The Fed & Goldman Sachs Take Care of Each Other

There's a reason why the financial dealings of the Federal Reserve are so arcane.  It helps in ripping off the American people.  Don Dzombak of The Motley Fool has posted a very funny homemade video in the style of South Park that explains in a simple dialogue how the American people get ripped off when buying U.S. Treasury bonds. 

Two barely animated cartoon characters resembling stuffed bears are standing in a field talking in robotic, tech-modulated voices about the Federal Reserve Board's asinine policies.  I'll pick up the dialogue midstream:

Bear #2:  So let me get this straight:  If I want to buy the Treasury bonds with my money, I can buy them directly from the Treasury.

#1:  Yes.

#2:  But if the Ben Barnanke wants to buy the Treasury bonds using the American people’s money, he doesn’t buy them from the Treasury but from the Goldman Sachs?

#1:  Exactly.

#2:  And does the Treasury give him a good price?

#1:  Of course not.  They are the Goldman Sachs.  They make their living ripping off the American people.

#2:  But how is the Goldman Sachs able to do this?

#1:  The Fed announces when it is going to buy, and what it is going to buy, before it does the trade. 

#2:  So the Goldman Sachs can front-run the Fed and give them the worst possible price on the Treasury bonds?

#1:  Yes. Exactly. 

#2:  And the Fed is okay with this blatant ripoff of the American people?

#1:  Yes, of course.  Otherwise, the Fed would just buy the Treasury bonds from the Treasury Department.

#2:  Who inside the Fed is responsible for the buying of the Treasury bonds?

#1:  The buying of the Treasury bonds is conducted by the New York branch of the Federal Reserve.

#2:  And who is in charge of the New York Branch of the Federal Reserve?

#1:  The head of the NYC branch is the William Dudley.

#2:  And what did the William Dudley do before running the New York Fed?

#1:  Before running the New York Fed, the William Dudley was a partner at the Goldman Sachs.

#2:  The guy in the charge of the American people’s money when dealing with the Goldman Sachs used to be a partner at Goldman Sachs?

#1:  And no one has a problem with this?

#2:  Apparently not.

#1:  Is this an episode of The Twilight Zone?

After several similar exchanges, Bear #2 says, "Excuse me, I am going to go hit my head against a wall."  But Bear #1 cautions her not to, because health care is very expensive, adding, "But that's the subject of another video."