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Spiegel reports that the International Monetary Fund will undertake a systematic examination of the U.S. financial system, including the U.S. Federal Reserve Bank. Spiegel also reports on differences among U.S. Fed officials, many of whom oppose Ben Bernanke’s policies.

Spiegel calls this audit an unprecedented humiliation for the Federal Reserve. This audit is warranted because of the massive amount of debt the Treasury has issued, underwritten by Federal Reserve purchase of Treasury bills. The amount of debt to GDP in the United States far exceeds IMF guidelines. The IMF is authorized to audit any country’s central bank when the debt ratio exceeds 200 percent of GDP.

As we wrote in our post Monsters vs. Aliens at the G20 meeting, the key decision out of the April meeting of the G20 national leaders was to give the IMF more power to regulate the global economy. “The question is whether the IMF will replace the influence of the U.S. Federal Reserve or be able to regulate the Fed’s activities.” The answer now clearly is, it will.

So what does this mean for the United States and for the Federal Reserve? First, the Fed is on warning that it can’t keep its policy of monetary easing (buying Treasury and agency debt) indefinitely, and it can’t keep assuming the bad debt of major banks indefinitely. The audit report is not due until 2010, so it is possible not much will come of this if the Fed aligns itself with the policies the IMF has in mind.

Ben Bernanke’s term is up this year. Bernanke may be reappointed if the global controllers believe the world economy is recovering and the Fed reverses its policies of “easing.” If the world economy worsens and U.S. debt financing causes interest rates to rise, Bernanke may be on the hot seat. Congressional investigations could discredit Bernanke if Congress forces a showdown with Bank of America’s Ken Lewis, who has charged Bernanke with exceeding his authority by threatening Lewis’ firing if he didn’t accept the proposed merger with Merrill Lynch. But Congress and the administration want to avoid a thorough investigation of the TARP bailout history as the corruption on Wall Street could be laid bare for all to understand.

The IMF monitoring of the Federal Reserve is a significant shift in global economic power away from the United States and toward IMF global financial regulation. Actually this is good for everyone in the world, generally speaking, as it is an admission that the Bank of England and the Federal Reserve can no longer act as the bankers of last resort. However, IMF control over other central banks around the world is a desired move on the world chessboard for the global controllers. The IMF is notorious for forcing financial restructuring that controls national economies and loots them in return for temporary financial support. Meet the new boss, same as the old boss. There is no good guy to root for in this realignment of the New World Order power structure.

Europe forced this restructuring because the world could no longer put up with the criminal financial moves of the Wall Street elite. German Chancellor Merkel’s visit to President Obama in Washington is most likely a presentation of the new guidelines the United States will have to follow. Merkel is the clear victor of the G20 struggles and has emerged as Europe’s new power broker with the fall of British Prime Minister Brown and the problems plaguing Ireland, Italy, Spain, Eastern Europe, and Scandinavia.

We believe this power shift reflects the new balance of power in the world, reflecting a new mini-era of New World Order history. We haven’t come up with a name for this era yet. It’s characteristics are a pause and look back at the global financial crisis, a fine tuning of national economies toward domestic consumption rather than world trade, an end to U.S.-Communist China dominance, buyer’s remorse for the election of Barack Obama, and a recognition that the Democrat’s can’t spend infinitely and show no results for it. The outcome will be a many-centered world order and curtailment of U.S. power, financial, economic, and military.

Tags: Federal Reserve bank, global finance, International Monetary Fund, New World Order realignment

This entry was posted by Director on Saturday, June 27th, 2009 at 1:49 pm and is filed under Global Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.