The 1/2 trillion handed out, that is the subject of this clip, is not tarp funds, it is the feds, His Most Gracious Highness Bernanke says so and then said he had authority under the 1913 act. Did you listen to the questions and answers.
He did not hand it out. It was a currency swap. We gave them some of our money. They gave us some of their money. As Bernanke stated, they’ve been doing it for generations. It’s not something he invented. If you want the dollar to be the pre-eminent international currency, then you’ve got to intervene in foreign money markets when there is a monetary disruption. Otherwise, the value of your currency will fluctuate wildly, and no one will want to hold it.
Grayson’s question: “Do you know who got the money?” was easily answered by Bernanke: The 14 central banks. That should have been self-evident to Grayson, but it wasn’t because he has no clue what the Fed does or how it works. So he asks the next question, who ultimately got the money?
That is an assinine question. First, it makes no difference because we weren’t the lender, the foreign central banks were. It makes no difference to us whether they repay the money. The foreign central bank is certainly good for it, and they are the party who owes us. Second, it’s a nonsensical question because money is fungible. You can’t say which money was lent to which party. All you know is that they loaned it out.
I’ve seen Grayson make that mistake in other contexts. There was an earlier video where Grayson castigated an auditor because she could not say “who got the money” when the Fed increased its balance sheet by $3 trillion.
Does he not understand that when the Fed increases its balance sheet by $3 trillion, it is in general buying $3 trillion of federal securities, not loaning money to private businesses? It’s the Treasury that is handing out the bailout money, not the Fed. When the Fed buys securities, it doesn’t matter “who got the money.” In fact, it’s impossible to say who got the money. When you buy shares of stock in IBM, you don’t know who sold it to you, nor do you care. All you know or care about is that you paid your broker, and your broker bought shares for you and put them in your portfolio.
So Grayson makes you think he’s a genius, but in fact he’s a fool and an opportunist who plays off the ignorance of the voters.