ARE YOU FED UP YET?
Excerpted From April 2011 Issue of Hill Country Happenings
March 23, 2011
“To cause high prices, all the Federal Reserve Board will do will be to lower the discount rate, producing an expansion of credit and a rising stock market; then when business men are adjusted to these conditions, it can check prosperity in mid-career by arbitrarily raising the rate of interest. It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down. This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. They know in advance when to create panics to their advantage, They also know when to stop panic. Inflation and deflation work equally well for them when they control finance.”
– Congressman Charles A. Lindbergh, Sr., 1913
I’m not sure why diabolical and evil plotting must occur in the depths of night, off everyone’s radar. It seems many current political and economic stories start like something out of a Edward Bulwer-Lytton Edwardian novel,”It was a dark and stormy night . . .” The formation of the Federal Reserve is such a horror story. The Federal Reserve Act was enacted on December 23, 1913, during Christmas recess, in the dark of night, and with many members absent.
This bill was concocted in even greater secrecy on a “duck hunting” expedition by the leading international bankers of the time at a place called Jekyll Island where they created a financial Mr. Hyde. A virtual who’s-who of financial power at the time were in attendance, including J.P. Morgan & Co. partner Henry P. Davison, National City Bank president Frank A. Vanderlip and Kuhn, Loeb, and Co. partner Paul M. Warburg. They were helped along by their evil legislative go-to guy and minion Senator Nelson W. Aldrich. From this meeting evolved the “Aldrich Bill” which was opposed and hotly contested on many fronts as the creation of a Central Bank, a failed experiment that was tried and died twice before in U.S. History. The First Bank and Second Bank of the United States were both the brainchild of James Rothschild and were run out of town due to massive fraud.
The Federal Reserve Act wasn’t going to work unless the stinking turd of banking fraud and theft could be polished into something that was more fragrant and palatable to the citizenry. And what a gleaming turd they produced. At the time of its inception, there was a great deal of well-deserved public distrust in banks and bankers. The U.S. was still reeling from the Panic of 1907, which was brought about by currency manipulation by the largest banks – particularly those in London and some of the villains listed above . The public wanted to be unshackled from “domination by what was known as the Money Trust.”
As it was apparent that Senator Aldrich was a bought man and sock puppet of Wall Street, the Democrats came up with their “opposing” bill, The Federal Reserve Act. Lost in fog of heated debate was the fact that the bills were essentially identical. Please choose from the following banking menu, evil or demonic. The financial sector came to our rescue with their standard solution to public economic woes, give the banks more power and money. On December 23, 1913, Congress abrogated its Constitutional (Article 1, Sec 8,, Par. 5) duty “To coin money, and regulate the value thereof .“ On that day, or rather that dark and stormy night, the economic backbone and foundation of our nation was outsourced. Economically speaking, it has been downhill from there. Except, of course, for the bankers.
Who owns the Federal Reserve? The name sure sounds official but the U.S. Taxpayer has absolutely not one dime in interest or equity in this money-printing beast. It is wholly owned by member banks and foreign affiliates.
The name itself, “Federal Reserve.” is oxymoronic. It is neither Federal, nor contains any reserves. The Federal Reserve is a privately owned bank, the public and little banks are not allowed to buy in. The next layer of ownership leads to the banks. More specifically, the biggest players are Bankers Trust Company, Bank of New York, Chase Manhattan Bank, Chemical Bank, Citibank, European American Bank & Trust, J. Henry Schroder Bank & Trust (a subsidiary of Schroders Ltd. of London), Manufacturers Hanover, Morgan Guaranty Trust, National Bank of North America (a subsidiary of the National Westminster Bank, London). These banks are owned by people. Very rich people. The Federal Reserve exists only to serve its owners and turn a profit for them, not the American public. At this, they have excelled.
Over the years, we have witnessed boom and bust cycles. Any economist will tell you that our economy is cyclical. Why? So that the monied few can take advantage of both the ups and downs. If you know what is coming down the road, whether the FED is planning on raising or lowering interest rates, and where the next injection of capital will occur (or not), you can easily bet on the upcoming winners or short the losers. Nothing wrong with a little insider trading among golf buddies and Ivy League classmates. The folks on top never lose, regardless of the outcome for the rest of us. This is the core nature of a managed economy, oddly something the Right claims to hate while robustly enabling the whole thing.
Over the last few decades, from the Savings and Loan debacle, to TARP and the other recent bailouts enacted by two White Houses with the gun of complete collapse and martial law held to their heads, we have seen the FED accelerate their policies to continue the growth of wealth at the very top.
In the pages of this magazine, in late 2006, I predicted the economic crisis that was to befall us well before it occurred.. At the time, I thought the whole thing was going to blow up in our faces at any moment. Me of so little faith never dreamed they could hold the economy together with duct-tape, bailing wire and bullshit for another fourteen months. When the crash finally occurred, it was anything but a surprise after I had spent months wading through toxic assets, credit default swaps and the derivatives market. It was not only coming, but inevitable. As I mentioned at the time, the people who took out mortgages they couldn’t pay for were on their butts in the street two years before the collapse came. They were just the tip of the woeful iceberg and had already been swept from the stage. The big money was in the derivatives that blew the whole industry way out of alignment.
The derivatives market defines fraud. When the crunch came, it was almost funny how the banks, mortgage servitors and other vampires were in a tizzy. Turns out that there were many “mortgage holders” waiting in line to repossess homes. How do you sell off a toxic asset worth, for example, $500,000 when there are $20,000,000 worth of people claiming it as an asset? Many of these “equity holders”, especially in the case of the banks, had these properties listed as prime assets, backed up by the rating companies who said they were “no risk, AAA” investments? It was an easy sell to gullible retirement funds looking for respectable returns. After all, ask any realtor, you can never lose money in the housing market. It is not the sky that is the limit but the entire galaxy.
So as I gaze into my crystal ball, I can see down the road Economic Meltdown V2.0. It will be a doozy that will overshadow all economic tragedies to date. There is a new litany of terms I now have to come to grips with. “Quantitative easing,” is one that comes to mind. Google up the short cartoon that explains how it works – more eloquently than I can describe, but, in essence, the FED prints money to buy U.S. Treasury bonds to float economic expansion. Problem is that each and every dollar the FED prints is merely a promissory note to the banks from the U.S. Taxpayers. We the people pay interest to the banks for the privilege of using their fiat paper money. Behind the smoke and mirrors are huge fees for the big banks and dumpster diving for the rest of us. It all boils down to leveraging.
Fractional reserve banking can let your local bank loan out many times more money than it has on deposit. Credit default swaps are hedge bets placed on economic assets that might go south. The problem with all these paper assets is that they have no real world correlation to property, products or services. We have seen how well theoretical monetary polices work in the real world. At least for real people. In ancient Israel, it was against the Law of Moses to loan money at interest. It is also expressly forbidden in the Koran. Usury was an offense against God until the Industrial Revolution. It is a strong statement to say that historically money lenders are powerful enough to roll back the commandments of even God. After that, Congress is, well, easy money.
So what are the bankers and the FED up to developing new recipes to cook our goose? Again I suspect the derivative markets will again rear their ugly heads in the very near future with a much different result than their last escapade. What is, historically, the ultimate hedge against total economic collapse? Precious metals. When people get really freaked out about the economic outlook, they start hoarding gold and silver. They realize that, ultimately, the worth of currency doesn’t surpass the piece of paper it is printed on. Our economy and money is a faith-based enterprise. It only holds up as long as people think that a worthless piece of paper is really a hundred dollar bill. There is a catch to successful precious metals speculation – you have to actually have to have the metal in your possession when the crunch comes. Therein lies the problem.
Conservative estimates now state that the precious metals market has less than 1% of the actual metals on hand that is claimed on investor balance sheets. The problem gets huge when these metals speculators finally get nervous enough to ask to take possession of the goods. Of the 100 people demanding their ounce of gold, only one will wind up with a Krugerrand or Maple Leaf. The other 99 hedge investors are left with nothing. It gets worse. When those who could not take possession start to raise a stink, the only solution that can be offered is to refund their money. At public expense of course in another round of bailouts.
Of course that scenario won’t work. These people invested in gold and silver to get away from dollars and other fiat currencies. Now the government and bankers will want to give them the same worthless paper they thought they had hedged against. It is not outside the realm of honest speculation to ponder whether these financial geniuses at the multinational banks have hedged the downside of their precious metals speculation with a bit of derivative backing which, like the housing bubble, multiplies the problem many times over. If there is a run on precious metals, and I believe there will be, the game is over.
If the FED was right in their judgment of economic conditions, I might give it a pass. Unfortunately, the FED has been dead wrong about every economic forecast for the last twenty years. Their batting average to date is zero for thirteen trillion and climbing
The Fed is outside the boundaries of oversight. An example is the T.A.R.P bailout that had so many up in arms. It was a fractional amount of the money printed by the Fed, at cost to us as taxpayers, to fund the “recovery” by injecting capital into the industries they select. Being in the banking industry, they selected themselves as recipients of the public largess. Can you say, “welfare for bankers?”
The Fed is not concerned with legislative initiatives to reduce spending, they are exempt. If Congress decides to reduce spending and the Fed doesn’t like the legislation, they can still, by fiat, act to contravene the intentions and goal of Congress and the American people. The Tea Party can whine all they want about government bailouts but, please note this, there is nothing Congress can do the reign the FED in. It is wishful thinking. All other deficit reduction schemes pale in comparison. What many people, including myself, don’t realize is that our political environment, economy and our personal lives are designed for unending debt.
Control of our nation is wielded by those whose primary interest is in keeping the people economically off balance and fearful for their futures. Every problem can be solved by borrowing more. America, under the rule of the FED, is the only nation in the world who believes it can borrow its way out of debt. Hang on to your hats folks!
BANKS AND MAJOR CORPORATIONS
DOING THEIR PART FOR AMERICA
To give you some idea of our bank and major corporate patriotism and tax burden, please note these numbers:
Bank of America operates 371 tax-sheltered subsidiaries, more than any other big bank studied, and 204 subsidiaries in the Cayman Islands alone, according to its latest regulatory filings.
This year, Bank of America is receiving the “income tax refund from hell” – $666 million for 2010, according to its annual report filed in late February 2011. This is following a $3.5 billion refund reported in 2009.
Government Accountability Office, 83 of the top 100 publicly traded corporations that operate in the US exploit corporate tax havens. Since 2009, America’s most profitable companies such as ExxonMobil, General Electric, Bank of America and Citigroup all paid a grand total of $0 in federal income taxes to Uncle Sam. Tax havens alone account for up to $1 trillion in tax revenue lost every decade.
George Bush’s billion Wall Street bailout was chump change compared to the trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to, among other s, Goldman Sachs, which received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion; Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1 trillion, and Merrill Lynch, which received some $1.5 trillion in short term loans.