Federal Reserve Insider Reveals Shocking Truth Behind QE


A Federal Reserve whistle-blower by the name of Andrew Huszar has spilled the beans on the real motive behind the Federal Reserve’s QE program that began in 2009.

Andrew Huszar says that QE has been, “the greatest backdoor Wall Street bailout of all time.” Source: Andrew Huszar: Confessions of a Quantitative Easer. Andrew Huszar says, “We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street.”

News flash: Americans are not stupid Andrew. What do you think Occupy Wall Street was about? It doesn’t take someone with an economics degree to follow the money and see how Wall Street was bailed out but main street was not.

Remember Michael Moore’s movie Capitalism: A Love Story where Michael Moore went down Wall Street and stopped into banking institutions that received billions in tax payer bailouts and demanded our money back?

The economic reports we tracking each month confirm what Andrew Huszar is saying. The unemployment rate has not really come down much at all. More Americans are on food stamps than ever. Median household income has been flat or has fallen for most Americans over the last 5 years. Meanwhile, the S&P 500 has gone up 140% since March of 2009. The stock prices of the big Wall Street banks have gone up even more: Bank of America (+270%), Wells Fargo (+280%), and Citibank (+230%).

From 2009 to 2010, Andrew Huszar was responsible for managing the Fed’s purchase of approximately $1.25 trillion worth of mortgage-backed securities. Andrew Huszar writes:

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

Andrew Huszar said that a few months after QE started, the Federal Reserve had ample evidence that QE was not helping average Americans. There was plenty of evidence that QE was helping Wall Street bankers. The Federal Reserve made the decision to roll out QE2 even though they knew it would only help Wall Street. Andrew Huszar writes:

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

You’d think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germany’s finance minister, Wolfgang Schäuble, immediately called the decision “clueless.”

That was when I realized the Fed had lost any remaining ability to think independently from Wall Street.

This is not some Federal Reserve conspiracy but a real Federal Reserve insider coming clean.

The Federal Reserve has lost a lot of credibility with average Americans. At some point, it wouldn’t surprise me to see the Federal Reserve chairman having to speak from behind bullet proof glass. That’s how unpopular the Federal Reserve is with most people right now. In my opinion, the idea that the Federal Reserve helps support main street and exists for the benefit of all is an idea that is gone forever, or at least a generation.

In the video below, Peter Schiff and Max Keiser talk about the greatest ponzi scheme of our time: QE. It’s a great talk that you won’t hear in the mainstream financial media. Enjoy and let me know what you think in the comments section below.

US GDP Game Changer Hopes Dead


Could have been so beautiful… could have been so bright. The ‘Great Hope’ amongst traders on Wall Street was that the GDP report in November 2013 and December 2013 too, would show an economy so much improved that the Federal Reserve would begin tapering by the end of the year as unemployment dropped. Put a fork in it. That hope is done. Once again it’s not going to happen.

US GDP 2013

The GDP expanded at a 2.8% annual rate. Economists’ expectations were for 2% growth. Sounds great, right? Not so fast.

Economic growth picked up in the third quarter because businesses needed to restock shelves; however, consumer spending growth slowed by the most in 2 years.

fredgraph

Where would the GDP be if the calculation wasn’t changed a few months ago? It probably would be in the 0.8% growth area.

Markets dropped at market open today on release of the US GDP report.

sp-500

It’s fairly clear that traders were hoping for a better GDP report that would suggest why the Federal Reserve was talking about tapering at the end of 2013 back in May. Now it looks more and more like the Fed’s taper talk back in May and June of 2013 was just a rope-a-dope to try and deflate some of the bubble that has formed in the bond market.

Max Keiser talks about how the U.S. has hit stall speed. Since the collapse of Lehman Brothers, it has taken $18 of debt to create $1 of GDP. Check it out and let me know what you think in the comments section below.