classical economics
for analysis,  forecasting
and policy design

Dudley Steps In Fed Fight

DUDLEY STEPS IN FED FIGHT
Trump Gains Points
By Wayne Jett © August 29, 2019     

     William C. Dudley was privately selected to be the president and CEO of the Federal Reserve Bank of New York in 2009 when Timothy Geithner left those posts to become Secretary of the Treasury in the Obama administration. Dudley held that powerful position, earning annual compensation from the New York Fed of “more than $410,000 per year” as of 2010, until 2018.      As noted below, during the same period Dudley was a member and Vice Chairman of the Federal Open Market Committee, setting and executing U. S. monetary policy. Now he has published his opinion urging that the Fed must do all it can to assure President Trump is not re-elected, including causing an economic recession, if necessary.

Who is “Bill” Dudley?     

     In his earlier years, Dudley was raised in Easthampton, Massachusetts, attended private schools there and in Florida, earned an M.A. and Ph.D. in economics at UC Berkeley, and then worked 21 years at Goldman Sachs. His time at Goldman Sachs spanned the entire reign of Henry Paulson as chairman and CEO, which included the “Tech Crash” of 2000-2002. In 2006, you will recall, Paulson accepted appointment by President G. W. Bush as “economic czar” and Secretary of the Treasury. Dudley was leading the New York Fed during the “financial terrorism” of 2008, for which no one of importance was prosecuted.     

     Does his background give you reason(s) to be confident that “Bill” Dudley has the well-being of ordinary Americans uppermost in his mind? The question is highly pertinent because Dudley recently called for the Federal Reserve to use its discretionary powers to assure that President Donald Trump is not re-elected in 2020, even if it means causing economic conditions to fall from expansion into recession.

The Fed Has Never Been Apolitical     

     At the outset, let’s dispense with the pretense by Dudley and others that the Fed has stayed out of political issues and campaigns in the past. Guffaw! The Kingmakers Cabal – known as the Establishment in Establishment-controlled media – has attempted to choose and control the candidates of both major political parties in every U. S. presidential election since at least 1880. With the Fed literally being owned by major Establishment players, and the Fed being one of the most powerful weapons in the Establishment’s arsenal, even an intimation that the Fed has stayed out of political controversies in the past is laughable.     

     If you require any example of past Fed conduct as proof, one should do. Consider 1979-1980. In the Fall of 1979, Paul Volcker of Chase Manhattan Bank was appointed Fed chairman by President Jimmy Carter, who was seeking re-election against challenger Ronald Reagan. Volcker promptly changed the Fed's declared method of controlling inflation from managing interest rates to managing the monetary base. Volcker added so much new money to the monetary base during his firs six months as Fed chairman, the price of gold rose quickly over $300/oz to a peak of $892/oz during the summer of 1980. Interest rates soared and the economy collapsed. Instead of boosting Carter's candidacy, the reverse occurred and President Reagan was elected. Regardless of the intended outcome, the Fed most certainly was an intentional player in the election.

The Fed Is Now Trump's Political Opponent     

     Now that Dudley has taken the bait to call for Fed actions to defeat Trump’s re-election – probably the precise stance hoped for by the president – the Fed itself is a fair target of presidential political action. The Fed is also subject to more intense public scrutiny by those who support the president but ordinarily would not suspect the Fed does more than issue currency.     

     As noted at the outset, while Bill Dudley was the highest official of the most powerful Fed regional bank during 2009-2018, he was also ex officio a member and Vice Chairman of the Federal Open Market Committee. The FOMC determines and conducts U. S. monetary policy.     

     In those brief ten years of Dudley’s tenure, the FOMC multiplied the Fed’s monetary base from about $845 billion to about $3.4 trillion – this increase being about three times the previous maximum monetary base, according to the Fed’s disclosures. Was this not reckless political intervention by the Fed to prop up the Obama economy?     

     Almost all of the new monetary base was added during the eight years Barack Obama was in the White House. From the outset of those eight years, Obama threatened to raise income tax rates, and did so effective after his re-election. Massive increases in monetary base and historically low overnight funds rate management by the Fed masked the declining economy, giving political advantage to an administration aligned with the Kingmakers Cabal.

End The Fed – Collect It’s “Notes”     

     The monetary base is customarily expanded by private bankers at least ten-fold in their lending practices. Viewed in this light, the Fed’s expansion of monetary base during 2009-2018 presented the preferred customers of major banks extraordinary buying power to acquire hard assets in exchange for Federal Reserve Notes – a fiat currency which ought to be ended at the earliest practicable date.     

      The “notes” issued by the Fed are promissory notes with face values far in excess of the Fed’s declared resources, as reported here previously. Throughout the history of central banks owned and operated by the Kingmakers Cabal, such paper currency has been used to steal the value of productive efforts by all people required to use it. That was not the case when the Federal Reserve first was given authority over the U. S. dollar in 1913. But the Fed worked inexorably (and politically) to make the dollar fiat, and achieved that goal in 1972, when the dollar’s value was officially floated.     
     As previously discussed here (Gold, Dollar & Prices), President Trump is engaged in comprehensive efforts to balance trade relations with each major international market – China, Canada, Mexico, Japan, South Korea, India, United Kingdom and the European Union (or individual nations within the EU) – so as to balance the U. S. trading current account annually. Accomplishing this objective will permit America to return to sound money and end the Fed.     

     These ought to be America's goals, which should be accomplished before the fiat currency value crashes. The fact that the contest with the Fed has moved into the public arena is a good thing. Collect the value of the Fed’s "notes" from assets of the Fed’s owners.