The Federal Reserve put $150 billion (the "cover") of 84-day credit up for auction on June 15, but the loans that banks requested amounted to only $48 billion (the "bid"). This low bid-to-cover ratio continues a trend of increasingly undersubscribed term auctions. That banks are not clamoring for credit at the Term Auction Facility (TAF) could signal that the credit crunch is easing. It raises the question of how effective the TAF has been and how long this “temporary” facility will last.

When the administration’s top economic advisors, Christina Romer and Jared Bernstein, released their projections in early January, they estimated that the unemployment rate would reach 9 percent in 2010 unless massive amounts of government funding were allocated to stem the loss of jobs. If the $787 billion economic stimulus was approved, they said, the unemployment rate would likely peak just shy of 8 percent in the middle of 2009.

The magnitude of the Federal Reserve’s extraordinary operations during the past year shows through clearly in its balance sheet and income statement, recently published in the Fed’s Annual Report 2008. Nevertheless, the new Annual Report and associated Fed reporting documents still fall far short of the disclosure standards that any other major American corporation ordinarily would be expected to observe. Below is a summary of balance sheet items for the Fed. It shows the acquisition of great quantities of asset classes that are far riskier than the U.S. Treasury securities traditionally held by the Fed.

The Declaration of Independence, signed by members of the Continental Congress on July 4, 1776, is the founding document of the American experiment in free government. What is too often forgotten is that what the Founding Fathers argued against in the Declaration was the heavy and intrusive hand of big government.