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. Mr. Ben Bernanke recently told the Senate Banking committee the government must take action (deficit spending) to prevent an economic collapse. Did he tell Congress that every dollar of deficit spending would be profit for the Fed/BOG that would be hidden by the FRBNY in apparent violation of the law ?? A popular concept is that the government will borrow from the Federal Reserve. This involves giving a Treasury security (bill, bond, or note) to the Fed as collateral and the Fed will credit an account of the government in the amount of the security. The government then spends the (book-entry) funds while the Fed (theoretically) holds the collateral; i.e. deficit spending. Voila !! Additional (fiat) money has been injected into the economy of the Nation which, in the projection of Mr. Bernanke, may stimulate the economy. (Actually, it continues the inflationary bubble started in 1913. Ref. RIP OFF BY THE FEDERAL RESERVE, ) Observe the Fed holds the collateral. When the collateral matures, government must pay the Fed to redeem the security. The fiat money spent by government must be re-acquired and paid to the Fed. But the money is long gone and the bank account is zero. So the Fed can sell the collateral at the auctions of Treasury securities (if it has not already been auctioned). If the funds went to the government, the Fed would essentially give up the security. Bankers are not known to generously give up billions of dollars. Also, if the funds went to the government, they would be used to pay off the debt of the security that had been issued and that would negate the existence of the debt. Further, it would eliminate any inflation from increased currency in circulation. Since the national debt consistently increases and inflation is prevenient, the funds from securities sold for deficit spending cannot go to the government. The Federal Reserve Bank of New York has the responsibility of handling all accounting and funds for auctions of Treasury securities. The funds from deficit spending go into the FRBNY but they are not recorded as coming out. These funds are not included in the ANNUAL REPORT TO CONGRESS nor are they dispensed in any public record Receipts from the 2010 auctions totaled $8.4 trillion. $7 trillion was used to roll-over preexisting securities (without increasing the national debt) and $1.4 trillion was received from deficit spending as detailed above. That $1.4 trillion ($4 billion every day--7/52) disappeared in the catacombs of the FRBNY. That is $4000 annually for every man, woman, and child in the United States. The only feasible conclusion is that the funds go to the owners of the BOG (assumed to be the Primary Dealers) mingled with the funds to redeem maturing securities. Profit of the Fed legally belongs to the government. Concealment of funds belonging to the government is identified as embezzlement and subject to one year incarceration per count. Ref. 18 USC 641. Nonpayment of monies belonging to the government is subject

to five years incarceration. Ref. 18 USC 1001. Anyone knowing of such an offense who relieves, comforts or assists the offenderto prevent his apprehension, trial or punishment, is an accessory after the fact. Ref. 18 USC 3. An audit of the auction accounts maintained by the FRBNY appears to be highly desirable. Ref. RIP OFF BY THE FEDERAL RESERVE, The dilemma of our economy, as the Nation is repeatedly pushed to austerity ---with hype to authorize the President be allowed to spend without restriction---requires an intensive review of the role of the Federal Reserve. The ultimate concern for the welfare of the American people transcends the ideologue division of Democrat or Republican. The doom of Cyprus, Greece and Europe awaits congressional indifference. Ref. The restrictions on auditing the Fed by Title 31 section 714 do not appear to be applicable to the auction accounts. An audit can be made by Congress without additional legislation.