Federal Reserve & Interest Rates

Most people would agree that the war in Iraq has taken a huge toll on American hearts as well as the federal wallet. Billions of dollars have been poured into this blood bath of a war and some recent news is rather alarming. It appears that there are some United States funds that went MIA.

The Federal Reserve shipped a total of $12 billion over to Iraq to aid the war between April of 2003 and June of 2004. The Coalition Provisional Authority (CPA) was supposed to receive and account for the cash. The were responsible for its distribution. To date, there are $9 billion unaccounted for.

What went wrong?

Theories of corruption are in circulation. Critics are curious as to whether or not President G. W. Bush will be held accountable for corruption. The Federal Reserve Bank of New York and the United States Treasury to great strides to keep the money under surveillance. That is, at least as long as the money was on American soil.

The money was tracked to Baghdad and then to Iraq, apparently to the hands of the CPA. CPA officials claim that there was a system of general tracking in place as far as where the money was spent. Iraq agencies were funded certain amounts, but there aren’t any specific records on what the money was to be used for, exactly. Good old trust and faith was used as a discretionary funding method.

Suspicious eyes are certainly staring at the CPA. Secret activities by government workers is a definite possibility. The United Nations attempted some type of auditing, but they say there was difficulty in contacting important CPA members to complete the task.

Something in this system of funding is lacking. There was obviously way too much opportunity for fraud and corruption. Without high levels of surveillance overseas, and no detailed accounts of spent funds, how can we expect the money to be accounted for? It is easy to point fingers at the CPA, but are they really the ones to blame? Without evidence of corrupt individuals, we really can’t say. The money is just missing. The money was handled too loosely once it left its country of origin (here).

In retrospect, I am sure that the Federal Reserve and the Treasury are wishing now that they watched the money a bit more closely once it got overseas. Where will the government begin to pick up the pieces of this mess? How will they prevent this from ever happening again? Chances are the money is not all in one place. At this point, the only thing that can be done is watch it next time. I don’t know how effective investigations will be now that there are a couple of years in between now and then.