A slightly watered down version of Bernie Sander’s amendment to the financial reform bill allowing for an audit of the Fed over the next year has passed the Senate in a 96-0 vote. The changes made to the bill kept Congressional influence over the audit at bay to prevent political intervention in the nation’s monetary policy. Nonetheless, the amendment that passed still allows for significant flexibility in an independent audit of the Federal Reserve. As we said just a few days ago, the Fed has been exploiting its power to control the nation’s interest rate and money supply by over adjusting them and propagating periods of excessive speculative trading. The audit is one year long with a report due out three months after the year long audit is completed. It is the first real attempt to check the power of the extremely powerful and unregulated Federal Reserve and will hopefully yield results that demonstrate it’s abuse of power to the public.

Next up on the Senate’s agenda is an amendment sponsored by Senator Kaufman (D-DE) essentially mirroring the Volcker Rule the Obama administration has come out in strong support of. The amendment does not have the far-reaching support that the Fed Audit does because it does substantial damage to banking profits and is heavily lobbied against. All the same, the amendment is liable to pass because of the bipartisan support from populist Democrats and a few libertarian-leaning Republicans in the Senate. Should it pass, it would do the most to limit absurdly risky profit making devices for banks since the passage of Glass-Seagal (since repealed) over 70 years ago. We’ll have updates on how that vote turns out soon.

Bernie Sanders and dozens of co-sponsors intend to propose an Amendment to the financial regulatory reform bill tomorrow that would allow for a public audit of the Federal Reserve.  We are coming out, today, in support of such an amendment, recognizing that it is important to protect the American people and Wall Street itself from further economic recessions caused by speculative or hyper inflated trading.  As you see below, the Federal Reserve has typically manipulated interest rates to excessive degrees and caused excessive growth that was unparalleled by other indicators.  The excessive growth led directly to a collapse in the American economy that was sparked by the weak fundamentals of the economy matched up with unyielding consumerism and investment.  And afterwards, the Fed, in a typically corrective way, began to lower interest rates as rapidly as ever, again unreasonably inflating consumer spending and economic growth.  The Fed has used its liberty as an independent government agency generally outside the public eye to mess with monetary policy to make insiders of the industry money and reward speculative trading and risky derivative trading at the cost of the nation’s populace and its economic health.  The trends reached their peak under Alan Greenspan but they continue under Bernanke and the only way to truly put an end to the abuses is to audit the Federal Reserve and make it responsible to the American people.

Today Goldman Sachs CEO made it clear that the concept of “too big to fail” truly exists, and that the government would undoubtedly bail out the banking giant if problems started to arise.  The hearing of major financial CEO’s dispelled any notion that the government would in fact not do anything about the possibility of another massive bank failure.  While many more Main Street minded consumers and even investors may see trouble with the notion that some banks are “too big to fail”, under a properly regulated financial sector it may have some necessary benefits.  Perhaps the most troubling aspect of the notion is that the bank would be free to do whatever it wants and get away with it.  After all, it was similar reassurances from the Bush administration that gave the banks the security to give out plenty of high-risk loans.  But these concerns directly tie with the necessity of stability in the financial sector: an interest that is actually furthered by the “too big to fail” concept.  If the government properly regulated the sector and prevented high risk loans then the banks would in fact have survived the financial crisis essentially unscathed.

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1. Nvidia: We’ve written a lot about the strength of Nvidia in the Tech sector and the incredible upward potential of the stock.  Not to push the meme, but its clear to us, at Fiscal Frenzy, that the strength of the stock is made most evident during bullish market cycles.  As we’ve said, we strongly believe that 2010 will be one of the strongest years of economic recovery for the United States.  Therefore, Nvidia will outperform the markets and see a strong recovery.  As a manufacturer of graphics cards (generally considered luxury items), consumers will be much more prone to buy such products.  Therefore, the technical and other strengths of Nvidia make it our number one recommendation for 2010. 2010 year end Price Target: 29

2. Research in Motion: Another tech stock that we love is RIMM, a company that we believe to have incredible upward potential.  Just looking from the year 2006 to 2007, the stock gained over 400 percent.  Its clear that like Nvidia, RIMM benefits significantly from bullish market cycles.  Thus, with the Dow expected to have another year with gains as large as early 2007, we expect a double in RIMM’s stock bringing our Price Target to 130.

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