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Thread: Obscure Court Case could cause HUGE problems for the US FED

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    Banned Melonie's Avatar
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    Default Obscure Court Case could cause HUGE problems for the US FED

    get a load of this ... from


    (snip)In what could to grow into a class action in US courts, a Chinese woman is suing the Federal Reserve after discovering that the real value of the USD250 she put in an account in 2006 had shrunk by 30%. She claims it was the result of the Fed issuing too much money, and as The South China Morning Post reports, her son Li Zhen, the lawyer, called the lawsuit "litigation for the public good". Alleging "abuse of monopoly in issuing currency," the People's Court of Kunming has yet to rule on the litigants' demand that the Fed cease-and-desist from its quantitative easing policy. While this may seem frivolous, there are some interesting points being made that bear watching, as Li notes, since "the Fed is private institution which enjoys monopoly over the issuing of currency, US Dollar holders can sue it for printing too much money."


    Via SCMP,

    A woman in Kunming, Yunnan province, is trying to sue the United States central bank after discovering that the real value of the US$250 she put in an account in 2006 had shrunk by 30 per cent.

    She claims it was a result of the Federal Reserve issuing too much money.

    Her attorney, her son Li Zhen , called the lawsuit "litigation for the public good" which aimed to stop the Fed from continuing its quantitive easing policy and promote people's awareness of their rights.

    He filed the lawsuit alleging "the abuse of monopoly in issuing currency" last month at the Kunming Intermediate People's Court on behalf of his mother, Liu Hua , but the court has yet to decide whether to officially place the case on file.

    ...he was the first mainlander to have filed a lawsuit against a foreign country's central bank.

    Li, who works at the Yunnan Tongbang Law Firm, said he referred to Black's Law Dictionary, the most cited legal dictionary in the US, and concluded that the Fed is a private institution instead of a government department.

    "Since the Fed is a private institution which enjoys a monopoly over the issuing of currency, US dollar holders can sue it for printing too much money," he said.

    Li said he requested two things from the court - that the Fed halts the abuse of its monopoly over the issuing of dollars and that it makes a "symbolic compensation" of US$1. Asked about the possibility of whether the court will accept the case, Li said it was "difficult to say".

    He said he was looking for more "victims" like his mother and expected to bring a class action in a US court.(snip)


    It will be interesting indeed if this case actually makes it to a US court ... something which is actually fairly likely given the relative positions of China vs the USA re trade balance / WTO. Obviously, the Chinese gov't ... as well as the gov'ts of many other countries ... have a strong vested interest in stopping future devaluation of the US dollar versus their own currencies ( which makes their labor costs more expensive, which hurts their export competitiveness etc. on a global basis )

    An official admission that the US FED is a 'private institution' could bring trillions of dollars worth of implied US taxpayer guarantees into question re mortgage / auto / credit card based 'junk bonds' currently owned by the FED ( which in turn could send future interest rates on 'subprime' mortgages / auto loans and leases / credit cards into the stratosphere ), as well as opening a potential Pandora's Box full of future lawsuits alleging financial 'damage' due to the FED's past and present QE policy erasing US dollar purchasing power.

    On the flip side, an official admission that the US FED is an agency of the US gov't ( which would confer 'sovereign immunity' against lawsuits ) could also lead to far stricter FED oversight by the US Congress including cessation of the FED's present 'independent' ability to embark on QE, TARP and other future policies which arguably benefit the big Wall St.'member' banks and certain huge US corporations at the expense of US savers / taxpayers. This could potentially end the 'too big to fail' business model thus forcing the investors in big Wall St. banks / GM and Chrysler etc. to face the possibility of future losses being foisted on THEMSELVES instead of the US taxpayer.

    ... never at a lack for 'entertainment' ...
    Last edited by Melonie; 04-22-2013 at 11:21 PM.

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    Default Re: Obscure Court Case could cause HUGE problems for the US FED

    It won't cause any problems for the Fed. This is a frivolous lawsuit.

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    Default Re: Obscure Court Case could cause HUGE problems for the US FED

    lol..good luck to her..she's gunna need it

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    Default Re: Obscure Court Case could cause HUGE problems for the US FED

    ^^^ if it were an American attempting to sue the FED, I'd agree that this lawsuit has no 'legs' whatsoever. However, given that the plaintiff is a Chinese national, refusal to hear the case in a US court could create all sorts of potential tensions re US / China trade, Chinese central bank policy re the US dollar, etc. - as well as opening up the possibility of this case being tried on the WORLD stage via the WTO. For these reasons I'm not inclined to simply 'dismiss' this lawsuit ( no pun intended ) , as I am certain the US federal courts wish they could do.

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    Default Re: Obscure Court Case could cause HUGE problems for the US FED

    I suspect this is not quite spontaneous. The Western central banks and international financial entities (WB, IMF) had for some time now been on China's case about them managing their currency so that it's "undervalued" and is not allowed to float at true free price on the exchange markets. So this, for the various reasons Melonie brings up in her last note, is more likely an engineered warning shot from China to the West's central banks to back off with a reminder that THEY too engage in monetary maneouvers and stand to be called on it.

    (BTW the Fed is not the only nominally "private" chartered-monopoly central bank, just the biggest/most powerful, and AFAIK it has always been an issue as to how truly independent vs. accountable to the political bodies are the central banks wherever they exist).

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