Sustainche™ thinks about the Fed
Sustainche can not stop thinking about the Fed: The Federal Reserve System or central banking system of the United States of America. Sustainche learnt that originally in late 1913 the Fed was designed out of a compromise between the competing philosophies of privatization and government regulation. In fact, this sounds very nice in theory; a Banker’s bank and a Government’s bank at the same time. However, as many institutions born from a human mammals money driven mind, practise is more relevant than theory. Sustainche with his big red heart has the feeling those government representatives in the Fed – although appointed by the President of the United States and confirmed by the US Senate – are rather some puppets on the strings who are allowed to play some kind of ‘Muppet Show of Democracy’ for public entertainment. Taking up this picture the Chairman of the Board of Governors of the Federal Reserve System, who usually appears on TV programmes like CNN plays the well paid role of Kermit the frog. Honestly speaking, Sustainche likes more the dubiously talented but irrepressibly good hearted Fozzie Bear 
One recent case made Sustainche extremely suspicious. On September 16, 2008, the Federal Reserve Board authorized an US$85 billion loan to stave off the bankruptcy of international insurance giant American International Group (AIG … the major sponsor of Manchester United football club). Not only in this case independent financial system experts criticized the Federal Reserve System’s role as – what is called – ‘lender of last resort’ because of shifting risk and responsibility away from lenders and borrowers and with purpose placing them on citizens in the form of taxes and/or inflation. Thus, in practical life the desired balance between the responsibility of private banks and the responsibility of governments representing their citizens becomes rather imbalanced … thanks to the ‘independent’ Fed.
Sustainche can not go in all details; he is only a Polar Bear and still a student on Sustainable Development. However, Sustainche likes to share information on what is named ‘primary dealers’ that he found on Wikipedia, the free internet encyclopaedia; Wikipedia in the 21st century became a major source helping students to do their home work all around the world 
:
“A primary dealer is a bank or securities broker-dealer that may trade directly with the Federal Reserve System of the United States. They are required to make bids or offers when the Fed conducts open market operations, provide information to the Fed’s open market trading desk, and to participate actively in U.S. Treasury securities auctions. They consult with both the U.S. Treasury and the Fed about funding the budget deficit and implementing monetary policy. Many former employees of primary dealers work at the Treasury, because of their expertise in the government debt markets, though the Fed avoids a similar revolving door policy.”
“Hmmm … especially the last sentences help a lot to understand”, Sustainche thinks.
The current list of primary dealers as of February 11, 2009 according to the Federal Reserve Bank of New York reads like the Who’s Who of global financial aristocracy:
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Five notable changes to the list have occurred in 2008. Countrywide Securities Corporation was removed on July 15 due to its acquisition by Bank of America. Lehman Brothers Inc. – a very interesting and internationally well-known case – was removed on September 22 due to bankruptcy. Bear Stearns & Co. Inc. was removed from the list on October 1 due to its acquisition by J.P. Morgan Chase. On February 11, 2009, Merrill Lynch Government Securities Inc. was removed from the list due to its acquisition by Bank of America.
Sustainche enjoys emphasizing the role of primary dealers in terms of “consulting with both the U.S. Treasury and the Fed about funding the budget deficit and implementing monetary policy.” ‘Budget deficit’ is the key term to follow again in Wikipedia:
“These [primary] dealers purchase the vast majority of the U.S. Treasury securities (T-bills, T-notes, and T-bonds) sold at auction, and resell them to the public. Their activities extend well beyond the Treasury market, for example, according to the Wall Street Journal Europe (2/9/06 p. 20), all of the top ten dealers in the foreign exchange market are also primary dealers, and between them account for almost 73% of forex trading volume. Arguably, this group’s members are the most influential and powerful non-governmental institutions in world financial markets.”
“The primary dealers form a worldwide network that distributes new U.S. government debt. For example, Daiwa Securities and Mizuho Securities distribute the debt to Japanese buyers. BNP Paribas, Barclays, Deutsche Bank, and RBS Greenwich Capital (a division of the Royal Bank of Scotland) distribute the debt to European buyers. Goldman Sachs, and Citigroup account for many American buyers. Nevertheless, most of these firms compete internationally and in all major financial centres.”
Sustainche is convinced that with the Fed and its system of primary dealers he not only identified the “most influential and powerful non-governmental institutions in world financial markets”, but a perpetual motion machine system being in the central position of performing perfect global crime. This includes making entire countries dependent and … if desirable … bankrupt; we remember Iceland. Sustainche is speechless !
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