The Federal Reserve’s chief monetary policymaking body is the Federal Open Market Committee (FOMC). The FOMC includes members of the Fed’s Board of Governors as well as presidents of the Reserve Banks around the country.  The FOMC holds formal meetings eight times a year. The Fed releases formal transcripts for each of these meetings, albeit on a five year lag.

A few days ago, the Fed released the transcripts for the FOMC’s 2007 meetings.  These transcripts are notable in part because the worst economic and financial crisis since the Great Depression – a crisis with long and still-festering economic wounds — was about to get underway.

FOMC meetings produce decisions with far-reaching consequences.  Section 2A of the Federal Reserve Act, as amended, sets out the Fed’s monetary policy objectives, and states: Read more È

Max Holland; Leak: Why Mark Felt became Deep Throat; Univ Press of Kansas (March 2012)

What was Watergate about?  Who was Mark Felt?  Was he “Deep Throat?� If he was, why did he do it?  Why should we care, now?  These are some of the questions underlying, addressed in, and raised by a new book by Max Holland titled Leak:  Why Mark Felt Became Deep Throat.[1]

Watergate, at its root, was about the abuse of executive branch powers.  The discovery of a break-in at the office of a rival political party spiraled into an affair leading to impeachment proceedings and the resignation of a President, following revelations of high-level support for illegal activity including campaign finance violations, money laundering, wiretapping, and burglaries.

In a country based on constitutional principles like ours, drawn on a tapestry following a war for independence from tyrannical government authority, the exercise of executive branch authority always calls for oversight.  And good lessons from history can help illuminate current events.  In Leak, Holland provides a valuable and original inquiry into important historical questions.  Holland’s interpretation gives us some insight into a murky history, and it also provides context for currently pressing questions about the integrity of government and our Rule of Law.

Who Do You Trust?

Who can we trust, when lawmakers and law enforcers become lawbreakers?  What motivates those who speak out, or “leak,â€� to provide sensitive and previously secret information to society?  Can we always rely on people of integrity to speak out when warranted?   What if we can’t trust the people who do speak out, or the people who report what they say? Read more È

Where to Blame the Crack-up in Jobs Growth?

Last week, Edward Lazear wrote an op-ed in the Wall Street Journal with the uplifting title “The Worst Economic Recovery in History.�  Lazear noted that many people have referred to our latest recession as the worst recession since the Great Depression.  He then proceeded to make the case that, while we may technically be in an economic recovery, our current recovery is not only the worst since World War II, it is even worse than the recovery in the Great Depression.

That’s a tough one to beat.  According to Federal Reserve data, it took 88 months (about 7 years) for industrial production in the United States to muddle through the Great Depression and get back to its previous peak level in August 1929.  We’ve only had 51 months since the December 2007 peak in industrial production before our latest recession, and we still aren’t back to that December 2007 peak yet.  This is bad, to be sure, but on this basis it’s hard to say our latest recovery is “even worse� than the slow one after the Great Depression, because we just haven’t had the time yet.

But Lazear was making his case in terms of growth rates during the recovery.  On that basis, in the 32 months since the latest economic “trough,â€� industrial production growth has averaged 0.4% per month.  This is about one-third the average growth rate in the 32 months following the March 1933 trough at the bottom of the Great Depression. Read more È

Part II of our book review of Frederick Sheehan’s Panderer to Power

Frederick Sheehan’s excellent 2010 book Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession provides us a window into the sources of the worst financial and economic crisis since the Great Depression.

In part I of this two-part review of Sheehan’s valuable book, we discussed Sheehan’s takeaways from Greenspan’s career before becoming Chairman of the Federal Reserve Board of Governors.

In turn, Sheehan’s review of Greenspan’s nearly twenty years with the Fed gets underway with the Senate confirmation hearing in 1987, after Greenspan’s nomination as Fed Chairman by President Ronald Reagan.  Sheehan notes with some approval the questioning of Senator William Proxmire of Wisconsin, then the chairman of the Senate Banking Committee.  Sheehan praises Proxmire’s willingness to critically examine Greenspan’s forecasting record and his apparent enthusiasm for serving the agenda of large banks.  Greenspan was a director of J.P. Morgan at the time of his appointment, which Proxmire noted along with Greenspan’s lobbying activity as a signal his expertise in banking issues might be more attentive to some interests than others. Read more È

Book Review — Frederick J. Sheehan’s Panderer to Power

Written on the heels of the worst financial and economic crisis since the Great Depression, Frederick Sheehan’s critical biography, Panderer to Power:  The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (2010) provides us with good lessons for the future.

Some perspective can be had from the fantasy classic Lord of the Rings.  Frodo, the hobbit, is on his quest to reach Mount Doom and destroy the Ring of Power.  Having made it substantially through his mission, but weighed by fatigue and fear for what lies ahead should he continue, Frodo asks Gandalf, a wise and powerful wizard, to take the Ring from him and complete the quest.  Gandalf says “No.�

“With that power I would have power too great and terrible. And over me the Ring would gain a power still greater and more deadly. … Do not tempt me! … Yet the way of the Ring to my heart is by pity, pity for weakness and the desire of strength to do good.�

Well, why did Alan Greenspan take the Ring?  Did he just take it when offered, or did he pursue it?  Greenspan certainly ended up in a powerful position, as Chairman of the Board of Governors of the Federal Reserve System – heading our nation’s central bank.  The Fed conducts monetary policy, regulates and supervises banks, serves as a ‘lender of last resort,’ and provides critical payment services for the financial system.  These responsibilities are, well, significant.  Consider monetary policy, where we have a law directing a committee of 12 people at the Fed to control the aggregate amount of money and credit used by over 300 million other people.

Coming on the heels of the worst financial and economic crisis since the Great Depression, Panderer to Power provides a valuable, critical biography.  Alan Greenspan led an institution that advertised its ability to stabilize the financial system – both before and after our recent financial meltdown.  Biography is a form of history, and as Santayana said, “Those who cannot remember the past are doomed to repeat it.â€�  In light of recent years, Sheehan’s biography helps us understand and remember the past, and underscores critical things to watch for in the future. Read more È

The amount of U.S. currency circulating outside banks rose sharply in July/August 2001.  The growth ran into the billions of dollars, and was concentrated in $100 bills.  These large-scale currency movements matter for anyone who cares about learning the truth about 9/11.

Under money laundering and other laws, assets can be frozen and seized in the banking system.  Knowing this, parties concerned that their assets might be frozen or otherwise at risk after 9/11 would have had an incentive to liquidate securities and banking accounts beforehand, and withdraw their money in difficult-to-trace ways.  This could have happened in U.S. banking and securities accounts, as well as accounts denominated in U.S. dollars outside the United States.  Finding the parties responsible for large-scale withdrawals of currency before 9/11 could help identify people aware of, if not responsible for, those events.

A banking crisis in Argentina can provide a relatively innocent explanation for the mid-2001 surge in currency shipments, at least in part.  But we still have no evidence of an honest, thorough investigation into other possible reasons for those shipments, reasons related to the crimes of September 11, 2001.  And the mid-2001 currency shipments to Argentina are worthy of 9/11 investigation, as well.

A third explanation has gained greater plausibility following recent 9/11 research.  Currency has a long history in covert operations.  Accelerated covert or other military action in Central Asia soon before 9/11 could have played a role in those mid-2001 currency shipments. Read more È

What Will Happen Today?

A hearing is scheduled today in a federal district court in New York City in a 9/11 case still winding its way through the court system.  The case was brought by thousands of relatives of people killed on 9/11, as well as insurance companies exposed to heavy losses.  The case was originally brought against defendants including members of the Saudi royal family and the Saudi government.  The plaintiffs are seeking to have the government of Saudi Arabia reinstated as a defendant, after it had previously been insulated under theories of sovereign immunity. 

Today’s hearing deals with issues relating to affidavits filed a few weeks ago by two former United States Senators in the case.  The material reportedly in these affidavits raises important questions about the integrity of the government’s 9/11 investigation. The affidavits came from Robert Graham, a former 18 year Senator from Florida, Chair of the Senate Intelligence Committee, and chairman of the Congressional Joint Inquiry, along with Robert Kerrey, former Senator from Nebraska and a member of the 9/11 Commission.  Read more È

Banking on Washington

Kenneth Wainstein earned an undergraduate degree from the University of Virginia in 1984, and went on to receive a law degree from the University of California-Berkeley in 1988.  He began working for the U.S. Justice Department in 1989 as an assistant U.S. attorney, with his work including narcotics and public corruption cases.  He served nine years in the U.S. Attorney’s office in Washington D.C. beginning in 1992, where he rose in rank to become the “Principal Assistant U.S. Attorney.�

In April 2001, Wainstein filled a vacancy and served as Interim United States Attorney for the District of Columbia.  Four months later, in August 2001, at a time of heightened importance for interdepartmental communication in counterterrorism efforts, he became the director of the Executive Office for US Attorneys at the Justice Department.  This office provided oversight and organizational services for U.S. Attorneys around the country.

During 2001, John Ashcroft was serving as the Attorney General of the United States, being appointed to that position in December 2000 by new President George W. Bush.  Ashcroft then served as Attorney General for the next four years.  At the FBI, within the Department of Justice, turnover was taking place at senior levels during 2001.  Louis Freeh served as Director of the FBI from 1993 until late June, 2001.  Thomas Pickard served as Acting Director of the FBI from June 25, 2001 to September 4, 2001, when Robert Mueller succeeded him. Read more È

9/11 Questions Bubble Up in the Media

On Friday February 24, Boiling Frogs posted an article titled “Media Sleepwalks, While History is in the Making.�  Three articles had come out the week before, one in the London Daily Telegraph and two in the Florida-based Broward Bulldog, raising important new questions about the crimes of September 11, 2001 and the quality of the government’s investigation.  In particular, these articles discussed new information and questions coming from former Senator Robert Graham, questions relating to secret documents that Graham described as running at odds with past government assertions in the 9/11 investigation. These three articles also raised new questions about the role of the government of Saudi Arabia.

The Feb 24 Boiling Frogs post discussed those three articles, and noted that there hadn’t been a single article in the mainstream media on the issues they raised, even though a week had gone by.  The post then asked if a valid prediction market could be established for the date when the media would wake up. Read more È