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Posts Tagged ‘bank fraud

Here’s the Setup for the Con of the Decade

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by Charles Hugh Smith
Posted April 15, 2011

The Con of the Decade, which I described last July, is being set up nicely.

I described The Con of the Decade last July (2010). The Con makes me a heretic in the cult religion of Hyperinflation. I consider myself an agnostic about the destruction of the U.S. dollar and hyperinflation (basically the same thing), but my idea that hyperinflation is fundamentally a political process makes me a heretic. I skimmed a few of the dozens of comments posted on Rick’s Picks and Zero Hedge after they posted one of my expositions on this dynamic, and didn’t see even one comment in favor of this perspective.

The Con is being set up right now, and the outlines are clearly visible. The Con works like this:

1. The Financial Elites/Oligarchy raked in billions in private profit from the orgy of leverage, credit expansion, fraud, embezzlement and misrepresentation of risk that resulted in the Housing Bubble.

2. The losses were transferred to the public (Federal government, i.e. The Central State) or its proxy, the Federal Reserve (i.e. the central bank), via bailouts, backstops, guarantees, the Fed’s purchase of taxic assets, and an open window for the financiers to borrow billions at zero interest (ZIRP) for further speculations.

3. The Treasury now borrows $1.6 trillion every year, fully 11% of the nation’s GDP, as the Central State has replaced private demand and credit expansion with its own borrowing and spending.

4. Non-U.S. central banks have largely ceased to support this unprecedented scale of borrowing, so the Federal Reserve now buys most of the Treasury’s issuance of debt via QE2 (quantitative easing, the direct purchase of $600 billion in Treasury bonds).

5. Unlike Japan, the U.S. cannot self-fund its own government borrowing: while U.S. investors, banks and insurance companies do own a significant chunk of Treasuries, the U.S. savings rate (capital accumulation) is still abysmally low, around 4%, which is half the historical average savings rate.

This is the result of the Keynesian Cult’s One Big Idea, which is to pull demand forward and encourage borrowing and spending now by any means necessary, and thus sacrifice capital formation/saving.

So the basic outline of the Con is that private losses from the financialization of the U.S. economy were shifted to the public. Now to keep the Status Quo and Financial Plutocracy from imploding, the public is on the hook for $1.6 trillion in additional borrowing every year until Doomsday (around 2021 or so).

Having secured the backing of the Central Bank and Central State, the Plutocracy’s only problem now is that it needs a risk-free source of high-yield income. Yes, it has a trillion dollars or so sitting in bank reserves, collecting interest from the Federal Reserve; this is certainly risk-free, but the Fed’s Zero Interest Rate Policy (ZIRP) keeps the rate of return absurdly low.

Here’s where we see the Con taking shape. The ideal setup for risk-free returns is to own Treasurys that pay a high yield. The way to get higher interest rates is to first make the Treasury market supremely dependent on a central bank or single buyer: Done. That buyer is the Federal Reserve.

Next, have that buyer stop buying. Suddenly, interest rates start moving up. If you don’t believe this is possible, or part of a larger project, then please explain why PIMCO sold all its Treasuries. Duh – because interest rates are set to rise, and not by a little bit or for a brief span, but by a lot and for years.

That means holders of long-term Treasuries (and other debt) will be cremated as rates rise. (Holders of TIPS will do OK, unless the government fraudulently sets the rate of inflation well below reality. Hmm, isn’t that exactly what’s it’s already doing?)

Once long-term rates have leaped up, then start accumulating the high-yield bonds. Why would rates jump? Supply and demand: as the demand for low-yield Treasuries dries up, the supply keeps rising: every month, the Treasury has to auction tens of billions of dollars of bonds, or even hundreds of billions of dollars. There is no Plan B, the bonds must be sold, and if there are no buyers, then the yield has to rise.

Once rates have been engineered much higher, the Financial Oligarchy accumulates the high yielding bonds.

Here’s where “austerity” comes in. Once rates are so high that they’re choking the real economy, then voices arise demanding the Federal government stop borrowing and spending so much. Austerity (forced or otherwise) soon reduces the supply of bonds hitting the market and so rates decline, boosting the value of the high-yield debt.

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The Return of Precious Metals and Sound Money

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by Giordano Bruno
Originally posted Neithercorp Press, March 15, 2011

WELL, THOSE DEVIOUS GOLD BUGS AND SOUND MONEY ADVOCATES ARE AT IT AGAIN! They had the audacity to produce economic analysis that consistently outshines and embarrasses mainstream Keynesian pundits. They had the nerve to expose the seedy underpinnings of the private Federal Reserve. They even had the gall to bring the long established short manipulations of metals markets by global banks like JP Morgan and HSBC into the light of day, where anyone whose head was not buried in the dark recesses of their own colon could see and say “My god! There really is an organized cabal against gold and silver!” But if you thought all that was outrageous, these people, who promote the insane notion that our currency should actually be backed by tangible wealth and should be under the control of the voting public instead of some unaccountable parasitic corporate central bank, have now brought state legislators into the mix! The return to sound money has begun…

Thirteen states currently have proposed measures which would reinstitute the long suppressed need for a precious metals standard. Utah is the furthest ahead in this battle, its House just recently passing a bill which would make gold and silver officially recognized as legal tender within its borders. All that remains is a signature from Utah’s governor:


Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington all have similar bills to that of Utah in different stages of development. Why, after decades of treating gold and silver standards like a cocktail party joke, have the states suddenly turned friendly towards the idea of commodities as currency? It makes perfect sense when you examine what is happening all around us in the world today…

Necessity is the Mother of Prevention

The states are broke. Not just broke, but destitute. If California had a loan shark, its knee caps would have felt the splintery sting of a Louisville Slugger years ago. Illinois would have turned to prostitution (and maybe still will).

All the clawing of eyes and gnashing of teeth that went on in Wisconsin this past month over the rather tame cuts to labor union wage bargaining power is nothing compared to what many states have to look forward to when they decide to confiscate employee pensions and cut major funding to basic services like fire, and police. Some state governments know what is coming, and they are wisely moving to cushion the fall.

Legislators recognize that if municipal bond investment continues on its current downward spiral, there will be widespread defaults. These city and state bankruptcies will almost assuredly be met with offers from the Federal Reserve of a new bailout; QE3… or QE20 (does it really matter anymore?). This bailout would not be “substantial”, it would be gargantuan! What do you get when states bring in increasingly diminished revenues while constituents demand more and more money for welfare and public services because of inflation and the subsequent rise in poverty?

You get a space-time-debt singularity so volatile it stretches the very fabric of your local economy until it tears wide open, unleashing a gravity well of capital destruction similar to a double-ended tornado that snatches your money and hurls it into the upper stratosphere never to be seen again. The point is, you get yet another Fanny and Freddy; a self perpetuating never ending bailout free-for-all that fizzles only when the dollar has been thoroughly cremated, which shouldn’t be long from now.

Intelligent and fiscally conservative local representatives have seen the obvious danger to the stability of the dollar in this equation, and are moving to PREVENT total collapse of their states, rather than wait until after the fact to initiate solutions. Sound money legislation and the creation of localized markets and barter networks give states the ability to function beyond the lifespan of the dollar and to ensure the continuing personal prosperity of residents.

Honestly, why should the states allow their destinies to be bound forever to the longevity of the ailing Greenback? If there is anything good to come out of our present predicament, it is that Americans, from average citizens to elected officials, are beginning to understand the reality of coming collapse and are preempting it with measures designed to insulate their communities from the inevitable firestorm.

Eventually, as this movement escalates, certain states will come out ahead of the pack, gaining a kind of “safe haven” status, and attracting liberty minded people from around the country to the protective shelter of their borders.

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The Ultimate Cost of Zero Percent Money

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by Jim Willie CB
Posted originally December 29, 2010

home: Golden Jackass website
Jim Willie CB is the editor of the “HAT TRICK LETTER”

Another major article from the inimitable Jim Willie. It seems so long now since we have had a zero interest rate policy in place that it appears to be just part of the normal background, and most of us don’t give it more than a passing thought. But here Jim Willie digs deep into the part that zero percent money plays, and it is not a pretty story… –Aurick

SINCE THE EARLY 1990 DECADE, THE NATION’S MAESTROS HAVE PROMULGATED the notion that cheap money is a beneficial factor for the sustenance of wealth, for economic development, for the standard of living, for the robust industries, in general for the American society. Nothing could be further from the truth, but even today the reckless US economists from the Keynesian Camp and their controllers from Wall Street have convinced the multitudes that cheap money is a good thing.

Cheap money comes with a deadly ultimate cost. The inept professor occupying the US Federal Reserve Chairman post has gone on record claiming the US banking sector has a secret weapon in the Printing Pre$$ that it can use with zero cost, in its electronic form. Nothing could be further from the truth. The Clinton & Rubin team began the distortion of the Consumer Price Index, ostensibly to reduce Social Security and USGovt pension benefits in cost of living raises. They wanted to cause a massive USTreasury Bond bull market, and succeeded in doing so. They wished also to bring down the USTreasury Bond yields.

The infamous Fed Valuation Model dictated that as rates rose, stocks fell. So the scheme to manipulate the bond market began with the venerable craftsmen of rigged markets, ruined engines, and mega-fraud schemes. They taught from their high priest pulpits that cheap money was good for the financial markets. Nothing could be further from the truth.

Many analysts have sought the underlying root cause for the systemic failure of the USEconomy, the US Banks, and the USFed itself. One can start in pursuit of answers by looking at the cause being a sequence of costly wars and the ensuing monetary inflation, followed by lost industry to globalization and price inflation. The Vietnam War had a powerful consequence of inducing Nixon to exit the Gold Standard, a linkage few if any economists or even gold analysts make.

But the true single cause of wreckage is the artificial low forced cost of money, the near zero cost of usury. The subtitle to that billboard is that CAPITAL IS TRASH. Imagine in a nation that developed, promoted, and exploited the fullest riches of capitalism, embarked upon a path to destroy capital without even the recognition by its best brain trusts. Their mental chambers have been totally corrupted by the justification that inflation is a positive force that must be managed. Nothing could be further from the truth. The consequences of artificially cheap money, the wrecked pricing of usury, ultimately is capital destruction and economic failure.


My friend and colleague Rob Kirby calls the artificially low cost of money, the cost of usury, to be the pox on humanity. It is actually a pox on the entire economy, in which humanity resides. The Jackass calls it acidic paper mixed in the cauldron to dissolve capital. The points of this article expose the most glaring blind spots of USEconomic and USBanking, a mindboggling failure that has delivered the United States of America to the doorstep of the Third World. The sins committed are almost precisely what Banana Republics have done, and faced ruin. The annual $1.5 trillion USGovt deficits are proof positive of the failure. Those deficits are grossly under-stated when hidden costs of war are factored, and when hidden costs of nationalized acid pits like Fannie Mae and AIG are factored. Leave alone the costs of endless war and its seamy motives. Consider the many sides to free money, the forcibly low cost of usury.

The 0% usury cost has destroyed capital, with the recent destruction seen as in an accelerated phase. The 0% money encouraged asset speculation, not business investment. The steady stream of nonsensical labels to the USEconomy are comical. The Macro Economy ten years ago fizzled. The Asset Economy six years ago fizzled. The bylines of a Jobless Recovery offer insult to one’s intelligence. Nothing could be further from the truth, since no such contraption exists. The 0% money even encouraged drainage of real assets, like gold. The Clinton-Rubin gang altered the gold lease rate toward 0% in an experiment. Almost the entire gold inventory was drained from the USTreasury and its secure storage facility at Fort Knox. It was essentially stolen from the front door using official trucks. In defiance, the USFed and USDept Treasury continue to refuse an independent audit. With artificially low rates come complete destruction of capital formation, as economic laws have all been commandeered.

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Driving the News Agenda: Jones and Keiser

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by: Rob Kirby
Posted 25 November, 2010


Who has picked up on the likes of Fox News’ Glen Beck and his ‘about face’ on many key issues? Over the past number of months personalities like Beck have completely reversed their positions on subjects like the existence of World Government and FEMA CAMPS – going from complete denial to admitting they exist and the fact that they are intended for the American people.

Beck is not alone. In recent weeks we’ve seen a similar reversal in position from none other than Geraldo Rivera – he’s flip-flopped on his public position on 9/11: Geraldo Rivera, who in the past labeled 9/11 truthers as nutcases, seems to have gotten the message. Not only did Rivera give air time to two people on the front lines of the 9/11 Truth movement, he also aired Larry Silverstein telling the world that they had no choice but to “pull it.”

Without a doubt, these are MAJOR recent reversals of position by key mainstream commentators. So what’s behind the change?

The origin of this change dates back to July of this year. Radio talk show host / documentary film producer, Alex Jones, became frustrated with Google blocking the viewing of one of his films [The Obama Deception] on Youtube [Google owns Youtube].

In response to this censorship – Jones began a campaign of having his radio listeners [his syndicated radio show has an audience in the millions] start conducting “google searches” – over and over again – titled, “Google Launches Cover Up”

Meanwhile, Jones simultaneously had his staff of skilled in-house writers prepare stories containing the key search term. The power of a few million listeners – entering the aforementioned google search term “drove” the issue to NUMBER 1 in google search. The “buzz” was driving huge new traffic to Jones’ internet portals, PrisonPlanet.com and InfoWars.com.

If any of you are wondering how effective this tactic really is – you can judge for yourself by clicking on the Obama Deception here. I think you will find that you can now view the film if you choose to do so. It would appear that Google has relented – wanting no part of the negative backlash their censorship was earning them.

The mainstream media – which seems to be losing ground to the internet almost daily – ALWAYS covers and writes their own stories [to give their own ‘slant’] to the number 1 google search terms. They do this because they recognize the number 1 search terms on the internet as being the ‘cutting edge’ of current news and for fear of becoming irrelevant if they don’t cover it.

Jones quickly realized he was on to something BIG.  Using the popularity of his radio show along with a combination of his two primary internet platforms and group of talented writers – he could have direct influence on “what is popular” or effectively, “what is news” on the internet. Jones had now replicated this initial success, over and over again, by introducing new search terms for his audience to ‘plug’ – typically at a rate of two or three per week. Ladies and gentlemen – nowadays, whatever issue is most popular on the internet “IS” or quickly becomes the key issue in the mainstream news.

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