The destructive trend of financializing the US economy may continue if the Fed has their way. Despite complaints by companies in the real economy over the manipulation of commodity prices by the banksters on Wall Street, the Fed is set to punt on limiting Wall Streets invasion of the real economy.
Wall Street has always been known for manipulating the price of commodities – from the oil spikes in 2008 to Enron’s electricity games in California to even as far back as Jay Gould trying to corner the gold market. That’s why we at one point in time had regulations, to stop the parasitic activity of speculators.
But the Fed of Greenspan and Bernanke was not convinced letting parasites run loose in the commodities market was a bad idea.
The Fed’s move to solicit public input on what it should do, rather than use its authority to regulate the activities of large financial institutions, is expected to be announced by Wednesday afternoon in advance of a Senate Banking Committee hearing on the issue. Some federal financial regulators said the move may be a way for the Federal Reserve’s Board of Governors in Washington to evade calls to curb banks’ risk-taking. It would come despite years of internal warnings at the Fed that Wall Street’s expansion into metals and energy puts the U.S. economy at risk in the form of higher prices due to alleged market manipulation and endangers the financial system because of the possibility that a catastrophic incident such as an oil spill would lead counterparties to flee the affected bank and put it at risk of failure.
The Fed refuses to regulate despite numerous requests that cite the danger for the economy if it doesn’t, what could go wrong?
Allowing Wall Street to jump head first into owning and producing an increasing amount of commodities has not surprisingly led to swings in prices. Also, given the Fed is giving the banksters money at 0% interest, financiers on Wall Street have quickly used their giant welfare checks to buy more and more parts of the markets. This, in turn, allows Wall Street to manipulate the price of commodities even more to the point where major companies are complaining to the government that Wall Street is making their businesses increasingly difficult to run due to price fluctuations.
… recent complaints by industrial companies, including Boeing, Coca-Cola, and MillerCoors, that financial companies effectively have been manipulating some markets for their own financial advantage, leading to higher costs for households, have prompted congressional scrutiny of Wall Street’s activities and the Fed’s alleged lack of oversight, and put pressure on the Fed to clamp down on banks. Investigations launched by other regulators and ongoing concerns that some of these same financial institutions remain “too big to fail” more than five years after the height of the financial crisis only intensify that pressure.
Too Big To Fail or Jail banks, borrowing money at 0% interest from the Fed, are running wild in the commodities markets screwing with businesses that participate in the real economy and actually make things – and the Fed still can’t bring itself to regulate.
At some point in these various discussions about the Federal Reserve someone is going to point out that far from being an “independent agency” the Fed is actually owned by the commercial banks and is stacked to the hilt with former (and future) Wall Street operatives. The Fed is a subsidiary of Wall Street with the only disagreements stemming from what is the best way to make Wall Street as rich and powerful as possible and to hell with the country.
Image by Alex1011 under Creative Commons license.