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.

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Sometimes Much Is Not Needed to be Said.

Since last September, the Fed has extended its balance sheet by over a trillion dollars and has conducted nearly $9 Trillion dollars in “off balance sheet” transactions. Just so you understand that is about $30,000 for every man woman and child in the US, and we are on the hook for that amount. Sen. Grayson inquires to the Inspector General of the Fed where did that money go and who was the recipients of these transactions. Here is the video of that exchange. If you do not believe the banksters aren’t fleecing America unchecked, you only need to watch this 5 minute clip!

 

 

December 23rd, 1913 is a Date Which Will Live in Infamy

That was the date the Federal Reserve Act was passed by our congress after almost half of the representatives had departed for the holidays. What is the result of that act? $32,343,000! Every Minute! What? If we were to pay off the National Debt in one year, that is what it would take to achieve the goal! We hear the numbers on the news X billion here and Y Trillion there, but in all honesty we cannot mentally conceive of these numbers and what they mean. What we also don’t seem to get our head around is that you and I owe this money! However, we do and we are enslaved to it.

We also don’t seem to understand that this debt was not created all by congressional spending which is also a popular myth. No, this debt was created by a private corporation with no government oversight, specifically The FED. All this “quantitative easing” to supposedly stimulate the economy requires this private corporation to print money which is backed by US treasury bonds (our promise to pay). To be exact as of this article being published, you, as a citizen, owe $191,360 of this debt, and yeah that includes every man, woman, and child. So if you are a family of four that tab comes to $758,700!

In addition to all of our debt, the U.S. government has also accumulated more than 200 trillion dollars in unfunded liabilities. This means you need to add another $2,210,000 to the $758,700 you as a family of four are on the hook for as a result of those who govern us. So say a cool $3 Million! This is no game here, that’s what you owe. This is insane, but also it is very real. Given the average household income of $45,000 per year, this means that 100% of what you earn for the next 66 years is required to eliminate this debt! Now ask who do we owe this money too? Bankers and global elite investors.

The greatest damage that quantitative easing has been causing to our economy is the fact that it is destroying worldwide faith in the U.S. dollar and in U.S. debt.  If the rest of the world stops using our dollars and stops buying our debt, we are going to be in a massive amount of trouble. Over the past several years, the Federal Reserve has been monetizing a staggering amount of U.S. government debt even though Ben Bernanke once promised that he would never do this.

To be fair, The Fed is just the modern version of the plan by “Central Bankers”. Long before the Fed our once honest leaders worried about the control these bankers had over our lives. The following is a February 1834 quote by President Andrew Jackson about the evils of central banking….

“I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out.

Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.”

The capstone of the global central banking system is an organization known as the Bank for International Settlements.  An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe.  It is called the Bank for International Settlements, and it is the central bank of central banks.  It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City.  It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws.  Even Wikipedia admits that “it is not accountable to any single national government.”  The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system.  Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does.  Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”.  During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on.  The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.

It is time that every single person understood these realities in the most fundamental manner. The greatest period of economic growth in U.S. history was when we did not have a central bank. You are intentionally being enslaved by these so-called moguls who believe they truly own you. We have stated several times in many articles that the solution is to rid our lives of these non-productive parasites who simply hoard the labor of us all to glorify their sense of power and entitlement and we do so by declaring a global jubilee. We have a sense that globally we are ready to stand up and reclaim our sovereignty and dignity as human beings and in doing so we can throw these chains of bondage off and begin to expand our civilization in the ways we were meant to evolve. We are the ones who must do this and all it will take is for us to collectively understand that it is us who are being manipulated in this not so velvet slavery. We must break this notion that it is someone else who is poor. Whether you are a poor slave or a well off slave, you are a slave nonetheless.

While Congress Diddles, Obama mumbles, and Bernake Fiddles-Rome is Burning

We just heard that the economy is going in the right direction and Pinocchio’s nose grew another 12 inches. Thanks to journalists like Michael Synder, we know the truth and the truth is the economy is getting worse month by month. Here are the facts, just the facts.

The only reason that the official unemployment rate has been declining over the past couple of years is that the federal government has been pretending that millions upon millions of unemployed Americans no longer want a job and have “left the labor force”.  As Zero Hedge recently demonstrated, if the labor force participation rate returned to the long-term average of 65.8 percent, the official unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.

Employment-Population-Ratio-2013-425x255

The percentage of Americans that are actually working is much lower than it used to be.  In November 2000, 64.3 percent of all working age Americans had a job.  When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job.  Today, only 58.6 percent of all working age Americans have a job. The “inactivity rate” for men in their prime working years (25 to 54) has just hit a brand new all-time record high.

Inactivity-Rate-Men-425x255

In November 2007, there were 121.9 million full-time workers in the United States.  Today, there are only 116.9 million full-time workers in the United States. Only about 47 percent of all adults in America have a full-time job at this point.  The ratio of wages to corporate profits in the United States just hit a brand new all-time low.

When Barack Obama took office, the average duration of unemployment in this country was 19.8 weeks.  Today, it is 37.2 weeks. According to the New York Times, long-term unemployment in America is up by 213 percent since 2007.

According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row. The rate of homeownership in the United States has fallen for eight years in a row. The gap between the rich and the poor in the United States is at an all-time record high.

Comp vs profits_0If that is not enough to understand how bad the economy is, then consider these facts. Under Barack Obama, the velocity of money (a very important indicator of economic health) has plunged to a post-World War II low. Back in the year 2000, our trade deficit with China was 83 billion dollars.  In 2008, our trade deficit with China was 268 billion dollars.  Last year, it was 315 billion dollars.  That was the largest trade deficit that one nation has had with another nation in world history.

Fortunately, it appears that most Americans are not buying into the propaganda.  According to a new CNN survey, the percentage of Americans that believe that the economy is getting worse far exceeds the percentage of Americans that believe that the economy is improving. However, we as a people are not doing anything to insure our congress and administration are reacting to correct this problem. We have to realize that WE MUST begin to hold these scoundrels responsible for their lack of action. At this juncture that includes most every member of congress, certainly the office of the President, and absolutely the FED decisions that have been made.

The American economy is being dismantled brick by brick and WE remain silent. The middle class is being eliminated and not only to we remain silent, we allow trade agreements like the Trans-Pacific Partnership (TPP) Free Trade Agreement (FTA) to be conducted IN SECRECY!  This compact may significantly limit public protections. The issues being negotiated extend to include “patent and copyright, land use, food and product standards, natural resources, professional licensing, government procurement, financial practices, healthcare, energy, telecommunications, and other service sector regulations.”  The secret process would establish policies binding on future U.S. Congresses and state legislatures on numerous non-trade subjects.

When you begin to marry first the lack of action by the congress to do ANYTHING effective concerning jobs with the outright disastrous monetary policies of the Fed and the SECRET free trade actions of the administration it is hard to deny those whacky conspiracy nuts who are saying the American economy is under attack!

We think every responsible adult should at a minimum pick up the phone and call their Representative or Senator and put them on notice to “GET TO WORK” on the economy or they will join the unemployed that they don’t seem to give a damn about.  So let’s make a New Year’s Resolution that by the second week in January, EVERY voting adult has called their representatives. It is just one phone call! Here is where to find their numbers. http://www.congressmerge.com/onlinedb/ We can do this. We must do this. EVERYONE!

There is Only One Way to Solve the World’s Economic Crisis –Jubilee

The situation as related to “public debt” global is beyond insane. Governments are being held hostage by global banks and central banks to repay odious debt that simply cannot be repaid. We could argue till the cows come home on the nature and responsibility for this debt, but the real point here is it is impossible for this debt to be repaid, period. The 100-year contract established with this privately-owned corporation known as “The Federal Reserve” will come to an end on December 23, 2013.On its 100th anniversary, the Federal Reserve System leaves the American people about 17 trillion dollars in debt , and times five in long-term debt. As of 2012, the Gross Domestic Product of the United States was close to $16.5 trillion. Comparatively, Spain’s Gross Domestic Product for 2012 was about $1.3 trillion. Spain’s debt was $2.3 trillion. Spain has a 167 debt-to-GDP ratio. The United States has a 106 percent debt-to-GDP, or nearly $17 trillion; Italy’s debt at $2.5 trillion is 108 percent debt-to-GDP. The European Union was at 85 percent debt to GDP at year-end 2012.

It is hard to talk about these numbers because frankly most of us cannot conceive the scope of these numbers. We feel the pain, but we cannot conceive or get our heads around the crisis. So a little exercise is in order to try and visualize what a trillion means. One trillion seconds is almost 32,000 years. So to pay off the debt, if Congress put a hundred dollar bill per second into an account to pay the debt, it would take well over 4,000 years to get the job done. Now expand that globally. It is just insane, isn’t it? Couple that with the fact if we let the Fed, and all the other central banks convince us this is our only course, we are indeed dead heads in the most extreme sense. One of the main reasons this is just impossible is the fact for every dollar we print to repay our debt, we go 46 cents more in debt than we were before we printed the currency (or sold the bond or keyed a number into a computer) to reduce our debt.

There is a solution, a real solution, that could change the whole situation with a stroke of few pens and the resolve of we, the people, to demand it. The crisis could literally end overnight and the economies of the world would boom. This solution has a long historical precedent dating back to ancient times. Simply declare a jubilee.  In ancient Jerusalem the 50th, (one year after the 49th) there would be a jubilee year during which any slaves would be emancipated and everyone would return to their land and family to live off of natural providence. A clear implication of this teaching is that all obligations, including debt obligations, would be forgiven in the process.  This was known as The Septuagint rendered the Hebrew yovel as “a trumpet-blast of liberty”.

Simply stated, all debt, both public and private would be reset to “0”, period, end of statement. This is not so crazy and if you think there is no modern precedent, you would be wrong.  After the Civil War, it was found that the Confederate States incurred great debt in its attempt to secede from the Union. The North won that war. It would have been immoral for the taxpayers of the United States (North and South) to be forced to pay the debts of the Confederacy which had seceded from the Union during the time the debt was incurred. The 14th Amendment of the United States Constitution repudiated those debts.

 Section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

We do not honor debts resulting from dishonorable purposes. We did not honor the debts of the Confederacy. After the Spanish-American War ended in 1898, the US turned to the Doctrine of Odious Debt when it rejected Cuba’s debts to Spain. We said the debts “…were imposed upon the people of Cuba without their consent and by force of arms.”

The peace negotiators argued that much of the debt was used to crush the efforts of the Cuban people to revolt against the domination of the Spanish. The money was spent in a way that was contrary to the interests of the Cuban people. To ask them to pay for debts incurred to help continue keeping them in a perpetual state of slavery would be immoral… it was odious debt – or, unlawful debt. To command the people of any nation to keep their shoulders to the rock of debt and keep pushing it uphill under threat of imprisonment if they do not is… slavery.

Citizens of this nation and of the world had an economic war declared against them by too big to jail banksters when the protections of the Glass Steagall Act and the McFadden Act were, with careless disregard for the outcome, over-ridden. For close to ten years, the world’s political machine has used debt to enslave the populace… what else can you call debt that is so huge it is not repayable?  In the US, the only thing that stands behind the value of the US Federal Reserve Note – American currency, regardless of what you call it – is the blood, sweat and tears of the American people. If you don’t pay your taxes, you go to jail.  According to the 14th Amendment, public debt must be authorized by law. From where does our Rule of Law in America flow? The Constitution!

Given that if a jubilee were to be declared, it would be the sovereign act of the government with the full backing of the constitution and since no physical assets would be lost, the only “so-called’ losers would be the banksters, who have been proven over and over again to be involved in criminal activity; and the central banks which are privately held and NOT sovereign, why not do it?

It doesn’t take a lot of mathematical skill to figure this out. The dollar, or more accurately stated the Federal Reserve Note, has depreciated to the point where its value is about 6 or 7 cents when compared to the 100 cents it was worth when the Federal Reserve Act was passed on December 23, 1913 and the unlawfully established Federal Reserve System took over the reins of America’s monetary management.

How is the Federal Reserve System unlawful, you ask? Article One, Section 8 of the United States Constitution says “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United State.”  Section 8 also says Congress has the responsibility “To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;”.

There is a lawful way to change the Constitution of the United States. It involves both the House of Representatives and the Senate. Each must approve by a two-thirds supermajority vote a joint resolution amending the Constitution. The joint resolution does not require the signature of the President but is sent directly to the states for ratification. Once ratified via a vote by the People, the Constitution is lawfully amended. That is the process put in place by our Founding Fathers.

As anyone who is familiar with the history of the Federal Reserve Act of 1913 knows, this procedure was not followed. Instead, politicians who supported the concept of a central bank (which America had only briefly on two occasions until 1913) let their opponents go home for Christmas on December 23rd and proceeded to pass this Act unconstitutionally. The Congress cannot, under its own limited power, change the Constitution of the United States. The Federal Reserve Act of 1913 and the banking system that evolved from it have never been constitutional.

Aside from nations that view the Doctrine of Odious Debt as a means to get out of debt every ten years, this concept may lend itself to an exit strategy for sovereign nations of the world to escape the crushing debt being heaped on the heads of people worldwide. The idea does hold some thoughtful possibilities. Iceland thought so – and its crooked bankers and its crooked politicians sit in Icelandic prisons rather than getting multi-million dollar bonuses annually… and Iceland thrives. Too bad the Greeks and Spanish haven’t followed in their footsteps.

What the Doctrine of Odious Debt makes quite clear is that a lie has been forced upon the majority of the world’s population by oligarchic elites. They like the concept of a two-class system with them as the elitists, running things, while the rest of us who used to be middle class are shoved into the labor class forced into careers they, not we, decide are best for us.

The question, then, becomes what debts are “odious” or “immoral,” and which are not? What is an illegitimate debt? In America, we can look at mortgage-backed derivatives and millions of unlawful foreclosures and costing the people trillions of dollars to immediately identify trillions of dollars of property value and profits by banks that can be defined no way other than immoral. Well, perhaps unlawful, too. These debts and the government funds loaned to the banksters that created them and who got bailed out by additional funds from taxes on American citizens can probably make the best claim of “immoral” or “odious” debt of any citizens in the world.

These are the facts of history. It would seem by any definition or legal argument, the debts we now face, on a global basis stem from these facts of the criminal and immoral acts of the too big to fail banks and the subsequent immoral acts of the central banks to “cover” their butts, and therefore the debts both public and private are by any acceptable or legal definition odious, immoral, and illegal.

If we as the people who select our representatives and leaders understand these fundamental facts and insist that the government we elect abides by the constitution, then declaring a jubilee is the ONLY correct solution to our current problem. This is not conspiracy rantings. This is simply the truth of it and the truth can set us free. More importantly the truth can set our children free. I would welcome anyone to tell us where we got this wrong. Anyone?

How “Bail-outs” and Bail-ins” Are Just a Huge Transfer of Wealth

In our continuing effort to educate even those who call themselves “experts” on the economy, we have to continue with the facts that the banksters, MSM, and dupes that call themselves legislators don’t want you to see or understand.  We have, in recent past articles, shown you just the facts about the bailouts and now the bail-ins going on in the EU for what they are, just a huge transfer of public wealth to the hands a few elites in banking and the central banking system.

As we watch the economy continue to falter, and jobs vanish, don’t you wonder where all the so-called QE monies really went that were meant to stimulate the economy? Here we are, 5 years into this so-called recovery and unemployment in the US is still 7.6% and only 47% of Americans hold full time jobs.  The number one employer is WalMart and the number two employer is Kelly Temp Services! In the EU, there is a 40% unemployment rate and people’s bank accounts are being raided without consent to supposedly prop up the banks (Bail-Ins). Government services are being slashed everywhere and still nothing seems to be improving.

Well, even though you are not supposed to understand this, let’s look at the Central Bank Practices and especially at the issue of banks’ reserves at the FED and other central banks in the world. This is a complex subject with much technical jargon that confuses a lot of people. Besides, don’t be surprised that your bank branch manager on Main Street as well as lecturers in finance and economics are also ignorant on this issue. In the case of the latter, this subject is hardly taught in universities. And this is the reason why the scam has not been exposed or understood. But, for those who have a basic idea of bank reserves and how this huge amount of “excess reserves” have been created by the FED, have you asked yourself, “Why have I not spotted this scam earlier?”

Many have been taken in by the propaganda that “excess reserves” is the means to encourage banks to extend credit (give out loans) to desperate borrowers who needed urgent funds to survive and to jump-start their businesses. This propaganda is grounded on the assumption that there is insufficient liquidity in the market. This assumption is misleading.

What are Excess Reserves? The latest figures obtained from the H.3 release from the Board of Governors of the Federal Reserve System (the FED) shows excess reserves of about $1.794 trillion (data as of April 17, 2013)! This level of excess reserves is unprecedented and is the highest since reserves were legislated as a requirement.

Excess reserves are the surplus of reserves against deposits and certain other liabilities that depository institutions (collectively referred to as “banks”) hold above the statutory amounts that the FED requires in accordance with the law. The general requirement is that banks maintain reserves at least equal to ten percent of liabilities payable on demand. There is now data to show that as much as 50% of these “excess reserves” are held for United States banking offices of foreign banks.

 

Let me elaborate. Banks receives deposits from their customers which are inter-alia placed in current accounts (checking accounts) or time deposits (fixed deposit accounts) and which the customer can at any time withdraw from the bank. But, banking practice shows that at any one time, only a small fraction of customers would withdraw their deposits in full. So, there was no need for banks to keep all the deposits in their vaults to meet such a demand for payment. Laws were enacted to allow banks to keep in reserve a small amount of monies to meet such demands. That being the case – if only 10% reserves is all that is required according to banking regulations to meet repayment demands, why should there be such a huge amount of reserves, beyond the legal requirement of 10%?

Understand the fact that when a customer deposits monies in a bank, he is in law a “creditor” (he has loaned the monies to the bank) and the bank is a “debtor” (and he can use the money in any way at his absolute discretion, even to speculate). This is because the ownership of the money has been transferred to the bank. The money is no longer the money of the customer. It now belongs to the bank. And as long as the bank is solvent, and there is a demand for repayment of the deposit, the law of contract stipulates that the bank must repay together with the agreed interest that has accrued.

silver-coins-bars

Now here is where, legally it gets interesting.. if at the time when demand for repayment is made, the bank is bankrupt (i.e. in a liquidation) then the depositor/customer in law is deemed an “unsecured creditor” and must join the queue of all unsecured creditors to share the proceeds of any remaining assets after all secured creditors have been paid. If there are no remaining assets, the depositors get zilch! That is why and as illustrated in the bank confiscation of deposits in Cyprus banks acting in concert with central banks can expropriate all customers’ deposits to pay their secured creditors. You catching on here?

How did the Excess Reserves balloon to a massive US$1.794 Trillion? The Fed’s overall balance sheet has expanded from about $909 billion before the crisis (i.e. before 2008) to about $3.3 trillion in 2013. Of the $2.4 trillion increase, approximately $1.8 trillion is excess reserves. Banks were up to their eyeballs in toxic assets (financial sewage) and they are drowning in this cesspool but for the rescue efforts of the FED and other central banks they would have sunk to the bottom of the cesspool.

The FED created trillions of money out of thin air by a digital entry in its books to purchase the toxic assets (financial sewage) in batches from the banks. The objective of QEs is to save the banks and to save the US Treasury from bankruptcy and not Joe Six-Pack. However, in this article we are focusing on the banks. So, let’s say that the banks HAVE OVER US$10 trillion of financial sewage AND WANT TO DISPOSE THEM WITHOUT AROUSING ANY ALARM.  The monies flowed from the FED to the banks to purchase the financial sewage. The financial sewage is sucked into the FED’s financial vacuum. However the monies are not channeled to the banks’ branches in Main Street to be loaned out to Joe Six-Pack. It is re-routed back to the FED as “reserves”. When the reserves exceed the minimum 10% requirement, the excess is classified as “excess reserves.” This is merely a book entry! And adding insult and injury to Joe Six-Pack, interest of 0.25% is paid on the reserves (i.e. giving profits to the banks).

The banks are allowed to survive in spite of their massive frauds and other financial hanky-pankey. The banks are allowed to use digital technology (e.g. high-frequency trading) to corner the market and destroy Joe-Six-Pack. But, Joe-Six-Pack has to suffer the indignity of unemployment, foreclosures, reduced unemployment benefits, surviving on food-stamps, and other austerity measures. Starting to see the picture here and how this crap is how we are being fleeced like passive little lambs?

“The money flows from the FED to the Too Big To Fail (TBTF) Banksters to Buy Toxic Assets, which is sucked in by the FED’s Financial Vacuum, thereby cleansing the TBTF banks’ balance sheets. The money is then re-routed back to the FED as “excess reserves”.

The FED create monies out of thin air to bail-out the Too Big To Fail banks (TBTF banks) by purchasing their financial sewage (valued at book value as opposed to mark-to-market i.e. instead of paying only 10 cents on the dollar or less, the FED pays dollar for dollar) thereby removing the financial sewage from the balance sheet of the TBTF banks to reflect a “healthier” balance sheet as there are now less financial sewage in the banking system. And, because the TBTF banks are suffering losses, the FED pays 0.25% interest on the “excess reserves” created so as to generate easy profits for the TBTF banks for doing nothing at all. They are earning profits merely from a book-entry in the FED’s books!

The propaganda which I referred to earlier that such monies were meant to enable the TBTF banks to extend credit is therefore bullshit and a load of financial nonsense. So why are the so-called reputable economists at leading universities such as Harvard, Princeton, Cambridge, Oxford etc. touting this propaganda?  In spite of all this past mismanagement, the practices by the TBTF banks is continuing unabated, including the so-called record profits declared by the TBTF banks and the huge bonuses given out to the bankers and their hire-lings. These practices are all just window dressing as long as the toxic assets are not marked-to-market and not declared as junk. If such assets are properly declared, the fiat money banking system would be staring at a bottomless black-hole of toxic assets and indebtedness! What’s worse is these same TBTF banks are still up to their eyeballs in toxic debt, such as derivatives, credit swaps, etc.  In fact JP Morgan Chase alone has exposure more than twice the US GDP! JPMC is exposed just in interest rate derivatives at $45 TRILLION. Take a look at the Fed’s H.8 report to understand how bad it really is.

This has compounded the problem. After the Global Financial Tsunami, all the TBTF banks don’t have enough reserves to meet the withdrawal of deposits placed by customers before the crash. The TBTF banks don’t even have the requisite 10% reserves to meet these demand deposits (Old Deposits).  However, banks are continuing to receive deposits from customers of which 10% of these deposits must be transferred to the FED as reserves. Data shows that customers’ deposits are at an all time high (since 2007), but bank lending is not keeping pace.

Banks are not lending out what they are entitled to do so for two reasons:

1) The banks are using a portion of the “New Deposits” to meet the liability of having to repay the “Old Deposits” in the system. This is because even the excess reserves (created under the QE) are insufficient to meet the demand for repayment of the Old Deposits. So, part of the current New Deposits would be utilized for that purpose. This is the Deposit Ponzi Scheme.

2) Banks are earning no risk profits from interests on “Excess Reserves” at the FED and are only willing to lend to credible borrowers. In the present economic climate, there are just too few credible customers. This is another reason why banks are not lending.

When QE stops, the FED would not be out on a limb because the monies used to purchase the financial sewage from the TBTF banks are still in the FED’s books. The Fed need only to have a reverse entry in it’s books after re-packaging the financial sewage INTO SOME NEW FORM OF FINANCIAL PRODUCT OR WHATEVER (which the TBTF banks are adept at doing before the crash and are still continuing to do so) and dumping them back to the banks and another generation of stupid investors at such time when and if the banks would have recovered. But with the TBTF banks continuing their same toxic practices unabated there is no recovery, ever. Further, with the bank’s unbridled right (sanctioned by law) to confiscate the customers’ deposits (now commonly referred as “Bail-In”) using the Cyprus template, banks have additional financial resources to continue with the plunder and financial rape of the public.

I hope this helps us understand that this unabated transfer of wealth ends with our economic enslavement. The public must be able to understand these fundamentals and demand the end to this fractional banking system and the end of the FED. Your congressmen and women are dupes in this game, as they really don’t understand and therefore do what they are told to do. Inform them WE GET IT and WE DON”T LIKE IT, AND IT MUST STOP NOW! Fire the Fed, break up the TBTF banks and return to pre-1913 banking system controlled by the US Treasury. WAKE UP!  A special thanks to Matthias Chang of Global Research, who unknowingly contributed so much to this article.

Economists Are Saying This is Not a Stock Market Bubble, But Margin Debt Says Otherwise

As  Michael Snyder so aptly points out. “What do 1929, 2000 and 2007 all have in common?  Those were all years in which we saw a dramatic spike in margin debt.  In all three instances, investors became highly leveraged in order to “take advantage” of a soaring stock market.  But of course we all know what happened each time.  The spike in margin debt was rapidly followed by a horrifying stock market crash.  Well guess what?  It is happening again.  In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars.  The previous high was 381 billion dollars which occurred back in July 2007.  Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall.  The stock market just continues to rise even though the underlying economic fundamentals continue to get worse.  So should we be alarmed?  Is the stock market bubble going to burst at some point?  Well, if history is any indication we are in big trouble.  In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed.  That certainly does not mean that the market is going to crash this week, but it is a major red flag.”

“The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world.  Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue.  The following is from a recent article in the Wall Street Journal…”

While the latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally, have you noticed every time the FED has hinted at letting interest rates rise to normal levels, the market gets very jittery, as well they should.  The IMF also sees the folly of the incompetent CONgress letting the sequester take its course, calling it “excessive and ill-designed.” For 2014, the IMF is forecasting growth of 2.7%, however, that’s a downgrade from an earlier forecast of 3%.  “When we forecasted 3%, we had assumed that sequestration will gradually be removed and reformatted more intelligently,” Lagarde said, explaining the pullback.  “We feel that we are not going to see that in the near term, which is why we believe that sequestration will actually impact growth in the United States in 2014.” Read more: http://www.foxbusiness.com/economy/2013/06/14/imf-lagarde-recovery-could-be-better-sequestration-will-hold-back-growth/#ixzz2WaAR2JZV

Others, however, consider the spike in margin debt to be a very ominous sign.  Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…

The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.

Posted below is a chart of the performance of the S&P 500 over the last several decades.  After looking at this chart, compare it to the margin debt charts that the New York Times recently published that you can find right here.  There is a very strong correlation between these charts.

margin debt

s&p responses to margin debt

Again as Michael Synder points out: “The following are 12 clear signals that the U.S. economy is about to really slow down…

#1 The average interest rate on a 30 year mortgage has risen above 4 percent for the first time in more than a year.

#2 The decline in the number of mortgage applications last week was the largest drop that we have seen since June 2009.

#3 Mark Hanson is reporting that “mass layoffs” have occurred at three large mortgage institutions…

The three large private mortgage bankers ALL had mass layoffs recently to the tune of 25% to 50% of their operations staff (intake, processing, underwriting, document drawing, funding, post-closing). Rrefi apps being down 65% to 90% in the past 3 weeks are far more accurate than the lagging MBA index, which is likely on its’ way to print multi-year lows in the next month.

#4 It was just announced that average hourly compensation in the United States experienced its largest drop since 2009 during the first quarter of 2013.

#5 As I wrote about the other day, the Institute for Supply Management manufacturing index declined to 49.0 in May.  Any reading below 50 indicates contraction.  That was the first contraction in manufacturing activity in the U.S. that we have seen since 2009.

#6 The inventory to sales ratio has hit a level not seen since 2009.  That means that there is a lot of inventory sitting out there that people are not buying.

#7 According to the Commerce Department, the demand for computers dropped by a stunning 9 percent during the month of April.

#8 As I noted in a previous article, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.

#9 Job growth at small businesses is now at about half the level it was at the beginning of the year.

#10 The stock market is starting to understand that all of these numbers indicate that the U.S. economy is really starting to slow down.  The Dow was down 216.95 points on Wednesday, and it dropped below 15,000 for the first time since May 6th.

#11 The S&P 500 has now fallen more than 4 percent since May 22nd.  Is this the beginning of a market “correction”, or is this something much bigger than that?

#12 Japanese stocks are now down about 17 percent from the peak of May 22nd.  Japan has the third largest economy on the planet and it is one of the most important trading partners for the United States.  A major financial crisis in Japan would have very serious implications for the U.S. economy.”

So be wise and don’t buy into the Lame Stream Media economists who are saying “nothing to see here folks, move along, the stock market rally is fine.  Thanks to decades of incredibly foolish decisions by our leaders, an economic collapse is inevitable.  This is especially true considering the fact that our leaders in Washington D.C. and elsewhere will not even consider many of the potential solutions which could help start turning our economic problems around.

People will be devastated if the markets do crash this time.  Just as it seems they have made some recovery from the 2008 crash in their 401Ks and retirement funds.  Be wise this time. Take a look at your portfolios and make some changes while you can.  Protect some of those assets in money market accounts this time.  But mostly, educate yourself more this time.  Don’t allow those bankster crooks and parasitic brokers lead you down the primrose path. YOU drive the bus and you own it.  Tell them where you want your hard earned money positioned.  This is not financial advice, it is simply a heads up. Decide for yourself.