Why Donald Kohn is Wrong and US Federal Reserve HR 1207 Needs to Pass

July 13th, 2009

Recently, Federal Reserve deputy chairman Donald Kohn has been very outspoken regarding the need of the US Federal Reserve’s actions to remain secretive from the public and his clear objection to US Senator Ron Paul’s bill to audit the US Federal Reserve (HR 1207). I have placed in bold print certain parts of the below story because these are the specific points of the story that I wish to analyze further.

WASHINGTON (AFP) – “Federal Reserve deputy chairman Donald Kohn on Thursday defended the US central bank’s independence, saying congressional oversight could interfere with monetary policymaking. If the Government Accountability Office (GAO), the investigative arm of Congress, were authorized to audit the Fed, that ‘could cast a chill on monetary policy deliberations,’ Kohn told a House of Representatives committee. He acknowledged that the possibility of expanding the audit authority of the GAO over the Fed ‘has recently been discussed.’

‘Although Federal Reserve officials regularly explain the rationale for their policy decisions in public venues, the process of vetting ideas and proposals, many of which are never incorporated into policy decisions, could suffer from the threat of public disclosure,‘ Kohn said. He also defended the Fed’s closed-door policy-setting meetings as vital for the financial markets and the public.”

” ‘The publication of the results of GAO audits related to monetary policy actions and deliberations could complicate and interfere with the communication of the FOMC’s intentions regarding monetary policy to financial markets and the public more broadly,’ he said, referring to the Fed’s policy-setting Federal Open Market Committee. Credit rating agencies, Kohn warned, would lower their ratings on the United States if the independence of the central bank seemed threatened, which would make it more costly for the government to borrow at a time when its deficit is soaring amid a recession.”

To provide a quick backdrop to Donald Kohn’s recent statements, watch these two videos below. The first video illustrates Donald Kohn’s January 2009 testimony about the $1.2 trillion expansion of the US Federal Reserve’s balance sheet, in which Kohn testifies that US citizens have no right to know what specific institutions the US Federal Reserve has given money to, even though the money distributed by the US Federal Reserve was taken from the American taxpayer.

Note in the above video, that when US Congressman Alan Grayson questioned Kohn about whether the US Federal Reserve had used US taxpayer money to buy assets from US banks that were worthless, Kohn states that “none are worthless”, yet followed-up his empty claim by stating ” we are marking the ones [assets] to market that have market values”, a clear implication that the US Federal Reserve purchased bank assets that have no market value with US taxpayer money.

In the next video dated May, 2009, the Inspector General for the Board of Governors of the US Federal Reserve stonewalls US Congressman Alan Grayson regarding his inquiry into Bloomberg’s report that the US Federal Reserve extended $9 trillion of off-balance sheet credit to unnamed US financial institutions.

Thus, in light of the above Congressional testimonies, allow me to present my interpretation of Kohn’s recent defense of the secrecy of the US Federal Reserve. Kohn’s defense of the US Federal Reserve’s secrecy revolves around his loyalty, not to the American people, but his loyalty to the controlling interests of the US Federal Reserve, a small cabal of families that have zero interest in serving the American people.

Kohn stated that any challenge to the US Federal Reserve’s “independence” would “‘could cast a chill on monetary policy deliberations”.

My interpretation? Kohn does not want the monopolistic, unchecked, unregulated powers and policies of the US Federal Reserve made public, because such revelations would cast a chill on their deliberations. Increased transparency of the Federal Reserve’s actions may finally grant the public a chance of understanding Henry Ford’s alleged statement that “It is well enough that people of the nation don’t understand our banking and monetary system, for if they did, I believe there would be revolution by tomorrow morning.” The “chill” Kohn fears is a revolt against the abuses and destructive policies of the US Federal Reserve.

Kohn stated that “the process of vetting ideas and proposals, many of which are never incorporated into policy decisions, could suffer from the threat of public disclosure.”

My interpretation? The transparency of US Federal Reserve’s actions would prevent it from being able to easily rob the public of its hard earned money by its continual devaluation of the US dollar year after year.

Kohn stated, “The publication of the results of GAO audits related to monetary policy actions and deliberations could complicate and interfere with the communication of the FOMC’s intentions regarding monetary policy to financial markets and the public more broadly”.

My interpretation? Audits of the US Federal Reserve would wipe away the veil of secrecy regarding its actions and lessen the effectiveness of its various efforts to hide from the public, the destructive effects of its monetary policy upon the US dollar’s purchasing power.

Credit rating agencies, Kohn warned, would lower their ratings on the United States if the independence of the central bank seemed threatened.

My interpretation? Due to the destructive policies of the US Federal Reserve, the Feds are relying on deception and fraud to maintain the current credit rating of the United States. If the fraud they are executing was revealed, then the credit rating of the US would be lowered because the entire world would far better understand the reality of the catastrophe in waiting that is the US dollar.

To learn more about how you can fight the endemic fraud that has been institutionalized in our global monetary system, visit the grassroots project, The Worldwide Initiative to Permanently End Financial Fraud. If you live in the United States and your representative is not yet a co-sponsor of HR 1207, call, write, and email him/or her. You can discover the numbers of your representatives by dialing the Capitol Switchboard at (202) 224-3121.

Entry Filed under: Financial Crisis, Dollar Crisis, & Recession Proof, Most Read Posts