The Fed Has Spoken: No Bailout for Main Street

The Fed Has Spoken: No Bailout for Main Street


Friday 14 January 2011



by: Ellen Brown, t r u t h o u t
News Analysis







(Image: Lance Page / t r u t h o u t; Adapted: Vince / Flickr)

The Federal Reserve was set up by bankers, for bankers, and it has served them well. Out of the blue, the Fed came up with $12.3 trillion in nearly interest-free credit to bail the banks out of a credit crunch they created. That same credit crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no "quantitative easing" for municipal governments.

On January 7, according to The Wall Street Journal, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout of state and local governments. "We have no expectation or intention to get involved in state and local finance," he said in testimony before the Senate Budget Committee. The states "should not expect loans from the Fed."