Almost no one is talking about the most serious financial catastrophe taking place in the U.S. today. Instead everyone is focused on reigning in Congressional spending, particularly in areas like entitlements and Obamacare. But there is a part of government that flies under the radar, unaccountably increasing our debt to far more dangerous levels. It is considered the financial part of the Executive Branch, but there are very few checks and balances coming from the other two branches of government. It is the powerful Department of the Treasury and the quasi-governmental Federal Reserve. Timothy Geithner, Secretary of the Treasury, and Ben Bernanke, Chairman of the Federal Reserve Board, are two of the individuals most responsible for this financial meltdown, although it began prior to their terms in office. The Fed and the Treasury are responsible for engineering financial institution bailouts that cost taxpayers $12.1 trillion through February 2009. This massively dwarfs the $3.83 trillion spent on Medicare/Medicaid, Social Security, defense, and other government programs.

A few people are starting to speak up about this shadow budget. Former CEO and stock trader Karl Denninger is leading the expose. Glenn Beck and Elliot Spitzer are covering it on their talk shows. Rolling Stone Magazine featured a stunning expose this month about two wives of Morgan Stanley executives who received $220 million in bailout funds. The new documentary “Inside Job” uncovers who was really responsible for the 2008 financial meltdown. Tea Party activist and social media guru Eric Odom wrote an article last week about it entitled “The Greatest Financial Theft in the History of Man.”

Odom calls the bailouts a Ponzi scheme. The simple explanation of how they work is this: The big banks on Wall Street invest in risky ventures, like granting high-risk mortgages to people who really cannot afford them. When the investments inevitably fall through, leaving the banks on the brink of failing, the well-connected, powerful bank CEOs use their connections to the Federal Reserve and the Department of the Treasury to get the government to bail them out.

The government then steps in and bails the banks out through the Federal Reserve and the Treasury Department. This allows the cycle to repeat itself. The government enables the banks to continue making greedy, self-serving decisions that benefit themselves, not the average investor. Responsible homeowners who are underwater on their homes but keeping up with their payments and middle class investors pay the price for Wall Street playing fast and loose, as their investments depreciate.

Glenn Beck compares it to rewarding a spoiled child when they complain. Instead of letting the banks fail, which would teach them a lesson not to make risky investments, the government props them up to continue their irresponsible investments. In fact, in the years leading up to the 2008 financial crisis, the government encouraged the banks to increase the number of risky investments, peaking in 2007 when Rep. Barney Frank (D) became Chair of the House Financial Services Committee. Frank used his power to pressure Freddie Mac and Fannie Mae to increase the number of mortgages provided to borrowers with weak credit histories. There is plenty of evidence that the banks knew the risky mortgages were resulting in increased foreclosures, but continued their pattern of lending anyways.

Nothing ever changes or improves – it actually gets worse. Many of the bailout loans the Federal Reserve made to these banks were made at near-zero interest. The banks then used the money to buy Treasury bonds at higher interest rates. It is akin to loaning the money back to the government at a higher interest rate! Even worse, in order to continue to afford these bailouts, the government must print more money, because there is no more money.

There is a conflict of interest helping create this Ponzi scheme: the revolving door between the administration’s top financial positions and Wall Street. Treasury Secretary Timothy Geithner was president of the quasi-governmental Federal Reserve Bank of New York where he worked with AIG prior to becoming Treasury Secretary. This no doubt influenced the favorable treatment AIG received later from the government when Geithner became Treasury Secretary, which included bailouts and approval of large bonuses to its executives.

The quasi-governmental nature of the Federal Reserve compounds the problem. It is given massive powers due to its governmental nature, while it is held less accountable due to its private side. Its decisions do not need to be approved by Congress or the Executive Branch. The Federal Reserve’s powers have expanded more under Bernanke than any other time during the Fed’s entire existence going back to 1913.

The Federal Reserve sets interest rates chiefly by funneling more or less money into the economy – which includes printing more paper money when there is no more money. When it allows too much money to enter the economy, triggering interest rates to fall, banks give out riskier loans, and eventually too many people default and everyone clamors for government to come in and rescue them, from the lenders to the investors and homeowners. Clearly, this is unworkable over the long term because it is financially unsustainable.

Fiscal hawks like Congressman Ron Paul have been calling to end the Fed for years. Lately, calls to audit the Fed have been picking up steam. If there were no Federal Reserve, and individual banks were left to fail when they made risky investments, we would not have the massive extended recessions and depressions. The Federal Reserve would not be able to prolong the influx of easy credit, which ensures that there will be a colossal failure when it all comes crashing down. Instead, individual banks would fail one by one, barely noticeable to the economy overall.

What is wrong with this picture? Why is government bailing out Wall Street - some of the wealthiest people in the country? Now, the folks responsible for this Ponzi scheme are the ones in charge of fixing it. Odom characterizes it this way: “The individuals who drove the car off the cliff were handed the keys to the new car.” Geithner, Bernanke and Frank are suggesting more government regulations to fix the problem. Some of their proposed fixes include helping homeowners in foreclosure keep their homes. This would not fix the problem but would only put a band-aid on it. Enabling people to remain in homes they cannot afford merely continues the cycle. High-risk homeowners should never have been put in homes they could not afford, with mortgage loan terms they could not keep up with, such as interest-only payments and ARM loans.

Geithner, Bernanke and Frank are calling to raise the debt ceiling. This will assist them with perpetuating the biggest legal government scam in history. Meanwhile, responsible middle class Americans are barely making it, as their investments are devalued and government expands, finding more ways to collect money from them to support its Ponzi scheme.

This is not capitalism gone amuck, as Barney Frank claims. The government bailing out private banks is not capitalism but quasi-socialism. There is a simple solution to fix this: the banks must be held accountable. There should be a way to sue the banks that originate the irresponsible investments and loans, even if they transfer their risky ventures to other banks. Nor should they be bailed out when they fail. For every bank that fails, another one that is more financially responsible is ready to step up and take its place. Fannie Mae and Freddie Mac are quasi-governmental lending agencies, so suing them would only hurt the taxpayers. They were responsible for the highest rates of foreclosures. They have grossly failed, and represent government at its worst, so the only solution is to eliminate them.

A few wealthy, unelected but well-connected public officials with conflicts of interest should not be able to transfer the public’s money to their favorite greedy, irresponsible, private financial institution run by friends. Especially when the country is going bankrupt. It is imperative that those who can bring attention to this looming disaster do so, and stop this spiraling cycle before our country collapses economically. Congress has made a good start by ordering the Federal Reserve to open its books on the bailouts. Now there needs to be some action.