Brawls at the Fed, as the System Comes Down
August 25, 2010 • 7:15AM
A senior Washington intelligence source reported this morning that a serious fight has erupted inside the Federal Reserve over hyperinflation, and that people close to the Fed are going to be leaking details, which means the fight will intensify and become more public. He added that that fight is now erupting inside this week's annual Jackson Hole economic summit of the Fed, whose host, Thomas Hoenig of the Kansas City Fed, has publicly dissented from Bernanke's hyperinflationary decisions at each of the last eight meetings of the Federal Open Market Committee. And indeed, sources at that Jackson Hole gathering report that it is an extremely interesting one, especially its off-the-record discussions.
Lyndon LaRouche responded, "I'm not surprised about the brawl in the Fed; for me it's not commentary. I know what's going on. If we don't get rid of this President, you're not going to have a country. We're talking about very short term. I think interpreting events is a mistake, because you're not interpreting the non-events, or the events which are happening but which are not being reported or not being referred to."
Returning to this topic, he added, later: "The break actually happened several weeks ago, and what you're seeing with this Jackson Hole meeting of the Fed, and things like that, is you're seeing reflections of the fact that anybody on the inside knows, without any statistical mumbo-jumbo, that this system is coming down fast."
Similarly, today's Wall St Journal reports that the Aug 10 meeting of the Federal Open Market Committee, whose decision to purchase hundreds of billions of Treasuries was part of the Weimar-hyperinflationary turn in policy that LaRouche had forecast, was the "most contentious" such meeting in "bubbles" Ben Bernanke's four-plus-year tenure as Chairman. Although Hoenig was the only dissenter on the final vote, the Journal reports that no fewer than seven of the seventeen committee members expressed serious reservations concerning that insane decision.
On Monday, Aug 23, Hoenig testified before a field hearing of the House Subcommittee on Oversight and Investigations. In his testimony, available at the website of the Kansas City Fed, Hoenig showed that it is the community banks which are still providing credit to American businesses, while the bailed-out Wall Street banks have ceased to do so for practical purposes. But that the great danger to these community banks is the "too-big-to-fail" giants of Wall Street. The Kansas City Fed website also features Hoenig's address to a Lincoln, Nebraska, Town Hall Meeting of Aug. 13, where he detailed his arguments against Bernanke's zero-interest rate policy. Sources around the Fed report that Hoenig feels obligated to publicize his opposition the more, because of the large numbers of other opponents who are unable to go public as of now.
Additionally, on Tuesday, Aug. 24, Dallas Federal Reserve President Richard Fisher gave a Fox Business News interview expressing cautious reservations about the Bernanke policies in diplomatic language. Both Hoenig and Fisher are Glass-Steagall supporters who also supported the Sen. Blanche Lincoln efforts to limit bank derivatives trading.
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