THE FED NOW OWNS THE WORLD’S LARGEST INSURANCE COMPANY -- BUT WHO OWNS THE FED?
THE FED NOW OWNS THE WORLD’S LARGEST INSURANCE COMPANY
-- BUT WHO OWNS THE FED?
Ellen Brown, October 7th, 2008
www.webofdebt.com/articles/time_to_buy_the_fed.php
“Some people think that the Federal Reserve Banks are
United States Government institutions. They are private monopolies which prey
upon the people of these United States for the benefit of themselves and their
foreign customers; foreign and domestic speculators and swindlers; and rich and
predatory money lenders.â€
–   The Honorable Louis McFadden, Chairman of the House Banking and Currency
Committee in the 1930s
The Federal Reserve (or Fed) has assumed sweeping new
powers in the last year. In an unprecedented move in March 2008, the New York
Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear
Stearns for pennies on the dollar. The deal was particularly controversial because
Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and
participated in the secret weekend negotiations.1 In September 2008, the Federal Reserve did something
even more unprecedented, when it bought the world’s largest insurance company. The
Fed announced on September 16 that it was giving an $85 billion loan to
American International Group (AIG) for a nearly 80% stake in the mega-insurer. The
Associated Press called it a “government takeover,†but this was no ordinary
nationalization. Unlike the U.S. Treasury, which took over Fannie Mae and
Freddie Mac the week before, the Fed is not a government-owned agency. Also
unprecedented was the way the deal was funded. The Associated Press reported:
“The Treasury Department, for the first time in its
history, said it would begin selling bonds for the Federal Reserve in an
effort to help the central bank deal with its unprecedented borrowing needs.â€2
This is extraordinary. Why is the Treasury issuing U.S.
government bonds (or debt) to fund the Fed, which is itself supposedly “the
lender of last resort†created to fund the banks and the federal government? Yahoo
Finance reported on September 17:
“The Treasury is setting up a temporary financing program
at the Fed’s request. The program will auction Treasury bills to raise cash for
the Fed’s use. The initiative aims to help the Fed manage its balance sheet
following its efforts to enhance its liquidity facilities over the previous few
quarters.â€
Normally, the Fed swaps green pieces of paper called
Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal
government’s I.O.U.s), in order to provide Congress with the dollars it cannot
raise through taxes. Now, it seems, the government is issuing bonds, not for
its own use, but for the use of the Fed! Perhaps the plan is to swap them with
the banks’ dodgy derivatives collateral directly, without actually putting them
up for sale to outside buyers. According to Wikipedia (which translates
Fedspeak into somewhat clearer terms than the Fed’s own website):
“The Term Securities Lending Facility is a 28-day
facility that will offer Treasury general collateral to the Federal Reserve
Bank of New York’s primary dealers in exchange for other program-eligible
collateral. It is intended to promote liquidity in the financing markets for
Treasury and other collateral and thus to foster the functioning of financial
markets more generally. . . . The resource allows dealers to switch debt that
is less liquid for U.S. government securities that are easily tradable.â€
“To switch debt that is less liquid for U.S. government
securities that are easily tradable†means that the government gets the banks’
toxic derivative debt, and the banks get the government’s triple-A securities. Unlike
the risky derivative debt, federal securities are considered “risk-free†for
purposes of determining capital requirements, allowing the banks to improve
their capital position so they can make new loans. (See E. Brown, “Bailout
Bedlam,†webofdebt.com/articles, October 2, 2008.)
In its latest power play, on October 3, 2008, the Fed
acquired the ability to pay interest to its member banks on the reserves the
banks maintain at the Fed. Reuters reported on October 3:
“The U.S. Federal Reserve gained a key tactical tool from
the $700 billion financial rescue package signed into law on Friday that will
help it channel funds into parched credit markets. Tucked into the 451-page
bill is a provision that lets the Fed pay interest on the reserves banks are
required to hold at the central bank.â€3
If the Fed’s money comes ultimately from the taxpayers,
that means we the taxpayers are paying interest to the banks on the banks’ own
reserves – reserves maintained for their own private profit. These increasingly
controversial encroachments on the public purse warrant a closer look at the
central banking scheme itself. Who owns the Federal Reserve, who actually
controls it, where does it get its money, and whose interests is it serving?
Not Private and Not for Profit? Â
The Fed’s website insists that it is not a private
corporation, is not operated for profit, and is not funded by
Congress. But is that true? The Federal Reserve was set up in 1913 as a “lender
of last resort†to backstop bank runs, following a particularly bad bank panic
in 1907. The Fed’s mandate was then and continues to be to keep the private
banking system intact; and that means keeping intact the system’s most valuable
asset, a monopoly on creating the national money supply. Except for coins,
every dollar in circulation is now created privately as a debt to the Federal
Reserve or the banking system it heads.4
The Fed’s website attempts to gloss over its role as chief defender and
protector of this private banking club, but let’s take a closer look. The
website states:
-
“The twelve regional Federal Reserve Banks, which were
established by Congress as the operating arms of the nation’s central banking
system, are organized much like private corporations – possibly leading to some
confusion about “ownership.†For example, the Reserve Banks issue shares of
stock to member banks. However, owning Reserve Bank stock is quite different
from owning stock in a private company. The Reserve Banks are not operated for
profit, and ownership of a certain amount of stock is, by law, a condition of
membership in the System. The stock may not be sold, traded, or pledged as
security for a loan; dividends are, by law, 6 percent per year.†-
“[The Federal Reserve] is considered an independent
central bank because its decisions do not have to be ratified by the President
or anyone else in the executive or legislative branch of government, it does
not receive funding appropriated by Congress, and the terms of the members of
the Board of Governors span multiple presidential and congressional terms.†-
“The Federal Reserve’s income is derived primarily from
the interest on U.S. government securities that it has acquired through open
market operations. . . . After paying its expenses, the Federal Reserve turns
the rest of its earnings over to the U.S. Treasury.â€5
So let’s review:
1. The Fed is privately owned.
Its shareholders are private banks. In fact, 100% of its
shareholders are private banks. None of its stock is owned by the government.
2. The fact that the Fed does not get “appropriationsâ€
from Congress basically means that it gets its money from Congress without
congressional approval, by engaging in “open market operations.â€
Here is how it works: When the government is short of
funds, the Treasury issues bonds and delivers them to bond dealers, which
auction them off. When the Fed wants to “expand the money supply†(create
money), it steps in and buys bonds from these dealers with newly-issued dollars
acquired by the Fed for the cost of writing them into an account on a computer
screen. These maneuvers are called “open market operations†because the Fed
buys the bonds on the “open market†from the bond dealers. The bonds then
become the “reserves†that the banking establishment uses to back its loans. In
another bit of sleight of hand known as “fractional reserve†lending, the same
reserves are lent many times over, further expanding the money supply,
generating interest for the banks with each loan. It was this money-creating
process that prompted Wright Patman, Chairman of the House Banking and Currency
Committee in the 1960s, to call the Federal Reserve “a total money-making
machine.†He wrote:
“When the Federal Reserve writes a check for a government
bond it does exactly what any bank does, it creates money, it created money
purely and simply by writing a check.â€
3. The Fed generates profits for its shareholders.
The interest on bonds acquired with its newly-issued
Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6%
return to its banker shareholders. A mere 6% a year may not be considered a
profit in the world of Wall Street high finance, but most businesses that
manage to cover all their expenses and give their shareholders a guaranteed 6%
return are considered “for profit†corporations.Â
In addition to this guaranteed 6%, the banks will now be
getting interest from the taxpayers on their “reserves.†The basic reserve
requirement set by the Federal Reserve is 10%. The website of the Federal
Reserve Bank of New York explains that as money is redeposited and relent
throughout the banking system, this 10% held in “reserve†can be fanned into ten
times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans.
Federal Reserve Statistical Release H.8 puts the total “loans and leases in bank
credit†as of September 24, 2008 at $7,049 billion. Ten percent of that is $700
billion. That means we the taxpayers will be paying interest to the banks on at
least $700 billion annually – this so that the banks can retain the reserves to
accumulate interest on ten times that sum in loans.
The banks earn these returns from the taxpayers for the
privilege of having the banks’ interests protected by an all-powerful
independent private central bank, even when those interests may be opposed to
the taxpayers’ -- for example, when the banks use their special status as
private money creators to fund speculative derivative schemes that threaten to
collapse the U.S. economy. Among other special benefits, banks and other
financial institutions (but not other corporations) can borrow at the low Fed
funds rate of about 2%. They can then turn around and put this money into
30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers,
just by virtue of their position as favored banks. A long list of banks (but
not other corporations) is also now protected from the short selling that can
crash the price of other stocks.
Time to Change the Statute?
According to the Fed’s website, the control Congress has
over the Federal Reserve is limited to this:
“[T]he Federal Reserve is subject to oversight by
Congress, which periodically reviews its activities and can alter its
responsibilities by statute.â€
As we know from watching the business news, “oversightâ€
basically means that Congress gets to see the results when it’s over. The Fed
periodically reports to Congress, but the Fed doesn’t ask; it tells. The only
real leverage Congress has over the Fed is that it “can alter its
responsibilities by statute.†It is time for Congress to exercise that leverage
and make the Federal Reserve a truly federal agency, acting by and for
the people through their elected representatives. If the Fed can demand AIG’s
stock in return for an $85 billion loan to the mega-insurer, we can demand the
Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail
out the private banking system from its follies.
If the Fed were actually a federal agency, the government
could issue U.S. legal tender directly, avoiding an unnecessary
interest-bearing debt to private middlemen who create the money out of thin air
themselves. Among other benefits to the taxpayers. a truly “federal†Federal
Reserve could lend the full faith and credit of the United States to state and
local governments interest-free, cutting the cost of infrastructure in half,
restoring the thriving local economies of earlier decades.Â
Ellen Brown, J.D., developed her research skills as an
attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest
book, she turns those skills to an analysis of the Federal Reserve and “the
money trust.†She shows how this private cartel has usurped the power to create
money from the people themselves, and how we the people can get it back. Her
eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr.
Lynne Walker, and Forbidden Medicine. Her websites are
www.webofdebt.com and
www.ellenbrown.com.
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my sentiments exactly!
If the Fed can demand AIG’s
stock in return for an $85 billion loan to the mega-insurer, we can demand the
Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail
out the private banking system from its follies.
Thanks for posting this especially, Dicktater,
E
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"It is difficult to get the news from poems yet men die miserably every day for lack of what is found there."
--William Carlos Williams (from the poem 'From')
addendum - now at the end of Brown's article
Addendum: Who Owns the Banks That Own the Fed?
Beyond merely stating that all the shareholders of the Fed are its member banks, I’ve been asked to elaborate on who actually owns those banks. Are they owned by powerful foreign banking families as has been alleged? According to a discursive article by Dr. Edward Flaherty, condensed below, the answer is no – not to any provable extent. But that does not mean that the Fed and the U.S. banking system are not controlled from abroad. The central banking system has its own “banker’s bank,†the Bank for International Settlements (BIS) in Basel, Switzerland. The BIS does control the international banking system, in part by setting capital requirements -- the requirements that have now caused the entire U.S. credit market to freeze up. But that is a subject for a later article. Dr. Flaherty wrote:
“. . . Each of the twelve Federal Reserve Banks is organized into a corporation whose shares are sold to the commercial banks and thrifts operating within the Bank’s district. Shareholders elect six of the nine the board of directors for their regional Federal Reserve Bank as well as its president. . . .
“The SEC requires the name of any individual or organization that owns more than 5 percent of the outstanding shares of a publicly traded firm be made public. If foreigners own any shares of [eight banks claimed by Eustace Mullins to control the New York Federal Reserve], then their portions are not greater than 5 percent at this time. With no significant holdings of the major New York area banks, it does not seem likely that foreign conspirators could direct their actions.
“. . . The law stipulates a small portion of Federal Reserve stock may be available for sale to the public. . . . However, under the terms of the Federal Reserve Act, public stock was only to be sold in the event the sale of stock to member banks did not raise the minimum of $4 million of initial capital for each Federal Reserve Bank when they were organized in 1913 (12 USCA Sec. 281). Each Bank was able to raise the necessary amount through member stock sales, and no public stock was ever sold to the non-bank public. In other words, no Federal Reserve stock has ever been sold to foreigners; it has only been sold to banks which are members of the Federal Reserve System.
“. . . [E]ach commercial bank receives one vote regardless of its size, unlike most corporate voting structures in which the number of votes is tied to the number of shares a person holds. The New York Federal Reserve district contains over 1,000 member banks, so it is highly unlikely that even the largest and most powerful banks would be able to coerce so many smaller ones to vote in a particular manner. To control the vote of a majority of member banks would mean acquiring a controlling interest in about 500 member banks of the New York district.†[Prof. Edward Flaherty, University of Charleston, “Who Owns and Controls the Federal Reserve?†(July 18, 1997); citations omitted.]
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"It is difficult to get the news from poems yet men die miserably every day for lack of what is found there."
--William Carlos Williams (from the poem 'From')
Dicktater - question for you
This is about the derivatives market. If the Fed intentionally loosened lending standards by artificially keeping interest rates low, and a bunch of people made essentially bets that these sub-prime borrowers would default, then wasn't the Fed in the best position to clean up on those bets? So, who won? Was it people associated with the Fed (like JP Morgan Chase) And where did the winnings go? I heard that Lehman Bros. took in billions (138 billion loaned from Morgan Chase alone) just before they went bust -- and that money went somewhere. Giant wealth transfer to Israel?
E
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"It is difficult to get the news from poems yet men die miserably every day for lack of what is found there."
--William Carlos Williams (from the poem 'From')
e vero, it would seem...
...that morgan, goldman, etc. would be in the best position to know what was going to happen. I think that they, and others, had to be a part of the plan. After all, they are the Fed.
They won. At least they think so right now. Winnings? Their winnings right now are foreclosures for pennies on the dollar. Next, it will be pension funds and other investment vehicular homicides that bit their poison apple.
Moved money to Israel? In what? It has probably been moved into commodities like metals, corn, wheat, and beans and real property all over the world. Not to mention the growing arsenal held by Blackwater. But, does it matter. They can say that they have as many digits as they want. They can say you and I have zero. That's why I keep only a few digits under their direct control.
Fuck, I really don't know. My head won't stop spinning right now. I do know this, though. Too many people are finding out what they are doing and getting really angry. This is good. The threats of new terror are becoming more numerous. That is bad. I hear more and more about people arming themselves to the teeth because, as one grannie put it when asked why she was piling a grocery cart with ammo so high she could hardly push it, "They're coming."
She knows. They are coming. And the first wave is gonna get creamed. Then come the Chinese and other mercenary collection agents of the globalist elite repossession taxation agency. Think of it like the IRS on supermegawannakillthefuckoutofyouandyourkidsrightnow steroids. That's why Obama intends to send more troops to Afghanistan, to prevent their being of assistance to us. But, he's got to quash the birth certificate inquiry in Hawaii first.
But, who'd a thought that oil would ever drop near $50 a barrel again? Lindsey Williams, that;'s who. He predicted this four mnths ago. Williams said that they were going to break OPEC's back this time. We'll see. You may not want to know what he says is coming next.
If you won't buy bullets, buy pencils. Think about it. Can you make a pencil?
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
who won? & Lindsey Williams
Okay, they probably did buy commodities (and if they didn't buy oil, they should buy it now!) and property.
I watched that 8-part Lindsey Williams youtube presentation and also read some of his stuff on the web. I am a little stymied, so maybe you can explain it to me. He starts out talking about how he was privy for 3 years to the conversations and schemes of this ultra-elite group who can control the world - and he specifically mentions the board of directors on the oil firm he was helping out (not for pay) as a minister. Later, he claims that the oil companies are not those making the biggest profits, but some middle men make the biggest profits. He names these intermediary mercenaries as the World Bank and the IMF. So that's a huge discrepancy. So was he privy to the inner workings of an oil company on the North Slope of Alaska, or was he privy to the inner workings of the World Bank and IMF.
Alternatively, maybe he was sitting around with the oil men who TOLD him that the IMF/World BAnk are the true beneficiaries of oil largess. In that case, let's assume he's right and that the oil companies are being financed (and subject to interest payments and ultimate control) by the banks, and supposedly that interest is not tax deductible and must be included as part of their reported profits). If so, then why would the oil company have gotten really angry (and fired that one executive - Rich Fromme) when Williams first published his book about this stuff (which after all only ALLUDED to what was really happening)? Then after Fromme supposedly helped him get the facts right in an updated edition of the same book, the oil company was suddenl happy and hired Fromme back? Is that because Fromme rewrote it to reflect the IMF/World Bank as the
"evil-doers?"
If the World Bank and IMF are so powerful, how is it that they've not yet killed this guy for speaking out? (His books are pretty much banned or out of print, though.)
Another time he said that "I will never forget that day . . . " but then he paused to turn the page where he had to actually look down to see the date "1976...." So he'd never forget this significant day but he managed to forget the year!
Plus, he's predicting all this disaster, which his website and trove of books conveniently prepare you to face -- for a large fee.
Plus, he never mentions Israel. It reminded me a lot of Alex Jones - lots is probably true, but a few things don't fit and/or are missing.
Plus, he says that the North Slope of Alaska has enough oil and natural gas to keep the US going for 200 years, even considering population increases. But says that somehow somebody (the US gov't) stepped in to prevent this fact from becoming known. Forces starting with Kissinger set it up so that we must buy oil from Opec countries (who agreed to trade oil for dollars, all but Iran and Iraq) so that they may buy back some portion of the US National Debt. If we really have so much oil on the North Slope, we could pay off all our national debit (like Russia did) and not need the central bank. This idea does, come to think of it, fit with what Williams is saying. The central bankers are the ones with all the power, who can manipulate oil prices, whether or not the dollar falls, whether or not we go to war, etc., etc.
I really respect your option, D, so maybe you can explain it to me better. Am I understanding any of it correctly? I realize that he did successfully predict a rise (this summer) in gas prices, followed by a drop (this fall). But he could be privy to some seven-sisters' plot to fix prices without really having a handle on how the whole thing works.
It's apparent to me that the price drop (50% or more in less than a year) in oil is an attempt to break somebody -- Russia? Opec? (And hey - why is gas still so high? this reminds me of local gov'ts failing to reduce property taxes when area property values fall, but inevitably raising taxes when values rise.)
E
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"It is difficult to get the news from poems yet men die miserably every day for lack of what is found there."
--William Carlos Williams (from the poem 'From')
e vero, i really dunno but, i'll try
to respond as best I can:
I understood that he was a chaplain on the pipeline, not the IMF or WB, and was well like by one or more execs who let him sit in on their meetings.
As far as tax liabilities, multinational oil companies probably have tens of thousands of ways to shift monies around to minimize their tax hits. I just saw something that stated that MOST corpporations actually pay little or no taxes. I'll see if I can find that sgain. About Fromme, I dunno.
I'm sure that Lindsey is also being used in some way, too. But, his being so vocal is possibly one reason he lives. A sudden death may shine a light too brightly on certain cockroaches at a time they may prefer the dark.
I'll never forget that day I climed over a huge boulder in the middle of the mountain stream I had been wading all day and first saw a particular waterfall, either. But, it would probably be impossible for me to ever tell you the date. I've never kept a journal. Maybe Lindsey does. Some dates I'll never forget. Some will remain forever elusive. I'm sure there are those kinds of days for you, too.
Fortunately, you have the Internet and can determine how best to prepare for what seems to be beyond obvious at this point. Most of Lindsey's material can be obtained for free, if one can't afford it and knows where to look. But, he only has a few pieces of the big puzzle. he has to eat just like the rest of us so, I don't begrudge his selling anything that someone else is willing to buy.
Maybe Lindey feels that the issues are bigger than Israel. I certainly do. But, I do beleive that there are puppets in Israel playing necessary parts and whose movements are made by others pulling the strings.
As i understand it, the end of the Bretton Woods agreement is what allowed Middle East oil to rise rapidly following the Arab oil embargo in the early 70s. The OPEEC nations were required to buy dollars in exchange for dramatically increased oil revenues with which a few have amassed vast personal riches while he rest of their populations se nothing in comparison. The North Slope oil was to remain in the ground so that it could be sold later to Japan, China, and the North American Union at new, astronomical prices. Then again, it may be that China knows of it being there and it is the collateral on their loans. Shit. I really don't know except that it is not coming out for us unless it is expensive. Hell, look at this:
3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montana’s Bakken Formation—25 Times More Than 1995 Estimate—
Released: 4/10/2008
http://www.usgs.gov/newsroom/article.asp?ID=1911&from=rss_home
Funny thing is, one month later this was reported:
"...there could be as much as 40 billion barrels of crude lying untouched in eastern Montana."
http://www.nypost.com/seven/05292008/business/montana_governor_is_sittin...
Then, earlier thi month came this:
"The US Geological survey just increased the estimate for the Bakken formation in North Dakota and Montana by 25 fold. Not 25 percent, but 2500 percent..."
http://www.cbsnews.com/stories/2008/10/02/earlyshow/leisure/books/main44...
Do you see a mad scramble to get that oil? I don't. Besides, I really don't think it's so much an oil supply issue as it is a refining issue. That's where the bottlenseck in the supply chain is said to exist. Why aren't oil companies using the massive profits reported to increase refining capacity? My guess is that they don't want to increaee refining capacity. They'd rather see the peak oil myth stay alive, work less to create less to sell at higher and higher prices. Gas prices would have to only fall later, well after the "new and cheaper" oilcomes to market. But, if oil prices are to rise again, any price reductions would probably be shortlived.
Did the rise in oil prices this past summer start a revolution? No. There was no unrest at all. So, that tells them that we are willing to live with the new, higher level of slavery. And, they will do it again, and again, and again, just like they have been doing for a decades. They will do it until too many people get pissed off. However, I'm sure that the idea is that a martial law crackdown will be ready for implementation. Shit. Who the fuck knows.
As far as paying off the national debt, it can never happen. It's impossible. The only option is paying down any legitimate debt, which probably is fairly small, and repudiating the rest. It will take a revolution for that to happen, though.
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
answer to D. Tater
 D:
I understood that he was a chaplain on the pipeline, not the IMF or
WB, and was well like by one or more execs who let him sit in on their
meetings.
This part just seems dubious. Why would these supposedly ultrapowerful people take a shine to a chaplain and let him in on their secrets?Â
As far as tax liabilities, multinational oil companies probably have
tens of thousands of ways to shift monies around to minimize their tax
hits. I just saw something that stated that MOST corpporations actually
pay little or no taxes. I'll see if I can find that sgain. About
Fromme, I dunno.
This I know - only the stupid or highly moral companies pay any taxes anymore. So why is Lindsey crying about how much taxes these companies have to pay out of their reported profits? It's not credible.
I'm sure that Lindsey is also being used in some way, too. But, his
being so vocal is possibly one reason he lives. A sudden death may
shine a light too brightly on certain cockroaches at a time they may
prefer the dark.
He may no longer be alive. His website says he "is no longer available" for anything. His estate may make more if people think he's alive somewhere.
I'll never forget that day I climed over a huge boulder in the
middle of the mountain stream I had been wading all day and first saw a
particular waterfall, either. But, it would probably be impossible for
me to ever tell you the date. I've never kept a journal. Maybe Lindsey
does. Some dates I'll never forget. Some will remain forever elusive.
I'm sure there are those kinds of days for you, too.
Point taken.Â
Fortunately, you have the Internet and can determine how best to
prepare for what seems to be beyond obvious at this point. Most of
Lindsey's material can be obtained for free, if one can't afford it and
knows where to look. But, he only has a few pieces of the big puzzle.
he has to eat just like the rest of us so, I don't begrudge his selling
anything that someone else is willing to buy.
Point also taken. He (or his estate) has to make a living. I guess I've got to stock up on toilet paper and ciggies. Of course, we'll all be dead unless we have access to a well. See that defeatist attitude of mine? I've given up already! Â
Maybe Lindey feels that the issues are bigger than Israel. I
certainly do. But, I do beleive that there are puppets in Israel
playing necessary parts and whose movements are made by others pulling
the strings.
I just don't get it - if the Iraq war was all about getting Iraq to sell its oil in dollars again (not even to the US), did it work? Some are saying it's all about dollar trading, others say its about protecting Israel, others say it's about getting oil (the latter does not appear to be happening). Â
All the rest of your speculations about what the vast reserves (that don't official exist) are for make as much sense as anything. It certainly makes sense that the oil companies have a disincentive to refine more oil, given that US consumers have signaled their willingness to pay more at the pump. They rapidly ramped down on consumption of gas, however, which probably prompted the players to lower the prices.
As for the national debt - Russia paid off their debt (using their oil riches) and got out of the clutches of the central banker. Why can't we? It's just too astronomically high?
Sorry for all the questions. I'm just trying to figure out that big picture myself. I'm inherently skeptical of those who claim to have all the answers. I really loved (in your next post) your depiction of tax accountants and tax attorneys (monkeys in robes with the captain crunch decoder rings). We obey those with the accountrements of authority. I also love the idea of not paying any income taxes at all since the gov't seems perfectly willing to print money out of thin air to meet their needs! You are a gifted polemicist.
E
This part just seems
This part just seems dubious. Why would these supposedly ultrapowerful people take a shine to a chaplain and let him in on their secrets?
That I can't answer, only make guesses. Maybe Lindsey was liked by someone with whom there were other shared experiences, values, beliefs, etc. All I rrecall is Lindsey saying that he was liked but, not really why. Maybe there was a plan to use him as a tool all along and it was to make him think that he was witness to something ultra secret when it was theatre produced specifically for him.
So why is Lindsey crying about how much taxes these companies have to pay out of their reported profits?
Maybe Lindsey believed what he was told. Has Lindsey ever stated that he felt he was being deceived or lied to by theses execs at any time? Hell, most people probably think that corporations are stupid and/or moral and/or divine creations. Just look at how many are proud to make themselves (and their property) human billboards sporting logos, slogans, mantras, etc.
He was on AJ's show last week. I think that he said he was having a clearance sale of everything and quitting the disco. He is an End-Times kinda guy isn't he. Maybe he thinks that time is here? gootubles here:
Lindsey Williams on The Alex Jones Show “End of Arab Oilâ€
You Tube
October 24, 2008
http://www.infowars.com/?p=5555
Three parts here:
http://www.youtube.com/watch?v=MjdezOnvTeQ
http://www.youtube.com/watch?v=-iHNGjzIKu8
http://www.youtube.com/watch?v=Bu05tbMJJDA
The Iraq invasion was never, ever, ever about any single issue. It was multi-faceted from the get go. There are probably many facets to the whole shebang that we will never know about. If it's one thing that I am convinced of is that "government" projects will have multiple purposes and objectives. Some will be public, some may be ultra secret. But, all will probably be related to slave management.
Russia got out of the clutches of the central banker. Why can't we?
"We" don't want to yet. Most of "we" worship the banking industry and are too skeered to give up our charger cards. And lots of "we" refinanced our homes at tempting low interest so as to buy more shit from China. (Aren't bass boats made in China now?)
As far as taxes go, there are two classes of import, taxpayers and non-taxpayers. It is the latter with which thee IRS has no business. Learning the distinction and how to make an informed choice as to which one to be is long study. It was my first red pill and I've yet to explore the entire depth of the rabbit hole.
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
Re: Lindsey Williams, Author of The Energy Non-Crisis $50
FYI:
Just some guy's opinion. (Ain't me. I don't gootuble.)
Re: Lindsey Williams, Author of The Energy Non-Crisis $50 Oil
October 17, 2008
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
sum moro linkies for e vero
Understanding Derivatives to Understand the Credit Crisis
Prognosis
Until monetary authorities come clean and admit what has truly occurred in our Capital Markets – aka a PROPER DIAGNOSIS – proposed remedies will have little effect and may even kill the patient.
http://www.marketoracle.co.uk/Article6890.html
All you need to know about credit default swaps
Warren Buffett called them "financial weapons of mass destruction".
http://www.moneyweek.com/news-and-charts/economics/all-you-need-to-know-...
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
I understand CDS
. . . but what I don't understand is why we can't just let them crash and burn? The banks will go down with them and so what?
E
-------
"It is difficult to get the news from poems yet men die miserably every day for lack of what is found there."
--William Carlos Williams (from the poem 'From')
crash and burn
I'm all for it. I got a can of gas to throw on that fire, too.
The only way out is to to repudiate the debt and the authority of any collection orders/agency. That will only happen when enough Totos pull the curtain fully open so that the silly humans will see.
"A billion here, a billion there, and pretty soon you're talking real money."
~~ attributed to Senator Everett Dirksen
interesting economic article from January 2007
and he uses an island metaphor--kinda like us! :)
Irreparable Cracks in the Financial System
by Marc Faber
A well-respected independent economist and strategist with a bearish trait told me recently that he wished he could be bearish, but that he couldn't find anything that he thought would disturb the asset markets and the global economy in the foreseeable future. Looking at the "real" global economy and at what people produce in terms of manufactured goods and services (ex-financial services), I would have to agree.
Comparing the current global economic expansion, which began in the US in November 2001, with previous economic expansions, it seems to me that the "real economy" isn't showing any signs of the overheating that, in the past, led to aggressive central bank monetary tightening. So, I am, like my strategist friend with the bearish trait, also impressed by the prospects for the global economy. However, I am increasingly concerned about the inflated asset markets around the world, and about the almost unanimous belief that nothing will ever come between the "Goldilocks" economic conditions and the Fed, in conjunction with the US Treasury standing ready to support markets should they decline meaningfully and disturb the current heavenly asset market conditions.
Let us examine the differences between the "real economy" and the "asset inflation economy" more closely. The real economy is typical of people's daily lives, their income, and their spending. If there is a boom in the real economy, wages and prices will tend to increase and the increased demand will be met by corporations' increased capital spending. The overheated economy eventually brings about a slowdown or a recession, because money becomes tight irrespective of the central bank's monetary policies. The recession then cleans up the system and allows the next expansion to get under way. Put very simplistically, this is the typical business cycle.
In the asset inflation economy, we are dealing with a totally different phenomenon. The higher the asset markets move, the more the increased asset prices can create liquidity. Let us assume an investor owns a real estate or stock portfolio worth 100 and that his borrowings are 50. For whatever reason (usually easy monetary conditions), the value of the portfolio now doubles to 200. Obviously, this allows the investor, if he wants to maintain his leverage at 50% of the asset value, to double his borrowings to 100. With the additional 50 in buying power, the investor can then either spend the money for consumption (as the US consumer has done in the last few years) or acquire more assets.
If he acquires more assets, the investor will drive the asset markets – ceteris paribus – even higher, which will allow him to increase his borrowings further. Now, I am aware of some economists who will dispute the fact that rising asset markets create liquidity. They argue that the seller of a portfolio or real estate or stocks at an inflated price will have to be met by a buyer at the inflated price. So, the increased liquidity of the seller is offset by a diminished liquidity of the buyer. However, the situation isn't quite that simple. Let us assume we are dealing with the market for Van Gogh's paintings, and let's assume that with the exception of just three works, Van Gogh's paintings are all in the hands of museums, foundations, or dedicated art lovers who wouldn't consider selling them except under the most unusual circumstances. Now enter the Russian oligarch who wishes to acquire a Van Gogh at any price. He might pay double the previous price paid for a Van Gogh, for one of the three paintings still available on the market. As a result of this one buyer, every Van Gogh work will now need to be revalued, and, in theory, all the owners of Van Gogh paintings could now increase their borrowings against the value of those works.
Two works by Van Gogh now remain on the market, one of which a hedge fund manager and an oil sheik from the Middle East both wish to acquire. In a bidding war, they push the price of that painting up another 100% above the previously paid price. Again, all of Van Gogh's works will need to be revalued and their owners can increase their borrowings against them. In other words, the buyers on the margin can move asset markets sharply higher in the absence of ready sellers and thus increase, through the additional borrowing power of the works' present owners, the overall liquidity in the system.
Under normal circumstances, the increased borrowings by the present owners would drive up interest rates. However, in a world of rapidly expanding money supply, this may not be the case. Moreover, which owner of a Van Gogh wouldn't mind paying 6% instead of 4.5% interest on his loans if Van Gogh's paintings were appreciating by 30%, or even 100%, per annum? (This is one reason why the Fed doesn't believe it can control spiralling asset prices with monetary policies.) In the real world, we are not dealing with just one Van Gogh market, but with many asset markets, but the point is that the marginal buyers set the price for assets. It should also be clear that not every owner of a Van Gogh will use his borrowing power and leverage his works of art or other assets.
But if an asset bull market has been in existence for a while, more and more investors will become convinced that the up-trend in asset prices will never end and, therefore, they will increasingly use leverage to maximize their gains. But not only that: lenders will also become convinced that asset prices will rise in perpetuity at a higher rate than the lending rate, and they will therefore relax their lending standards. This certainly seems to have occurred in the sub-prime lending industry.
There is one more point to consider. Liquidity isn't evenly distributed. Let's say that on an island there are two tribes. Ninety-nine percent of the population are the "Bushes" and 1% are the "Smartos." The two tribes arrived on the island at about the same time and had little capital at the time. So, initially, both tribes worked very hard in industry and in commerce to acquire wealth. But because of the Smartos' superior education and skills, their frugality, and also partly because of their greed and immorality, they soon acquired significantly more wealth than the Bushes, who, for the most part, were likeable but quite inept. After 50 years, most of the island's businesses were therefore in the hands of the Smartos, who make up just 1% of the population. Being clever, the Smartos generously gave some of their wealth to the tribal leaders of the Bushes, who controlled the entire government apparatus, the military establishment, and much of the land.
For a while this system functioned perfectly well. Among the Bushes there were also some smart people, and they were encouraged to accumulate wealth as well. However, they had to pay an increasingly high price to acquire assets, since most of the island's assets were owned by the Smartos and by the elite of the Bushes who, because of their wealth, never really had to sell any assets. Cracks in the system began to appear because more and more of the wealth began to be increasingly concentrated in fewer and fewer hands. (According to the Financial Times, the concentration of wealth is extremely high in the United States, with 10% of the population currently holding 70% of the country's wealth, compared to 61% in France, 56% in the UK, 44% in Germany, and 39% in Japan.)
However, the Smartos then stumbled upon another avenue to wealth: globalization. The island was opened to foreign trade and investments, which allowed the business owners to shift their production to low-cost foreign countries and, at the same time, to keep the masses among the Bush tribe happy through the imports of price-deflating consumer goods. In the same way that, in the 18th and 19th centuries, the European settlers of America had exchanged with the Indians worthless beads and booze for land, now the Smartos and the elite of the Bushes exchanged cheap imported goods, whose supply they controlled and from which they earned handsome margins, for assets. As a result, the majority of the population of the Bushes experienced a relative wealth decline compared to the wealth of the Smartos.
Again, this worked perfectly well for a while: the populace was happy to buy deflating consumer goods (like Mr. Faber's wife who, whenever a favorite shoe store holds a sale, immediately buys three pairs instead of one), but it overlooked the fact that its wages and salaries were decreasing in real terms because manufacturing jobs and tradable services were increasingly shifting overseas. For some time this wasn't a problem, because the Smartos had bought the island's central bank. They made sure that sufficient money was made available to the system to sustain the consumption binge, which was largely driven by inflating asset prices. Plenty of liquidity and rising asset prices created among the Bushes the "illusion of wealth." Naturally, the island's trade and current account deficit began to worsen as it consumed significantly more than it produced, but initially that wasn't a problem, for the Smartos had encouraged the Bushes to engage – in the name of all kinds of good, just, and well-meant causes, and without any self-interest whatsoever – in overseas military expeditions, which led foreign creditors to believe in the island's economic and military might, and social stability.
For a time, they were, therefore, perfectly happy to finance the island's growing current account deficits. At the same time, the increase in defense spending shifted wealth from the masses to the elite of the Bushes, who largely controlled the military hardware and procurement industries. As a result, wealth and income inequity widened further as the masses became largely illiquid and had difficulty in maintaining their elevated consumption, while the Smartos and the elite of the Bushes accumulated an ever-increasing share of the national wealth. But never at a loss when it came to creating additional wealth, the Smartos devised another scheme to enrich themselves even further: lending to illiquid households (read sub-prime lending). Not that the Smartos would have lent their own money to these uncreditworthy individuals (they were far too clever for that); for a fat fee, they arranged and encouraged this novel type of financing. Credit card, consumer, and mortgage debts were all securitized and sold to pension funds and asset management companies whose beneficiaries were the majority of Bushes, who accounted, as indicated above, for 99% of the population.
In addition, these securitized products were sold to some credulous foreign investors. By doing so, the Smartos achieved three objectives. They earned large fees, and unloaded the risks indirectly onto the very people who borrowed the money, and onto foreigners. But most importantly, they provided the Bush tribe with a powerful incentive to support their expansionary monetary policies, which ensured continuous asset inflation. After all, any breakdown in the value of assets would have hurt the Bushes the most, since they carried most of the risks by having purchased all the securitized lower-quality financial instruments. But not only that! The Smartos knew that as asset prices increased, their prospective returns would diminish.
But this wasn't an immediate problem, as they promoted increased leverage to boost returns to the investors and at the same time their own fees. This strategy worked, of course, for as long as asset prices appreciated more than the interest that needed to be paid on the loans. On first sight, the debt- and, consequently, asset inflation-driven society of the island seems to work ad infinitum. But in the real world this isn't the case. Sooner or later, the system becomes totally unbalanced and entirely dependent on further asset inflation to sustain the imbalances. It is at that point that even a minor event can act as a catalyst to bring down asset prices and produce either "total," or at least "relative," illiquidity in the system, because a large number of assets whose value has declined no longer cover the loans against which they were acquired. "Total illiquidity" occurs when the central bank, faced with declining asset prices, doesn't take extraordinary measures to support asset prices.
"Relative illiquidity" follows when the central bank implements, in concert with the Treasury, extraordinary monetary and fiscal policies (cutting short-term interest rates to zero, and the aggressive purchase of bonds and stocks) in a desperate effort to support asset prices. In both cases, a degree of illiquidity occurs and depresses asset prices, but in different ways. In the case of "total illiquidity" (1929–1932 and Japan in the 1990s), asset prices tumble across the board in nominal and real terms with the exception of the highest-quality bonds and, possibly, precious metals (flight to safety). In the case of the island's central bank taking extraordinary monetary measures, asset prices don't necessarily decline in nominal terms, and in fact can even continue to appreciate.
However, they collapse in real terms, and against foreign currencies and precious metals. How so? Above, we have seen that the island's asset inflation led to excessive consumption and to growing trade and current account deficits because the Smartos and the elite of the Bushes were quick to understand that much larger capital gains could be obtained by playing the asset inflation game and by manufacturing overseas, than by investing in new production facilities and producing goods on the island.
The growing trade and current account deficits of the island were not immediately a problem, because they were offset by external surpluses in other parts of the world, which were frequently and erroneously labeled as "surplus savings" or a "savings glut." But whatever one wishes to call these surpluses or reserves, it is interesting to note that where they accumulated (mostly in China, Japan, Taiwan, Singapore, and Switzerland), they led to an interest rate structure that was lower than on the island. For the Smartos, this was an extremely fortuitous condition. For one, it was easy to convince the recipients and holders of these rapidly accumulating reserves to invest them in higher yielding assets on the island. In addition, it was for a while extremely profitable to borrow in low-yielding foreign currencies and to invest in relatively high-yielding assets on the island.
Obviously, this all changed when asset prices began to decline and the island's central bank had to take extraordinary measures by aggressively cutting short-term interest rates and supporting asset markets through bond and stock purchases. The interest rate cuts immediately narrowed the spread between the interest rate on the island and foreign currencies and led to a run on the island's currency, not only by foreigners but also by the Smartos, who had known all along that the asset inflation game would one day come to a bitter end. The deleveraging of this carry trade led to "relative illiquidity," which the island's central bank had to offset with even more liquidity injections, which while stabilizing asset prices led to even greater loss of confidence in the soundness of the island's currency, and in its bond market, which by then was mostly owned by foreign creditors.
As Mao Tse Tung had observed much earlier, there was by then "great disorder," but the situation was "excellent" for the Smartos. On the short end, interest rates had been cut so much that they were in no position to compensate for the continuous depreciation of the island's currency. So, the Smartos and the Bush tribe's elite began increasingly to borrow in the island's currency and to invest in foreign assets and precious metals. In fact, the island's central bank, by its market-supporting interventions, encouraged this process. Stocks and bonds were dumped on to the central bank and the Treasury's plunge protection team at still high prices, and the proceeds were immediately transferred to foreign assets and precious metals, which appreciated at an increasing speed compared to the island's assets, which suffered from the continuous depreciation of the currency.
And in order to facilitate this trade, the Smartos, who controlled both the Fed and the Treasury, continued to make positive comments about "a strong currency being in the best interest of the island." Sure, it would have been in the best interest of the island to have a strong currency, but it was certainly not in the best interest of the Smartos, who had devised their last grand plan: shift assets overseas and into precious metals, let the currency of the island collapse, and then repatriate the funds and buy up the remaining assets of the Bush tribe's middle and lower classes at bargain prices since they had never understood that their currency had collapsed against foreign currencies and against gold.
January 11, 2007
Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow's Gold.
Copyright © 2007 Marc Faber
Find this article at:
http://www.lewrockwell.com/orig6/faber3.html