Ron Paul Discusses The Gutting Of The “Audit The Fed” Bill, Provides Observations On Collateral And Systemic Dangers

Ron Paul Discusses The Gutting Of The "Audit The Fed" Bill, Provides Observations On Collateral And Systemic Dangers

Courtesy of Tyler Durden

Again, the simple truth boils down to the concept of collateral, or more specificall, lack thereof:

"Pretending [$8 trillion worth of collateral] is worth $2 trillion or even less doesn’t solve our problems, it just delays the agony. It would be like in medicine somebody had cancer, and we treated him with aspirin saying you don’t want the truth and give him real treatment. You have to know the truth and you have to have the real treatment… They are doing everything that caused the bubble before to try to reinflate the bubble but believe me thay are not going to be able to do it this time."

Unfortunately Ron Paul’s cause is for now doomed as the Goldman – Fed – Administration power arrow has the adminsitration at its "rightful" place in the bottom. Who is first and second is not even that relevant, although [one] can likely guess the distribution. 

And an observation from Ratigan on why the swap market is kept off exchanges based on banker input: "because if we bring it into the public, we would have to post collateral, and we don’t have any collateral."

The next risk flaring episode is lurking so close, just off in the shadows… We need just one failed auction, and when interest rates explode, the entire $1 quadrillion IR derivatives house of cards will collapse and take everything away with it. America has bet its future on the goodwill of China and the Fed’s proxies: the Primary Dealers. If it does get to the point where Audit The Fed bill actually does get implemented in its non-abridged form, look for some fireworks in the IR world, courtesy of none other than Ben Bernanke. Would Uncle Ben be willing to wipe out the financial system as we know it as a final self-defense measure? Why, of course he would.