1-3) The Fed Has a Corpse In a Car Minus a Head In the Garage...  I'm Winston Wolfe; I Solve Problems... The Fed's Bonnie Situation...

The cartoonish game show nature of politics occasionally makes for fine entertainment. And the next two days have the potential to push the needle far to the right-hand side of the dial, well into the red zone where human eardrums are known to burst and bleed and animals begin to attack one another. In some circles, that's entertainment.

The Federal Reserve Chairman is on Capitol Hill today for a two-day hoot & holler, mainly with Congressman Ron Paul, who wants to, one, abolish the Fed, and two, barring that, at least find out what in the hell they are doing over there all day.

This isn't News, not in the traditional sense anyway, but it's crucial in the gambling sense. There was a time when a smug Bernanke would have sneered derisively at Paul, who although well versed in the inevitable outcome of a central-bank engineered credit expansion is handicapped by the fact he bears a striking resemblance to a nutty uncle who sips Gin &  Mountain Dew all day while tinkering over a boiling pot of squirrel-brain stew. He could also be armed. We just can't be sure. 

That kind of eccentricity might slide by unnoticed in Galveston, but not Washington D.C., which savagely punishes all things different according to Strict Party Lines, which is to say it swallows difference whole and vomits it back up in a putrid spray of homogenized pork drippings and boastful do-goodery.

Sorry. Again, that's not News. But if you are prone to wager on the outcome of these game shows, either professionally or as a sideline hobby, it's a useful nugget to keep in the back of your mind. Somehow Paul has managed to scare up 250 some-odd co-sponsors for his bill demanding Congress be allowed to Audit the Federal Reserve. This is what the political experts refer to as Momentum. And when the Chairman of the Fed goes so far as to directly address proposed  legislation you know the pig has been greased and the chute is about to open.

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The television is on and I'm sitting here watching Bernanke read his opening remarks; typical decoction of credit market non-sequiturs and outlandish promises that no reasonable person would ever think to make unless he knew with absolute certainty there would be no recourse or accountability whatsoever. Which is why we're seeing full-blown gangland warfare tactics from the Fed in an effort to crush the audit bill.

Yesterday former Enron lobbyist Linda Robertson officially took on her role as the Fed's Winston Wolfe, presumably to step in and conduct a powerpoint demonstration on how to clean and dispose of brain matter from the interior of a car.



We'll call it the Fed's Bonnie Situation.

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It only took about 10 minutes to get to the nut of Bernanke's opposition to Paul's audit bill today.

"Financial markets, in particular, likely would see a grant of review authority in these areas to the GAO (Government Accountability Office) as a serious weakening of monetary policy independence. Because GAO reviews may be initiated at the request of members of Congress, reviews or the threat of reviews in these areas could be seen as efforts to try to influence monetary policy decisions," Bernanke said.

In order to understand why the Federal Reserve is so viciously opposed to real  transparency, as opposed to its own twisted Nixonian version of it, you have to go back and consider what constitutes Fed Power in the first place. If a toothless meth head at the bus terminal offers to give you a piece of strange paper in exchange for your watch, it's called Theft by Deception. But if someone in a fancy stone building gives 250 million people some strange paper and says it's Okay to exchange it for watches and anything else people feel like parting with then it's game on. Why would people do this? For the same reason otherwise smart and worldly people fall victim to confidence games thousands of times a day all over the world: we want to believe. And if a confluence of bizarre and unrelated factors unexpectedly come together and convince billions of people all over the world to accept this strange paper in exchange for goods and services, well, then you have the ingredients for what the experts call a Global Reserve Currency.