Spitzer: Federal Reserve is a Ponzi Scheme and an Inside Job

Published Jul 26, 2009 by ■ Andrew Moran 


The former Governor of New York Eliot Spitzer and the former “Sheriff of Wall Street”, when he was Attorney-General, believes that the Federal Reserve is a “ponzi scheme” and an “inside job.”

In an interview on MSNBC’s Morning Meeting, Mr. Spitzer was discussing the Federal Reserve and Texas Republican Congressman Ron Paul’s HR 1207, which is a bill to audit the Federal Reserve. This legislation has received majority of support in the House of Representatives with 276 Congressional co-sponsors and 19 Senate co-sponsors.

Mr. Spitzer said in the interview, “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left. The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.”

The former Governor resigned in March 2008 due to a prostitution scandal in which he paid $1,000 per hour with a New York City call girl.

When discussing the Federal Reserve, the host of the show, Dylan Ratigan, explained the process where the Fed exchanged $13.9 trillion of bad debt for cash, wherein they gave it to the struggling banks.
Eliot Spitzer went on further, “The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination. You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous; it is time for Congress to say enough of this. And to give them more power now is crazy. The Fed needs to be examined carefully.”

The former Attorney-General also touched upon U.S. President Barack Obama’s recent economic policies regarding regulations by calling them “irrelevant” and further adding, “Regulatory agencies already had the power to do everything they needed to do. They just affirmatively chose not to do it.”