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Guest Post: The World's Largest Money-Laundering Machine: The Federal Reserve

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

The World's Largest Money-Laundering Machine: The Federal Reserve

The Fed policy's first-order effect is to issue hundreds of billions in "free money" to banks; the second-order effect is to destroy the rule of law in the U.S.

Let's start with a few questions about the proper role of the Central State and Central Bank: why should they bail out private banks? The answer boils down to something like this: "If the private banks absorbed the losses that are rightly theirs in a capitalist system, they would implode. Since the State and Central Bank have enabled these private banks to infiltrate and dominate the nation's financial system, that system is now hostage to these private 'too big to fail' banks."

In other words, "capitalism" in America now means socializing losses and privatizing profits generated by State and Central Bank intervention. Imagine for a moment the "beauty" of this system for owners of private banks: in a truly socialized banking system, the taxpayers would absorb any losses, but the State would also benefit from any future bank-sector profits. In the U.S. system, the losses are socialized but the people draw no benefit; the profits flow to the top 1/10th of 1% private financiers.

This is the perfection of State-financier crony capitalism.

Let's next ask why the Central State and Central Bank should subsidize and bail out the mortgage industry, a major component of private banking. Once again we find losses are neatly distributed to the citizenry while the profits all flow to private hands. Given that 98% of all mortgages are backed or guaranteed by Federal agencies (Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, FmHA, etc.), the mortgage market is already completely socialized: the taxpayers are on the hook for any and all losses, but the profits from originating and servicing the loans are all private.

Meanwhile, 1 out of 6 FHA insured loans are are delinquent, and everyone who cares to examine the ledger knows the taxpayers will soon be bailing out FHA just as they did Fannie Mae and Freddie Mac.

But the socialization of losses and privatizing of profits is only the first-order effect of the banks' capture of the State. The second-order effect is even more destructive: the rule of law has been subverted by the world's largest money-laundering machine, the Federal Reserve.

Once again we can start by asking why a nation's Central Bank should buy mortgages from private financial institutions. Once again the first answer is a variation on the same theme: the Central Bank prints money and buys the mortgages as a way of socializing private losses and passing through billions of dollars in "free money" to private hands.

The newly printed money robs purchasing power from every holder of the currency (the socialization of costs) while the immense flood of "free money" flows to private hands.

Here's how it works. We know Fannie Mae is absorbing losses of 50% to 65% on its foreclosed properties (Nearly half of Fannie Mae REO unable to reach market, via U. Doran), and we also know that 31% of all homeowners with mortgages are "underwater," owing more than their house is worth (Housing, Diminishing Returns and Opportunity Cost).

We also know the Federal Reserve bought $1.1 trillion in MBS (mortgage-backed securities) in 2009-10, and the Fed has announced its intention to buy $40 billion more MBS a month until the housing bubble re-inflates or Doomsday, whichever comes first.

The Fed also bought $1 trillion in Treasury bonds, monetizing Federal debt:

Let's say you own a portfolio of mortgage-backed securities and your pals at the Fed are willing to buy the garbage at full price, no questions asked: are you going to sell your few AAA-rated MBS, the good stuff, or are you going to sell them the absolute dregs, the MBS so stuffed with defaulted mortgages that you've never dared to even do a mark-to-market estimate of their real worth?

You dump the worst of your portfolio, naturally, and so in effect the $1.1 trillion in MBS the Fed bought with newly created cash was probably worth (charitably) $600 billion at best. That means the Fed not only wiped out the losses that should have accrued to the owners of the impaired mortgages by removing the MBS from their books, it handed the owners (banks, pension funds, etc.) a cool $500 billion in "free money" by paying full value for massively impaired assets.

Since there is about $9.7 trillion outstanding mortgages (down from $10.3 trillion at the top of the bubble--not much deleveraging going on here), the Fed could have paid off 10% of every outstanding mortgage in the country with that $1.1 trillion. The one-time payment of principle would have flowed right to the mortgage owners, just like the Fed's "gift purchase" did, but in this case the money would have reduced the principle owed by homeowners, reducing their debt directly.

Setting aside the ethical implications (what about those who have no mortgage, etc.), the difference between the way the $1 trillion flows to the mortgage owners is remarkably different: in the first case, the homeowners get nothing and the banks get $500 billion in free money. In the second case, the banks still get the $1 trillion, but because it flowed through the borrowers, it reduces the mortgage principle.

Since the Fed can create unlimited money, why not pay off every mortgage in the land? That's only $9.7 trillion, and if the Fed wanted to unleash an orgy of spending, that would certainly do it. Trillions in losses would be filled with "free money," since the Fed would pay the full value of all mortgages.

This thought experiment reveals the real agenda of the Fed's asset purchases: it's not about aiding the nation or borrowers, it's all about funneling "free money" to the banks to restore their balance sheets and profits.

There's another reason, one outlined by Catherine Austin Fitts: QE3 – Pay Attention If You Are in the Real Estate Market. Correspondent Jim S. has alerted me to the wide-ranging consequences of the Fed's money-laundering, and correspondents Chad D. and Stephen N. also directed me to this article.

The second-order purpose of the Fed's mass purchases of mortgages is to recycle dodgy phantom mortgages--in effect laundering the debt and money on a vast scale. Here is an excerpt from Fitts' analysis:


The Fed is now where mortgages go to die. Thousands of mortgages on homes that do not exist or on homes that have more than one “first” mortgage are now going to the Fed to disappear. Thousands of multifamily and commercial mortgages will be bought up as well. As this happens, trillions of dollars that have been amassed offshore will be free to come back into the US to buy up and reposition land, farmland, residential and commercial real estate and other tangibles.


With documents shredded, criminal liabilities extinguished and financial institutions made whole, funds can return without fear of seizure.


QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts and QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars.

In a nation in which rule of law existed in more than name, here's what should have happened:

1. The scam known as MERS, the mortgage industry's placeholder of fictitious mortgage notes, would be summarily shut down.

2. All mortgages in all instruments and portfolios, and all derivatives based on mortgages, would be instantly marked-to-market.

3. All losses would be declared immediately, and any institution that was deemed insolvent would be shuttered and its assets auctioned off in an orderly fashion.

4. Regardless of the cost to owners of mortgages, every deed, lien and note would be painstakingly delineated or reconstructed on every mortgage in the U.S., and the deed and note properly filed in each county as per U.S. law.

That none of this has happened is proof-positive that the rule of law no longer exists in America. The term is phony, a travesty of a mockery of a sham, nothing but pure propaganda. Anyone claiming otherwise: get the above done. If you can't or won't, then the rule of law is merely a useful illusion of a rapacious, corrupt, extractive, predatory neofeudal Status Quo.

The essence of money-laundering is that fraudulent or illegally derived assets and income are recycled into legitimate enterprises. That is the entire Federal Reserve project in a nutshell. Dodgy mortgages, phantom claims and phantom assets, are recycled via Fed purchase and "retired" to its opaque balance sheet. In exchange, the Fed gives cash to the owners of the phantom assets, cash which is fundamentally a claim on the future earnings and productivity of American citizens.

Some might argue that the global drug mafia are the largest money-launderers in the world, and this might be correct. But $1.1 trillion is seriously monumental laundering, and now the Fed will be laundering another $480 billion a year in perpetuity, until it has laundered the entire portfolio of phantom mortgages and claims.

The rule of law is dead in the U.S. It "cost too much" to the financial sector that rules the State, the Central Bank and thus the nation. Once the Fed has laundered all the phantom assets into cash assets and driven wages down another notch, then the process of transforming a nation of owners into a nation of serfs can be completed.

Here's the Fed's policy in plain English: Debt-serfdom is good because it enriches the banks. All hail debt-serfdom, our goal and our god!

In case you missed this:

The Royal Scam (August 9, 2009):

Once all the assets in the country had been discounted, the insiders then repatriated their money and bought their neighbor's fortunes for pennies on the dollar, finding cheap, hungry, competitive labor, ready to compete with even 3rd world wages. The prudent, hard-working, and savers (the wrong people) were wiped out, and the money was transferred to the speculators and insiders (the right people). Massive capital like land and factories can not be expatriated, but are always worth their USE value and did not fall as much, or even rose afterwards as with falling debt ratios and low wages these working assets became competitive again. It's not so much a “collapse” as a redistribution, from the middle class and the working to the capital class and the connected. ...And the genius is, they could blame it all on foreigners, “incompetent” leaders, and careless, debt-happy citizens themselves.

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Frederic Bastiat, 1850


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Mon, 10/08/2012 - 09:23 | 2867332 fightthepower
fightthepower's picture

Fuck you Bernanke!

Mon, 10/08/2012 - 09:27 | 2867358 LULZBank
LULZBank's picture

"Nobody puts Benny in the corner"

Playing song in the background: I have the time of my life and I owe it all to you...

Mon, 10/08/2012 - 09:31 | 2867372 GetZeeGold
GetZeeGold's picture



Well....our pet name for Ben Shalom is baby.


If you haven't seen the movie you totally won't get the reference.


Mon, 10/08/2012 - 09:45 | 2867403 vmromk
vmromk's picture

My name is Ben Shalom Bernanke, and I approved this article.

Mon, 10/08/2012 - 09:54 | 2867424 sickofthepunx
sickofthepunx's picture

this is why we need a man like mitt romney for president. 

Mon, 10/08/2012 - 10:01 | 2867442 Colombian Gringo
Colombian Gringo's picture

Banksters are like pedophiles, they won't stop until you lock them up. Bernanke needs to bunk in Rikkers with Bubba, LeRoy and Jose before he will learn his lessons.

Mon, 10/08/2012 - 12:21 | 2868283 economics9698
economics9698's picture

Printing money is more addictive than crack cocaine.  We need to admit there is a problem.  It’s a 12 step program to get back to gold.  We need to end the addition.

Mon, 10/08/2012 - 13:12 | 2868463 Pegasus Muse
Pegasus Muse's picture

Some people need hanging. Except this time the SOB gets it in the balls.

Mon, 10/08/2012 - 10:04 | 2867444 GetZeeGold
GetZeeGold's picture



this is why we need a man like mitt romney for president.


You know it's bad when Chris Matthews changes sides.

Mon, 10/08/2012 - 10:08 | 2867467 FeralSerf
FeralSerf's picture

Chris Matthews is a tool, a no good fucking whore.  He possesses not a shred of integrity.

Mon, 10/08/2012 - 10:21 | 2867495 Landotfree
Landotfree's picture

Sorry guys... nothing Mitt is going to do to "turn things around".   The system will collapse and it doesn't matter who you elect.   The unfunded liabilities will have to taken off the books, I expect 1-3 billion of them to go in the liquidation.  

All that is going on is setting up the scapegoat, as the system was unsustainable from the start.  Nothing Mitt, Obama, or even Ross Perot is going to do to help.  


'Banksters are like pedophiles, they won't stop until you lock them up.'

There are about 7 billion of them walking on this floating rock looking for someone to blame.   Blaming Benny or the Fed is not going to help and certainly is not the problem.


Mon, 10/08/2012 - 10:27 | 2867519 GetZeeGold
GetZeeGold's picture



nothing Mitt is going to do to "turn things around".


He a hoe - Snoop Dog

Mon, 10/08/2012 - 10:53 | 2867597 LMAOLORI
Mon, 10/08/2012 - 13:54 | 2868605 fourchan
fourchan's picture

2015 100 years, the end date for the system, now we know what system stands for.


enslaving an entire nation of free people to debt and capturing all assets.

Mon, 10/08/2012 - 10:30 | 2867525 SanOvaBeach
SanOvaBeach's picture

Absolute best post so far..........

Mon, 10/08/2012 - 10:32 | 2867530 Spastica Rex
Spastica Rex's picture

I hope for change.

Mon, 10/08/2012 - 10:47 | 2867576 NidStyles
NidStyles's picture

You mean the guy who has been taking Bankster donations for his campaign?

Mon, 10/08/2012 - 16:22 | 2869044 Panafrican Funk...
Panafrican Funktron Robot's picture

Which one?

Oh shit, both.  Democracy.

Landofthefree has been repeating a pretty good and disconcerting point recently, which is that a bunch of people are going to die as a result of shit already in motion that literally can't be undone.  At this point we're really just talking about the mass, volume, and velocity of the shit hitting the fan.

Mon, 10/08/2012 - 12:51 | 2868377 vast-dom
vast-dom's picture

email this article DIRECTLY to The Fed:


Federal Reserve Consumer Help:


Report the consumer fraud of The Fed to The Fed. 

Mon, 10/08/2012 - 14:46 | 2868181 LMAOLORI
LMAOLORI's picture



The World's Largest Money-Laundering Machine is actually the U.S. Government


Bernanky Panky will continue until he is given the boot. The real cause of our problems are the politicians.  Interesting how so many see terrorism or al Qaeda as a boogey man threat used by politicians but all you free thinking folks are not too quick to catch on that the Fed exists ONLY WITH THE PERMISSION OF OUR POLITICIANS PERIOD. In other words the politicians have successfully misdirected the anger from themself's to the Fed. The Politician's aside from being able to spend with reckless abandon are also profiting from Real Estate as another poster pointed out yesterday.

A lot of those worthless mortgages were dumped on the taxpayer's already via the GSE's Fannie/Freddie and the practice continues to this day.  If the government wasn't in the home loan business to begin with this couldn't happen and you can bet the Banks would be careful who they loaned money to then. These giant government programs are prime for abuse and they distort the free market.

Treasury Fights Back Against “Backdoor Bailout” Portrayal

Mortgage Putback Threat Reduced for Lenders Under New Rules

GSEs Remain Backdoor Bailouts for Banks


Charles Hugh Smith fails to point out that when they nationialize the Banks that works both ways they SOCIALIZE ALL the losses which would mean all those houses purchased with ZERO down YOU the taxpayer would be paying 100% for. That is the flaw in liberal thinking there is NO FREE LUNCH someone is picking up the tab. Until people wise up and start laying the blame where it actually belongs there will be no resolution. The Statute of Limitations for criminal financial fraud is five years the people to hold accountable are the politicians who did nothing to bring them to justice. If you want to End the Fed go after the politicians otherwise you are just wasting your anger.

Mon, 10/08/2012 - 16:34 | 2869068 Panafrican Funk...
Panafrican Funktron Robot's picture

And how do you propose we "go after the politicians"?  Ask other politicians to get involved in prosecuting misconduct?  "Throw the bums out"?  Do either of these things actually work?  If not, why not?  

If you're not at the point of understanding where the only actual answer is nonviolent resistance, you are behind.

To those that think violent resistance is the answer,

I disagree, I don't think it's nearly as effective, and it costs a lot more innocent lives, including yours.  Yes, Ghandi and MLK were martyred, but a lot of other people didn't die because their method (which has Quaker roots, who I consider the "true patriots") is the correct method.

Mon, 10/08/2012 - 17:29 | 2869179 LMAOLORI
LMAOLORI's picture



I would say that enough people have to first understand who is responsible. Once that is accomplished people could work together to demand politicians do something about prosecuting fraud even if the laws have to be changed to accomplish that. For example the DOJ is responsible for criminal prosecution and the politicians should have oversight and severe enough penalties to ensure the job is done so that we actually have equal justice under the law. As it is now that's just a soundbite. If necessary an outside independent panel who assess's the situation coupled with the power to bring charges that could result in prison for those whose duties it was to prosecute if they failed to do so. I bet they would take their government job more seriously if that were the case if they were held accountable. That law should apply to our politicians as well. We have top rot and any politician who didn't do their job deserves to be thrown out or thrown in jail. I think those things could work if people let them know they were serious people have gotten laws changed or enacted on lot's of issues. I'm sure people working together could come up with good ideas.

Mon, 10/08/2012 - 10:15 | 2867485 Monedas
Monedas's picture

There goes your invite to the 2013 Fed Centennial dinner !       

Mon, 10/08/2012 - 10:35 | 2867537 True.North
True.North's picture

I enjoyed this, but am convinced the US residential real estate market is the world's largest money laundering machine (as covered extensively by Tyler/Zero Hedge). 

Mon, 10/08/2012 - 15:40 | 2868968 DaveyJones
DaveyJones's picture

screwed up in part by manipulated rates

Mon, 10/08/2012 - 10:39 | 2867550 WarriorClass
WarriorClass's picture

And yet, there has been no revolution.

Mon, 10/08/2012 - 12:12 | 2868251 illyia
illyia's picture

The propaganda has been very effective.

Mon, 10/08/2012 - 12:48 | 2868374 oldman
oldman's picture


Zombies don't revolt.

Look around, please, see where you are, see who lives here----where ya gonna find a revolucion?

It's zombietime, bro', on zombiehedge            om

Mon, 10/08/2012 - 13:26 | 2868506 Darth Rayne
Darth Rayne's picture

I agree, fuck Bernanke. But he was placed there to do what he is doing. Fuck who put him there!

Mon, 10/08/2012 - 09:24 | 2867333 LULZBank
LULZBank's picture

We dont wash, we create money Bitchezz!!!

Mon, 10/08/2012 - 09:26 | 2867357 cossack55
cossack55's picture

Since, as you point out, that they are not "laundering", maybe 1 Hour Martenizing works better.

Mon, 10/08/2012 - 09:25 | 2867341 cossack55
cossack55's picture

When I used to surf, Hang 10 meant one thing. Now that I am a serf, well, Hang 10 means something else entirely.

Mon, 10/08/2012 - 09:28 | 2867363 sessinpo
sessinpo's picture

The proper title should be "The World's Largest Wealth Stealing Machine: The Federal Reserve"

Mon, 10/08/2012 - 09:31 | 2867371 Cognitive Dissonance
Cognitive Dissonance's picture

The Federal Reserve........where the Sublime meets the Stupid.

Or maybe I should say that the Fed is brilliant when it comes to financial slave manipulation and control and we are Sublimely Stupid for playing along as patsies.

Mon, 10/08/2012 - 10:15 | 2867483 DaveyJones
DaveyJones's picture

Where the slime meets the stupid

Mon, 10/08/2012 - 12:13 | 2868259 illyia
illyia's picture

CD - speak for yourself!

Mon, 10/08/2012 - 09:31 | 2867374 dbTX
dbTX's picture

It's simply a matter of time now.

Mon, 10/08/2012 - 09:47 | 2867408 LULZBank
LULZBank's picture

Black holes can slow down time, drastically.

Mon, 10/08/2012 - 10:53 | 2867599 NidStyles
NidStyles's picture

At least on paper they can.

Mon, 10/08/2012 - 15:35 | 2868953 DaveyJones
DaveyJones's picture

and we need more black on paper

Mon, 10/08/2012 - 09:33 | 2867378 Temporalist
Temporalist's picture
Eurozone rescue fund launch due

"The eurozone's new permanent fund to bail out struggling economies and banks will be launched later at a meeting of finance ministers.

The European Stability Mechanism (ESM) will have a full lending capacity of 500bn euros (£400bn; $650bn) by 2014.

It will initially run alongside, and then eventually replace, the European Financial Stability Facility (EFSF).

Europe's largest economy Germany will make the biggest contribution to the fund, about 27% of its total."

Mon, 10/08/2012 - 10:11 | 2867469 falak pema
falak pema's picture

and the PIIGS make 25% of it; hilarious!

Lending to yourselves with money you don'ty have! 

Piggggy backing is getting to be a funny money game; all holy smoke from Pope of ECB! 

Mon, 10/08/2012 - 09:33 | 2867382 resurger
resurger's picture

"Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow."

Mon, 10/08/2012 - 10:44 | 2867570 ATM
ATM's picture

Section 8

1:  The Congress shall have Power To lay and collect Taxes, DutiesImposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all DutiesImposts and Excises shall be uniform throughout the United States;

2:  To borrow Money on the credit of the United States;

3:  To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

4:  To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

5:  To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

6:  To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;


Seems simple to me.

Mon, 10/08/2012 - 10:59 | 2867619 NidStyles
NidStyles's picture

It's just a piece of paper. You can think it's more, but that just makes you an idealist.

Mon, 10/08/2012 - 09:42 | 2867387 falak pema
falak pema's picture

I am confused between CHS and Mike "the Eurobike" Grant.

Who washes best with corporate (p)OMO handouts : Draghi of ECB or Bernanke of FED?

I'm lost in CB whitewashed trillionomics tribulation! 

Maybe its not size of the balance sheet spike that counts but who takes predence in "prima notte" rights to grill the world in fiat hopium/dopium.

First son gets the juciest breakfast buns when the bell of WS jingles every morning. 


Mon, 10/08/2012 - 10:34 | 2867534 Spastica Rex
Spastica Rex's picture


Mon, 10/08/2012 - 09:37 | 2867389 AUD
AUD's picture

Since the Fed can create unlimited money

No it can't. It can however create unlimited credit, an important difference. Fed credit is not money. Once upon a time it may have been a quality monetary substitute but now it is junk.

The Fed's balance sheet is certainly opaque, but that's so none of you chumps realise it is junk.

Mon, 10/08/2012 - 09:58 | 2867436 dbTX
dbTX's picture

Good observation, their is a difference. Try to pring some of my shiney stuff.

Mon, 10/08/2012 - 10:19 | 2867458 AUD
AUD's picture

Thing is, authors like this Charles Hugh Smith base their analyses on the assumption that the US dollar is money rather than Fed credit. Like any bank credit, the value of Fed credit is dependant on the quality of the Fed's assets, which as he points out, are junk.

You cannot treat Fed credit as a standard of value, when its value is in fact massively inflated. As Doug Noland points out, "the biggest credit bubble in human history".

Mon, 10/08/2012 - 10:56 | 2867609 SubjectivObject
SubjectivObject's picture

Yes, Your's is a necessary insight, and must become the new reference tag:




Mon, 10/08/2012 - 09:43 | 2867396 cranky-old-geezer
cranky-old-geezer's picture



Money laundering yes, but it's also the biggest transfer of wealth from the population at large to crony insiders in human history.

And it's far from over.  Fed is now backstopping hundreds of trillions of dollars of off-balance-sheet derivatives issued by Wall Street firms. 

If a major "credit event" happens and those hundreds of trillions of CDS have to pay off, Fed would have to print hundreds of trillions of dollars overnight.

It would destroy the US dollar overnight.  Next morning it would no longer be world reserve currency and everybody on the planet outside America would be dumping dollars.


Mon, 10/08/2012 - 09:53 | 2867421 LULZBank
LULZBank's picture

Is it meant to be a bad thing?

Mon, 10/08/2012 - 10:36 | 2867541 SanOvaBeach
SanOvaBeach's picture

In other words, like a ice cave shelf, that suddently breaks-off!  Hope for the best, prepare for the worst.  It keeps on gett'in proped-up.  That couldgo on for 30+ years!  I'll probably be dead then.  The maggots eating my flesh.  Who gives a fuck!

Mon, 10/08/2012 - 09:46 | 2867406 Wakanda
Wakanda's picture

Charles writes so even I can understand.  Thanks and a big hat tip to CHS!

The Second American Revolution - unfolding now in a neighborhood near you.

Mon, 10/08/2012 - 09:47 | 2867409 Peter Pan
Peter Pan's picture

I have just realised that Atlantis was not an ancient world that sank beneath the waves, but rather it was a prophecy of a world to come where underwater mortgages would swallow up the lives and aspirations of countless millions around the world while enriching those that caused a great deal of the catastrophe.

Mon, 10/08/2012 - 10:10 | 2867472 mess nonster
mess nonster's picture

And, it was the Greeks who defeated Atlantis in its bid for world domination.


Mon, 10/08/2012 - 11:02 | 2867623 NidStyles
NidStyles's picture

The name Greek defines them as a united whole. I'm sure the Spartans would disagree with being refered to as being related in any way to the Athenians

Mon, 10/08/2012 - 09:49 | 2867410 ZeroPoint
ZeroPoint's picture

One thing I don't get -

I got a mortgage through a credit union. I put down 52%, have made all my payments on time, and my credit score is over 800. And yet, they still sold my mortgage to Fannie Mae.

I thought the Fed was buying crap?



Mon, 10/08/2012 - 09:56 | 2867429 LULZBank
LULZBank's picture

Fed doesnt like people who over estimate themselves and their worth.

Mon, 10/08/2012 - 11:06 | 2867633 ZeroPoint
ZeroPoint's picture

Do they like trolls?

Mon, 10/08/2012 - 10:23 | 2867496 Boxed Merlot
Boxed Merlot's picture

The fed exists for the benefit of it's member banks.  The imf / bis have directed a higher level of legal ownership of and legitimate title to real assets, including real estate.  Because the US allows any entity capable of paying taxes on real estate to possess it as long as it remains in their control, Ben will gladly exchange vaporous devices for legal claim to improved US real estate properties. 

This wealth transfer will continue in perpetuity at the rate of ~17 thousand frns per second from now on.

I guess with 9.7T still outstanding it will take some time, but likely doable, as they can ramp up or down at their leisure.  In addition, the taxes they will pay for ownership will certainly be less than the interst Timmy's stuff will earn and itself can be paid with newly created vaporous devices.  The true soveriegns have asserted their "rights".

Goodbye US middle class.

Mon, 10/08/2012 - 10:43 | 2867565 ebworthen
ebworthen's picture

If you are making brownies out of manure you need a little sugar.

Mon, 10/08/2012 - 10:43 | 2867566 Poundsand
Poundsand's picture

They aren't just buying crap, they are buying everything.  Posted back in '10 that the Fed would end up owning every mortgage in America. 

Take over healthcare, take over mortgages, take over companies, disregard laws.  Hmmmm. Pretty soon, you go along to get along as fighting the machine is fraut with danger and the risks are simply too great.  Welcome to the new Amerika.

Just wait until they alter all those mortgage contracts so that they are indexed to inflation!  No, they can't do that... Or can they?  Who will stop them?  Debt slave forever baby!

Mon, 10/08/2012 - 11:06 | 2867630 ZeroPoint
ZeroPoint's picture

Well if contract law is completely destroyed, the whole thing falls over anyway. If you can't make a deal that both parties agree to, then the whole world shuts down. No will do business with anyone else unless the deal is immediately completed.

Mon, 10/08/2012 - 11:45 | 2868120 NidStyles
NidStyles's picture

Uhh, sure maybe if the world were based around Contractual agreements that would be true, but it isn't, so it won't


Mon, 10/08/2012 - 15:39 | 2868945 Boxed Merlot
Boxed Merlot's picture

I thought the Fed was buying crap?...


Wrong, well unless you think that's the definition of improved US real estate.  Actually, your note just gave the rating agencies fuel to boost the value of the tranche your mortgage got tossed into.  Don't worry though, there's no way to separate your mortgage from the cookie that's been baked as others have mentioned.  The whole tranche will be scarfed up, if it hasn't been already, by the fed and be listed as their legal possession and prevent the likes of the NY AG from prosecuting any member banks that will by proxy enjoy joint custody.

The US middle class is becoming as rare as pre'64 US coinage, a fond memory of a bygone era.  All it took was a bunch of amoral (s)elected officials determined to do their own business and not the people's.

Mon, 10/08/2012 - 09:50 | 2867412 pndr4495
pndr4495's picture

When ordinary , decent people realize what is happening is so very clear and THREATENING to their ability to carry on each day , well , that resentment will pack a wallop when it is unleashed.  Human nature has not changed much over the last 10,000 years.

Mon, 10/08/2012 - 10:02 | 2867447 cranky-old-geezer
cranky-old-geezer's picture



that resentment will pack a wallop when it is unleashed.

But it won't be unleashed on the 1% who caused the problem.  

It will be unleashed on each other, people fighting each other in the streets when the US dollar collapses and becomes worthless overnight.


Mon, 10/08/2012 - 10:08 | 2867463 pods
pods's picture

I tend to agree.  People will be lost as their foundational beliefs collapse.  And that feeling of being cut loose from their moorings can manifest in very unpredictable ways.  Most of the time those closest to them will suffer.

There is a reason why there are no in depth analyses of our monetary system taught to our youth.


Mon, 10/08/2012 - 10:24 | 2867513 Overfed
Overfed's picture

If the people even had a clue as to who is responsible for this mess, the bankers would already be dangling from lightposts and trees. But unfortunately, the sheeple don't have a clue, and don't want a clue. They want the "facts" that backstop their current beliefs. It's gonna get ugly, dog eat dog, and the bastards who brought this upon us are going to sit in their Ivory towers and laugh while DHS protects them.

Mon, 10/08/2012 - 10:53 | 2867602 verum quod lies
verum quod lies's picture

One of my favorite quotes for Money and Banking students:

“The process by which banks create money is so simple that the mind is repelled.” Galbraith, J., “Money : Whence It Came, Where It Went”, 1975, p. 18 (chapter III).

In short, we have come to a point and place as a nation where true knowledge of the current form of central banking is doubly repulsive: (1) in the Galbraith sense and (2) in the sense mentioned in this piece by Hugh Smith. The mind is repelled and the stomach wants to reject breakfast. If we could only get off this ride many of us didn’t sign up for; and to all those that ridiculed Ron Paul yet now agree with Hugh Smith: f_ck you and the Bernank you rode in on, you hypocritical bitches.


Mon, 10/08/2012 - 18:17 | 2869256 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Here's an idea:  Recruit some office employee from each and every golf club throughout the surrounding suburbs of New York, Jersey, Philadelphia,Connecticut, D.C., Chicago,Palm Beach ,Fl.,  L.A.; 1) get the phone directories; 2) find out what they do for a living; 3) find out where they live.


When the revolution begins, and it will be sooner rather than later, people need to know who was raping and who was getting raped.

Mon, 10/08/2012 - 09:52 | 2867417 holdbuysell
holdbuysell's picture

So, the Fed is insolvent. Who woulda thunk it. /sarc

Mon, 10/08/2012 - 10:04 | 2867452 centerline
centerline's picture

Insolvent by the rules they established.  How convenient.  Guess the assets will have to claimed as collateral by the stakeholders.

Is good to be King.

Mon, 10/08/2012 - 09:53 | 2867419 Ned Zeppelin
Ned Zeppelin's picture

As I have said, The Fed is the Yucca Mountain for bad MBSs and many, many derivative contracts we don't even know about.  

Mon, 10/08/2012 - 09:55 | 2867426 nasdaq99
nasdaq99's picture

fascism comes to greece:  Police announce ban on rallies during Merkel visit

Mon, 10/08/2012 - 09:55 | 2867427 midtowng
midtowng's picture

Better be careful calling a spade a spade these days. Big Brother is watching.

Mon, 10/08/2012 - 09:56 | 2867428 machineh
machineh's picture

'Money laundering' is a victimless non-crime which was invented in connection with the War on Drugs.

It serves to politicize money, and give federal prosecutors new 'derivative offenses' with which to populate the Gulag.

Propagating government's 'money laundering' meme plays right into their hands.

Abolish the f***ing Fed ...

Mon, 10/08/2012 - 09:57 | 2867431 jal
jal's picture



"Once all the assets in the country had been discounted, the insiders then repatriated their money and bought their neighbor's fortunes for pennies on the dollar, finding cheap, hungry, competitive labor, ready to compete with even 3rd world wages. The prudent, hard-working, and savers (the wrong people) were wiped out, and the money was transferred to the speculators and insiders.""


Great advise.


Now every readers of this blog know how to play the stock market and make their fortune.


Mon, 10/08/2012 - 09:58 | 2867435 pods
pods's picture

This MBS purchase program is the most vile Trojan Horse.  Sold as a way to support housing prices for the proles.  Insidious as most of the proles do not own or even have a near majority stake in their property.  They have far less a stake in their property than the holder of the mortgage.

This is the perfect banker plan, as the shit gets hidden and the FED never has to realize the loss of defaults.  All the while the banks are made whole again with a big do over.

This was their only out from the gigantic MERS debacle.  

Rule of law be damned.

Shut up and eat your peas, proles!


Mon, 10/08/2012 - 10:02 | 2867446 LawsofPhysics
LawsofPhysics's picture

Patience Pods.  The supply chains around the world are just now starting to break down.  Keep an eye on contracts to deliver real commodities.  when these start defaulting, then we can start sweating.

Mon, 10/08/2012 - 10:19 | 2867498 pods
pods's picture

I have been amazed how long this has gone on. Back in 08 I thought we had until maybe 2010.  Another guy on a forum said 2013, as the republicans would gain control and americans would be sick of the going into debt, so austerity would wash ashore.

Seems they still have a majority of folks thinking that debt expansion is the answer.  Of course, that could be due to the amount of people that are directly dependent on that debt.  From SNAP, to SS, medicare, etc.  These folks are dependent on the FEDs monetizing 10%+ of GDP per year.

The cracks are everywhere in this facade though. The BLS is now laughed at in MSM circles.  The cognitive dissonance of the masses is boiling over.  "How can everything be fine when my bills exceed my income month after month?"  People are beconing more receptive to actual discussions of the whys and hows.  At least in my area.  So that one good sign. 

I peruse the headlines in the MSM and they are on a full court press:  Things are getting better.  

I think that soon we will be asked the modern equivalent of "How many fingers Winston?!"


Mon, 10/08/2012 - 10:03 | 2867449 holdbuysell
holdbuysell's picture

All the while the banks are made whole again with a big do over.

Bingo...this has to be the biggest Mulligan in history.

Mon, 10/08/2012 - 11:15 | 2867659 Widowmaker
Widowmaker's picture

Who pays for a mulligan?  

You paid for this shit sandwich, and I'll bet you didn't even play the hole.

Mon, 10/08/2012 - 11:22 | 2867691 Winston Churchill
Winston Churchill's picture

Your comment is partialy true.

The FedRes buying those RMBS bonds etc,while bailing out the banks in their ongoing litigation

with the investors and insurers,does not resolve the lack of standing issue for anyone(inc. the Fed)

to foreclose on defaulted mortgages.

That act alone will never win a defended foreclosure action.

The banks still win while most foreclosures are undefended.they are not winning hardly any of the defended ones

now.I'm sure the lobbyist are busy trying to rectify that with new legislation.

Mon, 10/08/2012 - 12:58 | 2868410 pods
pods's picture

The actual process of them severing the security interest is the bigger issue in this.  Can you imagine trillions in unsecured debt?  

With these residing at the FED, it is much easier for them to realize the losses.  The loss comes from newly created reserves.  And the FED is not audited, so how can the FED lose?  They can create reserves to pay for the defaults.

The courts have not been gentle on the banks/servicers from the cases I have seen, so this MBS purchase policy is an end around that.


Mon, 10/08/2012 - 10:00 | 2867440 centerline
centerline's picture

If you really want to know the score, it is really easy...

Banks do not create anything.  One can reasonably argue the do have a vital role to play in the facilitation of commence, flow of goods and services, etc. - of course.  But, they are a "service" to the greater good.  Facilitator, not creator.

Now, just drive through any reasonable size city and take a look at the name on the top of the big buildings, stadiums, parks, etc.  On average, do you see signs of industry or technology, or charities, etc.?  No.  On average, the majority is banks.

Banks own the world now.  Case closed.

Mon, 10/08/2012 - 10:01 | 2867441 TideFighter
TideFighter's picture

Many foreclosures in process have completed halted, no activity whatsoever. Many were being processed by foreclosure mills and gone through MERS. I would like to know the connection of MERS transferred properties that are in the MBS purcahse program? Can anyone say, "Let's sue for quiet title?" 

Mon, 10/08/2012 - 13:42 | 2868571 Winston Churchill
Winston Churchill's picture

You sure can.

Cost is the issue.My lawyer quoted upto 45K if I initiated it.

His advice was,wait and see if the servicer is stupid enough to try again and

counter claim quiet title,making them pay for it..

Tick tock on the statute of limitations anyway.

Mon, 10/08/2012 - 10:11 | 2867450 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

I'm sick and fucking tired of watching the clock, waiting for financial armageddon.  Personally, I hope for some cataclysmic financial/political event that will expedite this narrative from what if... to what the fuck do we do now?

Get your pitchforks sharpened and your oil boiled!  There are a shit load of kleptocrats with some serious explaining to do.....Or they should indeed be skewered and scalded as we send them down the road to hell. 

Mon, 10/08/2012 - 10:09 | 2867468 q99x2
q99x2's picture

That's not fair of them to do that. The world will go boom if they do that. Corporations should take them down before they take down the corporations. Get the FED before they get you.

Mon, 10/08/2012 - 10:15 | 2867484 yogibear
yogibear's picture

The Federal Reserve knows the majority of the population is too stupid to realize their scheme and will not react.

Washington is given the power to spend with the Fed's printing. Expect more of the same until others around the world put a stop to the Ponzi.

Mon, 10/08/2012 - 10:17 | 2867489 mickeyman
mickeyman's picture

" . . . until the bubble reinflates or until Doomsday, whichever comes last"


is what he meant.

Mon, 10/08/2012 - 10:17 | 2867494 Its_the_economy...
Its_the_economy_stupid's picture

F@@k the Fed

Mon, 10/08/2012 - 10:22 | 2867511 Monedas
Monedas's picture

Let them eat $400 aspirin !     I'm not defending the Fed .... it's just how Pax Americana was financed .... guns and butter .... a regressive tax on the whole world .... but we were the Ponzi Masters .... it was the spoils of war .... it's a little late to complain about it !

Mon, 10/08/2012 - 10:28 | 2867520 Wakanda
Wakanda's picture

It's never too late.

The Second American Revolution, unfolding now in a neighborhood near you.

Mon, 10/08/2012 - 10:34 | 2867533 Monedas
Monedas's picture

It's going down .... but it can be a useful framework for a return to the gold standard .... we don't want caos and confiscation .... we want PM hoarders to be elevated to their rightful position of leadership !

Mon, 10/08/2012 - 10:26 | 2867517 SanOvaBeach
SanOvaBeach's picture

PM's. commoddesssies(oil, energy,food), short etf"s, but be carefull on these...U can burn your fingers...........Surf,s up

Mon, 10/08/2012 - 10:30 | 2867526 tbone654
tbone654's picture

as we Phuck the rest of the world again... and ourselves...

Mon, 10/08/2012 - 10:31 | 2867529 Budd aka Sidewinder
Budd aka Sidewinder's picture

Does anyone have the data on what percentage of time deposits at; BofA, JPM/Chase, Wells, Citi are held by the serfs?  Would it be a good non-violent start for everyone to withdraw their checking accounts from these banks and redeposit at local banks?  My local bank that I've used for years now has all the fancy bill pay software the big boys do and I have a rep that handles my account that I can email at any time and get issues resolved.

Mon, 10/08/2012 - 10:36 | 2867540 Overfed
Overfed's picture

Even better, local Credit Unions. Sometimes I'm amazed that the banksters haven't gotten CUs outlawed.

Mon, 10/08/2012 - 10:37 | 2867545 ebworthen
ebworthen's picture

Too many uninformed sheeple.

All JPM/Chase, Wells, Citi have to do is run some happy serf advertisements on NFL, Idol, Voice, and the stupid sitcoms and reality shows and the sheep will run toward the wolves.

If they haven't figured it out in the past four years they aren't going to; at least not until their ATM won't give them cash and the debit card says "denied" and they hear "'s gone".

It will be too late by then, but that is why they run commercials non-stop and why GMAC changed their name to "Ally".

Mon, 10/08/2012 - 10:42 | 2867563 Monedas
Monedas's picture

When we return to the gold standard .... it will be an electronic gold backed money system .... the potential for economic growth is breath taking .... as mankind's "potential" always is .... if the Socialists get the fuck out of the way !

Mon, 10/08/2012 - 11:07 | 2867634 Widowmaker
Widowmaker's picture

It's fascists, not socialists.

The common man only gets jack shit.

Mon, 10/08/2012 - 11:49 | 2868086 Monedas
Monedas's picture

They are the same "JACK SHIT" !      The Fascists are a little more sentimental, romantic .... and make better Socialist Realism poster art !  Obama's "Hope" poster is a case in point .... reminded me of the good old days of Stalin, Mao and the Hitler Youth !  Socialist Realism poster art ......  Norman Rockwell on crack !        Monedas   1929      Comedy Jihad World Tour

Mon, 10/08/2012 - 22:43 | 2869764 Monedas
Monedas's picture

Hitler invaded Russia for lebensraum and raw materials .... not because Communism offended his Socialist/Fasciost sensitivities !

Mon, 10/08/2012 - 22:45 | 2869768 Monedas
Monedas's picture

He would have hated whatever system the Russians had .... if they wouldn't let him have his way !

Mon, 10/08/2012 - 11:12 | 2867572 Widowmaker
Widowmaker's picture

I know you the reader won't do a thing because all you pussies can muster is inaction.

The Fed has killed the fiat-goose, confidence.


All short this vapor racket.


Mon, 10/08/2012 - 10:49 | 2867583 Fix It Again Timmy
Fix It Again Timmy's picture

If monetary debasement can truly create economic recovery,?why did our Founding Fathers establish, in the US Coinage Act of 1792, that any ?persons discovered to be deliberately debasing US money 'shall be guilty of? felony and shall be punished by death'?

Death to the Fed! - Well, we can hope anyways....

Mon, 10/08/2012 - 11:04 | 2867601 Monedas
Monedas's picture

Legalize the possession, use, transfer, transport of gold worldwide .... and the marketplace will take care of the rest .... but I don't imagine TPTB will go away and let freedom happen !  About 1/7th of the world's population .... the Socialist PTB .... deserve death .... the rest of the poor filth can just die if they can't find a way to peacefully make themselves useful to their neighbors !  Economic Darwinism !

Mon, 10/08/2012 - 10:56 | 2867610 Downtoolong
Downtoolong's picture

Here's the Fed's policy in plain English: Debt-serfdom is good because it enriches the banks. All hail debt-serfdom, our goal and our god!

And sadly, no citizen really has an opportunity to avoid or escape it. Even when you eliminate all your personal debt, as I have done, you can’t stop others from taking on and abusing debt for you. That applies to governments, and private companies that most people have their wealth invested in. Even hard assets and commodities are heavily influenced by the debt of others. There is simply no escaping the abuse of power of the debt pushers.


Mon, 10/08/2012 - 17:21 | 2869159 honestann
honestann's picture

Sure, hard assets are influenced by the overwhelming dominance of the fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-mania world we live in.  But they are still vastly better than the alternative.  Just because you can't avoid 100% of the abuse doesn't mean you should just let yourself be totally screwed over.

Mon, 10/08/2012 - 11:13 | 2867653 Miramanee
Miramanee's picture

A question - just a question!!!! Relax!! - Let's say we end the Federal Reserve system, we do away with fractional reserve banking, we let the too-big-too-fail go bankrupt, we restore the rule of law (as much as is possible) vis-a-vis ALL citizens, we return to a commoditized montery standard, etc. etc. What happens? My argument (Not one that I endorse, but that I recognize) is that we are really REALLY hosed; end the FED and the fraud and private money creation and the ever-expanding pultocracy, and the nation implodes...50-100 million people hungry and homeless. KEEP the current system, and we wend our way, over generations, toward banana republic and neo-Roman empire. Either way, we're screwed. Maybe it's better to kick-the-can down the road and to be  a serf with a cell phone and a nice TV and food on the table, then a free man on the street.

Mon, 10/08/2012 - 11:13 | 2867654 Miramanee
Miramanee's picture

A question - just a question!!!! Relax!! - Let's say we end the Federal Reserve system, we do away with fractional reserve banking, we let the too-big-too-fail go bankrupt, we restore the rule of law (as much as is possible) vis-a-vis ALL citizens, we return to a commoditized montery standard, etc. etc. What happens? My argument (Not one that I endorse, but that I recognize) is that we are really REALLY hosed; end the FED and the fraud and private money creation and the ever-expanding pultocracy, and the nation implodes...50-100 million people hungry and homeless. KEEP the current system, and we wend our way, over generations, toward banana republic and neo-Roman empire. Either way, we're screwed. Maybe it's better to kick-the-can down the road and to be  a serf with a cell phone and a nice TV and food on the table, then a free man on the street.

Mon, 10/08/2012 - 11:45 | 2868114 blindman
blindman's picture

good question and may be the real question
underlying the dilemma today in the money
fiat systems.
one way offers challenges and requires cooperation
and work, the other oblivion and eternal serfdom.

Mon, 10/08/2012 - 17:19 | 2869155 honestann
honestann's picture

WRONG.  It has been so long since westerners experienced a "low cost economy", they can't even imagine one.

It is simply amazing to see people honestly convinced that removing predators and parasites from the backs of man... empoverishes man.  Holy crap!  How can anyone become so confused?

What happens in a society in which all forms of fiat, fake, fraud, fiction, fantasy and fractional-reserve perversion are eliminated?  Answer: you get the goods you produce, and subsequently you get whatever you trade your goods for.

Without the losses imposed by predators and parasites, costs would drop to roughly 1/4 the current costs.  As a consequence, prices would drop to roughly 1/4 to 1/3 current prices and sometimes less (depending on the nature of each item).

What about people who produce nothing?  Everyone who works and produces will be flush with money compared to today.  Those folks who produce nothing but are disabled will be taken care of by well meaning folks.  Those folks who produce nothing but are "good folks" will be taken care of by family and friends until they can find productive work.  In fact, most of these folks will be offered "simple work" by their family and friends --- gardening, home cleaning, home repair, babysitting and so forth... because they can afford it in the new "low cost economy".

It is amazing that people can no longer even imagine "the good life"... which simple mean "the life without significant interference from others".

So no, the world would not be screwed if the scam currently perpetrated by the human predators and parasites of the world ended.  The world would become paradise compared to what exists today.  Not perfect, not heaven, but... paradise in comparison to today.

Mon, 10/08/2012 - 19:10 | 2869378 sherryw
sherryw's picture

Ann, Over the longer term, yes. But in the shorter term it would be horrible; a bit like driving into the Mariana trench economically and politically.

Tue, 10/09/2012 - 01:11 | 2869912 honestann
honestann's picture

I don't really care if non-productive folks have a bit of "culture shock" or "discomfort" when they realize they'll need to perform productive work, not worthless motions.  But they will quickly find they are proud of what they produce, and they and everyone else will be much better off given the newly found liberty and low cost of living.

Tue, 10/09/2012 - 08:13 | 2870238 Miramanee
Miramanee's picture

So my analysis brings me to a different conclusion. I see a world in which the confluence of religious zealotry (on ALL sides), deep-seeded hatred of "the other", and competing standards of living and spheres of influence as being the primary drivers political action over the next 10-30 years. Your view appears to me rather utopian. In my world, 20-30% economic contraction - contraction that would come from the elimination of the myriad frauds perpetrated by the finacialized world on the rest of us, for lack of a better way to put it - would in the very short term destroy the (addmittedly "evil") financial-ecological balance that keeps the world from truly blowing up. Yes, it is exploitative. Yes, there are haves and have-nots. Yes, it is malevolent. My question remains: what is worse? The current evil, or an evil perhaps far more destructive. Here's the deal Ann. I make about $40K/year. I am increasingly poor. kids live in a relatively safe and secure world, with food and shelter and comforts and....and maybe that's better than the alternative you propose.

Tue, 10/09/2012 - 21:33 | 2873209 honestann
honestann's picture

I probably don't disagree with you as much as you infer.  But I have taken a lot of risk in my life, and found that risks of "physical reality" are something I can deal with or avoid by applying common sense (or uncommon sense).

I'm not afraid of "suffering".  I have purposely suffered many times in the short term in order to achieve goals and improve my situation.  So what?  All I need to do is consider what knowledge and resources humans had 20,000 years ago to deal with "the risks and dangers of physical reality" compared to those I encounter today or even those I would encounter in a worldwide economic collapse.  This understanding instantly stops me from even starting to feel sorry for myself.

Furthermore, you are wrong to believe that some magic "economic-ecological balance" makes our lives better.  That "balance" makes our lives SUCK --- in comparison to what our lives would be without the endless artifice created by the predators-DBA-government and predators-DBA-centralbanks.

Having said all the above, I do not dispute that some percentage of human beings (at this sad point in human history) are so completely insane, so completely detached from reality, and so completely determined to stay insane and detached from reality... that they would refuse to "get real" and start being productive.  And yes, for a short time, some percentage of these nutballs would "run wild".

Don't worry about that.  Those of us who clearly understand that humans deserve to suffer the consequences of their actions will... arrange to let them suffer those consequences before they destroy us or others.

But these nasty aspects of the switch from "bogus predator-controlled reality" to "plain old natural reality" would be short and vastly less disruptive than you imagine.  Believe me, without the "psychological justification" and "backup from the predators and their fictions", people would be far less likely to abuse others.  They would find out very quickly that such action paints a bullseye right between their eyes.

You also need to understand how quickly people would discover how lightweight and capable they would feel after the shackles are removed and they are free to act as  free agents.  Most people today will be positively shocked at how much better life is without the balls and chains around them, and that will make most decent folks happy to take care of other decent folks.  As for full-time scumbags who have no real friends as a result of their behavior?  I don't care what happens to them.  As far as I'm concerned, good riddens to them.

PS:  If the current system collapses, everyone will have MORE food available, and almost certainly it won't be full of mercury-laden high-fructose-corn-syrup and 37 filler ingredients either.  Life will become much better, and very soon too.

Mon, 10/08/2012 - 11:27 | 2867711 Monedas
Monedas's picture

"Driving Mitt Romney" !    Mitt plays himself .... a Bain Capitalist !   Barack Obama play's Mitt's idiot/savant negro chauffeur !  Michele Obama is his cook and cleaning lady !  Moral:  "Can't we all just get along ?"....Rodney King

Mon, 10/08/2012 - 12:05 | 2868209 Totentänzerlied
Totentänzerlied's picture

"The rule of law is dead"

Chaaarles! How can something that never lived have died!?

Mon, 10/08/2012 - 12:08 | 2868233 Tombstone
Tombstone's picture

As stated; rule of law is dead and buried in America.  You cannot have rule of law in a Communist state.  Slaves take note; China is now producing millions of ball and chain sets to be exported to the US.  Upon the day The Dictator is re-elected (see Hugo),  citizens will be required to purchase a set.  Serfdom now rules.

Mon, 10/08/2012 - 14:19 | 2868707 ilovefreedom
ilovefreedom's picture

I agree with this article, except the thing is, the Federal Reserve CANNOT bailout mainstreet as it would at this point screw up inflation metrics despite an incremental increase in employment. Maybe before the first go around, but with the quantities of currency we're talking about. 1 Trillion to mainstreet would equal huge inflaton and it gets worse from there.

Infact I think that's probably why almost all of these programs have gone to wall street, as long as banks keep the capital parked in Federal Reserve funds (minus profits and bonuses of course) that capital never makes it into the larger economy and then they can trumpet the fact that inflation is 2-3% (despite value deflation from the vaccum and misallocation of top level funding).

The FED can only dilute the monetary base so much before there are major reprocussions and so far the happy little coincidence is the banks have gotten most of the cash while inflation has stayed low despite lagging employment due to misallocated resources.

Mon, 10/08/2012 - 23:03 | 2869798 AAA21
AAA21's picture

ALL TRUE!  And unfortunately neither candidate will do anything about it. 

Tue, 10/09/2012 - 04:21 | 2869982 Procras7inator
Procras7inator's picture

I regret reading most of these comments even more than I regret reading the original post. I will just add it to the list of time spent in vain.

Do NOT follow this link or you will be banned from the site!