but...I keep saying, "omg" after I read your diaries.

I can't think of a more dangerous development. The legislative branch's neutering is almost complete.

Keep in mind, the legislative branch, especially Congress, is the people's branch. They're neutering you.

If you have some time watch Paul Volker's speech to the Economic Club of New York the other day.

It was scathing, in central banker terms, and very very scary if you read between the lines.

Volker is quite a man. He has been warning for a long time about the mess we are seeing the beginnings of.

Two points form the questions afterwards:

1. Are we going to see a dollar crisis as you predicted? Volker: We're in one right now!

2. Why are you supporting that liberal Obama? Volker: (paraphrasing) Because we need change!

Link to part 1, I think there are 5 parts in total. It is a bit long, but well worth watching. Listen carefully because Volker is very discreet in calling people morons.

"As an ex-banker and one who has scuttled quite largely about this country of ours, I give you my solemn word of honour that I have never seen any other class more corrupt, conscienceless, and thieving than bankers." - Jack Woodford

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it." -- Congressman Louis T. McFadden in 1932 (Rep. Pa)

"The Federal Reserve Bank is nothing but a banking fraud and an unlawful crime against civilization. Why? Because they "create" the money made out of nothing, and our Uncle Sap Government issues their "Federal Reserve Notes" and stamps our Government approval with NO obligation whatever from these Federal Reserve Banks, Individual Banks or National Banks, etc." - H.L. Birum, Sr., American Mercury, August 1957, p. 43

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States." -- Sen. Barry Goldwater (Rep. AR)

"The fact is that there is a serious danger of this country becoming a Pluto-democracy; that is, a sham republic with the real government in the hands of a small clique of enormously wealthy men, who speak through their money, and whose influence, even today, radiates to every corner of the United States." - William McAdoo - President Wilson's national campaign vice-chairman, wrote in Crowded Years

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs." - Thomas Jefferson

"Every Congressman, every Senator knows precisely what causes inflation...but can't, [won't] support the drastic reforms to stop it [repeal of the Federal Reserve Act] because it could cost him his job." -- Robert A. Heinlein, Expanded Universe

"In a small Swiss city sits an international organization so obscure and secretive....Control of the institution, the Bank for International Settlements, lies with some of the world's most powerful and least visible men: the heads of 32 central banks, officials able to shift billions of dollars and alter the course of economies at the stroke of a pen." - Keith Bradsher of the New York Times, August 5, 1995

the legislative branch never had law enforcement authority, that always having been the provence of the executive ("executing" the laws that the legislative passes).

You could say that, through signing statements, that Congress has ceded much of its lawmaking authority.  Moreover, by allowing multiple abrogations of the constitution by the executive to stand, you can say Congress has ceded the Constitution itself (which makes the issue at hand unlikely to be challenged by them).

Thanks for putting this out there.  Time to batten down the hatches, it seems.

Those other currency crises you mentioned--Argentina, Mexico, Russia, Southeast Asia--were ameliorated in part by actions of the world's central bankers, the Fed in particular.

And those other currencies were not the world's principle reserve currencies.

Who will step in to help us out?  Who could, even if they were so inclined?

Sunspot cycle?

No, I guess we have to settle on capitalism hoisted on its own petard.

130 years ago Corporations spent fortunes on ad campaigns to convince the American people (who widely knew that giving control to monied interests was suicidal), that Corporations were our friend, and the route to the good life.

So since at least the Fed came into being nearly 100 years ago, and the Income Tax as surety for the Fed as well, everybody's been playing money games.

The only rational alternative to a conspiracy theory is a bury-your-head-in-the-sand theory.

Things need changing at their root.

But how is this unconstitutional.  All of this presupposes the Congress and President approving the change.  Also, the Fed, is a private entity, so how could it violate the constitution?  

Basically all of this amounts to a desperate gambit to keep the credit markets from seizing up.  What we've been seeing is a fluctuation over the last few months where credit markets appear to be ready to lock up and the Fed finds a way to inject enough liquidity to keep things rolling.  They are trying to avoid a situation where the credit markets seize up and they have no means to add more liquidity.

Frankly, they have every reason to be looking at extreme measures because if the credit markets seize up, we will be up shit creek.  Companies that need short term financing as a part of their operational model will be unable to get it.  They will default, that will cause others to default.  Panic will ensue as investors make margin calls to get their money out as soon as possible to avoid getting it locked up in the system.  

I have it from sources close to events that the ECB balance sheet is just as bad, if not worse.  

Also, a better way to fix the problem would be for the US Treasury to issue Treasuries and swap them for the collateral cluttering up the Fed's balance sheet.  This would be justified on the basis that the bailouts and TAF lending are essentially political acts in the interest of financial stability and should be regarded as quite separate from the Fed's monetary policy mission.