Fed Vice Chairman Kohn Resigns, Now 3 Vacancies at FRB

Tuesday, March 02, 2010


While the rest of the US labour market is still in free fall, job openings at the world's biggest money printer become abundant. The resignation of old hand Federal Reserve Vice Chairman Donald Kohn raises the number of open slots at the monetary policy setting Federal Reserve Board to a stunning 3 out of 12 available fireside chairs. In a letter to the Fed Kohn announced his intention to leave the Fed after a 40-year career by June 23.
While other FRB members like "Easy" Alan Greenspan have always been defending themselves, stating that bubbles could only be recognized after they start bursting, Kohn is on record with bubble warnings and dissent since June 2005 with one of the most impressive speeches ever given by a central banker when he warned bankers to prepare for the
"unexpected (that) inevitably happens."
Alas, his cautioning was totally ignored until the (not so) unexpected housing bubble began to burst and has crashed America into the biggest debt crisis of all times.
Kohn's resignation is another blow to the beleaguered Fed whose chairman Ben Bernanke refuses to accept the concept of bubbles through too easy credit, worsening the situation with the Fed's ZIRP with every passing day.
As Kohn's resignation leads to a 75%-Fed where only 9 persons decide the fate of Federal Reserve Notes and the Fed's wilingness to monetize the debt, US President Barack Obama confronts another pothole on the road of his presidency as there are seemingly no takers for 3 of the most interesting - but nowadays also most challenging - jobs in the world.
Isn't it astounding that a quarter of the FRB is vacant and no experts want to tackle the job?
We may witness a selection of the negative: I have been highly inconfident into "helicopter" Bernanke since his nomination because of his infamous speech from 2002 where he hallucinated about "money at virtually no cost."
3 vacancies, 2 of them open since years, at the most powerful board in the world of fiat money lead to one conclusion: If nobody with the required expertise wants to do the job it is most certainly because they see what the blogosphere sees since many years. The US path of ballooning deficits is unsustainable and unbacked Federal Reserve Notes (FRN) will go down the drain as ALL fiat currencies did in the last 300 years.
Current woes in the Eurozone (Greece is not California) may delay the end of the dollar a little, but Kohn's prediction may have even reached to the point where the unexpected demise of the world's biggest Ponzi scheme - called US dollar - will inevitably happen.
Kohn does not appear to hope for a wonder, taking it from his letter, says the LA Times.
In a letter to President Obama announcing his intention to resign from the board, Kohn didn't say why he planned to retire at this juncture, but noted that the last several years have tested the ability and dedication of the Fed to maintain financial and economic stability.
"I am confident that history will judge the Federal Reserve, under the leadership of Chairman Ben Bernanke, to have met these challenges with great speed, imagination and effectiveness," he said in the letter dated March 1.

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