De-Dollarization and the Collapse of the US Economy

For several months we have been writing about how the world’s financial landscape is changing and the complete failure of the FED’s monetary policies and how their policies are creating an utter disaster for the US economy. Since 2008, when the FED decided for us (the US taxpayer) that we would bailout and continue to fund the totally insane bankers and their never ending casino games, our economy is flat, poverty is increasing, our infrastructure is collapsing, our trade deficits are exploding, and we are beginning to look like a third world country.

All the while, the rest of the world (excluding the US. Canada, the EU, and Japan), are starting to wake up and say “No More Insanity”. Quietly, but surly, the BRICS and in particular China began to build consensus that a new approach was needed to address the world’s economic situation. When China formed the AIIB, the FED, the World Bank, and the IMF snickered arrogantly at their efforts. After all, the US, Japan, and the EU were giants in the financial world.

Now, just a few years later, there is quiet panic within this same group and for very good reason. Not only has the BRICS and particularly China been successful in their efforts, they are about to crush the EU and US economies. The dollar is essential DOA as the international trading currency. It is truly criminally negligent how the FED and the ECB have handled this situation. Further, instead of waking up to the new economic reality, the western banking cartel continues to play their insane game.

These bankers have created a $278 TRILLION dollar derivatives time bomb SINCE 2008 that could go off at any moment.  The ECB has doubled down on Greece and this will absolutely insure a Greek default which will, without question, create a total collapse of the Euro. Instead of curbing the gambling excesses of these bankers, breaking up the too big to fail banks, stopping the blatant market manipulations, the FED and the ECB continue to ignore their fiduciary duties to regulate and police the very bankers that have created this disaster.

They say a picture is worth a thousand words, so here is the big picture.

aiibmap

 AIIBCapitalStructure

 

What is most important to note is that in just under a year, the AIIB has created a membership of participating countries that is quickly isolating the ECB, Japan, and the US. Secondly, you can see the AIIB already has more paid in capital than the World Bank, the IMF, and the ADB combined.

What is also interesting to note is how far behind the US has fallen in infrastructure. Infrastructure is the backbone of economic growth and the US is beginning to look like a third world country. Our CONgress continues to ignore these needs and by all measures could be seen as criminally negligent in addressing these issues.

It is really time that the American people begin to wake up and understand that these issues are at the very core of our standard of living issues and if we don’t make these issues the focus of the next election, we are in for one helluva dismal future. This isn’t a theory or opinion. It is FACT.

What can we do? Here are just a few suggestions that need to be addressed immediately.

1). Can the FED and return the responsibility of determining fiscal policy back to the Treasury Department.

2). Break up the big six “too big to fail” banks and instead of fining them, start the criminal charges and send some of these idiots to jail. Congress and our Department of Justice should be doing their jobs honestly and not as dupes to these cronys.

3). Starting working with the BRICS and the AIIB, instead of being like recalcitrant children. This means working on sound global fiscal policies, developing real backing to international trading currencies, and addressing the world’s infrastructure needs, instead of trying to fast track TPP, which is just another failed effort to exert a strength we no long have in the world. Our trade agreements, based on this unrealistic premise, has been a disaster for the US economy and US workers, has killed our manufacturing capabilities, and skyrocketed our trade deficits. These are facts, not opinions or theories.

4). Make rebuilding the US infrastructure a priority in the federal budget. It is the fastest way to create jobs and economic demand. Our critical immediate needs would generate nearly $5 trillion in spending. That is money that would go directly into the economy and not in some bankers accounts.

Get informed as a voter, speak up, demand these actions from our representatives. We are literally only months away from a total economic meltdown from which there is no immediate recovery. It would take decades to recover. Action is needed right now.

How Big is the Economic Bomb? Big, Very Big

In the after math of the 2008 crisis, and after “We the People” bailed out the “Too Big to Fail Banks” to the tune of over $14 Trillion dollars, our CONgress vowed they would never let that happen again. Yet since 2008, this very same CONgress has blocked every effort to regulate the banks and audit the FED. The result of the 2008 crisis has had our economy stagnated for the last seven years and the very same people that caused the last economic crisis have created a $278 TRILLION dollar derivatives time bomb that could go off at any moment.

According to Michael Snyder, when this absolutely colossal bubble does implode, we are going to be faced with the worst economic crash in the history of the United States.  It is dangerously bad, as you will see below, those banks have actually gotten far larger since then.  So now we really can’t afford for them to fail.  The six banks that we are talking about are JPMorgan Chase, Citibank, Goldman Sachs, Bank of America, Morgan Stanley and Wells Fargo.  When you add up all of their exposure to derivatives, it comes to a grand total of more than 278 trillion dollars!  But when you add up all of the assets of all six banks combined, it only comes to a grand total of about 9.8 trillion dollars.

In other words, these “too big to fail” banks have exposure to derivatives that is more than 28 times greater than their total assets!  To put this in perspective, it is like you having $100,000 in assets and owing more than $2.8 million dollars! Do you think you could get away with that? This is complete and utter insanity, and yet nobody seems too alarmed about it.  For the moment, those banks are still making lots of money and funding the campaigns of our most prominent politicians.  Right now there is no incentive for them to stop their incredibly reckless gambling so they are just going to keep on doing it.

So precisely what are “derivatives”?  Well, they can be immensely complicated, but on a very basic level, a “derivative” is not an investment in anything.  When you buy a stock, you are purchasing an ownership interest in a company.  When you buy a bond, you are purchasing the debt of a company.  But a derivative is quite different.  In essence, most derivatives are simply bets about what will or will not happen in the future.  The big banks have transformed Wall Street into the biggest casino in the history of the planet, and when things are running smoothly they usually make a whole lot of money, and just like in 2008, things can go very wrong very fast.

Today, the “too big to fail” banks are being even more reckless than they were just prior to the financial crash of 2008. As long as they keep winning, everyone is going to be okay.  But when the time comes that their bets start going against them, it is going to be a nightmare for all of us.  Our entire economic system is based on the flow of credit, and those banks are at the very heart of that system. In fact, the five largest banks account for approximately 42 percent of all loans in the United States, and the six largest banks account for approximately 67 percent of all assets in our financial system. So that is why they are called “too big to fail”.  We simply cannot afford for them to go out of business.

Our politicians promised that something would be done about this.  But instead, the four largest banks in the country have gotten nearly 40 percent larger since the last time around.  The following numbers come from an article in the Los Angeles Times

JPMorgan Chase

Total Assets: $2,573,126,000,000 (about 2.6 trillion dollars)

Total Exposure To Derivatives: $63,600,246,000,000 (more than 63 trillion dollars)

Citibank

Total Assets: $1,842,530,000,000 (more than 1.8 trillion dollars)

Total Exposure To Derivatives: $59,951,603,000,000 (more than 59 trillion dollars)

Goldman Sachs

Total Assets: $856,301,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,312,558,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,106,796,000,000 (a little bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $54,224,084,000,000 (more than 54 trillion dollars)

Morgan Stanley

Total Assets: $801,382,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $38,546,879,000,000 (more than 38 trillion dollars)

Wells Fargo

Total Assets: $1,687,155,000,000 (about 1.7 trillion dollars)

Total Exposure To Derivatives: $5,302,422,000,000 (more than 5 trillion dollars)

A majority of these derivatives are focused in the energy and financial sectors, and what we are seeing now is great volatility in both of these sectors. Demand for oil has been grossly miscalculated and when the OPEC nations decided to continue to produce at the same levels after the demand declined, you saw what happened to oil prices at the pump. This is further complicated by the cost of recovering oil from fracking in the US. This bomb is about to go BOOM!

Further complicating the picture is the moves being made by the BRICS and the newly developed AIIB. The Asian Infrastructure Investment Bank (AIIB) is an international financial institution that was proposed by the government of China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia region. AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries like the United States. The United Nations has addressed the launch of AIIB as “scaling up financing for sustainable development” for the concern of Global Economic Governance. Chinese Premier Li Keqiang affirms AIIB cooperative stance. As of April 2, 2015, almost all Asian countries and most major countries outside Asia had joined the AIIB, except the US, Japan (which dominated the Asian Development Bank, formed in 1966) and Canada. North Korea’s and Taiwan’s applications were rejected. This is a serious threat to the US dollar as the international trade currency and increases the exposure of the big banks in a way that is not yet completely discernible, other than if AIIB has its way, the dollar is in for a big devaluation. Already the AIIB has proposed an alternative to the dollar, called the SDR, which would be asset based something like the following manner.

SDR

And finally, Greece sits on the edge of collapsing the Euro. This will occur if Greece finds some or all of its debt to the ECB and IMF are odious. Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

Today Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.

According to Greek Reporter, Konstantopoulou has said that the newly established “Debt Truth Committee,” will investigate how much of the debt is “illegal” with a view to writing it off. Proving that this is more than just a populist stunt, during a vote that took place early yesterday, out of the 300 Greek MPs, 156 voted in favor of establishing the public debt auditing committee. “The committee will examine how Greece entered into the bailout agreements with its international lenders, as well as any other matters related to the memoranda’ implementation,” SYRIZA Parliamentary Secretary Christos Mantas had explained earlier. “We are fulfilling our commitment and the social demand to explore the causes and responsibilities of an unprecedented crisis that devastated the vast majority of society,” Mantas added. If the Greek “Debt Truth Committee” indeed persists with determining how much of its debt is legal and enforceable, and ultimately decides to rescind some (or all) of it, the only question is how long until other countries around the world, all of which are burdened with massive, untenable debt loads across the government, financial and household sectors, decide it is time to do the same and declare a fresh start.

So given these current situations, it is very easy to see just how crazy these “Big Banks” are, and how they are going to come crashing down, given their current exposures. There isn’t enough money in existence to “bail them out” and the impacts on the world’s economy will be felt for decades. It really isn’t a matter of if this current economic situation is going to come crashing down, it is only a matter of when, and “when” looks real big and up close right now.