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...

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

Mad Marv's picture

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

hedgeless_horseman's picture



Unaudited (in perpetuity) FTMFW!

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.

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.

economics9698's picture

It makes me become overcome with confidence for the future. 

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.

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.

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.

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.

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.

piceridu's picture

Yeah, this already's called China

Ghordius's picture

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

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?

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.

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?

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.

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.  

Element's picture

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

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.

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.

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.

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?  

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.

tarsubil's picture

Blue hairs also watch Bill O'Reilly.

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?

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.

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.

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.

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).

ghengis86's picture

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



Unprepared's picture

Does bilateral netting apply to this as well?

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  

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.

Gringo Viejo's picture

Physical PMs. Your ONLY shelter from the storm.

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.

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

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.

Conor's picture

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

Tens of trillions of dollars.

Money counters can make numbers do anything. 

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.

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....

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.

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% ?

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.

illyia's picture

I am also surprised. Which is not comforting.

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.

Amagnonx's picture

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

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.