This page has been archived and commenting is disabled.

This Is The World's Balance Sheet

Tyler Durden's picture


It is rather surprising that in a world in which anything and everything is only about money, it is next to impossible to find a consolidated balance sheet of the world's insolvent economies (i.e., the developed countries: US, Japan and the Euro Area). So for all those seeking a visual presentation of all the liabilities that have to be inflated away by the central banks (because that's what this is all about), rejoice: the broke world is presented below in its glory. The irony is that the problem would be quite fixable if it weren't for one minor issue: the bulk of the world's assets also happen to be its liabilities! At the end of the day, this may prove to be the fatal flaw in the chairman's attempt to dilute the global liabilities, he will be doing the same with the assets.

We will follow up with an analysis of what this actually means shortly (those who have been reading in the past year can come to their own conclusions), but more importantly we well next show how the global "household" sector is invested across these three distinct economies by assorted asset class. Prepare to be rather surprised as various conventionally accepted notions are thoroughly debunked...


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 03/27/2012 - 21:18 | 2296148 Top_Kill
Top_Kill's picture

Broke Bitchez!

Tue, 03/27/2012 - 21:32 | 2296180 SHEEPFUKKER

I owe, I owe, it's off to print I go. 

Tue, 03/27/2012 - 22:24 | 2296272 Mad Marv
Mad Marv's picture

Screw GAAP, we can show currency as both a liability and an asset.

Tue, 03/27/2012 - 22:40 | 2296307 hedgeless_horseman
hedgeless_horseman's picture



Unaudited (in perpetuity) FTMFW!

Tue, 03/27/2012 - 23:29 | 2296386 TruthInSunshine
TruthInSunshine's picture

I'm sort of off topic & sort of on topic here, but want to mention this because it does tie into this article, and it's been front and center on my mind lately - and some of you may be out front on this - so if anyone has any feedback, hit me with it.


I posted a video a while back that had a certain seemingly intelligent person, wise in the ways of fractional reserve banking, actually making an intelligent case that The Federal Reserve really is just a front for Congress, in order to protect the financial entities that own not just the U.S. Government, but most developed nations that have a fractional reserve central bank, without having to take the heat for those policies they actually support enacted by the Fed, without having to be visible about it (in fact, they have plausible deniability). If anyone sees that video, where the speaker compliments The Creature From Jekyll Island, and while not denying the history and chronology laid out therein, essentially states that Congress could simply revoke the Fed's charter at any moment if they wished to do so, but there's good reason for most of them not to want to do so, please link it.

In other words:

Inflation too high?  Don't blame Congress. They'll have Kangaroo Court hearings in the Senate or House of Representatives and get all angry with the Chairman of the Federal Reserve (allowing them cover and a distraction to blame while they benefit from the inflationary policies and are able to win re-election).

Yields for savers too low, which is especially galling for senior citizens who depend on returns from fixed income?  Don't blame Congress. They'll have Kangaroo Court hearings in the Senate or House of Representatives and get all angry with the Chairman of the Federal Reserve (allowing them cover and a distraction to blame while they benefit from the inflationary policies and are able to win re-election).

Economy sucks, or is in a meltdown, with living standards plunging, along with consumption? Don't blame Congress. They'll have Kangaroo Court hearings in the Senate or House of Representatives and get all angry with the Chairman of the Federal Reserve (allowing them cover and a distraction to blame while they benefit from the inflationary policies and are able to win re-election).

Structural unemployment is really high, leading to falling wages and - again - plunging living standards, along with massive, debilitating debt burdens for small businesses and individuals? Don't blame Congress. They'll have Kangaroo Court hearings in the Senate or House of Representatives and get all angry with the Chairman of the Federal Reserve (allowing them cover and a distraction to blame while they benefit from the inflationary policies and are able to win re-election).


IOW, the Fed is a convenient creation of Congress, as Congress has been deeply captured since well before 1910 (the year of that infamous meeting on Jekyll Island that the POTUS was allegedly denied access to, which gave rise to the Federal Reserve Act of 1913, and America's 3rd fractional reserve central bank since its birth).  Congress gets all the benefits of being insiders, knowing what the Fed will do and when, but they get a fall guy to blame when the their constituents are angry and looking to break something, and it increases their odds of being able to put on some kabuki theater, rage at the Fed, and keep their seats.

Tue, 03/27/2012 - 23:51 | 2296412 Oracle of Kypseli
Oracle of Kypseli's picture

Maybe the origin was not meant to be that way, but they have cleverly started using it the way you describe. Where is the press with the tough questions?

The main question should be: You have created this monster, you can kill it.

The counter argument though is that Congress changes every two years and if you leave it up to congress to play with that type of mandate, you may end up with something worse and perhaps very inconsistent in its actions and reactions.

Wed, 03/28/2012 - 00:05 | 2296430 economics9698
economics9698's picture

It makes me become overcome with confidence for the future. 

Wed, 03/28/2012 - 00:19 | 2296448 whstlblwr
whstlblwr's picture

Speaking of Federal Researve. Anyone watch Bernanke propaganda at GW, on CSPAN late night right now.

Bernanke sounds like drug addict alcoholic pleading understanding for his action. He's sick and students aren't falling for the bullshit. He gives himself credit for backstopping lenders to stop bank run to restore confidence but he doesn't mention how Fed creates conditions for money market fund risky behavior and how he puts all taxpayers on the hook, even ones who were smart enough to avoid bubbles. Bernanke you lose.

Wed, 03/28/2012 - 01:09 | 2296503 TruthInSunshine
TruthInSunshine's picture

Oracle, that's a fair point.

Whether Congress was co-opted (Deep Capture) before or after The Federal Reserve Act of 1913 was passed is not that relevant.

I just really wanted to find the video I had posted here, because the essential point made by the economist being interviewed was that The Fed is basically an extension of the U.S. Government, allowing it to do highly politically unpopular things, yet shield those in political office from blame (or at least allow them to deflect the blame by claiming the Fed as a scapegoat).

The most interesting point is that for all the rage against the Federal Reserve (and rightfully so, as its policies really are perpetuating a textbook Ponzi or Pyramid Scheme), if even a small plurality of Americans pledged to never vote for a Congressional Candidate unless they pledged to vote to revoke the Fed's charter, the coinage of money would return to the Congress itself, and it could no longer deflect blame or engage in scapegoating when monetary policy caused major disruptions.

I should post a video of a lecture that Murray Rothbard gave on this point, and the other related economic issues.

Wed, 03/28/2012 - 02:54 | 2296594 Ghordius
Ghordius's picture

TIS, sorry, IMHO you are looking this trough a very narrow and modern American point of view. Your constitutional setup was better balanced before 1913, then came the 16th amendment, the 17th amendment and of course the FED. And btw, you can't have the FED without the first two, they are practicly preconditions.

Your two-years Congress (the only chamber of the world with this kind of short period) was balanced by a powerful Senate that was not elected directly and that represented the State Legislatures - it was sent by them.

I'm not the only one hinting at this - listen to Judge Napolitano and other Libertarians whispering about this point nobody wants to know about...

Your "Deep Capture" is just that in a political context, the way you frame the institutions has a direct influence in the way the political questions and answers can be framed. 1913 ensures two parties that can't be challenged by a third one, for example.

Wed, 03/28/2012 - 10:09 | 2297099 Greater Fool
Greater Fool's picture

Sorry, I strongly disagree on this point. The last thing I want to do is give more power over the economy to a group of people who are engaged in a constant popularity contest and who can't even pass a budget, determine where the Pentagon actually spends its money, or a whole host of other gross malfeasances that have become habitual in Congress.

Yes, the Fed is, at its worst, both fig leaf and enabler. But the ability to carry out unpopular policies at need is essential for any government, and since it seems that Congress and the Executive are for the most part incapable of this, some other institution is required.

In fact, I would go further to say that the only way this country will ever get its fiscal house in order is for a Fed-like institution to take charge of expenditures and debt issuance and put Congress on an allowance.

Wed, 03/28/2012 - 10:16 | 2297123 TruthInSunshine
TruthInSunshine's picture


Let's just do away with a republican form of constitutional democracy, altogether, then.


Let's have a "Fed-like" institution run all policies. Why limit them in any way to those policies regarding expenditures and debt issuance?

A Fed-like instution can even interpret and amend the constitution for us.

We won't even have to bother to have to vote in sham elections anymore, and can stop pretending we the people have any voice in what future path the nation takes.

Wed, 03/28/2012 - 11:15 | 2297325 piceridu
piceridu's picture

Yeah, this already's called China

Wed, 03/28/2012 - 12:14 | 2297559 Ghordius
Ghordius's picture

TIS, in history there have been cases where a republic with democratic institutions did this - sometimes with good results

Wed, 03/28/2012 - 12:50 | 2297676 TruthInSunshine
TruthInSunshine's picture

a technocracy, ruled by technocrats, right?

Can you cite an example, or two (or three) where a technocracy was installed in a nation to replace representative leadership, that was as long lasting and sustainable as indirect democracies?

Wed, 03/28/2012 - 12:12 | 2297554 Ghordius
Ghordius's picture

I agree with you - every time in history the (political) Treasury was also in charge of the (technical) Central Bank functions this made the decline of the currency only faster... this includes every hyperinflation I have studied, with the exception of Weimar...

it is practically the hallmark of a democratic country that you separate the big spenders (politicians) from the currency "guardians". though at this point in the US the banksters have the firsts in their pockets and the second too...

getting the financial/fiscal house in order? a question of political will - last seen in the US by several Congresses paying back the WWII debt.

Wed, 03/28/2012 - 10:51 | 2297212 BooMushroom
BooMushroom's picture


if even a small plurality of Americans pledged to never vote for a Congressional Candidate unless they pledged to vote to revoke the Fed's charter

If all the sane people pledge not to vote, guess who elects the ruling class?

Tue, 03/27/2012 - 23:51 | 2296413 AldousHuxley
AldousHuxley's picture

Assets, liabilities, is all financial bullshit.


not everything is financialized.


when it comes down to it, it is all about intangibles that you can't buy or put price on it.


US gets away with liabilities because they have the strongest military and controls the sky.

Wed, 03/28/2012 - 00:47 | 2296475 Antifaschistische
Antifaschistische's picture

Bingo Hux,

The entire concept of "Balance" is complicated enough in the private sector.  The concept of "balance" is completely worthless in the Public Sector.  

Wed, 03/28/2012 - 03:43 | 2296617 Element
Element's picture

Then there's Sectoral-Balances ... the balance you're having when you aren't having any sort of balance whatsoever.

Wed, 03/28/2012 - 01:19 | 2296519 ChrisFromMorningside
ChrisFromMorningside's picture

The question you pose is a "chicken-or-egg" question. The Federal Reserve could not exist without Congressional approval. In turn, most Congressmen would not be in power if not for the campaign money they receive from The Banking Cartel (i.e. JP Morgan, Citi, BofA, Goldman), which also happens to own The Fed. It's all one big monopoly.

Wed, 03/28/2012 - 02:06 | 2296564 TruthInSunshine
TruthInSunshine's picture

I agree.

But if one asks the hows/whys of how The Federal Reserve Act passed in 1913 to begin with, mechanically speaking, at least, it passed by a majority vote of Congress.

So the origin was the Deep Capture of Congress Pond-Scum.

Wed, 03/28/2012 - 09:29 | 2297008 moroots
moroots's picture

Don't forget that the Federal Reserve Act was brought to the floor for a vote something like moments before Congress was to break for Christmas.  History might have looked much different had the debate and vote on the bill been delayed until after the holiday.  Of course, this was part of the strategy by House, Aldrich, and Wilson, among others.

Wed, 03/28/2012 - 01:27 | 2296526 PersonalRespons...
PersonalResponsibility's picture

"Don't blame Congress. They'll have Kangaroo Court hearings in the Senate or House of Representatives and get all angry with the Chairman of the Federal Reserve (allowing them cover and a distraction to blame while they benefit from the inflationary policies and are able to win re-election)."


The only people that are concerned and know/feel what you are talking about are the small middle class.  The rest have it made.  So, to whom are you asking and what are you/they going to do about it?  What can they do; buy gold and silver?  

Wed, 03/28/2012 - 02:04 | 2296560 TruthInSunshine
TruthInSunshine's picture

It is rumored that a large block of voters who do vote in high % terms known as "senior citizens" are quite angry this year, and I'm quite confident that many in Congress blaspheme Ben Bernanke (in a really academy-award winning performance) when they return to their home districts to campaign, and blue hairs raise hell about interest income/fix income yields.

Wed, 03/28/2012 - 07:25 | 2296719 tarsubil
tarsubil's picture

Blue hairs also watch Bill O'Reilly.

Wed, 03/28/2012 - 08:26 | 2296824 IAmNotMark
IAmNotMark's picture

So a large block of voters are angry.  Will they vote for the red big government candidate or the blue big government candidate?

Wed, 03/28/2012 - 09:56 | 2296986 TruthInSunshine
TruthInSunshine's picture

That's the point of Deep Capture. You have two parties that divide the electorate with social wedge issues like gay marriage or what have you, and then in reality, when it comes to the substantive issue that affect the core structure of the nation (debt/deficits, MIC, etc.), there's no real choice:  Both the Blue Party & Red Party will fail to fix anything, because their asses work for the same people, and it's not the voters. IOW, there is no choice on the part of voters. The true bosses have created a heads you & I lose, tails you & I lose guaranteed way that they will always win.

I am cynical and admit it. That doesn't mean many of my opinions are wrong or off the mark, just as is true of many here.

I truly believe there is no real choice offered to voters. Brand Red and Brand Blue won't do anything to further the interests of anyone or anything other than the Crony Capitalist Financial-Military-Industrial Complex for whom they both truly work, and they don't have to worry about repercussions from voters anymore.

Wed, 03/28/2012 - 02:14 | 2296572 Z Beeblebrox
Z Beeblebrox's picture

The Fed has a monopoly on money. The government has a monopoly on force. The Fed's product is a currency that robs from all who use it, but it is government that mandates this use. Printing monopoly money is a peaceful activity until you shove it down the throats of the people.

I don't know who controls the government. Maybe it's the old banking families working through proxies. Maybe it's some religious cult, known or unknown to the general population. Maybe it's just a loose-knit club of the rich and powerful, working in their common interest. Whoever it is though, I imagine they are the same people who control world finance, as well as the culture machines of Hollywood and Rome. Force, Money, and Culture are all tools of control. Asking if government controls money, or money controls government, seems to me like asking if the hammer controls the wrench, or the wrench the hammer.

Wed, 03/28/2012 - 04:58 | 2296642 Rynak
Rynak's picture


Wed, 03/28/2012 - 07:42 | 2296736 Momauguin Joe
Momauguin Joe's picture

Always follow the money and ask yourself, Who stands to benefit?  The Federal Reserve. Owned and operated since 1913 by eight families:  the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.

Wed, 03/28/2012 - 12:06 | 2297159 TruthInSunshine
TruthInSunshine's picture

Follow the money further, and ask how many politicians doing the bidding of the entities (and more than you mentioned) above, rather than the people who voted for them, have been and are being financially rewarded for doing so (their 'business' relations, family members getting cushy jobs, and dozens of other ways they are massaged, oiled and lubed).

Tue, 03/27/2012 - 22:40 | 2296313 ghengis86
ghengis86's picture

I read that section a few times; liability, asset. Liability...asset. Liability...



Tue, 03/27/2012 - 23:02 | 2296343 Unprepared
Unprepared's picture

Does bilateral netting apply to this as well?

Wed, 03/28/2012 - 10:23 | 2297141 Neo1
Neo1's picture

Returning to real money is the best way to show how inflated to worthlessness debt money is since 1913.

The real reason you pay an income tax, is for the privilege of using a private currency.

Also known As A:  Federal Reserve Note

Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours.

Tax Exemption:

 Web search these three different phrases:

Redeemed in Lawful money  or

Redeemed in Lawful money Pursuant to Title 12 USC §411  or

deposited for credit on account or exchanged for

non-negotiable federal reserve notes of face value  

Wed, 03/28/2012 - 01:33 | 2296289 cranky-old-geezer
cranky-old-geezer's picture



Yep, that about sums up the financial system these days. Governments keep borrowing and spending money banks print on a printing press and buy government bonds with.

It's a growing tide of printed money and government debt while currencies continue losing value and economies continue collapsing.

It's not only the end game for America, it's the end game for all fiat currencies around the world except nations with a huge trade surplus. Their currencies will remain strong relative to other currencies.

But it definitely is the end game for America.  The only thing propping up the dollar now is its world reserve currency status and petrodollar status.   When those two things disappear the dollar will be worthless ...and America will collpase soon after.

No doubt ZH will continue their cute little reports and charts highlighting this little segment of the problem or that little segment of the problem ...right up to the overnight collapse of the dollar ...which will catch ZH and all their contributors just as flatfooted as everyone else.

Tue, 03/27/2012 - 23:27 | 2296385 Gringo Viejo
Gringo Viejo's picture

Physical PMs. Your ONLY shelter from the storm.

Wed, 03/28/2012 - 01:28 | 2296529 ChrisFromMorningside
ChrisFromMorningside's picture

PMs are secondary. PM investment presumes that our globe's movement towards an oligarchical police state is transitory and a free market will prevail. That's a big "if." Lead and steel are your only REAL shelters from the storm.

Wed, 03/28/2012 - 02:31 | 2296579 AldousHuxley
AldousHuxley's picture

PM are like homes. it won't make you richer...just make you appear richer because everyone dollar is sinking. but at the end of the day, 1 gold bar is 1 gold bar.

to profit, you have to leverage.and buy more than you own. Then also sell before Fed hikes interest rates.


buy low sell high

Wed, 03/28/2012 - 08:12 | 2296749 sessinpo
sessinpo's picture

Did anyone bother to really look at the numbers before posting, just to be the first to post?


I don't agree with the charts. In essence, the chart claims that assets are larger than liabilities. The chart does not seem to include unfunded liabilities and valuations of assets may be suspect as we have found out in real estate after the bubble, tech bubble, and whatever bubble BB inflates.


Edit 8:02 am. I noticed the chart has been taken down. Maybe it was because the chart did not support the idea that liabilities outweighed assets. Those posting on the debt problem are correct but didn't seem to actually looking at the data that didn't support their post.


Chart back up but still does not show liabilities outweighing assets.

Wed, 03/28/2012 - 08:15 | 2296792 Conor
Conor's picture

Yes. Unfunded liabilities are the problem.  Medicare, SSI, etc.

Tens of trillions of dollars.

Money counters can make numbers do anything. 

Tue, 03/27/2012 - 21:22 | 2296158 maxw3st
maxw3st's picture

I'm willing to bet the data is fudged just enough to make those totals tilt to the asset side. Reality is they probably need to print more currency to pull that off.

Tue, 03/27/2012 - 21:58 | 2296228 UP Forester
UP Forester's picture

"Others" can cover quite a bit.

I'm just wondering what the total off-book liabilities are, 'cuz I know the "assets" are empty Doritos bags and condoms already used to fuck the sheeple, and those awake as well....

Tue, 03/27/2012 - 22:18 | 2296251 vast-dom
vast-dom's picture

it's fudged a hell of a lot more than just enough -- i can guarantee you that the shadow books on toxic assets such as true housing liabilities (adjusted) were NOT factored in. Also, if you factor in bank assets such as savings vs. the consumer credit owed against those dwindling savings you get a wholly different more at horrific picture with nice blood-stained splattered little graphs and legends and such.


and let's not get into The Fed's toxic derivatives to the Nth illegal holdings, which for obvious reasons aren't showing up in the above charts.

Tue, 03/27/2012 - 22:28 | 2296282 Dr. Engali
Dr. Engali's picture

Surely not. I've never heard of the government fudging any numbers before. If that's the case do you suppose our unemployment is really at 8 % or that inflation is really at 2% ?

Tue, 03/27/2012 - 21:22 | 2296159 Cursive
Cursive's picture


At the end of the day, this may prove to be the fatal flaw in the chairman's attempt to dilute the global liabilities, he will be doing the same with the assets.

This was always the problem.  I'm surprised the central bankers have pushed it this far, but we CANNOT inflate our way out of this.

Tue, 03/27/2012 - 22:16 | 2296253 illyia
illyia's picture

I am also surprised. Which is not comforting.

Wed, 03/28/2012 - 00:59 | 2296490 cranky-old-geezer
cranky-old-geezer's picture



but we CANNOT inflate our way out of this.

True, but that's exactly what the Fed and ECB and every other central bank plans to do, print currency and keep buying government debt.

I bet Fed's true balance sheet is closer to $5 trillion, maybe $7 trillion.   Our government has to borrow $150 billion a month.  Nobody else is loaning the government that money, so the Fed IS printing $150 billion a month and buying those Treasuries one way or another, maybe thru proxies.  

QE3 has been going on since QE2 stopped, and there's no end in sight.  There's no other way the government can borrow $150 billion a month to keep operating.

Fed's balance sheet may show $3 trillion, but they have another $3 - $5 trillion off balance sheet nobody is looking at, maybe even $10 trillion by now.

And all of those "assets" are declining in value, something else nobody is looking at.  Sure, most of it is AAA, but AAA is meaningless these days. 

And the biggest thing nobody is looking at is the declining value of the US dollar from all the money printing going on (behind the scenes).  It seems like Bernanke is determined to destroy the dollar with Euro currency swaps and buying Euro government debt and buying all kinds of crap trying to keep the Euro afloat. 

Like I said, I suspect Fed's true balance sheet is closer to $7 trillion, maybe $10 trillion by now, and all that stuff is purchased with printed dollars.  That's why the dollar is losing value rapidly now, and yes it will collapse altogether at some point, probably sooner rather than later.

Wed, 03/28/2012 - 10:12 | 2297109 Amagnonx
Amagnonx's picture

Didnt I hear of a $15tril facility to BOE and friends?

Wed, 03/28/2012 - 10:27 | 2297151 FreeNewEnergy
FreeNewEnergy's picture

I'm with the geezer on this one. Why do you think the Fed is so radically opposed to an audit as are most members of CONgress. Were the Fed to be properly audited, they would be shown to be insolvent. Of course, they could just print up more money and Presto!, solvency.

Also, I'm not an accountant - are there any around here? - but I'm pretty sure assets and liabilities are supposed to be equal, ergo, the term "balance sheet."

The only way to take back the nation, IMO (no, I refuse to be Humble or call my opinions such) is for Americans to completely ignore all laws, edicts and taxes which are not in the public interest.

Now, that's a difficult equation, because a large and diverse public, such as is the USA, has many interests, but, we could start with the fact that the feds borrow 40% of every dollar spent, so, let's start with reducing all expenditures - and politicians, cops, teachers and all public employees and their benefits and all entitlement recipients: welfare, disability, SS, Mediacre - should be reduced by 40% immediately.

They say that deflation will be painful, but, tell you what, it will be most painful for those people who depend on it the most: the public sector. And, I daresay that the effects of such a massive readjustment will make the private sector much stronger as they will adapt much quicker, such is the nature of business.

40% cuts, NOW. Take it or leave the country to the scum that's put us in this mess.

Tue, 03/27/2012 - 21:24 | 2296161 Western
Western's picture

I wonder where the $700 trillion in derivatives stand in all of this...

Tue, 03/27/2012 - 21:27 | 2296168 fonzannoon
fonzannoon's picture

Western if you net it all out there is really only about 12k in derivatives. No really the longs and short net out equally. I think BAC owes JPM a hot dog and a diet coke.

Tue, 03/27/2012 - 21:31 | 2296175 dick cheneys ghost
dick cheneys ghost's picture

With "pink slime" or without?

Tue, 03/27/2012 - 21:37 | 2296187 rehypothecator
rehypothecator's picture

I think they're planning on giving the pink slime to us.  

Wed, 03/28/2012 - 00:37 | 2296464 mkhs
mkhs's picture

Planning?  What do you think you have been eating in those dollar menus?

Tue, 03/27/2012 - 22:17 | 2296260 illyia
illyia's picture

So why don't we just do that... often thought... simple algebra...

Probably will happen as it will be the only thing they haven't tried.


Wed, 03/28/2012 - 08:19 | 2296800 Conor
Conor's picture

"I wonder where the $700 trillion in derivatives stand in all of this..."

Now you're talking.  Funny that nobody talks about that so much.

Tue, 03/27/2012 - 21:25 | 2296166 nmewn
nmewn's picture

Keynes would be so proud.

Let's dig him up and show him! ;-)

Tue, 03/27/2012 - 23:09 | 2296350 Monk
Monk's picture

Actually, most of total money supply isn't created by governments or central banks but by commercial banks, with the bulk consisting of unregulated derivatives.


Wed, 03/28/2012 - 10:19 | 2296555 TruthInSunshine
TruthInSunshine's picture

Where do you think "commercial banks" get their initial capital (and ongoing capital) to parse out leveraged loans?


If you said (and especially since the abandonment of any standard, gold or otherwise, that sets any inherent limit on how fast and by how much the fractional reserve 'banking' system can grow the fiat currency supply was abandoned) from the Central Fractional Reserve Banking Fiat Creation Machine, you win!

i.e. Money Multiplier

Tue, 03/27/2012 - 21:32 | 2296172 sitenine
sitenine's picture

Does that mean the United States has $2.7T in Stockholders' Equity?  And what does that mean?  Or am I just looking at this wrong?  Little help please?

Tue, 03/27/2012 - 21:36 | 2296186 wombats
wombats's picture

No.  It means your children owe $2.7T.  Better have them pay soon.  By June they might owe $27T.

Tue, 03/27/2012 - 21:39 | 2296182 earleflorida
earleflorida's picture

ya know, it might just take a small failure/ default far less than lehman, that brings the entire world financial system down, with the fed having shot its last load into a defunct sperm bank some call the 'once-great-american-fertility-clinic'?

ALERT: sperm count negative


Tue, 03/27/2012 - 21:46 | 2296203 Dr. Engali
Dr. Engali's picture

I thought the same thing until MF Global collapsed and nothing happened. Uncle Ben's hedge fund with infinite capital is a powerful thing.

Wed, 03/28/2012 - 01:03 | 2296495 lasvegaspersona
lasvegaspersona's picture


think Japan. not so little and tied to everything

Tue, 03/27/2012 - 21:39 | 2296191 alfred b.
alfred b.'s picture


   The second chart looks like the floor plan of my apartment...

  Seriously though, nothing in there that a HF(T) paper shredder can't fix!




Tue, 03/27/2012 - 21:41 | 2296194 Al Gorerhythm
Al Gorerhythm's picture

Where lies gold?

Tue, 03/27/2012 - 22:46 | 2296326 ghengis86
ghengis86's picture

Where lies the tungsten?

Tue, 03/27/2012 - 21:44 | 2296198 infiniti
infiniti's picture

Nice work in making excel charts not look like excel charts.

Tue, 03/27/2012 - 21:44 | 2296200 Bunga Bunga
Bunga Bunga's picture

Looks like a forensic analysis of used toilet paper.

Tue, 03/27/2012 - 21:45 | 2296202 gwar5
gwar5's picture

Not Heisenberg this time. The dreaded Chinatown Omen: The balance sheet is your daughter and your sister at the same time thanks to Sugar Daddy Ben.

Tue, 03/27/2012 - 23:13 | 2296360 Cursive
Cursive's picture


Damn fine analogy.

Tue, 03/27/2012 - 21:57 | 2296227 gookempucky
gookempucky's picture

and of course our current esteemed comptroller of the currency ate lobster and caviar with these low life carbon units.


Tue, 03/27/2012 - 22:00 | 2296233 Tom Green Swedish
Tom Green Swedish's picture

2.7 trillion dollars is half as much as the entire GDP of China. The USA has twice as much as Europe and half as many people and we're just getting started.

Tue, 03/27/2012 - 23:29 | 2296388 UP Forester
UP Forester's picture

I wonder if China "is one of our closest allies," or "punches above its weight"....

Wed, 03/28/2012 - 00:41 | 2296468 Tom Green Swedish
Tom Green Swedish's picture

Who gives a shit? Just work hard and do the best you can.

Wed, 03/28/2012 - 01:09 | 2296504 lasvegaspersona
lasvegaspersona's picture


'work hard' and get paid in a rapidly (and intentionally so) inflating currency...I agree we should keep on trying but I'd have a back up plan too.

Wed, 03/28/2012 - 01:19 | 2296520 Tom Green Swedish
Tom Green Swedish's picture

Go take your money and inflation and shove it.

Wed, 03/28/2012 - 01:12 | 2296508 Tom Green Swedish
Tom Green Swedish's picture

Didn't see China in  your "Youtube" message though

Wed, 03/28/2012 - 01:15 | 2296514 UP Forester
UP Forester's picture

Guess the teleprompter hasn't told the puppet-in-chief to placate China, yet.

Unlike Belgium, the Netherlands, Norway, Canada, Germany, Japan et al.

Tue, 03/27/2012 - 22:03 | 2296237 Sam Clemons
Sam Clemons's picture

The solution for this is for every country to create and short inverse ETF products ad infinitum.  

Tue, 03/27/2012 - 22:17 | 2296259 mess nonster
mess nonster's picture

I can apreciate that the charts are "objective", in that they take literally the "assets" as positive. This allows us to insert the irony where and how much we see fit.

But how about a real chart, one that shows the "assets" for what they are, not only shit, but shit crawling with pathogenic, flesh eating bacteria, mutated killer viruses, and a liberal dose of giardia, just to round out the micro-organism roster.

Fer instance, the Fed has as "assets" mortgage CDO bonds (shit) euro junk bonds (shit) Treasuries (shit, i mean, are we REALLY going to pay these off?)... shit and more shit. 

Marky-market is the rap star of the next decade bitchez.

Tue, 03/27/2012 - 22:20 | 2296265 bigwavedave
bigwavedave's picture

"Pink ......people!"

Tue, 03/27/2012 - 22:30 | 2296286 blindman
blindman's picture

27 March 2012
Warren Pollock: Overall Derivative Market Contracts - Warning Signs
"..In less insane times the notional risk was reduced to a mere 50% through the netting process. Even with 8% risk not covered by netting the liabilities of JPM and others are far greater than their assets under management. The problem being that JPM's assets are secured by its liabilities and the liabilities of banks tend to be YOUR Savings.

With changes to Safe Harbor rules the government is not only facilitating fraud with these netting assumptions but they are also putting your savings at risk by giving the coverage of derivatives priority should there be a dispute. This very issue is being worked out presently with MF Global." Warren Pollock /jac
Tuesday, March 27, 2012
Lindsey Williams on Jeff Rense Radio - 26 March 2012

Tue, 03/27/2012 - 22:31 | 2296291 sadmamapatriot
sadmamapatriot's picture

I call this Peak Credit.

Tue, 03/27/2012 - 23:10 | 2296352 Unprepared
Unprepared's picture


Just the other day, we discovered a huge fiat field at 33 Liberty Street33 Liberty Street

Tue, 03/27/2012 - 22:38 | 2296304 WoodMizer
WoodMizer's picture

One man's trash

Tue, 03/27/2012 - 22:41 | 2296314 Jim in MN
Jim in MN's picture


This is the world's balance sheet...ON CRACK!!!

Tue, 03/27/2012 - 22:43 | 2296321 Atomizer
Atomizer's picture

If we can only get another 5 trillion austerity/stimulus package passed, it will be different this time around. We need to pass this bill before we can read it!!!


Tue, 03/27/2012 - 23:05 | 2296347 regionswork
regionswork's picture

Thus the limitation of the balance sheet concept.

Liabilites creativley become assets.

You can be broke and not know it.

Cash accounting requires a sharp focus and limits credit.

Sweat equity and knowledge create leverage.

Long term slow growth is more sustainable.

Few hockey stick graphs.


Tue, 03/27/2012 - 23:12 | 2296356 nathan1234
nathan1234's picture

Medicare and Social Security payouts in the USA liabilities are not included.

Totally incomplete.

Liabilities are over 200 trillion.

Tue, 03/27/2012 - 23:26 | 2296382 Coldfire
Coldfire's picture

These are not legal liabilities, just bare unenforceable promises, which will be broken.

Wed, 03/28/2012 - 01:13 | 2296512 lasvegaspersona
lasvegaspersona's picture


I disagree, the promise will NOT be broken, they will be fullfilled,...with severely debased currency. It always happens this way with fiat. There would be too much pain and fired politicians, if promises are broken.

Tue, 03/27/2012 - 23:15 | 2296363 Monk
Monk's picture

Almost all of total money supply consists of debt, while most precious metals have little practical value. The value of physical assets are essentially based on their use; tag on a money value to them, and you end up with the same problem of seeing money as an asset.


Wed, 03/28/2012 - 07:56 | 2296755 BigJim
BigJim's picture

  while most precious metals have little practical value

O dearie, dearie me. Silver has 'little practical value'? Platinum has 'little practical value'?

Even gold has 'practical value' - as the best form of money yet invented/discovered.

Tue, 03/27/2012 - 23:20 | 2296370 ILikeBoats
ILikeBoats's picture

What is the value of publicly traded shares, when you have to unload them quickly to another buyer?  Much less than the stated value.  This means the chart for USA is not 100% accurate, as shares would take a big haircut.

Wed, 03/28/2012 - 06:50 | 2296700 Non Passaran
Non Passaran's picture

Well it's not like that's the case only with shares. What would happen with the rest (and look at that much bigger chunk called bonds)?

Tue, 03/27/2012 - 23:26 | 2296381 ss123
ss123's picture

It looks like Assets less Liabilities are all greater than zero.

Party on.

Tue, 03/27/2012 - 23:49 | 2296407 Peter Pan
Peter Pan's picture

There doesn't seem to be much by way of unencumbered assets left over. It would seem to mean that diminishing asset values contaminate the value that liabilities have as assets. This level of interconnectedness means that a domino effect would well and truly cause some angst when things fall apart. Or am I reading all this incorrectly.

Wed, 03/28/2012 - 00:16 | 2296446 jimmyjames
jimmyjames's picture

There doesn't seem to be much by way of unencumbered assets left over. It would seem to mean that diminishing asset values contaminate the value that liabilities have as assets. This level of interconnectedness means that a domino effect would well and truly cause some angst when things fall apart. Or am I reading all this incorrectly.


Correct--so called "assets" marked to market = deflation

Wed, 03/28/2012 - 00:00 | 2296422 slewie the pi-rat
slewie the pi-rat's picture

when it comes to dilution, the banksters study homeopathy!

them are some big fuking zombies. BiCheZ!

what we have here are the real TBTFs

why are they TBTF?  b/c they can print?  maybe.  be pretty tuff sledding w/out that, doncha think?  then again, there's that MIC thingy, too... 

as long as those IOUs are "assets" and those paper notes in your wallet or purse are "money" (legal tender laws!!!) and people accept them as such, it is game0n!

the human comedy may fit on paper, by only symbolically

however, it fits in the universe!  at least so far...  e = mc2  ; debits = credits;  and boys and girls?  the universe is a vast system of energy transformations and here we sit on a living golf ball with a molten core, running the juicer, spiralling our path thru the milkyWay together, devising ways to rob and murder each other b/c we love our children

got Juice?

Wed, 03/28/2012 - 01:41 | 2296536 oldman
oldman's picture

Hey pi-rat,

You know it's the juice

that's the medical wizard

who whispers in my ear

during his teachings

it's all energy, oldman

it is all just energy

and nothing more


i believe the plant master---he always tells the truth                 o m

Wed, 03/28/2012 - 02:16 | 2296575 slewie the pi-rat
slewie the pi-rat's picture

is that the same plant master that just loves to fatten people up on truth before he butchers them and eats them?

Wed, 03/28/2012 - 02:36 | 2296585 oldman
oldman's picture

Nah, pi-rat,

Not for me, anyway. The dude is like a grandfather ought to be.

Just let's your mind run on and on for half a day

never has much to say except, occasionally,

a thought will enter your head that you know is not yours

and looking around             no one to be found

how did a  flower arise from such ground?


Never heard of a natural plant that fattened one up

maybe cows know or deer

but i weigh the same as I weighed fifty years ago

 I'm with you though because me eating the plant

is the same as the plant eating me

We work well together though I hate the taste

better as a juice than  slimy paste


Nah, pi-rat, this plant is the teacher and this oldman the student                     om


Wed, 03/28/2012 - 02:59 | 2296598 slewie the pi-rat
slewie the pi-rat's picture

that's the thing about e = energy

it "equals" some mass, and maybe the 'speed of light' isn't a stopper in "relativity"

so if that plant is gnawing on yer leg, mine would like some greyPoupon, please   L0L!

Wed, 03/28/2012 - 00:06 | 2296431 WilliamShatner
WilliamShatner's picture


Someone just tell the US, France, Russian & China to launch the nukes and get it over with.

Wed, 03/28/2012 - 01:09 | 2296502 dark pools of soros
dark pools of soros's picture

My god Jim, you sound like Israel

Wed, 03/28/2012 - 04:17 | 2296629 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

For God's sake Jim... I'm a doctor, not a mechanic!

Wed, 03/28/2012 - 00:43 | 2296471 sasebo
sasebo's picture

Is that why they call it a balance sheet?

Wed, 03/28/2012 - 01:05 | 2296497 Xue
Xue's picture

We live in a world where somebody's asset is someone else's liability.

Wed, 03/28/2012 - 01:06 | 2296500 dark pools of soros
dark pools of soros's picture

It's impossible since inflation makes future liabilities even more expensive unless all social nets are redacted. Can't happen since they want all wealth gone and embark on Agenda 21

Wed, 03/28/2012 - 01:33 | 2296532 Zgangsta
Zgangsta's picture

Quit scaremongering.  The European Debt Crisis is almost over.  Monti said so!

Wed, 03/28/2012 - 01:56 | 2296551 jomama
jomama's picture


Wed, 03/28/2012 - 01:49 | 2296544 nathan1234
nathan1234's picture

Good Luck to those who keep their fiat money in Banks

Even fiat money can just disappear.

It just happened in Greece.

Only Precious metals in your physical possession helps you to retain wealth.

Keeping your money with the Banks or Government is like leaving it with the crooks for safekeeping




Wed, 03/28/2012 - 02:43 | 2296589 AnAnonymous
AnAnonymous's picture

Good Luck to those who keep their fiat money in Banks


The point. They will miss the train of consumption through unsustainable debt.

Living within your means is somehow a borderline criminal piece of advice in a US driven world.

Wed, 03/28/2012 - 03:23 | 2296608 slewie the pi-rat
slewie the pi-rat's picture

i know

it's like cigarettes:  marketed to the young, if you will

the damned nannies ought to doSomethingTM and crash the mofo, BiCheZ!

that debt is stressful; no wonder all the kids smoke

we know that the nannies know the vaue and function of PMs

trust me

and they love a good cause!

Wed, 03/28/2012 - 03:09 | 2296602 cnhedge
cnhedge's picture

debt mountain is kill the world.

Wed, 03/28/2012 - 03:44 | 2296603 cranky-old-geezer
cranky-old-geezer's picture



Only in America can a bank take worthless nonperforming debt that will never be paid back and show it as "assets" on their balance sheet at full original value.

It's called accounting fraud.

What?  It's covered by CDS?  You mean CDS that will never pay off?

What?  It's guaranteed by some government agency?  A government agency that's broke?

That's America's financial system in a nutshell.   One huge mass of accounting fraud where worthless "assets" are hedged with CDS that will never pay off or backed by government agencies that are broke.

The only reason a collapse occurred in '08 was CDS triggering and discovering the issuer (AIG) didn't have any money.

They solved that problem now.  No more credit events and no more CDS triggered ever again.  Writedowns and haircuts are "voluntary", like happened with Greek bonds recently ...or the Fed buys the worthless crap (at full original value) with printed money.

So no, there won't be another collapse.  The ponzi scheme called America's financial system will go right along.

The next collapse will be a currency collapse, something not shown on anyone's balance sheet, but universally ignored, never discussed, never even mentioned.

Wed, 03/28/2012 - 09:11 | 2296945 Sandmann
Sandmann's picture

CDS were a masterstroke ! To simply print off Uncovered Warrants on Bank Loans as if they were secured is truly visionary. Maybe the Fed should assign a Giant PUT to the ECB and match it with an ECB Giant CALL on the Fed. This daisy-chaining of self-cancelling transactions is a superior way of walking naked in the rain

Wed, 03/28/2012 - 03:37 | 2296614 EcoFlow
EcoFlow's picture

"  the bulk of the world's assets also happen to be its liabilities! "

What ?? You are discovering this just right now here ???


Wed, 03/28/2012 - 03:45 | 2296620 Sandmann
Sandmann's picture

I like Bank Balance Sheets as they are the Mirror Image of the Real Economy summing the System to Zero Balance. Quite why Politicians focus on the Banks as Institutions without understanding the nature of their role in the Economic System beats me. Possibly because Politicians are obsessed with Box Shifting rather than Hydraulic Systems

Wed, 03/28/2012 - 05:31 | 2296654 Bartanist
Bartanist's picture

Given then above, it just occurred to me that for the banks to own everything in this fiat-slave society. The only equation they have to balance is:

Total value added through labor = Total interest collected and due.

Wed, 03/28/2012 - 06:46 | 2296696 Withdrawn Sanction
Withdrawn Sanction's picture

"At the end of the day, this may prove to be the fatal flaw in the chairman's attempt to dilute the global liabilities, he will be doing the same with the assets."

This was Prof. Fekete's point from the other day, presented in a somewhat different fashion. The unbridled creation of liabilities (currency, bank reserves, etc.) erodes capital (the residual of assets minus liabilities). When capital is gone, one is insolvent and it's game over. The (household, firm, or govt) is either reorganized or liquidated (i.e., assets sold for the benefit of creditors). Size differences matter only in degree not in kind.

Though the government is bigger and seemingly capable of carrying such a charade longer and higher, it cannot do so indefinitely. The math is inescapable. Though the government may order suppression of honestly presented (i.e., fair value) data, it cannot suppress the reality of capital disappearance. And it's not really the math that causes this of course, but rather what the math represents. Even if all the assets were seized (and that act of desperation may yet be coming), there will not be enough collateral to satisfy the liabilities. Someone loses, in other words, in a negative capital environment.

The arrogance (not to mention ignorance) that causes men like BB and the banksters to think they can actually get away w/this is truly breathtaking.

Wed, 03/28/2012 - 07:17 | 2296715 highwaytoserfdom
highwaytoserfdom's picture

Bernake's son has $450,000 in student loans.. Don't expect a moral epiphany by TBTF, after all Blankfine  and these clowns believe it is God's work.  Balance sheet? Heck it is more like two fat bloated guys balancing a seesaw falling out of an airplane without a parachute... If that image is not enough these two fat guys don't see the splat because they do God's work and will never hit reality. Financial legacy for the future. 

Wed, 03/28/2012 - 07:25 | 2296720 nathan1234
nathan1234's picture

Ben's God is Satan



Wed, 03/28/2012 - 07:51 | 2296751 tradewithdave
tradewithdave's picture

If technology = money, then

Assets = Liabilities + Technology

So much for capital.

Wed, 03/28/2012 - 08:49 | 2296868 gaoptimize
gaoptimize's picture

Is the 13% and 18% loans on the assetts side of the USA depository corporations and other financial intermediaries at mark-to-market or par?

Wed, 03/28/2012 - 10:39 | 2297174 Yellowhoard
Yellowhoard's picture

People equals liabilities.

Rationed healthcare equals fewer people.

Problem solved.

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