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Nightmare Scenario: The Fed Outlives the US Federal Government
This is a relatively short piece, because a longer one may
be considered "conspiracy theory".
Similarly, I've removed all citations and references (US Supreme Court
rulings, etc.) because those may obscure the point, since people's eyes tend to
glaze over with such (mostly irrelevant) facts/details. However, all assertions here are
easily/trivially provable with a simple web search, or are obvious logical
conclusions (with which the reader is free to rebut).
Rather, these are merely clinical observations and
assertions regarding what I would do to become King of the World, if I were Ben
Bernanke.
- Background: The US Federal Reserve (i.e.,
"Fed") is a private institution, which the US Congress and US Supreme
Court agree is not part of the US Federal Government. Rather, the Fed is merely a private
bank. - Many
private companies exist in the United States. The Fed is one of them. - Many
private companies have contracts with other companies, and even with the
US Federal Government. Some private
companies have "charters" established through the US Congress (i.e.,
"Government Sponsored Entities [GSEs]"), and thus may be
considered "pseudo-private".
The Fed has such a charter.
However, the charter merely establishes bounds regarding the
institution's founding and behavior.
Typically, that charter still permits the chartered private company
to sell shares and perform other market functions typical of a private
company (that was the goal, which is why the GSE was sponsored in the
first place, so the government could "kick-start" a private
enterprise). - Should
the US Federal Government dissolve, private companies would continue to
exist (e.g., they are owned by their shareholders, they have debt
obligations to their bondholders, and they engage in contracts with other
companies, in addition to possible contracts with the Federal Government.) True, private companies holding
contracts with the (now-dissolved) Federal Government would no longer have
those contracts (since the counter-party no longer exists). This is a typical occurrence with any
contract (dissolution through defaulted counter-party) which has nothing
to do with the lifespan of the remaining party, except for possible losses
associated with contract termination (e.g., loss of future revenue,
etc.). Similarly, a private company
established through charter with the Federal Government would continue to
exist when the Federal Government is gone (it just means the charter is no
longer in effect, since the sponsoring institution no longer exists). That now-unchartered organization
continues to exist because it is still owned by its private shareholders,
still has bond obligations, and still has other outstanding
contracts/agreements.
The above assertions suggest the Fed, as a private
institution, can continue to behave as a viable private institution once the US
Federal Government is gone. In such a
case the Fed would be just like any other private institution (it simply would
no longer have a US Congressional Charter).
These are the implications:
- The US
Congressional Charter gave the Fed a monopoly control of the US
$dollar. Literally, the dollar (a
"Federal Reserve Note") is the intellectual property of the Fed,
not of the US Government. The
charter "promotes" use of the dollar as a currency, and in
return the Fed (at some level) is "restricted" in what it can do
with the dollar. - The
Fed has claims on the US Federal Government. The US Federal Government does not have
claims on the Fed. Thus, dissolving
the US Federal Government does not trigger Fed liabilities. - In the
event the US Federal Government dissolves, the charter would no longer
exist. However, the Fed would
continue to exist (e.g., it still owns the intellectual property called
the "dollar"). Other
parties are free to interact with the Fed if they wish (like with any
private institution). However, the
Fed would no longer have "sponsorship", so these interactions
would be voluntary. - Without
a charter, the Fed is free to arbitrarily establish policies for its
intellectual property (the dollar), and even to establish a new charter
with another institution.
Many assume that the Fed would not survive a dissolution of
the US Federal Government. However, that
is not true: The Fed will only dissolve
when its intellectual property (e.g., the "dollar") no longer has
value, and the Fed shareholders
decide to liquidate assets. If people
still want dollars, the Fed exists.
Since the dollar is an unsecured claim on Fed assets, even if people do
not want dollars, the Fed remains one of the largest real property owners in
the United States
(through its mortgage securities and stock market holdings).
If I were Ben Bernanke and wanted to become King of the
World, I would:
- Encourage
nations all over the world to issue sovereign debt denominated in US
dollars (Germany
and numerous other EU nations are doing this now). I would do this even if I needed to print
dollars to promise/subsidize their debt issuance (it's "free to
me"). This establishes a
future need by that nation to come up with dollars at the sovereign level. - Print
dollars to gift/loan massive amounts of dollars to nations all over the
world. I want as many (public and
private) institutions using dollars as possible, and more importantly, to
leverage debt denominated in dollars.
(This was the purpose for the AIG bailout, and continues with
currency swaps and outright purchases of foreign sovereign bonds.) - Print
dollars to purchase real assets and securities which establishes my
"fundamental value" as a holder of assets (MBS purchases, POMO,
etc.)
What would happen next:
- Sovereign
defaults will start worldwide. I
could even trigger them by restricting currencies, or buying/selling
currencies to force a change in exchange rates that would trigger
sovereign default (since nearly all countries are over-leveraged past the
point-of-no-return). The ECB can't
freely print, but I can. The US
Congress can't freely issue bonds, but I can freely print. You think a $700B bailout is a big
deal? Bah. I can write checks $Trillions at a time with no vote and no review. - In the
deflationary unwind, people would need dollars. The dollars would not exist (e.g., debt
would not be serviced, counter-party risk would be massive). Suddenly, my ability to print dollars
would make me even more important. And, these are my dollars that I am free to spend as I please. - I'd
default foreign nations first, and the US Federal Government last. As the holder of the World Reserve
Currency, I don't want the US Government to default first, because there
would be a chance that another world reserve currency would replace
me. However, by removing all
foreign currency viability *first*, and then defaulting the US Federal
Government *last*, I would be the undisputed holder of the World Reserve
Currency without a challenge. - To
fortify my World Reserve Currency status in a new world of sovereign
mistrust (which further undermines the chance of a new sovereign currency
arising), now freed from the restrictions defined by US Congressional
charter, I would establish a new charter with the IMF or BIS (each is outside
the bounds of any given nation). I
would probably pick the IMF, since they are more "direct
meddlers" with a good history of ensuring indentured servitude on
nations. I would thus enhance my
protected "world currency" status, and the IMF would gain the
power to print its own currency without the annoying influence of
sovereign governments. - To
show my "good will", I would start a "new" Marshall
Plan to "print-and-gift" my dollars to countries that agree to
use my currency. This will ease every one's transition in a new uncertain world. Why use "New
Greek Drachmas" when you can't buy a tanker of oil with them? I'll give Greece enough dollars to buy
*three years* of oil, after which time the Greek economy will be entirely
denominated in dollars. Greece
doesn't want to play? Fine. I'll ignore them for a few years until
they realize the Saudi's don't want New Drachmas, and Greece
gets desperate for my grace (at which point I'd make them an offer they
can't refuse).
Not only is this plausible, it's rather simple. If Ben can't pull this off, he really is a moron.
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This seems entirely inplausible. In the face of a collapsed US Government why would any other governments continue to use their money? What's to stop them from just passing a law saying all US Dollar denominated liabilities will here by be settled with xxx currency at the following exchange rate... Not to mention without the US Government to back them up who protects the Federal Reserve Bank's "right" to print dollars? I'll start printing them in my basement. Fuck you Bernanke - death would be too good for him!
The Federal Reserve Note (US dollar, or "FRN") is not the US Government's currency. Rather, the US Government has chosen to *use* FRNs (e.g., demand it from its citizens in taxes, and denominate its Treasury Bond Issuance in FRNs). They could have used McDonald's Gift Certificates or iPhone Gift Cards, but they chose to use FRNs.
Similarly, Germany is choosing to issue Sovereign Bonds denominated in FRNs (US dollars). They *could* have issued notes denominated in Euros (and they do that too), but they now issue sovereign bonds denominated in FRNs.
When the German Government defaults on its Sovereign Bonds, bond holders will be screwed, and the net result is deflationary (the bond holders will not get their FRNs back).
Thus, Germany's pre/post default does not directly impact the FRN as a currency (actually, a German default would indirectly make the FRN worth *more* because the default is deflationary). Rather, the only issue is whether other parties will continue to accept FRNs in trade for oil, rice, etc.
This post asserts "Yes", because there won't be a better alternative (no better world reserve currency, and conceivably no other significantly recognized worldwide currency). That is especially true if the Yen, Pound, and Euro are gone before the US Federal Government defaults.
Any country could pass a law outlawing use of a given currency, or attempt to re-price previous contracts between private parties in that country. It's messy, but possible.
However, that same nation must "come up" with something for which other nations will trade. If I offer you MiklaBucks to buy your lemonade, you may decide no, you want something else. In that case, I'll have to use the currency you demand.
Greece can print New Greek Drachmas, but if nobody wants them, Greece will quickly figure out it should start using somebody else's currency.
For example, even if the Federal Reserve does *not* re-charter under the IMF, it is *possible* for the IMF to just stand up and shout, "We Print IMF-Dollars!" and agree to transfer one "old" FRN to one "new" IMF-dollar. In that case, if other nations agreed to that transfer, then the Federal Reserve could be gone, and all nations are now merely trading IMF-dollars (the same result). It doesn't matter if the US didn't like that -- it could be done entirely outside the US's structure (it only requires agreement among sovereigns outside the US).
This would be a "simpler" transition in the event the US is unable to influence international banking (current banking was defined by the US after WWII).
International Banking Agreements (e.g., Basel II and Basel III) define whether some foreign bank, the IMF, and the BIS recognize what you pretend to do with your ledgers. While you might "claim" you just printed FRNs, if those institutions disagree with you, then you actually didn't print anything. You can't "transfer" your printed things to anywhere.
Unless the government "polices" counterfeiting, yes, it is possible to collapse a currency through this type of deception. In part that happened with the British Pound after World War II (the Nazis made better British Pound Notes than did Britain -- must be the high quality and highly motivated labor they employed).
However, this doesn't relate specifically to the FRN, but to any currency: If people think every gold coin they see has a tungsten core, it would have the same problem (no trust in the currency at the point of exchange).
I'm expecting a call from Ben soon -- he apparently wants advice on advancing (4) and (5) simultaneously. I'll pass your thoughts along to him. ;-)
LMAO, sorry, I just had to throw this out there. Hot off the presses from Mish today, Currency Wars begin.
Mish has no love for Stiglitz, but included this quote:
For the casual reader, we've completed all prior steps, and we are now in the "what happens next" category. Ben is working simultaneously on (1), (2), and (3) (which is the same thing I would do). We can't proceed to (4) until after the US Federal Government defaults (which will happen after defaults for Japan, Britain, and the rest of the EU).
I'm not joking. Ben is *not* printing because he thinks this will "help the US economy" -- this is an all-out war, and Japan and China have figured it out.
None of the actions of the Fed, the Treasury or the White House over the past few years were designed to "help the US economy". That was not their plan.
Updated GOLD monthly chart:
http://stockmarket618.wordpress.com
Too many people/nation states would not go quietly into the economic good night for that to occur in the light of day. Besides, the vampire that keeps the victim alive keeps getting to extract more blood over time.
I like where you're going with this unfortunately in spite of its evil genius my sense of weakness comes in the form of "legal" not "military." Even should the Federal Government be "constitutionalized" and made null and void it still leaves "the Constitution" and "what is deemed legal." Clearly "tender for debts public and private" would fall under that purview which "makes the parchment worth more than the paper." In short the Supreme Court will define our monetary union--if we get to this point more than likely with some type of convertible paper note. The Fed with no law enforcement powers whatsoever would be forced to accept as they could not act extra-constitutionally. This is what Madison meant by "checks and balances." (some pun intended i guess.) and our "system" would live on. in other words "don't forget the Supreme's." or as the Native Americans use to say "beware the lawgiver." That is not the Fed.
Agreed -- in theory, this *could* be a "game changer". However, my great fear is that this is, in fact, a "Hail Mary".
A US Supreme Court Case could *theoretically* be brought, which results in a ruling that the Fed's existence is Unconstitutional. *Poof*, the Fed is gone. However, IMHO, this is a "Hail Mary" because I am absolutely *unconvinced* that will happen (it puts in doubt the entire worldwide financial system, every contract within the United States, and everything that happens in every *current* US Treasury Auction -- those same auctions that permit Social Security checks to be mailed *this week*.) I doubt five Philosopher-Kings-In-Robes have the guts for that. Even if they do, my guess is the result would be identical to a failed US Treasury auction -- *poof*, the US Federal Government is declared to be insolvent (because it is, and the Fed is the sole mechanism to hide that fact).
One can hope, but IMHO, there is no bigger "Hail Mary" than this one. (But, like the name implies, Divine Intervention *is* *possible*.)
This isn't going to end well
If Bernanke is reading ZERO HEDGE he might be enchanted by the brilliance of this article. God forbid he learns something and follows your instructions. Just joking, such a moron can not learn anything.
minute 39 or so.
perfect crime dynamics.
status quo nightmare, ongoing.
nothing to see here???
https://
This year's department- sponsored lecture, The Steinhardt, features Dr. William Black, University of Missouri-Kansas City.It occurred Thursday, Feb. 18th, 2010, 7:30-9:00 PM, at the Council Chamber.
The title of Dr. Black's talk is: Why Elite Frauds Cause Recurrent, Intensifying Economic, Political and Moral Crises.
william black , The title of Dr. Black's talk is: Why Elite Frauds Cause Recurrent, Intensifying Economic, Political and Moral Crises.
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on to qe II, no investigation here .... must be a flawed ideology thing.
market will self correct. .... when the fed owners move to a global seat.
expect the same globally .... etc.
thanks to the original poster of this presentation.
control fraud, epic failure,
http://en.wikipedia.org/wiki/Gresham's_law
.
“From Jesse's Cafe Americain:
"Gresham's Dynamic: The least ethically inclined have an advantage in the US financial system (in which regulatory capture nullifies enforcement) driven by perverse incentives of oversized bonuses and the failure to investigate and prosecute criminal activity.
In addition to the overhang of unindicted and undeclared fraud that is still in place, distorting the clearing of the markets, there is the issue of an imbalanced economy in which an oversized financial sector exacts what amounts to a Draconian Tax on the real economy, that is, fees and tariffs and other unproductive drains in excess of anything that the government is levying."
http://jessescrossroadscafe.blogspot.com/2010/08/william-k-black-on-financial.html”
The US
Congressional Charter gave the Fed a monopoly control of the US
$dollar. Literally, the dollar (a
"Federal Reserve Note") is the intellectual property of the Fed,
not of the US Government. The
charter "promotes" use of the dollar as a currency, and in
return the Fed (at some level) is "restricted" in what it can do
with the dollar.
Intellectual property has no existence without government. Government is never truly abolished so long as tanks and bombs exist. The issue is who gets the tanks and bombs. Whoever gets the tanks and bombs will have considerable influence in determining monetary policy if/when the Federal Government as we know it dissolves.
The simple solution is nullification and seizure by the states of federal nuclear and other military facillities. Quite simply, you will need governors who tell the federal government to go straight to hell and use their state forces to seize the military establishments when nobody is looking. This can be done with a simple coup, and it must be preceded by a massive propaganda campaign to sway federal armed forces from loyalty to the federal government. You will also have to have the state buy massive amounts of gold and use that to back a state currency. Keep in mind that regardless of how farfetched this sounds, it is the most plausible way of holding off the ongoing NWO coup.
The US Congressional Charter gave the Fed a monopoly control of the US $dollar. Literally, the dollar (a "Federal Reserve Note") is the intellectual property of the Fed, not of the US Government. The charter "promotes" use of the dollar as a currency, and in return the Fed (at some level) is "restricted" in what it can do with the dollar.
Intellectual property has no existence without government. Government is never truly abolished so long as tanks and bombs exist. The issue is who gets the tanks and bombs. Whoever gets the tanks and bombs will have considerable influence in determining monetary policy if/when the Federal Government as we know it dissolves.
The simple solution is nullification and seizure by the states of federal nuclear and other military facillities. Quite simply, you will need governors who tell the federal government to go straight to hell and use their state forces to seize the military establishments when nobody is looking. This can be done with a simple coup, and it must be preceded by a massive propaganda campaign to sway federal armed forces from loyalty to the federal government. You will also have to have the state buy massive amounts of gold and use that to back a state currency. Keep in mind that regardless of how farfetched this sounds, it is the most plausible way of holding off the ongoing NWO coup.
True. However, in this sense, we're talking about "intellectual property" in terms of the international banking agreements (e.g., Basel II or Basel III), as opposed to international copyright.
When the US Federal Government falls, international copyright agreements will continue to exist. More importantly (more relevant to this discussion), when the US Federal Government falls, the international banking agreements will continue to exist. In any case, only a single "authority" is recognized internationally to debit/credit accounts based on dollars. The Fed is (currently) that authority. Depending on the nature of the collapse, if the new government attempts to "seize" the Fed, "it depends" on whether foreign banks will recognize the new ritual by the new government to increment/decrement dollars in ledgers. (That is the same as any coup in any nation -- "it depends" on whether foreign banks consider the currency in the overthrown sovereign to be valid.)
This is one option for overthrow of the US Federal Government, and it happens to be quite popular in banana republics. This is the definition of "free-for-all", and everything is up-in-the-air during the chaos.
This is a tough one. The state doesn't have a currency, and in the middle of a coup, the state does not typically have access to credit. Similarly, even if the state of Kentucky decided to "seize" Fort Knox, there is speculation there is no gold there.
In these plausible scenarios, the states are broke, and can't buy/establish access to PMs.
A coup within the US is possible. Other US Federal Government failure scenarios are possible; For example, a failed US Treasury Bond auction, and States voluntarily withdrawing any support-for/recognition-of the Federal Government when it can no longer give States free money (IMHO this one is more likely).
Unfortunately, any of them only defines re-structuring *within the US*. Establishing a NWO, by definition, occurs across sovereigns, and *outside* the US (for example, look to today's speculation on France/China/Russia/etc. attempting to establish a new world currency).
Thus, depending on how the US Federal Government falls, it could *promote* a NWO (because at this brief moment in time, a NWO is not possible without US Federal Government support, since it defines the world reserve currency).
You will also have to have the state buy massive amounts of gold and use that to back a state currency.
Not a bad idea, but I'd say that kills the proposition nonetheless, since the states are all insolvent. They can't afford any more gold than I can. And, trust me, I won't be moving to usurp the Fed should opportunity arise!
The forgotten ingredient to make itself known in a crisis such as this is the people.
There are four power centers in this situation-- the owners of the Fed, the Congress and their lobbyists, the military and its generals and its command structure. The fourth is the American people.
It was the people, and not the bankers or the military that overthrew the British government. It was the people who seized the initiative themselves to meet the crisis in the Colonies; there was no word that came down from on high. A local government did exist, as well as police and military: the Red Coats. The people were the ones who went to Concord and Lexington—primarily farmers. There wasn’t even an organized militia.
IOW, the people have, in the end, the last word on whether or not they will accept a failing government or its worthless currency. They may, as a matter of course, just stop accepting Fed notes as currency. If the currency begins a Zimbabwe-like devaluation, no one will be able to buy anything with it because no one will accept it. What they will accept are potatoes, work, five gallons siphoned off a thousand gallon tank of fuel stored in the backyard… Or gold…
Worldwide there may come such a currency explosion that people worldwide won’t accept any of it, contracts or anything else. There is no way to predict when the dominoes start falling what people will do to try to save themselves.
So when these hedge fund operations, whose owners concentrate along the beaches in Hawaii behind their multimillion-dollar estates, try to get the police to stop people from ransacking their places, there’ll be no police to call because there’s nobody to pay the police. The police will be a part of the ransackers. And they will be thinking, here are the guys who brought us to this point; we own those paintings and that food in the pantries and the vintage wines in the cellars and the rows of shirts and dresses in the closets as much as they do. And they’ll feel justified in going in to get it. It’ll be gone in an afternoon. And no military police around…
And when a government is finally set up to put down the anarchy, I can tell you it won’t be a former hedge fund manager, or a university economist or a general placed in charge. It will be a spokesman of the people, one who has the trust of the people, who is honest, and will deal fairly.
I nominate ME! (I'm so full of crap, I could spew every day -- you did ask for a "spokesman", right?)
All I want is (1) Free house, and (2) Free food.
Maybe people will volunteer to take me to lunch?
I had a friend once. I miss that.
PS Lunch is on me anytime, mikla!
Mikla, you have my vote. Seriously, this has been an exceptional presentation, both with your original article and your response to bloggers. Anybody who can come up with this scenario, and make it understandable, is not only honest, he’s a genius.
As Lennon (John) suggested: Happiness Is A Warm Gun. They're not so bad as best friends at times, either!
Hope you're right, JR. I'm less optimistic after confronting this little exercise in what-if, however.
If the system went down in a reasonably controlled demolition, with us as the last nation economically standing, the "PTB" would control the MSM. Frightened people would be glued to their televisions desperate for "news" and direction. They would believe whatever they were told, given that it would be wonderfully well-spun and told. Look at the march to War in Iraq as a demonstration.
Barry "We Are The World" Obama is an unequalled speaker, imo (teleprompter or not) who would speak to The People (perhaps even The World) "in our darkest hour." He would do whatever he had to do--and his only alternative would be to set aside the government, so that's a no-brainer. We would be rapt and incomparably grateful. We would be unprecedentedly inspired, steeled to accept the challenge, dedicated to carrying the burden, answering the call of destiny. We'd eat shit as long as it were the only thing to eat and were told it is candy.
I'm sorry, but I'd book it.
The last thing the people would do is listen to the radio, IMO, Bob. They would know that that has been the voice of the enemy. There would be stacks of TVs and radios in the public squares… on fire.
I really do hope I'm wrong. BTW, this is the first time I've disagreed with one of your consistently ambitious and insightful posts!
Well, at this point our answer is "in the stars," but I suppose we'll have our answer soon enough.
Dup
So, I was going to ask - who should I align myself with - my military, my congressperson, or my neighbors? Then I read JR's post up there about Scott Rasmussen and I'm guessing the correct answer is my neighbors. But I hate my neighbors. Guess I should move.
Be very wary of approaching your neighbours.
The greatest danger to a disgruntled slave is the frantic efforts of his fellow slaves to silence him (lest they also be punished for his discontent). That is why just one overseer with a whip can easily manage a whole plantation of compliant slaves armed with shovels and other sharp implements.
Given how few neighbors we have and the likelihood of massive numbers of them banding together, perhaps this exercise suggests we should start considering China as a possibility. I would see them as the only force likely to have either the will or the means to fight it . . . or even live outside it.
"The successful rechartering to an IMF-dollar (from a US-dollar) would be highly oppressive, and very stable. It introduces a World Tax directly to a World Central Planner, without any possible electorate input. "
And that dear world... is the end game.
Introduce financial panic, have an (albeit despised, yet 'known' entity with a track record .... such as the IMF) offer a solution. You all don't think a world suffering in the throes of a currency meltdown wouldn't grasp at that? (And nevermind that the IMF is controlled by the principals that also own the Fed. A world in desperate need shouldn't concern itself with such trifling details).
Beyond that... look at the bigger picture.
News flash: In the US recently, Obama signed (god..what is this, the 9th extension) of an act declaring the US is in a "state of emergency". And why exactly?
Does it maybe have anything to do with the move to get 1099 statements for any transaction over $600. Or perhaps related to the move to have banks submit to the feds any international money transfers over $500. Or perhaps related to the US Homeland Gestapo instituting a 72 hour rule where a citizen intending to travel first has to ask permission from the federal overseers. And did you see the recent proposal in the UK from a branch of their gov such that all wage earners pay go first to the government such that tax agencies could take their cut.
Look folks, the US is becoming a 1984 type police state under the impetus of
Congressmen bought off by the banksters. The idea is such that ANY financial
activity comes under the aspices of the powers that be so that they get their cut.
A global Fed would elimate any hope of escaping this type of
oppression (surely you don't think a global currency comes without cavets?)
Am I a "tin foil hat" conspiritist who wandered into zerohedge?
Well consider this... 2 years ago or when ever when zerohedge came on the scene,
who would of imagined that it would be taken as common knowledge that
the US stock market was fraudulent and manipulated. Yet today it's mainstream.
Likewise, I doubt many out there are yet receptive to the depths of corruption our institutions have descended. If the theory of a fed with alterior motives is true then look for futher Bernanke moves to accelerate the implosion of our economic systems and further restrictions on our freedoms introduced in Congress by bankster puppets ....(all in the name of fighting "deflation" & "terrorism" of course).
RE: " further restrictions on our freedoms introduced in Congress by bankster puppets . . ."
I believe all the laws necessary to make us literal prisoners, individually and collectively, have already been put in place over the last ten years. All it would take is for circumstances to provide the President reason for using them. And, of course, he does that as he sees fit under Emergency Powers.
... and under a raft of Executive Orders that were put in place by JFK 50 years ago which are still operational.
Damn, I knew I'd get called on that--just tryin' to keep it simple! Good catch. And good point--this is not merely a contemporary phenomenon.
I think your article is fascinating in that there is a possibility that a world reserve currency may already be here. There was no need to reissue an Amero or Bancor, just simply dominate with the dollar. Brilliant.
...
keyword: authorities.
.
http://www.federalreserve.gov/
the owners of the fed will abandon it when something more
to their liking is available. (good luck). the owners of the treasury have
already abandoned their collective expression, knew not what
was happening and the generals sat on their hands, i don't
rest easy on that score; look at what they do not what they say
they stand for.
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comment; if the usa folded the federal reserve, central bank
of the nation, would immediately cease to exist. period. and if
it did claim to exist it would need to create a nation to be the
central bank of, a taxbase to justify it's note creation, an armed
and brainwashed authority to kill or punish it's divergent minions, etc.
the owners would do better to just convert their "assets" and take their
chances with a royal family somewhere or with the chinese , good luck.
mercenaries demand payment in something valuable. too expensive.
the fed will bleed the usa till it heaves for breath, but it fears it's death
more than anyone. rightly so. ie. they are bluffing and the people should
know that. but... they have no clue. imo.
good luck.
Maybe they could franchise to China
maybe, but why would the chinese choose to embrace a
squid breeding, blood and life sucking parasite to their jugular
vein after having just witnesses it devouring their best trading
partner. it would be kinda dumb? plus they are already communists
and don't need the financial side of fascism. they have it all covered.?
i mean what is the fed gonna put on their resume? we just destroyed
the last best hope for humanity in substance and spirit and it only
took 98 years? we can do you and yours in less!
thank you
Thought provoking mikla...very nice piece.
This caught my eye as it has always been one of my pet peeves;
2...Print dollars to gift/loan massive amounts of dollars to nations all over the world. I want as many (public and private) institutions using dollars as possible, and more importantly, to leverage debt denominated in dollars.
The reason for this...in my opinion...is blackmail. It works like this as I see it.
To achieve foreign policy goals, the government (working in concert with the Fed), mostly under the guise of being humanitairan, artificially props up the the lifestyle of many foreign nations populations.
So now you have created an addict, that government...and by proxy it's people.
You can now threaten this foreign government with the witholding of expected funds to force them to give you something in return. It can be a vote in the UN or intelligence or resources...anything really. The "addict" will go along not wishing to see his buildings burn when the funds are cut off and his people in discontent.
In my view, solid individual sovereign money is the answer. You need more choices not less...or one. I agree whole heartedly with your assessment of the IMF as another vampire.
One individual or entity simply is not capable of withstanding the impulse to convert monetary superiority into ultimate worldly power which can only lead to the servitude of me.
I prefer my team, that is, the peoples team.
On a side bar...maybe it's time for a class action lawsuit against this entity for damages ;-)
As you say, nmewn, that’s what globalization is all about, getting the nations addicted and dependent and then managing them for the benefit of the looters. The value behind the currency as a medium of exchange is to be used for our interests, not the bankers'; that’s why we need our own currency. It’s what keeps us free and gives Americans the incentive to produce. It’s what gives other nations a chance to be free.
The money manipulators are using the political frames of the Fed, the IMF, the World Bank and a universal fiat currency to loot the resources of the world and turn the American republic into a global empire.
As John Perkins writes, they “are high paid professionals who cheat countries around the globe out of trillions of dollars. Their tools include fraudulent financial reports, rigged elections, payoffs, extortions, sex, and murder. They play a game as old as Empire but one that has taken on terrifying dimensions during this time of globalization.”
Perkins, writing in Confessions of an Economic Hit Man, said such economic international skullduggery has dire consequences for the future of democracy and the world. It can be seen from mikla’s KOW Fed scenario: “Print dollars to purchase real assets and securities which establishes… [its] ’fundamental value’ as a holder of assets (MBS purchases, POMO, etc.).”
The Fed, the IMF, and the World Bank, are one.
I find it astounding more can't see it.
I'm no leftwing, molotov throwing anarchist...not by a long shot...but by climbing in bed with these people they guarantee their own perpetual misery. Even a king cannot be said to be free with this hanging over his head.
They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety-Benjamin Franklin
The quote can seem cold and harsh...but when one reflects on it you begin to fathom the reality of life as a free, independent, sovereign being...completely separated from your would be masters.
"The Fed, the IMF, and the World Bank, are one."
I would add the Hague & the UN to the list...as excess power and money will always find and corrupt each other.
Plato's problem is solved...it is the freemans business to watch the watchmen ;-)
I don't really buy this. But it has occurred to me that when the fed started seriously buying treasuries, they were buying claims against future tax dollars. And soon they will be the largest single holder of treasuries, which means they can pretty much lay claim to whatever percent of GDP they want, short of causing peasant revolt.
Also, it is a common plot in movies to destroy someone by extending credit then calling the note due. (Count of Monte Cristo).
All things considered, soon, the fed will be in a position to absolutely dictate terms to congress and the senate. Because if they stop buying it is game over.
Have a nice day.
Don't bankers already have a claim on most assets in the country? Isn't that the problem? The value of the assets that they can claim (collateral) does not equal or exceed the value of liabilities on their books (deposits). Oops.
"which means they can pretty much lay claim to whatever percent of GDP they want" That's sort of my understanding. But, I think more to the point, they can pretty much lay claim to whatever wealth I might have as long as there is a federal government with the ability to sieze and confiscate my property. Bye bye 401k, bye bye bank deposits, bye bye equity investments, bye bye home equity, bye bye brand new Jaguar.
Still looking forward to the fun part -- liquidation. Liquidation is kinda like playing musical chairs. Or yelling fire in a crowded theater. Or a flash crash that doesn't find a bottom after 15 minutes or 15 days or 15 weeks or 15 months. Myself, I'm already sitting in a chair even though the music is still playing (at least in my head, a lot of Who with some Dead; no, no ABBA, at least not yet), I don't go into crowded theaters, and I've sold everything I used to own and then some.
I guess I'm just thinking that the federal reserve's power over congress will greatly increase when the federal reserve owns the vast majority of treasuries.
It is true, what you said about the banks balance sheets.
I am not as debt free as you. But I only owe against my house, and I'm trying to arrange to own some rural acreage outright at the moment. I didn't buy my house near the peak. We refinanced when rates dropped, but never took money out. So if and when it is underwater, there will definitely be blood in the streets.
Right now, if I rent it out, the rent will pay the mortgage, insurance, and property tax. Maybe a couple hundred a month over, so we can save up enough to cover maintenance as well.
--mamba-mamba
The Federal Reserve's buying of Treasuries is a double-edged sword. They get claims on the future production of the U. S. citizens, true, but they also produce a hell of a lot of FRNs in the process. Why cannot the U. S. through the Treasury simply default on the debt to the Federal Reserve? Remember the old saw about debt: It may be our currency but it's your problem, and, if you owe the bank a hundred dollars it's your problem but if you owe the bank a million dollars it's the bank's problem.
I'm not naive enough to think that there is not enough vested interest in the preservation of the Federal Reserve, but I just thought I'd throw that out there.
Congress certainly can default in theory. I guess the way I see it is that Congress is like a junkie hooked on deficit spending. The federal reserve is the dealer. Soon, the federal reserve will be the ONLY entity willing to "buy" US debt. At that point, the federal reserve can basically force congress to do whatever it wants, because congress knows that if it defaults, the federal reserve can punish it by cutting of the supply.
Junkies have to do what the dealer says, especially if there is only one dealer in town.
I'm just thinking this out as I type it. Take it for what it is worth. May not be much. ;-)
...and some dealers are known for robbing their clients.
Looks like that is what is happening here.
Ben would be room temp the minute the plan when from his brain to paper. Just saying
Excellent discussion and it has suggested two points.
If it seems slightly hypothetical that the Fed could survive a failure of the U.S. government, one has to wonder what would happen when both entities are threatened for failure, which is the more probable. The owners of the Fed, in my mind, would take every severe action available to dominate. We’re sitting here talking about a what-if situation; but if the Fed is in danger of being destroyed these owners will take drastic steps to save it. It could be that’s what is happening now. Certainly, we’re seeing almost weekly financial moves by the Fed that can only be considered crisis oriented and exceptional.
The other point: this very discussion only proves how much incredible power the Federal Reserve Act gave a private company in that such a scenario--so skillfully presented here--could take place.
But, again, it strikes me that if the international bankers are threatened to lose all this—and it’s at the same time the US government is sinking—the money power will do everything to save itself and let the government sink.
"but if the Fed is in danger of being destroyed these owners will take drastic steps to save it." No, there will be nothing to save. The "owners of the fed" will only care about two things if the Fed is in danger of being destroyed - safety and comfort. They will take steps to ensure both for themselves no matter what happens. The rest of us will be left to fend for ourselves.
Great piece Mikla!
You gave us a taste in the comments to Bruce Krasting's recent Fed piece. Thanks for elaborating.
I always try to keep in mind that "money" is, after all, only a means to power. And power is what the game is all about. Given this, I will again include the quotation, attributed to Karl Rove, that I posted in the Krasting comments string:
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors…and you, all of you, will be left to just study what we do."
Obviously Rove is a only a functionary of the Oligarchical class and not a member of it. Still, I know of no better succinct statement of the world view of the Oligarchs - given that it is anathema to them to reveal themselves or their true intentions. But the inclusion of the word "empire" in the quotation reveals the true nature of the matter at hand.
Again, thanks for your work.