White House announces debt ceiling will be raised, bankers rejoice

In a last-minute turn of events, the US Government announced it will increase the debt “ceiling” for the 75th time since 1962.

What makes this time special is that National Debt is now equivalent to GDP (~ $13 Trillion).  A 1:1 ratio may not mean anything other than being a nice even number (like on the odometer of your car) for us to come to our senses and stop this self-destructive debt money creation before it becomes hyperinflation. Problem is, hyperinflation is the only thing the bankers can do now to sustain their ponzi scheme we refer to as the dollar.  Inflation has predictable results, like concentrating wealth in the banks and devaluing everyone’s investments ( ie savings and retirement).  As Ron Paul says, inflation is a hidden tax which affects the poor and middle class most, in our case, paid directly to the international bankers of the Federal Reserve System.  Who wants to be a millionaire?

Raising the debt ceiling this time is just one more step in a long process. They won’t default, they will just keep “printing” money until it becomes so worthless that everyone is forced to dump the dollar and adopt a new currency (Amero, SDR or what have you).  By this time there will be nothing to default on, and holders of dollar debt will have been robbed blind.  This is a manufactured Problem-Reaction-Solution dialectical mind trick marching us toward a world financial system and a perpetual state of financial depression; under a world government of, by, and for the banks.

The sane course of action would be to stop the imperial wars and nationalize the Fed immediately, but corporate interests control our government and the cancer is everywhere.

See you in the forced labor camp.

TSHTF:2014

I’m going out on a limb and making a financial projection.  Sometime in 2014, if this trend continues, an ounce of gold will cost infinity US Dollars. Obviously this inflationary debt-money creation is not sustainable, as we know by looking at recent examples of hyperinflation like Weimar Republic, Argentina, and Zimbabwe.  If people wake up to the scam, there could be a break point prior to 2014, a rush on metals, bank runs, and an attempt by the US Government to confiscate citizens’ gold as they did in the 1930s, so this trend may not hold… but look at the curve:

This nearly perfect curve represents debt feedback in the system, in the form of existing debt requiring more and more debt-money to be created, in order to pay back interest.  How can interest be paid on loans for which the principal was created out of thin air, except if new money is created elsewhere within the system?

The only way to avoid total dollar collapse is for Congress to nationalize the “Federal” “Reserve” cartel which has perpetrated this ponzi scheme on the US taxpayer.   We need to adopt a non-fractional, non-debt based currency, and put our dollars in valuable assets such as land, water and food production, energy independence, gold and silver, self-defense, and other real assets which will be valuable in a metal and barter system.

Unintended Consequences

The Secret of Oz

The Secret of Oz is a new documentary video from the creator of “The Money Masters.”   Basically one of the main premises of the film is that as long as the government or some other good guy controls the issuance of currency, and it’s issued debt-free, the money system will benefit the public and not just the elite.   I don’t entirely disagree with the idea that a fiat system *could* work for us, but in practice the power to issue currency has repeatedly fallen back into the hands of the bankers.  Even if we allow them to issue something as simple as gold or silver receipts, bankers will inevitably turn it into a fractional reserve system and defraud the depositors, concentrating wealth for themselves. So I’m surprised they are so quick to dismiss gold. 

Rich people do already hold most of the gold, yes.   But they also control the government printing presses, and it’s a lot easier to inflate paper (or numbers in a database) than it is to prevent people from digging more gold out of the ground.  Private companies can will continue to mine gold, somewhere.   Metals markets are international.  For thousands of years, humans have been able to spend a gold coin anywhere in the world.  Metals already are the world currency. Fiat currencies come and go but gold holds intrinsic value.

Now as for the rich hoarding it, I would argue that inflatable, easy-to-manipulate fiat money systems have enabled the bankers to obtain a disproportionate share of real assets, such as metals and property, using their 100:1 fractional reserve leverage and inflationary money creation thru loans. Are you aware that in the ’30s the US government actually confiscated gold in the name of saving everyone from the banker-engineered great depression?

If we went to a metal and barter economy, commerce could be less centralized yet more global. Even gold and silver certificates present the opportunity for fraudsters to create a fractional reserve system which is in essence a ponzi scheme. While metal bullion is not fraud-proof (recall recent tungsten bars plated with gold) it’s significantly more difficult to manipulate on a large scale.

• A big pile of gold doesn’t do you much good unless you spend it into the economy.
• It’s difficult for bankers and governments to maniuplate the worldwide flow of gold out of the ground, due to market competition.
• It can’t be counterfeited with current technology

We don’t actually need a currency “backed” by anything.  All we need are land, food, water, protection, and some metals and other raw materials to trade for goods and services. I want no part of this casino gambling.

The international banking elite control the issuance of currency. They are not going to give up that position without a bloody fight. BUT… gold and silver exist already in the free market. We can dig more of it out of the ground, while bankers, government, and whoever has control over the issuance of currency can “row” the fiat economy with ease. “Power corrupts, absolute power corrupts absolutely.” One thing corrupt officials can’t do, however is create gold or silver out of thin air. They can flood the market, but they’ll be losing their own wealth in the process. And no, the bankers don’t control all the gold. Actually I believe the Vatican is the single largest owner of gold in the world. Better brush up on your Hail Marys.

Maybe someday we’ll find a way to enforce strict control over a fiat paper currency, and permanently protect ourselves from corrupt hands massaging all the wealth out of the economy by means of inflation and deflation. Until this technology exists, metals are the next best thing.

“It’s not what backs our money, it’s who controls the quantity.” Makes sense.  And the quantity of gold is a lot harder to manipulate than the quantity of fiat paper or zeros in a database.
The new human rights movement

Although I honestly think in the current environment gold and silver are the most fraud-resistant form of money, there is one big problem with it – the environmental cost of mining. We need to find sustainable methods to mine gold that don’t involve cyanide. But when you weigh the downside of living in this banker-take-all system, it becomes apparent which the lesser of 2 evils is.

Thank you for reading, and may your chains rest lightly.

Wells Fargo banker admits mortgages create money out of thin air

Unchecked creation of new fiat money backed by no assets is at the core of this ongoing planned slide into debt slavery.  While on the surface one might assume that a house is a reasonable asset to “back” the creation of this new money, this is not how it works.

For one thing, there isn’t just one mortgage for each new house built.  A single house could have dozens of mortgages on it over the existence of the house, each time creating new fiat money and resulting in this new money + interest being paid back to the bank over the term of each mortgage.   A $100k house could be foreclosed after $90k has already been paid, giving the bank both the house AND the majority of the money they created initially (out of nothing).   They will then turn around and create yet another new mortgage and thus new money.  This in no way represents the real expansion of the economy and is obviously not a reasonable asset to back our currency.

What’s shocking is that someone actually got a banker to admit to this, and I do know for a fact this is authentic…

From Revolution Not

“The short answer would be yes (promissory notes are the backing for new money) if you look at it that way we do loan money out of “thin air”. We are able to loan money just like any other bank is able to.”

- Ryan S.  Loan Administration Manager, Wells Fargo Home Mortgage

So, the very root of what a mortgage is and how it works is based on fraud. It is unconstitutional and cannot hold up in court if one reads the Constitution, even a strict constructionist view point.

Read more…

Who wants to be a millionaire?

From BSC

Central banks start to abandon the U.S. dollar – From the Wallstreet Blogs, Fortune, CNN

“Just last week, America’s debt lept $166 billion in a single day. That one-day run-up is greater than the entire U.S. annual deficit in 2007. And Americans, the world’s consumers, continue much of the behavior that helped the U.S savings rate drop so low.

The dollar has been in free-fall since 2007.

Last year, both China and Russia have questioned why the dollar should be the world’s reserve currency.  (Naturally, they were advocating for the ruble and yuan).

A new report from Morgan Stanley analyst Emma Lawson confirms what many had suspected: the dollar is firmly on its way to losing its status as the reserve currency of the world.

And just last week, the United Nations released a report concluding that the dollar should no longer be the world’s reserve currency because it is not stable enough. The dollar is down 5% over the past month, and even currency traders don’t see it as a safe haven any more.

There is certainly an element of economic competitiveness in those statements from foreign bodies and governments, but at the same time, Americans houldn’t be surprised that, in these touchy times, central banks want more of a measure of security than the dollar can afford right now – particularly when we’re running up an enormous deficit through the costs of stimulus programs and two simultaneous wars.”

———————————————————————————————————–

The US Dollar is losing reserve currency status because it is being over inflated to near worthless proportions, by being printed with wreckless abandon by PRIVATE CORPORATE BANKS.

If we do not take back the power to issue our own currency, as provided by the US Constitution, we will never escape the DEBT SLAVERY that occurs by allowing private central banks to loan us our own money at interest!  This currency black hole creates inflation and loss of value because every dollar “borrowed” comes with debt attached, and in order to pay the interest on the first dollar we have to borrow more dollars, again with more interest!  These bankers have run this same scam in other, less sophisticated countries.  Now they’re running it here.

These are real images of devalued, inflated currencies from the last 60 years.  Some so worthless that the people use them as wallpaper or simply throw them away.  Imagine a loaf of bread costing 200 billion dollars!  Thats what they pay in Zimbabwe.

DON’T BE A SUCKER!

Fractional reserve, banks, and foreclosures

RevolutionNot.com

I’ve been thinking a lot recently about the banking system in the USA and how banks create money out of thin air (if they have the reserves).

Under the fractional reserve system, banks are allowed to create money through a multiple of their reserves. When they create the money, it becomes the reserves for the next bank and so on and so forth. The reason why this is corrupt is because the banks don’t create value. They only create money. They only create money through loans, meaning they own the real value until you pay them back with their fake, newly minted, money

As this crisis continues they have stopped lending…. This has an important side effect. When a bank lends, they create new money. This is the only way a bank will lend because it’s virtually risk free for them. They now see money creation as too risky.

The problem we are running into now is that the banks aren’t creating new money, ahem, they aren’t lending. This can be seen here in the recreated M3:

Recreated M3

As banks continue to go bankrupt, their creation of new money dwindles. The effects of which can be seen in the decreasing M3 over the last few months.

This is why the banks continue to get preferential treatment over average citizens. They create the money. New money is ESSENTIAL to the functioning of our economy.

The reason is quite simple actually. When the bank system loans new money, they don’t lend out the interest payment. Meaning, a new loan must be taken out by the economy in general to pay the interest of that person (or company). Thus, new money is essential to keeping the race going.

Without new money, more and more people won’t be able to pay back their loans. We are already seeing this happen with the never ending “foreclosure crisis.”

Until new money is being created by the banks then there is less and less money to be able to pay the banks their interest.

What’s really cool about this is that the government has been doing EVERYTHING they can to buoy the balance sheets of banks and they still aren’t creating new money. In fact, the banks don’t want government money because they can’t give themselves billions in bonuses.

The decreasing M3 is due to people paying off their loans. This has an amazing effect of causing less money to be in the system. In essence, if all loans were paid off, there would be no money anywhere.

So in the mean time, more foreclosures will occur both in residential and now commercial real estate. The banks will continue to be in bad shape regardless of how much they legally or illegally manipulate their books. This will cause no new money to be issued thus making the problems worse.

All those people talking about a “recovery” have no idea what’s really going on. A company’s balance sheet may look good but until the banks start issuing new money, the public will stay in a world of hurt. Foreclosures will remain high and jobless numbers will keep being massaged downwards.

So what are we to do? Well, the government has been trying to fund projects to inject money into the system. The problem here is that the government is getting the money… from the banks! Our government must pay back the interest on that… meaning…. you, me, our children, grandchildren, and, well, generations will be paying back that money.

If the government actual did the constitutional thing, and took the money creation powers back from the banks and reinstalled it with Congress, we may actually have a chance to make it. As it is, I am very pessimistic about the economy due to the fraudulent ponzi scheme run by the Federal Reserve.

Last note, the Federal Reserve has a mission to have a stable currency and try to maintain high employment. They have failed on both account horribly. They have debased the dollar by 95% over the last century, and unemployment is now 20%+ using actual numbers and not the fudged ones produced by the government. A stable currency would mean 0% inflation/deflation over 100 years. A target of 2% inflation per year is NOT stable. It’s exponential growth.

Debt is Not Money

“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs.”

–Thomas Jefferson letter to Thomas Cooper, 1814.

Are we standing at the edge of a Great Inflation (like Weimar Germany), a second Republican Great Depression, or a return to the middle class prosperity of the Roosevelt/Eisenhower New Deal era? Until Americans understand the difference between “money” and “debt,” odds are its going to be one of the first two, at least over the next few years.

Money

“Money” is a convenient replacement for barter in an economy. Instead of my giving you five pounds of carrots, so you wash my car, then you trade the carrots for a new shirt, and the clothing store then trades the carrots to a trucker that brings them their inventory, we all just agree to use a ten-dollar bill. Because a nation’s money supply represents that nation’s “wealth” – the sum total of goods, services, and resources available in an economy/nation – it needs to have a fixed value relative to the number/amount of goods, services, and resources within the nation.

As an economy grows – more factories, more goods, more services – the money supply grows so one dollar always represents the same number of carrots. (And with a fractional reserve banking system like we have, that growth is created mostly by banks lending money and creating it out of thin air in the process.)

If the money supply contracts, or grows slower than the economy, then we experience deflation – the value of money increases, goods and services become less expensive (fewer dollars to buy the carrots), but because the value of money has increased it becomes harder to get. When this happens quickly, because of its economically destabilizing influence (businesses and people can’t get current money – cash – or future money – credit – because money is more valuable), it’s called a Depression.

On the other hand, if the money supply expands or grows faster than the economy, there are more dollars than there are goods and services so the number needed to buy a pound of carrots increases. This is inflation, and when it happens suddenly and on a large scale, it’s called hyperinflation.

Therefore, one of the most important jobs overseen by Congress and executed by a Central Bank (or the Treasury Department if we were to go with the system envisioned by the Founders and Framers of the Constitution) is to “regulate the value” of our money (to quote Article I, Section 8.5 of our Constitution) by making sure the number of dollars in circulation always steadily tracks the size of the overall economy. If the economy grows 2%, then that year there should be 2% more dollars put into circulation. More than that will create inflation; fewer will create deflation.

Debt

“Debt” is not money. Instead, it’s a charge against future money. But even though it’s a charge against future money, it can still be spent as if it was today’s money – except that it must be repaid with interest. And therefore debt must have some sort of a balanced relationship to the total size of the economy – albeit the future economy – for it not to be destabilizing.

In other words, if over the next twenty years (the term of a typical and healthy mortgage) the economy is expected to grow by X percent or X number of dollars, then the total amount of twenty-year debts that can be issued should be limited to X. But if it’s greater than X, then when the future arrives there won’t be enough circulating money to repay the debt, because the economy (and the money supply) won’t have grown as great as the debt repayment demand. The only two options are for debt holders to default (bankruptcies, foreclosures, etc. – Depression), or for the government to suddenly increase the supply of money (inflation).

The same is true of one-year debt (credit cards), four- or five-year debt (car loans, typically), and all other forms of debt. In aggregate, if the amount of debt is allowed to grow faster than the economy will grow over the term of the debt, when the debt is due there will be a problem, and if it’s grown hugely, a disaster.

This is what we’re experiencing right now. Over the past three decades – largely since Reagan – debt (both private and public/government) has expanded much more rapidly than the economy has grown. “Now” was “the future” when the debt was issued, but the economy hasn’t grown to the point where there are enough dollars (in reality, enough value – goods and services) to repay that debt. Thus we are experiencing a “wringing out” of that debt – bankruptcies and foreclosures – relative to the current wealth of the economy.

This is the most critical thing to see clearly – without adhering to this simple concept, a government or central bank will always either create boom/bust cycles (depressions/recessions) or inflation. Without regulating debt, a government will be taken hostage and an economy destroyed by for-profit institutions that are able to create debt without regulation (banks).

Panics

Although Thomas Jefferson and Alexander Hamilton – two opposite sides of the national bank debate – both understood this simple concept, it wasn’t brought into the realm of law until the mid-1930s with a series of strict regulations on the abilities of banks to create debt (loan money), and strong political limits on the ability of government to go into debt outside of wartime. That’s why from the founding of this nation until 1935, we experienced a “banking panic” at least once every 10 to 15 years from 1776 until 1935.

Then Roosevelt took the banks in hand, by creating a series of regulatory agencies and empowering them with strict laws. The result was that for fifty years in the United States – roughly 1937 to Black Monday of 1987 – we didn’t experience a single national “panic” or consequential bank failure. The stock market grew steadily (allowing for the blips surrounding WWII).

It was also hard to get a credit card (short term debt), buy a car (medium-term debt), or get a mortgage (long-term debt) without proving that you would be able to repay the amount in the future – in other words, that there would be future expanded-economy dollars that you could lay claim to because of your particular job and skills. Credit was regulated.

Reagan changed the rules of the game, particularly when he brought in the anti-regulation Libertarian Alan Greenspan as Chairman of the Fed. He ran up a massive federal debt – greater than that of every president from George Washington to Jimmy Carter combined – in just eight years, and began the process of loosening the power of bank regulators.

That process was finished by a Republican Congress (particularly Phil Gramm) and President Bill Clinton (with help from Rubin and Summers) and then booted out the door by George W. Bush, who borrowed even more than Reagan. Bush even used an obscure 19th century law to fight states’ attorneys general who wanted to regulate or prosecute fraud among banks and mortgage lenders in their states (see the article by Eliot Spitzer in the Washington Post just before his being outed for sleeping with a hooker).

Green Eyeshades

During the “Great Stability” – that period from the 1935 onset of the New Deal and the beginning of its end with Reagan’s massive tax cuts of 1981 and 1986, leading directly to the stock market crash of 1987 and the S&L debacle – banking was, as Paul Krugman noted in a recent column, “boring.” Credit and currency were considered part of the commons, not something off which a small elite should profit. Like the utilities in the game Monopoly, banks provided a predictable but relatively low profit. Nobody got rich, but nobody lost anything, either.

Bankers were the safe and predictable guys who wore green eyeshades at work and pocket protectors in their shirts. The nation’s main products were goods and services; nobody “made money with money” in any big way.

Since the serial deregulations of the financial services sector brought on by Reagan, Bush, Clinton, and Bush, however, bankers became fabulously rich. They called themselves the “Masters of the Universe.” They came to dominate contributions to politicians, and facilitated the takeover of most major US newspapers, all the while using debt as their mail tool to make money (burdening those newspapers with such debt that many are now going out of business because they can’t repay it).

By 2005, fully 40 percent of all corporate profits in the US came from the financial services sector – a group of people who didn’t produce anything at all of value, nothing edible or usable, nothing that would survive into future generations. They invented fancy derivative “products” that they “sold” at high commission rates around the world so others could “make money with money.” In fact, they weren’t making money – they were taking money. Behavior that would have been criminal during the Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter administrations became “normal” and was even encouraged: more than half of all the graduates from many of America’s top colleges and universities went into finance so they could get in on the very lucrative scam.

They created debt. As Ellen Brown notes at www.webofdebt.com, according to the Bank of International Settlements, they created and sold at a profit over 900 trillion dollars worth of debt- and risk-based “instruments.” That’s a pretty mind-boggling number when you consider that the GDP of the United States is around 14 trillion and the GDP of the entire planet is around 65 trillion.

All of these “products” were made and sold based on the assurance that when “then” became “now” the economy would have grown fast enough for there to be enough dollars to pay it back. But the reality of a debt bubble that exceeds the world’s GDP many times over came crashing in on us in 2007 – and still hasn’t fully crested – producing the “crisis” we currently face.

Are we there yet?

Are we recovering from it all now? Will things soon be back to normal?

If by “normal” we mean like life during the “Great Stability,” the answer is: “Not a chance.” Back then we had in place tariffs and trade policies, first initiated in 1791 by Alexander Hamilton, that protected our domestic manufacturing industries. We still made things – in fact, the USA was the world’s largest exporter of manufactured goods, and the world’s largest creditor. Like today’s China, for over 100 years we’d loaned other countries money so they could buy our stuff!

On the other hand, if by “normal” we mean how things were over the past 28 “Reaganomics” years – a stagnating middle class, disintegrating manufacturing sector, and piles of money being made by bets and debts – then maybe. After just the first decade of Reaganomics, we went from being the world’s largest exporter of manufactured goods to being the world’s largest importer; we went from being the world’s largest creditor to being the world’s largest debtor.

None of that has changed. We haven’t repealed Reagan’s disastrous tax cuts, which have exploded our nation’s budget deficits. We haven’t repudiated NAFTA and the WTO and gone back to an international trade policy that puts American interests over those of transnational corporations. We have not re-regulated the banks, and have not brought back 6000-year-old laws against usury (excessive interest rates on debt).

The bankers, in fact, are fighting it tooth and nail – the financial services industry in whole has spent over $5 billion lobbying Congress over the past ten years – and their acolytes like Lawrence Summers and Tim Geithner play major and consequential roles in the Obama administration.

It appears that the plan today is not to regulate the amount of debt that banks can create, but instead to both print more money and do everything possible to reinflate the debt bubble. (Lacking a return to Hamilton’s national manufacturing and trade policy, as a nation we just continue to slip deeper and deeper into Third World status as an importer and debtor – this may be our only choice if we don’t wake up soon.)

If followed, the Summers/Geithner policy can have only one of two outcomes: inflation or another, more serious crash. It’s possible we could have both. Apparently the bankers and Summers/Geithner’s hope is that neither or both don’t happen for at least three and a half years…

Thom Hartmann (thom at thomhartmann.com) is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program The Thom Hartmann Show. www.thomhartmann.com His most recent books are “The Last Hours of Ancient Sunlight,” “Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights,” “We The People: A Call To Take Back America,” “What Would Jefferson Do?,” “Screwed: The Undeclared War Against the Middle Class and What We Can Do About It,” and “Cracking The Code: The Art and Science of Political Persuasion.” His newest book is Threshold: The Crisis of Western Culture.