What Did Fed Chairman Yellen Tell Obama?

by Ron Paul

This week, President Obama and Vice President Biden held a hastily arranged secret meeting with Federal Reserve Chairman Janet Yellen. According to the one paragraph statement released by the White House following the meeting, Yellen, Obama, and Biden simply “exchanged notes” about the economy and the progress of financial reform. Because the meeting was held behind closed doors, the American people have no way of knowing what else the three might have discussed.

Yellen’s secret meeting at the White House followed an emergency secret Federal Reserve Board meeting. The Fed then held another secret meeting to discuss bank reform. These secret meetings come on the heels of the Federal Reserve Bank of Atlanta’s estimate that first quarter GDP growth was .01 percent, dangerously close to the official definition of recession.

Thus the real reason for all these secret meetings could be a panic that the Fed’s eight year explosion of money creation has not just failed to revive the economy, but is about to cause another major market meltdown.

Establishment politicians and economists find the Fed’s failures puzzling. According to the Keynesian paradigm that still dominates the thinking of most policymakers, the Fed’s money creation should have produced such robust growth that today the Fed would be raising interest rates to prevent the economy from “overheating.”

The Fed’s response to its failures is to find new ways to pump money into the economy. Hence the Fed is actually considering implementing “negative interest rates.” Negative interest rates are a hidden tax on savings. Negative interest rates may create the short-term illusion of growth, but, by discouraging savings, they will cause tremendous long-term economic damage.

Even as Yellen admits that the Fed “has not taken negative interest rates off the table,” she and other Fed officials are still promising to raise rates this year. The Federal Reserve needs to promise future rate increases in order to stop nervous investors from fleeing US markets and challenging the dollar’s reserve currency status.

The Fed can only keep the wolves at bay with promises of future rate increases for so long before its polices cause a major dollar crisis. However, raising rates could also cause major economic problems. Higher interest rates will hurt the millions of Americans struggling with student loan, credit card, and other forms of debt. Already over 40 percent of Americans who owe student loan debt are defaulting on their payments. If Federal Reserve policies increase the burden of student loan debt, the number of defaults will dramatically increase leading to a bursting of the student loan bubble.

By increasing the federal government’s cost of borrowing, an interest rate increase will also make it harder for the federal government to manage its debt. Increased costs of debt financing will place increased burden on the American people and could be the last straw that finally pushes the federal government into a Greek-style financial crisis.

The no-win situation the Fed finds itself in is a sign that we are reaching the inevitable collapse of the fiat currency system. Unless immediate steps are taken to manage the transition, this collapse could usher in an economic catastrophe dwarfing the Great Depression. Therefore, those of us who know the truth must redouble our efforts to spread the ideas of liberty.

If we are successful we may be able to force Congress to properly manage the transition by cutting spending in all areas and auditing, then ending, the Federal Reserve. We may also be able to ensure the current crisis ends not just the Fed but the entire welfare-warfare state.

This column was published by the Ron Paul Institute.

  • Nid

    And markets, which appeared to be rolling over Monday 4/11 PM and Early Tuesday 4/12 AM, went vertical at 11:00 AM ET on what turned out to be a bullshit rumor re: DOHA. At the same time, volume in commodities futures surged and commodity prices rallied hard for the next week….coincidence?

    Consider this with Yellen’s documented conversations with BOE and ECB chairs on 2/11 and 2/12 and the subsequent 15% rally in the S&P 500….coincidence?

    Central bankers are not simply buying bonds and printing dollars…they’re are blatantly manipulating Equity markets and Commodities markets.

  • Trent Squires

    Last week, former Congressman Ron Paul and his assistant Daniel McAdams met the President of the Mises Institute, Jeff Deist. It was a secret meeting, so the American people have no way of knowing what the three might have discussed. The real reason for this hidden encounter was very likely something quite nefarious, because otherwise they would have met in public! These hidden shenanigans are yet another powerful indication that the Final Collapse is coming soon. We’re now much closer to it than ever before. But then, Liberty Will Rise and We Must Prepare Ourselves For It!!

    Just kidding… Ron Paul’s point is obviously that there is way too much secrecy surrounding the Federal Reserve and the government in general. They should be more open about what’s going on, without causing a panic. Sometimes truth is indeed the best medicine!


    • ash6222

      It appears that the Fed doesn’t have an exit strategy nor do I ever think they did. Mankind still enjoys being enslaved to systems they never care to understand. Maybe after the financial collapse, we can try to rebuild a better world but till then, the public will be yelling and screaming to bring this financial calamity on sooner and sooner.

  • Jd Rafferty

    Ron Paul isn’t on the inside anymore, wasn’t able to SUCCESSFULLY navigate the GOP when he was.. Paul always has a ‘sky is falling’ message that makes him appear to be a lunatic…. How can we take Paul seriously when he sounds ludicrous???

  • Jd Rafferty

    One thing for sure… If you want the economy to crash you say what Ron Paul does…
    KNOCK IT OFF RON PAUL …… Your Libertarian goose was cooked years ago…
    Why exactly did you have so many NEGATIVE guesses as to what the FED meetings were about???

    • Trent Squires

      It’s sort of the chicken and egg problem… if you believe the collapse is coming, should you warn others about it? What if it’s your warning that actually causes the collapse? I’m sure Ron Paul has asked himself this question and he thinks he can do more good by blowing the trumpet of righteousness than by pretending to play along with the delusional masses as they worship fiat money and its evil architects.

  • olde reb

    your link to the ron paul institute is missing an “l” and does not work.

    • ronpaulcom


  • olde reb

    The writing suggests the government “borrows” money for deficit

    How is it that an (assumed) government agency (the Federal Reserve) can
    “loan” money to its creator (the U.S. Government) ?? The
    concept is absurd. [The nature of the operation of the Board of
    Governors has been declared by the Supreme Court in other
    applications to constitute that of a government contractor and not
    that of an agency. Contractors do not have government immunity.]

    The value of Federal Reserve notes are created as a book entry on the
    ledgers of the FRBNY. The value did not exist before the ink was on
    the paper. Therefore, no consideration (value) was in the possession
    of and thereby transferred by the grantors to culminate the act.

    Who, or what, is assumed to have had the value of the “loan” and
    transferred it to the government ? Where is the documentation of the
    transfer ?

    If the value of the loan had existed prior to the transfer, there would
    be no increase in the value of money in circulation and there would be
    no increase in the Natioal Debt. Obviously there is no loan.

    • PWT420

      We Americans will look back in time and wonder how we were able to fall for this Fed illusion. Way too much bread and circus distractions…

  • MolokaiAdvertiserNews

    Another example of Obanana’s promised transparency. ARREST the illegala alien Muslim Jihadist I.D. fraudster Enemy#1 of USA named Barack Obama aka Barry Soetoro who is criminally USURPING the Office of POTUS and committing felony crimes daily including TREASON! ARREST Obama to NDAA Prison NOW!

    • Jd Rafferty

      Go back to playing with yourself, you’ll be more effective…

  • Jim Shier

    Thank you Dr. Paul once again for doing what you can to wake people up!