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US was 3 hours from complete economic collapse

February 11, 2009

At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania drops a bombshell on how the Federal Reserve told Congress members about a “tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to Kanjorski, this electronic transfer occurred over the period of an hour or two. The Federal Reserve Estimated that by 2pm, 5.5 Trillion dollars would be removed from the US banking system forcing a complete economic collapse of the United States. Within 24 hours all world markets would have followed suit leading to a complete global economic collapse.

Transcript:

“I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on… Here’s the facts. We don’t even talk about these things.

“On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

” The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

” They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened.

” If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

“Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.”"

Written by TheFounder · Filed Under Advertising Agency News 


Comments

  • http://ajwitoslawski.blogspot.com/ AJ Witoslawski

    A better bailout plan would have been if the Federal Reserve issued its own debt and swapped that debt with the asset-backed securities that banks hold. This would free up lending to these banks, since their balance sheets would have been greatly improved. Another action that the Federal Reserve could have taken would have been to flood these banks with additional money to cover their reserves and then demand much higher reserve ratios, possibly even 100% reserves (or full reserve banking). This would greatly stem the tide of bank failures while preventing the money supply from decreasing.

    Unfortunately, any bailout plan will simply prolong the necessary malinvestments from being liquidated. Our economy was growing beyond a sustainable path, and now it must suffer through a recession before we can return to sustainable growth. By preventing bad business decisions from being liquidated, you are simply delaying economic recovery.

  • http://ajwitoslawski.blogspot.com/ AJ Witoslawski

    A better bailout plan would have been if the Federal Reserve issued its own debt and swapped that debt with the asset-backed securities that banks hold. This would free up lending to these banks, since their balance sheets would have been greatly improved. Another action that the Federal Reserve could have taken would have been to flood these banks with additional money to cover their reserves and then demand much higher reserve ratios, possibly even 100% reserves (or full reserve banking). This would greatly stem the tide of bank failures while preventing the money supply from decreasing.

    Unfortunately, any bailout plan will simply prolong the necessary malinvestments from being liquidated. Our economy was growing beyond a sustainable path, and now it must suffer through a recession before we can return to sustainable growth. By preventing bad business decisions from being liquidated, you are simply delaying economic recovery.

  • http://www.tribbleagency.com/ TheFounder

    “Now it must suffer through a recession” while I agree with you.. I have to stress it’s not suffering though a recession .. it’s a depression by the time all is said and done and recovery will take years…. this is bad..

  • http://www.tribbleagency.com TheFounder

    “Now it must suffer through a recession” while I agree with you.. I have to stress it’s not suffering though a recession .. it’s a depression by the time all is said and done and recovery will take years…. this is bad..

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