In the footnotes of a speech U.S. Federal Reserve Bank Chairman Ben Bernanke would have given to the House Financial Services Committee on Feb. 10, lies a unique and startling disclosure.

Hosted on the Federal Reserve’s own servers, the written testimony of the bank’s chairman explains in plain text what expanding the Fed’s powers will do.

“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system,” footnote number nine, at the bottom of the page, explains without additional qualification.

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Sen. Chris Dodd (D-CT), who is not running for reelection, is currently pushing a financial reform bill that would grant the Fed unprecedented new powers to regulate financial markets, including insurance companies and small lenders, under the auspice of forcing such firms to lessen their exposure to risky investments.

Wondering how that would have prevented a collapse the likes of which nearly sank the financial system at the end of George W. Bush’s presidency, Forbes writer John Carney mocked Dodd’s plan as “incredibly stupid.”

“[The] Federal Reserve had regulators in place inside of Lehman Brothers following the collapse of Bear Stearns. These in-house regulators did not realize that Lehman’s management was rebuking market demands for reduced risk and covering up its rebuke with accounting sleight-of-hand. When Lehman actually came looking for a bailout, officials were reportedly surprised at how bad things were at the firm. A similar situation unfolded at Merrill Lynch. The regulators proved inadequate to the task.”

Yet, by the Federal Reserve’s stated assumption, that it will one day be able to eliminate the requirement forcing financial institutions maintain even a fraction of their depositors’ assets, it’s proposed mass-regulation of the financial sector sustains a brand of logic, however skewed.

Unhinging banks from even basic deposit standards would essentially create a class above the daily requirements of capitalism, resting atop a pool of funds with infinite depth, removing the need for what’s currently known as “fractional reserve banking.”

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Such a system is described by Investopedia as such: “A banking system in which only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties. Most countries operate under this type of system.”

What Bernanke is flatly stating is the need for that fraction, representing the actual wealth by which the bank’s capital multiplies, could soon be eliminated for the U.S. Federal Reserve, making free-floating, infinitely self-replicating capital a pervasive reality.

Only a few other nations have endowed their fiat currency with such buoyancy, their numbers including Mexico, Canada, Australia and the United Kingdom.

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“The truth is that the financial system that we have created makes inflation inevitable,” opined Business Insider writer Michael Snyder. “The U.S. dollar has lost more than 95 percent of the value that it had when the Federal Reserve was created. During this decade the value of the dollar will decline a whole lot more.

“That doesn’t sound like a very good investment.

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“But that is what happens when you give bankers power to make money up out of thin air.

“And things are only going to get worse.”

In the op-ed, Snyder points to one member of Congress, Rep. Ron Paul (R-TX), as someone who “realizes” the alleged grievous failings of the Fed, quoting Paul from a recent hearing of the House Financial Services Committee hearing.

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“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.”

Paul, who ran away with the top honors at the 2010 Conservative Political Action Conference, earning the influential conservative activists’ pick for the GOP’s 2012 presidential nomination, was not shy about his feelings on the Fed’s conduct during a Feb. 24 hearing, saving his harshest criticism for Chairman Bernanke.

Watch:

He accused the Federal Reserve Bank of laundering money connected to the Watergate scandal, and making loans to Saddam Hussein ahead of the first U.S. invasion: claims which Bernanke dismissed as “bizarre.”

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At the end of Rep. Paul’s speech, committee chairman Barney Frank (D-MA) pledged that his committee would probe the claims.

Days later, Frank wrote a letter to Bernanke asking for an internal investigation.

“According to a 2008 book, ‘Deception and Abuse at the Fed,’ by University of Texas Professor Robert D. Auerbach, then-Fed Chairman Arthur Burns tried to block lawmakers’ probes into the source of $6,300 found on the burglars of the Democratic National Committee’s offices in Washington’s Watergate complex in 1972,” Business Week noted. “Burns, who served as Fed chief from 1970 to 1978, died in 1987.”

The report also noted that, the book’s author had investigated the Fed prior to the Gulf War and saw his probe repeatedly obfuscated, only to discover that the Fed had completely neglected oversight on more than $5.5 billion which was sent to Iraq from a U.S.-based branch of an Italian bank in the 1980s.

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Citing the Fed chairman’s objection to allowing any oversight of its activities, Rep. Paul asked if the Congress could perhaps be allowed to go back 10 years and open the bank’s books, to study how the institution operated.

“Would you like to know … what kind of shenanigans they’re involved in with foreign countries and foreign central banks?” he asked. “Possibly, you’re working right now to bail out Greece, for all we know.”

“I have no knowledge of anything remotely like what you’ve just described,” Bernanke replied.

“I think eventually though, because this system is not viable … we will get to the point where something will have to be done about this financial system,” Paul said.

An audit of the Federal Reserve is one of Rep. Paul’s core issues, and he’s pursued it for 30 years, according to his Web site. Paul’s Audit the Fed bill obtained bipartisan majority support in the House and is currently pending in the Senate. Sen. Dodd’s financial reform legislation does not include a Fed. audit.

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America’s main global economic rival, China, has repeatedly increased reserve requirements for its’ state-owned banks since the U.S. financial system began exhibiting such marked instability.