However, as reported by CNBC, the Federal Reserve Bank has sneaked in an important accounting rule change, that puts the taxpayer on the hook for all losses it incurs. In effect, the private (it is not a federal government agency) can no longer go bankrupt, and may spend money, make purchases, and back bank assets without fear.
As for this change being unconstitutional, well, the constitution only matters if the law is enforced. In this case, I doubt this will be challenged and the constitution upheld. For the Federal Reserve Bank is stepping into the marketplace to prop up the US financial situation.
This is a huge blow for those who point to the US dollar as being a world reserve currency, and therefore cannot implode. The keys for the currency valuation have been given to a private banking organization. Therefore, we are in new territory. Once cannot look at the history of American currency since 1913 as a guide.
For more commentary, I highly recommend everyone read other bloggers, more verbose and detailed than myself. I have provided links below.
This event goes into my Financial Ground Zero series, as I highlight events that will eventually likely result in USA financial collapse.
Mish: Timothy Geithner Meets Vladimir Lenin Stage II; Accounting Rule Changes at the Fed will Mask Losses
Market Ticker: The "Independent" Fed Admits The Truth
Hussman: Fantastic detailed outline of Federal Reserve Bank monetary pressures "Sixteen Cents: Pushing the Unstable Limits of Monetary Policy"