If We Knew the Truth, The Economy Would Collapse!

There is an interesting battle taking place between the Federal Reserve Board of Governors (The Fed), and a New York District Court judge. Bloomberg LP (which owns the Bloomberg Financial News Service) has filed a lawsuit against The Fed under provisions of the Freedom of Information Act. This lawsuit, if successful, would require The Fed to release documents that contain the names of the banks which have received financial aid from The Fed during the current economic crisis, as well as the amount of aid they have received.

A simple, straight-forward request

It would seem to be a straight-forward request and it is hard to imagine a compelling reason why The Fed should not comply with this request. The Fed, however, is adamant that they will not release such documents. This is, perhaps, not surprising. But what is surprising is their most recent argument presented to the judge. As reported at Bloomberg.com today:

The Fed’s board of governors asked Manhattan Chief U.S. District Judge Loretta Preska to delay enforcement of her Aug. 24 decision that the identities of borrowers in 11 lending programs must be made public by Aug. 31. The central bank wants Preska to stay her order until the U.S. Court of Appeals in New York can hear the case.

“The immediate release of these documents will destroy the board’s claims of exemption and right of appellate review,” the motion said. “The institutions whose names and information would be disclosed will also suffer irreparable harm.”

The Fed’s “ability to effectively manage the current, and any future, financial crisis” would be impaired, according to the motion. It said “significant harms” could befall the U.S. economy as well.

It's that last sentence which is incredible! The Fed is basically saying that if the public knew the truth about what they have been doing with taxpayer money behind the scenes, "significant harm could befall the economy!"

If that statement doesn't cause immediate panic, then the American public is sleepwalking! Their argument as to why they shouldn't release the documents presents a very compelling reason why they should!

Methinks they doth protest too much!

After that declaration, there is little reason why the documents should remain secret. The damage they are trying to prevent (to the economy, to their reputation, etc.) may have already been ordained by their demands of secrecy.

Our economy has already been put in jeopardy by the mere fact that they have admitted that their actions, if made known to the public, would do "significant harm!" Now the public imagination is left to run wild with the possibilities. Could the truth be any more damging than the implications of their argument?

I harken back to my post of April 24, 2009 (Spin, a Double-Edged Sword) which now seems astutely prophetic. In it I wrote:

"It now appears that the stress test was merely a ploy to properly spin the financial condition of the 19 largest banks, so that the public won't panic, the economy won't crater further, and the government sycophants and their programs remain credible."

"Everyone will experience the consequences of his own acts. If his acts are right, he'll get good consequences; if they're not, he'll suffer for it." --Harry Browne