I don’t agree with Allan on much politically, but on this we do agree. I’m quite sure I didn’t say (nor do I believe) that we should “live with it”. I’m all in favor of the fed being audited regularly, and substantially more oversight than currently exists. The fed was created by congress, under it’s power of appointment granted in Section 1 of the constitution. It can just as easily amend the mechanism under which it was created.
The problem is not ownership. The problem is it’s lack of transparency in operation.[/quote]
SK: Given that we’re both former accountants (I was not a CPA, however), I’d frame my response within that context. I’m less worried about the Fed’s ownership, than their ability to perform as a “going concern”. We’ve seen a rapid ramp up in their balance sheet, specifically massive acquisition of assets that are, in my opinion, toxic, or at a minimum, difficult to value/sell (i.e. highly illiquid).
While the Fed is not Bear Stearns, nor is it Lehman Bros., it would still be problematic to unload these various assets in a timely fashion, and it would also be difficult to unload them in such a way as to return maximum value to the US taxpayers, who financed their acquisition in the first place.
I don’t see a conspiracy, per se, but I do see a huge “shadow” buyout, wherein the Fed became a purchaser of last resort in order to avoid a huge and disorderly unwinding. In that regard, I would like to see the Fed audited, and I’d love to see an opinion letter by a wholly objective third-party auditor (if one still exists) as to the estimated value of the Fed’s balance sheet, and both Assets and Liabilities. I think this document would be a whole helluva lot more interesting than the Fed’s ownership.
