Kennedy, the Fed, EO 11110 and simply doubling the money in circulation

Few people know and less remember that on June 4th 1963 President John Kenndy before his brain was air conditioned in Dallas signed an Executive Order :

Executive Order 11110 AMENDMENT OF EXECUTIVE ORDER NO. 10289
AS AMENDED, RELATING TO THE PERFORMANCE OF CERTAIN FUNCTIONS AFFECTING THE DEPARTMENT OF THE TREASURY

By virtue of the authority vested in me by section 301 of title 3 of the United States Code, it is ordered as follows:

Section 1. Executive Order No. 10289 of September 19, 1951, as amended, is hereby further amended-
By adding at the end of paragraph 1 thereof the following subparagraph (j):

(j) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12,1933, as amended (31 U.S.C.821(b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denomination of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption
and --
Byrevoking subparagraphs (b) and (c) of paragraph 2 thereof.
Sec. 2. The amendments made by this Order shall not affect any act done, or any right accruing or accrued or any suit or proceeding had or commenced in any civil or criminal cause prior to the date of this Order but all such liabilities shall continue and may be enforced as if said amendments had not been made.

John F. Kennedy The White House, June 4, 1963.

It appears that this EO has never been revoked but since Lyndon Johnson took over after Kennedy's asssination has been totally been ignored. A number of "Kennedy bills" were indeed issued with the heading "United States Note" (see pic - note red ink) - but they were quickly withdrawn after Kennedy's death.

One source says .." As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations. $10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated"

This is seen by many students of the curious nature of the Federal Reserve as a swipe at Fed and it's powers... as explained here

The "Federal Reserve System" is a network of 12 central banks to which most national banks belong and to which state chartered banks may belong. Membership rules require investment of stock and minimum reserves.

Privately-owned banks own the stock of the Fed. This was explained in more detail in the case of Lewis v. United States, Federal Reporter, 2nd Series, Vol. 680, Pages 1239, 1241 (1982), where the court said:

Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stock-holding commercial banks elect two thirds of each Bank's nine member board of directors.

Similarly, the Federal Reserve Banks, though heavily regulated, are locally controlled by their member banks - these privately owned banks actually issue money:

The Federal Reserve Act was a law which created Federal Reserve banks to act as agents in maintaining money reserves, issuing money in the form of bank notes, lending money to banks, and supervising banks and is administered by Federal Reserve Board. President Wilson's signed it on December 23, 1913.

This is what he said subsequently ..

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

In 1964, the House Committee on Banking and Currency, Subcommittee on Domestic Finance, (pdf - essential reading) at the second session of the 88th Congress, put out a study entitled Money Facts which contains a good description of what the FED (para 47)is: "The Federal Reserve is a total money-making machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover its check simply by asking the Treasury Department's Bureau of Engraving to print them". Any one person or any closely knit group who has a lot of money has a lot of power. Now imagine a group of people who have the power to create money. Imagine the power these people would have. This is exactly what the privately owned FED is! "

Do read this clear simple analysis of what the Fed is and how it acts.

The Fed moves to buy up debt today

The Fed pledged today ( announcement was released at 8:15 a.m. ET )to purchase up to US$500 Bn. in so-called agency debt as well as up to US$100 Bn. in direct debt of Fannie Mae and Freddie Mac, the world’s two largest mortgage buyers, and Federal Home Loan Banks. The
Fed also said it would set up a $200 billion program to support consumer and small-business loans. They call this in the bewildering world of credit crunching programs - the Term Asset-Backed Securities Loan Facility (TALF). (Terms & Conditions pdf)

Together, the programs almost match the $864 billion of U.S. currency in circulation, as reported by the Fed in a Nov. 20 statement.

Whilst mortgage rates quote dropped from say 6.5% to as low as 5.25% the biggest drag on house sales in the US is the unsold stock.

In 2005 this stock was equal to 4.5 months sales, in 2007, the supply averaged 8.9 months - it was 10 months in September 2008 and according to the National Association of Realtors said in a Nov. 24 report 10.2 months. In 2007, the supply averaged 8.9 months, almost double the 4.5 months in 2005, the end of a five-year housing boom.

Together, the programs almost match the $864 billion of U.S. currency in circulation, as reported by the Fed in a Nov. 20 statement.




These guys don't fuck about when you cross them ...

This hurts us more than it will hurt you.

"“promoting a competitive financial services sector leading the world and supporting continued economic innovation.”...remeber that was the Bush plan ... now Hank the Bank according to the Guradian today ...An insider said Paulson dictated the terms after summoning chief executives on Monday. "It wasn't a debate."

More bollocks from Hank ... Government owning a stake in any private U.S. company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable." ...This hurts me more than it hurts you.

Harvey Pitt briefly held the Chairmanship of the US Securities and Exchange Commission (SEC) for two years until 2003 when he resigned on election day.

He is quoted by the BBC as having said yesterday on BBC World News, "We've got a 21st century financial services marketplace and a 19th century regulatory model."

He further added that there was a lack of transparency both within and between organisations and businesses in the financial / insurance sectors in the US.

Belatedly he has placed his finger on the problem that has been glaringly evident to many outside the incestuous world of international finance. The current problems of credit lockdown are a SYMPTOM not a CAUSE.

The falire to close down credit both with individuals (when were you last chased down a mall to open anew Credit card ?) businesses but also between banks and quasi (investment) banks - resulting in the soaring LIBOR rate (whose calculation has been rigged for years - see Friday, April 18, 2008 British Bankers Association caught lying about LIBOR rates ) only reflects that the gig is up for the lying bankers.

Banks of all shapes, sources and sizes have been producing fraudulent balance sheets and declaring non-existent profits and paying massive bonuses and dividends for years -

1. Lloyds bank was offering a higher yield on shares than on their best deposit accounts.
2. 60% of Sacks of Gold Gross Trading profit went in remuneration of staff.
3. leveraging of 30 - 1 was (and still is) common , ie they borrowed £30 for every £1 deposits.

The result is not lack of confidence but confusion, wrought by criminal behaviour of many (but not all) - politicians bereft of ideas have decided to throw the taxpayers money at the problem.

Hank was on the blower again the last few days but we couldn't help him... he had this crazy idea of buying into banks, taking preference shares with a 5% coupon (so he gets his (taxpapyers) money back in 20 years).

Apparently hidden away somewhere was the power for him to do this with the money in his swag bag.

Can you imagine the organisation that must be put in place to oversee this massive shareholding in banks ? Who will staff it ?

Maybe the guys lining Wall Street round the corner from the door marked EXIT at Lehman Bros.

In the UK Gordon Brown...

...says he doesn't want to run banks... Ho.Ho.Ho...This on the day when the Cabinet are ready to give the go ahead to having a National database on every individual which will have details of our web browsing, phone calls .....?

Is this the end of the beginning ? NO way...not even the begining of the start of the early part of the financial holocaust that is on it's way. Especially on those nations where financial jugglery has overtekn real economies, where people make things and sell things with worth, asset value and utility.

Next up for a shock horror explosion of concern and worry is the insurance industry.

One good bit of nes is that the EU is dismantling the nonsense of carbon trading .... Old Lord Patel's Almanac says you will here no more about Global warming in 5 years time as wesern economies fight energy costs to keep their populations fed and watered.

Another conduit for David Abrahams cash to the Labour Party is exposed - Janet Dunn

Mr David Abrahams lawyer Louis Charalambous (we said we would here more from him sooner rather than later) has said a payment of £25,000 was made through Janet Dunn, the wife of one of Mr Abrahams' employees, in 2003.

The Electoral Commission record from January 2003 is above.

It appears that the donor was unaware of having provided this donation.

It gets better by the hour.

All this money will presumably be returned to the donor of record - who then of course may pass it on to Mr David Abrahams ...but then they might just not.

Update 11 pm. : Interviewed on Newsnight Ms. Dunn explains she knew absolutley nothing about her name being used for the donation and anyway she votes Labour.

Curiously Newnight also disclose that Mr Abrahams was a member of The Labour Friends ofIsrael and managed to be kicked out - it appears, by Mr Mandelson friend and fixer for Gordon Brown.

Cuirouser and curiouser.

The Federal Open Market Committee meets March 20/21st - Federal funds rate to rise 1/4%

.....these factors were expected to prove largely transitory ..... price inflation in December ..... labour market exhibited continued strength Output of manufacturing industries rose noticeably in December ... sizeable gains in the production ....Real consumer spending rose briskly in November and December .....sizeable increases in outlays for non-auto consumer goods ....Real disposable income posted solid gains in October and November and likely rose further in December.

...... further declines in energy prices .... consumer sentiment moved up at the end of last year and held steady in early 2007.

.... Construction in the multifamily sector, ...... rose sharply in December to the upper end of the range that has prevailed over the past decade. Sales inched up in both months. Inventories ..... ticked down in December for the second straight month. ......real investment in equipment and software fell in the fourth quarter.

....Economic activity in the advanced foreign economies appeared to have accelerated .....consumption spending in Japan apparently rebounded last quarter ...... expansion in the United Kingdom\''s economy strengthened ..... In China, the most recent evidence suggested that growth had remained strong..... can growth be sustained .... capitalism hits the buffers.... real lending starts

Year-over-year increases in average hourly earnings ..... rose at a moderate rate in the three months ending in December..... inflation pressures seemed likely to moderate over time......both inflation and economic growth, as implied by incoming information.

...yields over those of comparable-maturity Treasury securities moved down .... equity indexes edged higher. ..... dollar against other major currencies rose, on balance, particularly versus the yen.... market ready to dive .... dive , dive , dive

......contraction in housing activity expected to abate this year .....some upward revision to its estimate of output growth in the fourth quarter and perhaps a slight downward revision to its forecast for the current quarter....The BOJ voted 8 to 1 to raise the overnight call money rate to 0.5 % from 0.25 % .... Asia shakes as real money required real rates ... China to follow ....

..anecdotal reports presented a mixed picture...significant wage pressures being reported ...concern about the outlook for inflation......did not yet see a downtrend in core inflation as definitively established ... pressures in labor and product markets and the behavior of inflation expectations ..... some inflation risks remained and note that additional policy firming was possible....

....sub-prime lending business in meltdown .... credit crunch is coming ....nail bangers out of work ...... empty properties.... sellers pulling out of the market as equity goes negative ... mortgage quality gets highlighted .... sub - prime guys hit hard ....

... and Mr King and his courtiers to beat Mr Bernanke and his banking barons to it ?

UPDATE 22/3/07 11.00 EST

Sorry folks, got the wrong call there or maybe the OMC did... just diggin' a deeper hole for us all. The longer the boom ( well ..let) the bigger the BANG.

the NYT says " Fed Weighs Words About Its Next Move" The text of the fed's statement is here. The IHT is similiarly gnomic - "Fed leaves rate unchanged but weighs its words"

Seeking alpha makes a very jumbled fence sitting analysis "Inflation or Recession? Parsing the Fed Statement" ... watch out fed rates are going UP ... or maybe well, they are going down.

Meanwhile just watch those bottom feeding Private Equity jocks crusing around the desperate sub-prime lenders.

Citadel LP, which runs one of the world's largest hedge funds (founded Nov. 1, 1990 with $4.2 Mn.)has taken a 4.5 % stake in Accredited Home Lenders Holding Co. (LEND.O - what a ticker !), San Diego-based subprime lender.

Citadel now holds 1,132,738 shares in Accredited. Forbes says they manage at least $12 billion, and 30 odd something founder , Harvard educated Kenneth Griffin, is worth about $1.7 billion- Forbes says 204th richest American (paid himself US$240 Mn last year) . His 36 yr old wife of 2 years Anne (Dias)-Griffin is a managing partner of Chicago based Aragon Global Management which she founded (She cut her teeth on Goldman Sachs, Fidelity and Soros Funds)

In October 2006 they both gave US$19 Mn to the Chicago Art Institute to celebrate a date. They are both active in Chicago based philanthropy and work with Bill Gates on educational projects.

Almost simultaneously Accredited got a five-year, $200 million loan from a San Francisco hedge fund, Farallon Capital Management LLC. Farallon has a 6.9 % stake in Accredited.

Mkaes you wonder where those stakes HSBC and Barclays have in the sub prime mortgage market are going to end up. Maybe Kenny and his computers know a better way to run loans on double wides and run down city blocks than they do.