I have been a longtime critic of the Fed, but the latest moves by the Fed are beyond even my most cynical estimations.

Bear Stearns was one of the most aggressive banks in facilitating the excessive lending that helped create the mortgage mess. This mortgage mess is impoverishing millions of Americans and affecting us all through a lower dollar and higher gasoline prices.

Bear Stearns bet heavily on the mortgage market, made billions in profits on the way up, and rewarded employees and executives with hundreds of millions of dollars in bonuses. However, once the bubble burst, Bear Stearns was proven to have been too aggressive in pushing mortgages. The value of its assets fell so far that they could not cover the company's liabilities. Bear Stearns was bankrupt, and no one wanted to buy them.

The bankruptcy of risky and irresponsible companies is an important part of capitalism. This creative destruction eliminates waste and fraud and ensures appropriate amounts of risk taking during the next business cycle.

For companies and individuals, insolvency leads to bankruptcy. However, in the banking sector, the insolvency of a major bank can lead to a domino effect, with other banks, which are owed money by failing bank, falling into bankruptcy. As a result, insolvent banks are nationalized, as happened to Northern Rock in England recently or many S&Ls in the U.S. in the 1980s. The government prevents a domino effect by guaranteeing payment to counterparties.

Why didn't the U.S. government simply nationalize and wind down Bear Stearns? If the government is in the bailout business, Hillary Clinton is now asking, why can't the U.S. government bailout homeowners, too?

Of course, the Fed claims there was no bailout, but the facts are obvious. Bear Stearns shareholders, holding a company that no one wanted to buy, received over $2 billion. JPMorgan, the buyer, received all the most valuable assets of Bear Stearns, which may be worth tens of billions, if not more, in the future. And we, the people of the United States of America?

According to BusinessWeek, "In essence, the New York Fed [essentially, the government and therefore the people] will create a special company that will hold the $30 billion in Bear assets. It will lend the unit $29 billion at 3.25% interest and JPMorgan itself will lend the unit $1 billion. When the assets are liquidated, JPMorgan won't get back its $1 billion until after the Fed has been fully repaid with interest. And if there's any money left over from the liquidation after all the loans have been repaid, the Fed will get to keep it." In other words, the risky, nearly worthless $30 billion in assets that were bogging down Bear Stearns have been handed to you and me. If somehow these securities end up being worth something we profit. If not, which is what the market is currently saying, all of the liability (except for $1 billion) will be borne by us, the people. And worse still, this portfolio of $30 billion in bonds will not be managed by the government, but will be managed --- at a high cost --- by one of the original creators of the type of exotic mortgage products that helped create this mess in the first place.

Why did the government hand all the upside of Bear Stearns over to JPMorgan without any calm auction process? Why did the government assume nearly all of the risk? And what do you think the chances are that Ben Bernanke, upon leaving the Fed, will get an extremely high-paid job at JPMorgan (after all, that's what happened to a lot of the Fed managers who helped bailout Long-term Capital) [participate in our poll at fakeben.com].

Please visit fakeben.com and help us to stop these continued and flagrant abuses of our system.

The Fed must be stopped before it totally destroys the dollar and impoverishes hardworking Americans through policies that encourage too much debt, not enough savings, and banking excesses.