wastes 20 minutes, let alone 3 hours, on that video needs his head examined. I feel embarrassed to have wasted the minutes I did.

Yeah, the "need" to have to watch a video on YouTube in support of an argument is often inversely proportional to the video's length.

 

[RVonse]

George Gammon is suing the federal reserve because he feels they broke the federal reserve act when they bought millions of dollars of corporate bonds and junk debt in March. According to George, the federal reserve act should not allow them to do that. Also that the central management of the federal reserve has been directly hurting the lower and middle class at the expense of the upper rich 1 percent. This video goes into a lot of complicated detail and is long to watch but very informative. Apparently the unintended consequences of actions of the fed over the last 20 years is being blamed for causing the entire society to become speculators and has caused the rich to become richer while the whole of the US becomes a financing economy instead of a manufacturing economy. I have to admit after watching it all I am highly swayed by his arguments. If you do not already own assets in this economy you are basically screwed.

https://www.youtube.com/watch?v=6pnK7W4b0Ro

What also I find interesting is at the end of this video he makes the claim initial funds for the legal work ($100,000) was donated and secured within 48 hours. So apparently there are many others who share his point of view.

So should the fed be more transparent and held to the letter of the law? What say you?

At this point there is no evidence that the Fed has not been held to the letter of the law. As for transparency, I have no idea what Mr. Gammon or you think that means in the case of the Fed.

The first part of his lawsuit is simply to find out what the fed has been up to using the freedom of information act. But as I understand the federal reserve act, it is supposed to prevent them from injecting liquidity directly into the markets without going through the treasury first. Purchasing stock or junk bonds would not fit that category.

 

[Jimmy Higgins]

I think it is quite funny that the Fed provided the tools to help arrest the economic crash... (though truthfully was also part of the reason for it as well) and some people are despondent that the global economy didn't disintegrate into ashes. They have invested so much energy into the Fed is evil argument (inflation! inflation! inflation!), that when the Fed helped stop the crash from becoming catastrophic, they start whining 'that isn't fair!'

 

[RVonse]

There are several different questions:
(a) Is what the Fed did (buying large quantities of corporate debt) illegal?

Yes

(b) Was it corrupt?

Not necessarily

(c) Whether illegal or corrupt, did it in fact help rescue the economy?

Yes, definitely helped the economy in the short run. In the video he explains how in the late 1910's both the US and Germany handled their recessions differently. The US took the pain and had a quick depression but Germany handled it like the fed is doing today which ultimately led to Weinmeir inflation and the beginnings of WW2.

(d) Did it, once again, effectively make the rich richer and the poor poorer?

Yes. Most definitely. What happens is that great amounts of financial liquidity causes asset prices to rise and bubble. That greatly helps the rich to become richer. But it hurts the real economy which is where goods and services are produced. It becomes more and more difficult to manufacture and produce services in a country where the price of real things can not be determined. Free market capitalism begins to shut down and government gets bigger and bigger. During its best times, the US had 4% government of its economy and that is now north of 20% and rising. When private firms leave this country, the middle and lower classes are most affected by it.

(e) Is the Fed overturning the "free market"?

Yes. They are doing it with good intentions and over a long period of time. But yes, they are overturning the "free market"

(f) If the Fed is to assume a "central planning" role, should it give greater emphasis to, e.g. green energy, rather than banks' solvency?

I would say no. No, because the fed should not be doing anything except for their charter which to ensure a stable currency and high employment. I like green energy but IMO it should be up to the congress and executive branch of the government to favor green energy. The fed is not directly accountable to the people.

(g) How will the U.S. economy and financial parameters evolve over the next 3 years or so, and how was this affected by Fed behavior?

If you think central planning is better than the free market the fed has done very well over the last 3 years. The US makes fewer and fewer real goods and services and has more and more financial services.

(h) How will world finance and governance evolve over the next decade or two?

There are many who believe the dollar will suffer an eventual crises. But even without that or hyperinflation, the obvious trend is more government and less private industry. There were obvious historical problems with the central planning economy of the USSR but there are also problems with free market capitalism. But on balance, I would take free market capitalism because with that system, at least rich people can still buy goods and services. With a central planning economy no one will eventually buy any goods and services, it will be like getting toilet paper during the pandemic. Furthermore, other countries who do practice free market capitalism will rise to take the place of the US in world dominance.

An interesting political aspect: Even if what the Fed did was illegal, it presumably would have been legal if done by Congress and the Executive branch. Is part of the problem that Congress is so dysfunctional that the independent Fed has to assume some powers that should belong to Congress?

Yes. If most of us really want communism to be our economic future then at least let democracy vote it in.

 

[RVonse]

I think it is quite funny that the Fed provided the tools to help arrest the economic crash... (though truthfully was also part of the reason for it as well) and some people are despondent that the global economy didn't disintegrate into ashes. They have invested so much energy into the Fed is evil argument (inflation! inflation! inflation!), that when the Fed helped stop the crash from becoming catastrophic, they start whining 'that isn't fair!'

There are actually arguments of deflation in the near future by many libertarians. But rather than arguing inflation or deflation, the argument they should all be shouting is feudalism. Because that is what the financialization of the economy is causing. The rich to own everything and the poor to own nothing at all.

 

[RVonse]

I think it is quite funny that the Fed provided the tools to help arrest the economic crash... (though truthfully was also part of the reason for it as well) and some people are despondent that the global economy didn't disintegrate into ashes.

You have to understand how free market capitalism works. It depends greatly on bad business going out of business in order to leave room for better firms to survive. If the fed prevents a bad firm from going under (by giving money at zero interest), those firms become the dinosaurs who prevent the better firms from succeeding. And that lowers everyone's standard of living.

If the fed had been around in pre-historic times humans may never have evolved from apes. Because the apes could not have succeeded living with the dinosaurs that the fed would have saved.

 

[Patooka]

Yeah, the "need" to have to watch a video on YouTube in support of an argument is often inversely proportional to the video's length.

Words to live by. I'd rate this lawsuit a 6.5 Lindells on the self indulgent crap-o-meter.

 

[RVonse]

Yeah, the "need" to have to watch a video on YouTube in support of an argument is often inversely proportional to the video's length.

Words to live by. I'd rate this lawsuit a 6.5 Lindells on the self indulgent crap-o-meter.

Then don't watch the video, remain ignorant, and by all means give us your opinion about what the fed is doing today. But please do not tell us how bad the video is that you did not bother to watch.

 

[Jimmy Higgins]

Yeah, the "need" to have to watch a video on YouTube in support of an argument is often inversely proportional to the video's length.

Words to live by. I'd rate this lawsuit a 6.5 Lindells on the self indulgent crap-o-meter.

Then don't watch the video, remain ignorant, and by all means give us your opinion about what the fed is doing today. But please do not tell us how bad the video is that you did not bother to watch.

20+ years (well probably did so at 10) of web boarding has conclusively led to Higgins Law, that the need to watch a video on YouTube in support of an argument is inversely proportional to the video's length. Once a video gets past the length of motion pictures, it becomes an issue of being too long and is likely a waste of time. When working on a job that was heading to arbitration, we needed to make an argument for our position. My goal was to establish the argument with as few words as possible. We could have gone on and on with page after page of writing, but in general, the shorter the argument, the more refined and simple it is presented, the more likely it will be viewed favorably. A three hour video on YouTube? I don't have time to sit down and watch a three hour IPL cricket match. Why in the heck would I, or anyone that has a life watch a three hour YouTube video?!

Yes, there are problems with our economic system. But the Fed is always portrayed as the big bad boogieman. The printing of money always portrayed as the end times. Yet, after '08, it apparently became noticed that the Fed was capable of stopping economic Armageddon, making a lot of the hyperbolic fear about the end times really stick out as wrong. The Fed was evil? No, the low interest rates and a capitalistic system that went virtually unmonitored buried our economy. Again, the Fed provided the kindling, but unmonitored capitalism almost burned down the town.

 

[jonatha]

There are several different questions:
(a) Is what the Fed did (buying large quantities of corporate debt) illegal?

Yes

No.

CARES Act

SEC. 4003. EMERGENCY RELIEF AND TAXPAYER PROTECTIONS.
(a) IN GENERAL.—Notwithstanding any other provision of law,
to provide liquidity to eligible businesses, States, and municipalities
related to losses incurred as a result of coronavirus, the Secretary
is authorized to make loans, loan guarantees, and other investments
in support of eligible businesses,
...
(b) LOANS, LOAN GUARANTEES, AND OTHER INVESTMENTS.—
Loans, loan guarantees, and other investments made pursuant to
subsection (a) shall be made available as follows:
...
(4) Not more than the sum of $454,000,000,000 and any
amounts available under paragraphs (1), (2), and (3) that are
not used as provided under those paragraphs shall be available
to make loans and loan guarantees to, and other investments
in, programs or facilities established by the Board of Governors
of the Federal Reserve System for the purpose of providing
liquidity to the financial system that supports lending to eligible
businesses, States, or municipalities by—
(A) purchasing obligations or other interests directly
from issuers of such obligations or other interests;
(B) purchasing obligations or other interests in secondary markets or otherwise; or
(C) making loans, including loans or other advances
secured by collateral.

The first bolded phrase means any reference to prior existing law governing the Fed is moot. The rest of the bolded phrases appear on their face to give the Fed the authority to do what it did...

 

[laughing dog]

In the video he explains how in the late 1910's both the US and Germany handled their recessions differently. The US took the pain and had a quick depression but Germany handled it like the fed is doing today which ultimately led to Weinmeir inflation and the beginnings of WW2.

It is delusional to think that current Fed policy will lead to the post WWI hyperinflation in Germany, Austria, and Hungary.

 

[Elixir]

directly hurting the lower and middle class at the expense of the upper rich 1 percent

WUT?
Misstatement, I presume.

 

[Loren Pechtel]

Yeah, the "need" to have to watch a video on YouTube in support of an argument is often inversely proportional to the video's length.

Yup. Unless you need visuals you can almost always do better with text than with video. Any argument that needs a long video to explain it is almost certainly false.

 

[Loren Pechtel]

I think it is quite funny that the Fed provided the tools to help arrest the economic crash... (though truthfully was also part of the reason for it as well) and some people are despondent that the global economy didn't disintegrate into ashes.

You have to understand how free market capitalism works. It depends greatly on bad business going out of business in order to leave room for better firms to survive. If the fed prevents a bad firm from going under (by giving money at zero interest), those firms become the dinosaurs who prevent the better firms from succeeding. And that lowers everyone's standard of living.

If the fed had been around in pre-historic times humans may never have evolved from apes. Because the apes could not have succeeded living with the dinosaurs that the fed would have saved.

Your argument would make sense in regular times. However, what's going on now is helping firms who are actually decent firms but not doing well because of the pandemic.