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.
#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?
#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."