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I’m not a political/economic blogger and don’t want to be one, but this latest debacle w/the Federal Reserve attempting to bail out investment bank Bear Stearns* demands comment.

first, let’s get one thing straight: the Federal Reserve is no more “federal” than Federal Express. the facts that the president of “the Fed” is appointed by the President of the United States, that the regional Federal Reserve banks act “as fiscal agents of the U.S. Treasury” (emphasis added), or that the Federal Reserve website sports a “.gov” top-level domain are NOT proof that “the Fed” itself is a federal entity; it’s a private bank w/a singular and very dangerous relationship w/the U.S. federal government that allows “the Fed” to stipulate domestic monetary and fiscal policies and even influence American foreign policy, much to our nation’s detriment, if the political events and economic conditions of the last decade are any indication of America’s standing in the international community. (*frankly, I don’t know if reporters like Stephen Bernard and Joe Bel Bruno, the AP writers who authored the Yahoo! Finance article referenced above, are complicit in the deception of “the Fed” masquerading as a federal entity or if they’re just ignorant dupes, but either way, by choosing the language they did at the beginning of their article on the Bear Stearns bail-out, they’re serving to perpetuate the treacherous fallacy that “the Fed” is somehow an official component of the U.S. federal government.)

one of the VERY few notable people who really seem to “get it” right now is investor Jim Rogers, CEO of Rogers Holdings, who told CNBC Europe that the best thing that could happen to the U.S. economy right now would be for Federal Reserve Chairman Ben Bernanke to resign and for “the Fed” to be abolished. I’m no political pundit or economic expert, but I do agree, sort of. I don’t think that the federal government has the right or the authority to abolish a private business enterprise, which I’ve already mentioned is what “the Fed” really is; however, if we instead look at “the Fed” as a government contractor who’s been given a vast array of responsibilities and power that should never have been given to it in the first place, it’s well past time for the government to cancel said contract and bring those responsibilities back “in house” in accordance w/Section 8 of the U.S. Constitution.

so why would “the Fed” rush to rescue a failing investment bank? as cynical as it sounds, my guess is that it’s probably got a lot more to do w/throwing a lifeline to their cronies and relatives who find themselves losing their shorts as more and more people default on mortgages they can’t afford (ergo shouldn’t have gotten into in the first place) than it does w/genuine concern for the ~7 million people who stand to lose their homes (altho’ as someone who’s had property repossessed in the past myself, I have little sympathy for those folks — if you can’t afford to make your payments, you forfeit whatever it is you put up as collateral for a purchase on credit, which is nothing more or less than a contractually-bound promise to pay over time. period. that’s all, the end.). as for the investors who’re losing their shorts, I seem to recall learning the concept of “no risk, no reward” back when I was a kid, and my father — who’s not a wealthy man, but neither is he stupid nor arrogant — taught his children that we should never make an investment that we couldn’t afford to walk away from ENTIRELY. now “the Fed” has basically told wealthy investors that there’s no risk for high-risk investments b/c we’ll come bail you out. who’s “we”? inevitably it will be the American working class, of course: the so-called “investment class” is apparently entitled to going to get a ~$200 billion bail-out at the expense of the ordinary American worker. think about it: you KNOW that money’s going to be repaid — with interest — and you KNOW it’s not the people who actually took the risk who’re going to get stuck w/the bill (the concept of personal responsibility and accountability has long gone the way of the dodo, and the essential destruction of that crucial morality is accelerating the downfall of our nation). Jim Rogers said it best: “Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich.”

disentangling “the Fed” from our national monetary, fiscal, and credit systems will be much like performing surgery to remove a malignant tumour: the procedure will be unavoidably painful, and the recovery lengthy and unpleasant, but the survival of our financial system depends upon that surgery (and of our current Presidential candidates, t’would appear that Dr. Ron Paul is the only person who has the foresight and wisdom not only to see the threat to our economic health but to have understood it and developed a treatment and recovery plan for the patient). I said it before, but I think it bears repeating: it’s well past time for “the Fed” to have their government contract canceled, especially since they evidently aren’t fulfilling the charter of said contract, which is stated at the top of their own home page: “The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.” (if THAT doesn’t make you go “yeah, right!” then I don’t know what will)

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