Alert: Fed Preparing For US Default Says Philadelphia Federal Reserve Bank President Charles Plosser

Got gold and silver?

Fed Preparing For US Default Says Plosser (ZeroHedge, July 20, 2011):

That giant whooshing, and humming, sound you hear are all the printers at the basement of Marriner Eccles getting refills and start the warm up process. Because according to the Fed Charles Plosser the Federal Reserve is actively preparing for the possibility that the United States could default. Which can only mean one thing: an immediate paradrop of millions of $100 bricks to every man woman and child in the US since as we all know by know Tim Geithner has repeatedly confirmed the Treasury has absolutely no default plans. None.

Per Reuters:

Philadelphia Federal Reserve Bank President Charles Plosser said the Fed has for the past few months been working closely with Treasury, ironing out what to do if the world’s biggest economy runs out of cash on August 2.

“We are in contingency planning mode,” Plosser told Reuters in an interview at the regional central bank’s headquarters in Philadelphia. “We are all engaged … It’s a very active process.”

Plosser said his “gut feeling” was that President Barack Obama and Congress will come to an agreement to increase the Treasury’s borrowing authority in time to avert a default on government obligations.

And in addition to the warming up, the Fed is also engaging in the following:

The Fed effectively acts as the Treasury’s bank — it clears the government’s checks to everyone from social security recipients to government workers.

“We are developing processes and procedures by which the Treasury communicates to us what we are going to do,” Plosser said, adding that the task was manageable. “How the Fed is going to go about clearing government checks. Which ones are going to be good? Which ones are not going to be good?”

“There are a lot of people working on what we would do and how we would do it,” he said.

Plosser added that there are difficult questions that the Fed itself had to grapple with.

The Fed lends to banks at the discount window against good collateral. But what happens if U.S. Treasuries no longer fit that bill?

“Do we treat them as if they didn’t default, in which case we would be saying we are pretending it never happened? Or do we treat them as if they defaulted and don’t lend against them?” Plosser said. “Those are more policy questions.”s at the basement of Marriner Eccles getting refills and start the warm up process.

We urge the secretary of tax evasion to take a hint or two from his “Treasury Bank” brethren and start contemplating a Plan B since we now stand less than 48 hours away from D-Hour and there is still no consensus.

1 thought on “Alert: Fed Preparing For US Default Says Philadelphia Federal Reserve Bank President Charles Plosser”

  1. The debt ceiling is a politically created crisis to give our corrupt leaders an avenue to gut Social Security and Medicare. SS is solvent, they have been stealing from it for years. Last year when Obama pushed the extension of the bush tax cuts, they gave the workers a tiny bite, too. They called it a payroll holiday, and guess where they allowed the non-payment. FICA.
    That is when it became obvious SS was next. This president is corporate to the bone. People need to stage a nationwide general strike, shut down the country ASAP. Next, recall petitions and lawsuits against the malpractice carried out by our foolish greedy leaders. Malpractice is a simple way to go, and we want to see they lose their pensions and retirement, like a dishonorable discharge from the armed services.
    Time for Americans to hit the streets to stop the madness. Otherwise, we are finished.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.