Former Federal Reserve Official Admits the Fed is Screwing Main Street

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Yesterday, the Dow opened at 16,000 for the first time ever. Wow, tAndrew Huszar on GBhat’s awesome, right? Many in the media reported this as something exciting, and some reported that investors attributed these “gains” to Janet Yellen, who is likely going to be the next Chairman of the Federal Reserve. That is absolutely correct – these “gains” can be attributed to Yellen’s future chairmanship of the Fed. But that doesn’t mean anything positive for you and me and other regular Americans. It just means that Wall Street is excited about Yellen’s promise to continue to print money. In order to confuse us regular folk, this policy of digitizing new money out of thin air has a cute name: “quantitative easing” (or QE).

About three weeks ago I penned an article for this site about how Wall Street & the Fed was screwing Main Street. You can read that article here. Last week, Andrew Huszar, a former Federal Reserve official who worked on the Troubled (read Toxic rather than troubled) Asset Relief Program (known as TARP), wrote an OpEd piece in the Wall Street Journal apologizing to America for his participation in the “never ending quantitative easing”. Huszar called this program the “biggest back door Wall Street bailout of all time”. You can read Huszar’s OpEd here.

Huszar’s piece describes how he was asked to rejoin the Fed to help with this program. He states about the QE program:

It wasn’t long before my old doubts resurfaced. Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

Did you get that? Wall Street was pocketing most of the extra cash. As I mentioned in my last article that I referenced above, most Americans are not benefitting from the highs in the stock market. On Glenn Beck’s TV program last night, Huszar agreed with that and stated that only 50% of Americans even own a single share of stock.

Huszar agreed to return to the Fed because he believed the 2008 financial crisis was a “wake-up call” that the financial markets, particularly the banking industry, needed serious structural reform. The economy, he said on Glenn Beck’s TV program last night, was overly dependent on Wall Street. But here we are, 5 years later, and it is now even worse. Basically, 6 (count ‘em, SIX!) 220px-Janet_Yellen_official_portraitbanks control 70% of the banking industry. The ‘too big to fail’ problem has not been corrected, it is now much worse. This is not a free market any longer. Huszar says the Fed is just “kicking the can down the road”.

Huszar said that the Fed is supposed to be ‘independent’ of Wall Street, but that independence is eroding. I think he’s being kind. The Fed is so in bed with Wall Street that the two institutions are sharing an afghan-sized blanket. If you look at the people in the Fed and their backgrounds, they essentially all come from these big six banks. And when they leave the Fed, they go back there.

Last night, Huszar said he is ‘hopeful’ that we can get out of this mess. He should not be hopeful. He admitted that the questions posed to Janet Yellen last week in her confirmation hearings in Congress were “cupcake questions”. The Fed’s “easy money” policies that we had under Ben Bernanke’s Fed chairmanship will be expanded under Yellen. That’s not my speculation, that’s what she said in her confirmation hearings. She will be confirmed as the next Fed chair, without a doubt. She needs only five Republican votes to get it (can you say McCain, Graham, and McConnell, for example?).

Read my last article again about the inflationary effects of QE. Yellen will make this worse. Much worse. Last night, Glenn Beck asked Andrew Huszar this question: “Have you ever seen the digitizing or printing of money EVER in the history of the world, work? Ever?” Huszar responded “I am not aware of it.”.

So, once again America, We the People are getting screwed by the arrogance of the “elites” in Washington, D.C. These people in the Fed and the government think they can pull off a feat that has NEVER once in the history of the world EVER worked. Hyper-inflation ALWAYS follows the massive printing of money. The Fed’s printing/digitizing of money so far? Four trillion dollars. And Yellen thinks that’s not enough – we have to print more and do it faster. Prepare, people. Your carefully saved dollars won’t buy you squat in the future.

Follow Gail on Twitter: @AcctgProfTX

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