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US Launched Financial War on World and They're Fighitng Back


World  (tags: world banking, gov versus banks, thrid world contries bankscorporate, corruption, debt, finance, money )

Mac
- 1499 days ago - alternet.org
US banks and corps are aggressively leveraging themsleves into other countries' economies, but other coutnries are starting to fight back. Long article and a complicated story, but well worth the read for those concerned about intl banks taking over.



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Comments

Jae A. (322)
Saturday October 16, 2010, 10:30 am
This is really an informative article...Not about 'politicl parties'...about the reality of what is going on with the banks and the financial war that has been launched on the world by the U.S...

.I hope others who read the article will pass it on to those on their friends list and other e mail list. This is REALITY in the making !!!

Knowledge is Power !!!
 

Kit B. (276)
Saturday October 16, 2010, 11:12 am
Because I can not use the personal message system on Care2 - for what ever reason, I will just have to send this to other Care2 people on my private email list.

Without some back ground and understanding of finance and how American and world economics function many may not understand the far reaching potential of this article.

Personally, I see the problems as beginning with 1) the quaternary based on credit 2) removal of critical regulation on business 3) rapacious abuse by lending institutions 4) intentional withholding of normative loans to keep the Keynesian cycle moving.

Can we find a way out of this short of another international war? That will depend on who is in charge of the flow of finance in Congress - which countries can afford to continue a constant trade policy (sans the open black mail) with the United States. These are extremely delicate policies and as the article makes clear, others (China etc...) are finding partner ships to allow movement around the US policies.

Deep, exacting, long term clear and stringent regulations of internal policies may prevent a full collapse of the dollar; however that does not seem likely.

I would beg to differ - this is politics it's international and world finance, few things are more affected by political actions or in actions. Should we bring in these radical elements that indicate by word and deed and thereby demonstrate a complete lack of international relations, much less international finance, we will find these people voting and moving toward an ideological agenda rather then a long term structured agenda.

In his book, "Ascent of Money" Nails Ferguson began with a journey to understand the collapse of the strong and vital German economy, in doing so he found that by necessity one must look back farther, so it is true of our current financial and economic situation. It does require some study and long term thinking (with historical perspective) to understand the intricacies of where we are, how we got here, and how to survive past and beyond very same policy decisions than began 30 years ago. We must find a way to have the US population understand how badly misled they are by accepting that our current situation is simplistically tied to either the Fannie Mae or Freddie Mac these are convenient diversions, to agitate the population and create a dialogue that can not begin to address the international monetary crisis.

This article is truly a needed element of education addressing our current world and US economic crisis. Those who by choice read all ten articles of The United States of Inequality have a much better understanding of how we got here. As that series begins at opening of the twentieth century and carries forward through to the current.

Thanks Mac!
 

Hans Mueller (591)
Saturday October 16, 2010, 11:37 am
"What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1 per cent interest cost? This is the game that is being played today."

Who in the world thought this up. Wall Street has a number of greedy, manipulating bad apples. Our financial system is still in need of a lot of regulatory repair. But, there are some safeguards in place. Such an attempt to manipulate the stock market would be shut down. Even if this fairy tale were to succeed, it would make trading markets worthless along with their stocks and bonds. In fact. just the opposite is true with no end in sight. We are financially beholden to China and others. Devaluation of our currency is a slippery slope. When I read this, I kept thinking that this article was some kind of joke but I never found the punch line. Sorry Mac.
 

Kit B. (276)
Saturday October 16, 2010, 11:45 am
We are far less beholden to China then people are led to believe, just because it's on TV or in a newspaper does not mean it's factual. This is not a fairy tale, Hans, but it does require understanding the full article and that Wall Street is extremely vulnerable - mostly to their corrupt manipulations. Most markets are currently worthless unless you have deep pockets, even deeper knowledge of Wall Street and know how to short/ long buy and when to sell.

Got your note Mac - please use my private email cannot answer you on Care2.
 

Mary Coleman (148)
Saturday October 16, 2010, 11:50 am
Thank you Man & Jae---I am totally forwarding this to Robb---I know he'll want to read it, and my super second mom like person too :)
 

Jae A. (322)
Saturday October 16, 2010, 11:54 am
A reminder to take note of : ...there are several 'pages' to this article so one must click from one page to the next..or click on the 'view as single page' at the bottom of the first page.
 

Mac R. (289)
Saturday October 16, 2010, 12:51 pm
Yes Kit, well, few people are going to dig that deeply into it all and especially the history that led us to this point. How many people do you know who even know who Keynes was, let alone what his philosophy was and how he remade Japan after WWll? You notice I did not say "rebuilt", but "remade" Japan. Educating people in this complex system is very difficult. Hell, the traders on Wall Street don't even really understand much beyond their specific field or area of manipulation.

It's definitely true that the info in this article does no one any good if they don't understand the basics of the creation of the fed and that entire corruption of our national integrity, and a basic understanding of wealth creation through creation of debt. I don't pretend to know all the details, but I have learned enough to understand the hisotry and some of the main players and events that have brought us here.

What this article addresses is the imminent revolt by the rest of the world to our hegemony. And when that happens, all hell is gonna break loose. It's entirely possible that the BRIC will quietly build a parallel structure, as they are actually starting to do, and not ally the rest of the third world against us, but our greedy bastards in the Whitehouse and on Wall Street are too cocky and arrogant to sit quietly by and not call a showdown at some point. At least that is what I fear.

And anyway, regardless of this BRIC problem, our financial house is already crumbling down and there is no saving it, I think. This next year is going to be probably the most important and volatile year in our history. We have to just wait and see how our gov and the banks handle their entire system losing all worth and the world shutting us out with a snide "I told you so!"

I have to go right now, but I will write you personally later, okay Kit?
 

Mac R. (289)
Saturday October 16, 2010, 1:01 pm
Hans, This is not about Wall Street manipulating stocks on the DJ. This is about currency manipulation on a worldwide basis, done from/by US banking interests and arbitraguers. Manipulation that is destabilizing nations with purely predatory fabricated credit. And no, there are no safeguards to stop this and no, there is no one to shut this down. The very people who would shut it down are the main players, namely the fed, and the SEC and others are just fed and private bank guys put in place to let them roll with it.
 

Mac R. (289)
Saturday October 16, 2010, 1:07 pm
And Hans, they won't stop this because they set up the system to be able to do exactly this type of thing and consolidate their control over everyone else. No one who COULD stop it in this country has an interest in stopping it because this is "our" only way of getting richer these days. We have no other way of making money from nothing. We have no manufacturing base left. All we have is debt servicing and credit creation... and Hollywood.
 

Mac R. (289)
Saturday October 16, 2010, 1:09 pm
Oh, and war.
 

Sanja T. (154)
Saturday October 16, 2010, 1:29 pm
noted ... thanks guys
 

Hans Mueller (591)
Saturday October 16, 2010, 3:01 pm
Kit B. - I beg to differ but we are far "more" beholden to China than people are led to believe. China's holdings of U.S. Treasury securities were stated, by the U.S. Treasury, at $755.4 billion at the end of 2009. The U.S. Treasury data understates Chinese holdings of our government debt because the figures do not reveal the ultimate country of ownership when debt instruments are held through an intermediary in another jurisdiction

Mac R. - Points well taken. I am certainly not an admirer of the fed. Are you saying that US banking interests and arbitraguers are destabilizing nations with purely predatory fabricated credit but not caring or realizing the imminent revolt by the rest of the world to our hegemony?

There is little doubt that we are losing our role, in world economics, at the big kid on the block. Soon Brazil, Russia, India and China will be joined by Mexico and South Korea. One of BRIC's stated goals is to reform international financial institutions.

I would like to think that there are ways to save our financial house from crumbling down. You are certainly correct that we have squandered our manufacturing base. I personally place great fault with NAFTA and think it's time that we think seriously about what we have done. (Let's not make the same blunder with cap and trade).

We are in this predicament not becuase of any one administration or political party. The question now is who is going to lead the way out. What concerns me with the current administration is their lack of expertise in this area. No, the prior administration was no better equipped.
 

Kathy Chadwell (367)
Saturday October 16, 2010, 5:32 pm
In short,,, our money isn't worth the paper it's printed on, but the bean counters are trying to out wit other countries (the small broke ones first I'm sure) and take over with numbers printed on paper instead of the real gold that makes it worth something, Hang on to your gold & silver folks, it was predicted back when bush was in office that this was coming and the only thing of value would be gold, silver and land. Ted Turner is set:(
 

Mac R. (289)
Saturday October 16, 2010, 5:40 pm
Hans, kind of. They are seeing it, but they are so arrogant and the entire system was rigged in their favor decades ago that they apparently think it's a my-way-or-the-highway type scenario, that they're still the only game in town. I'm speculating here, but I figure that they see what the BRIC are doing and they're panicking, extremely worried that an alternative system might catch on and go viral around the globe and everyone will shut us out. But they (the US banks and fed et al) are not nearly as unified and cohesive as conspiracy theorists portray them, mainly cuz they're far too greedy and focused on the instant graification their games provide, so it's hard for them to step back and get together to moderate their rapacious system and appease the rest of the world, which is what they are saying they might think about doing if they can't bully the BRIC and others to stop going around them.

But like I said, the extremely precarious situation at home may end up settling a lot of this by utter collapse before the BRIC's new system can really get built and have any effect. We ARE at the abyss, right now, this very moment. They've been propping things up hoping things could catch up and stabliize, but the very way they went about it has caused just the opposite, and they can't gloss it over and project recovery for very much longer. There has been no recovery. It's just a matter of time before it all collapses. I really don't think it's possible to save it.

And no, it wasn't particularly all due to one party or the other. Larry Summers worked intimately with Phil Gramm to craft the repeal of Glass Steagal, for just one example. But as to your comment that this administration has a lack of expertise in this area........ That is looking at it the wrong way. Think about it. Larry Summers, Tim Geithner, the whole gang in there, all players in this game who brought this all down on us. These guys ARE the ones who helped their banking buddies get us here. Put it this way, they know just as much about it all as anyone in an executive offices at Chase or the fed. As to how smart they are in dealing with it and fixing it just enough to not collapse completely? I don't think any of them has the brains or skills to change course this late in the game. I also think that the biggest players, that really small club of men, will gain tremendously from a collapse, so they're driving this on as much as they can, using the greedy short sighted peons (traders, arbitraguers, etc) in offices all over as weapons of mass destruction.

But the emergence of the BRIC and its attendant potential is a game changer that, like I said earlier, has given me a little, tiny, very small glimmer of hope that they can't pull off quite the coup they were going for worldwide. I think it's all over for us Americans at home, but the world stage has gotten more complicated.
 

Susan D. (116)
Saturday October 16, 2010, 5:40 pm
Outside of US we get the truth- dont go thinking you get it over there-- you are treated like mushrooms.
I have to tell you that the US IS financially beholden to China, and every time that govt bonds are issued, China buys them up. This enables China to continue to export all the cheap goodies that you see in your shops. One in 3 ships on the world's oceans is carrying Chinese goods to Walmart!!! Thats without the other purchasers of Chinese exports.
The reason for quantititive easing is not a sinister one, or a scam. It is an engine for increasing inflation / growth -- this may sound bad to some people, but the opposite is recession / depression.
No-one wants a return to the 30s, that was the depression which led to WW2.
The alternative option to going for further growth / inflation -- preferably by public works such as building railways-- or by quantititive easing, is to go for austerity. This is the right wing option. It was recently put in place in Ireland and led to a double-dip recession.
 

Mac R. (289)
Saturday October 16, 2010, 5:53 pm
Oh and Hans, 755.4 billion is a pittance. And, as this article pointed out, has been a result of China appeasing us and playing our game in the interest of not rocking the boat worldwide. Recall WHY everyone is buying our securties. China didn't need to, but they did to help keep things stable so as not to shake their own system, which relies on ours and Europes stability less and less each year. They can do okay through a depression on internal consumption alone (well, that statement needs tons of qualifiers, but I'm not gonna type that much, lol) along with their developing markets in the BRIC and third world. Interestingly, China is who is bringing many African economies up into the higher echelons of third world status. They won't become wealthy, but they may stabilize if they can get out from under our bankers' (IMF, fed and WB) clutches.
 

AWAYNOW M. (463)
Saturday October 16, 2010, 6:20 pm
Noted,and Kathy thank you for the forward!
 

Mary Hall (74)
Saturday October 16, 2010, 6:27 pm
Excellent, albeit lengthy article. I've also enjoyed the discussion that follows. Thanks for sharing & for the intelligent comments. I could see this article being broken down into a series for the average Joe. Most folks won't take the time to read & digest complex information. Unfortunately, it's easier to see what's up on TV.
 

Hans Mueller (591)
Saturday October 16, 2010, 6:53 pm
Mac, as I said earlier, we are beholden to China for much more tham the U.S. Treasury states. Mr. Johnson, a former chief economist for the International Monetary Fund, estimated that China owns about $1 trillion in U.S. Treasury securities, or nearly half the $2.37 trillion stock of Treasury debt held by "foreign official" owners.
The amount of U.S. debt held by China is even higher than that, according to Eswar Prasad, an economist at Cornell University. Under the widely held assumption that 70 percent of China's $2.4 trillion in foreign exchange reserves is invested in dollar-denominated bonds, Mr. Prasad estimates that China probably holds about $1.7 trillion in U.S. government debt. That would include the more than $400 billion in debt issued by U.S. government agencies, such as Fannie Mae and Freddie Mac, whose obligations are liabilities of the U.S. government.

Naturaly China is going to do what is in their own best interest (no pun intended).

The "my way or the Highway" scenario would also fall on the perpetrators. They might be crooks but they aren't stupid or suicidal. If I read you correctly, the current administration includes those perps as did previous administrations. In that case, the best course for the beleagured voters is to clean house.

 

Debbie Hogan (118)
Saturday October 16, 2010, 7:44 pm
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
~ Thomas Jefferson ~
 

AniMae Chi (428)
Saturday October 16, 2010, 8:19 pm
Than.q Mac

Than.q Kathy for fwd.
 

LucyKaleido ScopeEyes (80)
Saturday October 16, 2010, 9:10 pm
I'm happy to see, Mac, that your fears that this article wouldn't be appreciated and get to Front Page were not founded. happy for you. haven't read it yet cause it's 6 am and, as we say in French, i don't have my eyes alined with the holes, if you see what i mean. But I'll come back, promise!
 

Linda G. (187)
Saturday October 16, 2010, 9:45 pm
I am by no means an expert in this area and have not yet finished the article... I keep going over parts until they sink in. But I do appreciate all the comments and all the food for thought. Thank you all.
 

Mac R. (289)
Saturday October 16, 2010, 11:56 pm
Maaaan, Hans, I had a long reply going to your commnet a while ago, and then these @8$%#@*&!!! mofos who design these keyboards put these $@#%@&*#@ control alt etc buttons right at the base of the letters and if you accidenatlly hit one you lose everything and I just want to scream! I was on the 6th or 7th paragraph and just lost it all!!!! I want to glue the damn buttons in place so this can't happen like it has so many times! But once in a while I do need the control alt delete combo. @%#$@*&@#!!!! I know I can't be the only one who has lost a ton of stuff to accidentally hitting these buttons! Why are ALL keyboards designed this way?????? I can't even imagine a tiny fraction of people using these buttons relgularly enough for them to be the most prominent buttons on the damn keyboard!!!!!!

Anyway, tomorrow maybe I'll be calm enough to re-write what I was gonna say.

Thank you to all of you who've noted this article and commented here! Thank you for all the green stars, too! I'm gonna try and start replying to all the people who send me green stars, and I want to become your friends! I just need to try and make time to do it.

Ya know, Jae and I have complained, whined really, for years that we met so few people who think like we do. I mean, back home in in Palm Springs, even with such a large gay community, it's a very conservative place, even the gays are more conservative than liberal. I know, I know, seems like an oxymoron, but it's just the way it is. Meeting so many awesome people here on Care2 has been a revelation for us. We don't feel so isolated in our thinking. We have a ton of friends back home in PS, but a big majority of them are conservatives (at least they're not religious wingnuts though) and it's not easy to relate.

I admit that I find it hard to think of a republican as a decent human being. I mean, hear me out. To really believe in the republican worldview, you have to basically distrust people who are different than you and you have to actively not want to share the world and its resources among all people. You cannot have much compassion for your fellow man if you are determined to make sure that there is nothing from your government to help bring them up in this world and level things out just a little. Caring and wanting others to have as good as you do is NOT a republican value; it's the opposite of their values.

Anyway, I just want to say that we feel like we've found a home base. It may be in cyberspace, but it's warm and cozy--- sure, we have to verbally battle with wingnuts here too, but that discourse gets a lot of food for thought out there that we wouldn't have occasion to say if we weren't challenged to say it in debate with them. So, I salute you all!!!!!!
 

Bill C. (98)
Sunday October 17, 2010, 1:05 am
Which came first: money or greed? Thanks for this very enlightening post, Mac!
 

Susan D. (116)
Sunday October 17, 2010, 2:32 am
Q why does China buy up US securities?
A So as to keep their exports cheap and build their economy at the expense of the US economy (or anyone's)

Q Why does China invest heavily in Africa?
A Not out of altruism! They can see the potential. Already they are controlling a lot of business there, to the extent that African people are feeling pinched. It is the 21st century version of what the Europeans and the Americans have done in the past (and would continue to do if / when they can get away with it.)
 

Peace Monger (185)
Sunday October 17, 2010, 2:57 am

http://www.dailymail.co.uk/money/article-1321001/Bank-Fed-We-print-money.html#ixzz12bmcZbEV

Let's just print more money! yeah... that's the solution
 

Terry B. (649)
Sunday October 17, 2010, 5:45 am
Kit, I am somewhat surprised by your allegation that the United States is not beholden to Communist China as is commonly spread in the media.

While I certainly have less faith in the media than I do in your comments, I would like some backup on that assertion.

It does not seem that you can buy anything in the Uninted States (or very much in Canada) that is not made in Communist China, so they must be raking in the heaps of hard currency that is claimed. Since the quality of their crap is abysmal, they can, in effect, sell the same jumnk over and over, while building in America nothing but debts and landfills.

If Wal-Mart itself were a separate country it would be Red China's seventh largest trading partner, and the ships and trucks used to import Wal-Mart's garbage are said to cause 40% of all the pollution in Los Angeles/Long Beach harbor.
 

Debbie Hogan (118)
Sunday October 17, 2010, 6:42 am
Hmmm...Was just looking over the Jefferson quote I posted...Not sure I like his phrase "...the continent their fathers conquered."....but I do agree fully with his last phrase...The power should be given back to the people...and yes, Mack, I do agree completely with you in what you say about Care2...It isn't easy to find a sympathetic ear...or in this case eyes...for many of my thoughts outside of this...I'm grateful to those I've "met" here and for all I've learned and continue to learn from them.
 

Debbie Hogan (118)
Sunday October 17, 2010, 6:45 am
...Sorry...No "k" in Mac....:-}
 

Jeannette A. (146)
Sunday October 17, 2010, 11:47 am
This demands some real investment in time and thought... like all things that have so much to say. This is an extremely complex situation which has allowed people and companies to take unfair advantage of those less informed and less diabolical. It is difficult for all of us"little people" to get out of harms way but the more information we have, the broader our world view and the more control we have over what happens TO us. Thanks, Mac!
 

Hans Mueller (591)
Sunday October 17, 2010, 1:34 pm
A great industrial nation is now controlled by its system of credit.We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men
 

Aletta Kraan (146)
Sunday October 17, 2010, 1:42 pm
Noted , thanks !
 

Henriette Matthijssen (148)
Sunday October 17, 2010, 4:00 pm
Money has the value of only what good one can accomplish with it!
It does not bring love, or buy happiness to oneself! If fact it makes one become even more greedy, deceitful, dishonest, unkind, cruel, selfish & the list goes on! We see this in elites, big corporation, politics & governments. They loose all respect for human/animals life, destroys all hope of any kindness, compassion or caring! It is insanity at its worst form! Evil in actions! Destruction in motion! Banks prey on the small/weak/lame/elderly/poor for gains. Like Jae A. says Knowledge is Power!
 

. (0)
Sunday October 17, 2010, 5:34 pm
Thanks Jae & Mac for this post & to Henriette for the forward. I really enjoyed reading the comments. Great discussion!!
 

Brenda M. (133)
Sunday October 17, 2010, 5:52 pm
N'd, Thanks Mac, and thanks to Jae and Henriette for forwarding. First off no buisness should be to big to fail including banks, if a small business can fail, so can a huge one with its way to much money, they should be the first to fail and not be bailed out, for they can't seem to get anything right with running or maintaining it even with thier ridiculous money, the only ones that get failed are the people when they get to big to fail....let them fail. Second I don't think there should be any--nill--campagne financing, then there would be set guide lines on how many ads and debates on issues, instead of the constant wonder of who scratching whos back, and whos backing or paying for what, as far as I'm concerned it is all out of wack...the big corps are way to big and way to powerful...and with the way it is now the only ones that could even consider winning a office of any kind almost has to accept the big business contrubutions to even keep up with advertising ...which has only become about who bashes who better....I say issues only, what your for, what you'll do and without all this big corp. money even involved casting any shadows of doubt. Its become so bad with these big corps that there is not much they don't have thier uncaring dollars dipping into! We need our voices to be counted again as people and they never should've had the power they have and seek!
 

Kathy Chadwell (367)
Sunday October 17, 2010, 5:56 pm
Once again I'd like to complain about us needing agree or like buttons.
So many on here can talk about this subject so much more elegantly than I can & I've already given them 1 star for seven days of comments:( I totally agree with what so many of you are saying, thank you all
 

Hans Mueller (591)
Sunday October 17, 2010, 6:46 pm
Quantitative Easing, Inflation, Hyperinflation and Global Deflationary Depression

Today’s great debate basically between the US and Europe is – should the Fed go full bore by implementing a second quantitative easing? In part it is a moot point, because they have been doing just that in the repo market for four months without letting anyone know what they were up too. Their mandate is to reduce inflation and create full employment. Real inflation is 7% and unemployment is 22-3/4%. The Fed for three years has concentrated on bailing out Wall Street, banking, insurance and transnational conglomerates. Little has been done to fulfill their mandated mission. The main recipients of their largess, of course, are the firms that actually own the privately owned Fed.

There are two options left to the Fed. Create a full QE2 by injecting another $2.5 trillion into the economy, as they just did with QE1 with $868 billion in assistance from the Senate and the House, or they can purge the system and have a deflationary depression. That result will be the fate of the Fed eventually if they create QE2 or perhaps QE3. No matter what the Fed does a deflationary collapse, one way or another, is inevitable.

Few pay attention to the fact that the US has been in deflation for 8 years and has been kept afloat by injections of massive amounts of money and credit. Not to be singled out most all nations have been doing the same thing and that is why all currencies have fallen versus gold for the past 9 years. This is how the game has been continued, otherwise we would have all fallen into deflationary depression or a death spiral. This has given us less consumption, zero interest rates and higher unemployment.

Officially inflation is 1.6%, but real inflation is 7% as most of the liquidity injections have been used to beat back the undertow of deflationary depression. That has resulted in a Fed expansion of from $1 trillion to $3 trillion and who knows how much more is being hidden on the books of other foreign central banks. As the Fed has told us it is all a state secret. To their credit the Fed has held off financial collapse, but we ask you how do they believe that they can keep this up indefinitely? The obvious sacrifice is the dollar and that is in progress.

As this increase in money and credit continues at a $2 to $2.5 trillion pace over the next year the vision of hyperinflation looms in the background. The only way to avoid hyperinflation is to allow deflationary depression to proceed. It is going to happen anyway no matter what the Fed does. The chaos of hyperinflation should be avoided at all costs. The owners of the privately owned Fed won’t allow that because they want to hold on to power and control as long as possible. Thus, in all likelihood we will have inflation, then hyperinflation and then deflationary depression. Having been at this for 50 years we now nothing is written in stone. It may not seem sensible to you but it is reality. Our track record for the last 21 years speaks for itself. Correct calls in all sectors 98% of the time.

Wages and salaries and asset prices have been falling with inflation rising, as we have endured a credit crisis for the past three years. The dollar is close to its lowest levels and gold is flirting with $1,360 an ounce. That is a disastrous situation for Americans, except the 2% to 3%, who have had sense enough to invest in gold and silver bullion, coins and shares. That excludes the ETFs, GLD and SLV, which we believe are a disaster waiting to happen.

Thus, there is to be another monetary expansion, which will take inflation up to 14% or more and that will in part cause a flight to quality, which will continue to be boasted by gold, which has replaced the US dollar as the world’s reserve currency. Many question that, but in time people will realize that is what in fact has happened. Monetarily that means that the one-worlder’s dream of a world currency will never be fulfilled. Hyperinflation in the US dollar will spread in varying degrees to all fiat currencies and these elitists will be deprived of issuing any currency that is not backed by gold. The game they have played for so long, the suppression of gold prices, will be lost. That means those who are in control already realize that their war against gold for financial domination has been lost and they will have to concentrate on the survival of what they term, their system.

Inflation is on the way in much higher numbers to be followed by hyperinflation and ultimately deflationary depression.

Presently the US government debt to GDP is about 93% of GDP with an annual debt to GDP of about 10%. QE2 means more of the same along with government debt. Government continues to create debt and the Fed continues to monetize debt. Both are trying to bury the economy, increase demand and to keep deflation at bay. The result they hope is recovery, which in reality is out of their reach. Even with $5 trillion over the next two years the best they can do is to barely stay on the plus side. Over the last two years they have accomplished very little.

Those who have been paying attention have seen the Fed’s targeting of the Treasury market. Not only do they have interest rates at zero, but also they have caused yields on the 2-year bills to fall to 0.36%, but also the 10-year notes are yielding 2.47% and they look like they are headed lower. This makes borrowing very cheap for large corporations and for mortgage rates to be very attractive. This has made treasuries the focal point of Fed policy. The strength or weakness of their program. Most small business and medium sized businesses still cannot get loans and they are the ones that create 70% of the jobs. Thus, it is still Wall Street; banking, insurance and transnational conglomerates that get virtually free money. The intention is that all the elitists survive and the heck with the rest of the country. These same firms are the ones that are still laying off.

The result is that treasuries, in spite of their bogus AAA rating, are the new addition to junk bonds and toxic waste. They are overvalued and the yields ridiculous. We believe in time the Fed will end up with total treasury issuance. That means the US dollar will sink to new unheard of depths, which it is in the process of doing.

Much of the Treasury sales by money managers are sending money into the commodities market and in limited cases in gold and silver and shares. Such switches will put pressure on Treasuries, which will make the Fed’s job more difficult. They will have to create ever more money to control that market. As we move forward the Fed will be forced to create more liquidity by buying more Treasuries than they might have to otherwise. Eventually this will appear to be a bubble, which it in fact it’s becoming as we write, and that is how the Fed will end up with the entire issuance.

The big money center legacy, too big to fail banks, is essentially broke. In fact they have been nationalized via infusions of capital by the Fed plus are being allowed to keep two sets of books. Regulations have been bypassed and they have become a law unto themselves with the help of the federal government, the BIS, The Bank for International Settlements, and the FASB. They borrow funds from the Fed at zero interest rates and then lend it back to the Fed at 2-1/2%, which taxpayers get to pay. This is for a subsidy to try to keep these banks on the edge of solvency. These actions also allow their officers multi-million paychecks that under the circumstances border on the obscene. They hoard funds and have cut lending to small- and medium-sized businesses by 25%, which keeps those funds sterilized. When they monetize these funds it is in the form of loans to the elite corporations and in the purchase of treasuries. This as the Fed buys $1.7 trillion in toxic waste at prices it won’t divulge from these same and other banks. Now they are in the beginning process of selling this toxic waste back to the banks at low prices to allow the losses to be transferred to the taxpayers. This is exactly what is going on. The fed is totally subsidizing these banks, which just happen to own the Fed. We call this an incestuous relationship. We all know what will happen when these banks and the foreign holders all try to exit Treasuries at once – the bubble will break. This time no one will be there to play catcher and yields will climb quickly and furiously.

This scenario brings us to where will all the money go? The first haven has been commodities. That will push prices up and add to price inflation. Those who choose to use ETFs will be jumping from the frying pan into the fire. We all can see that this is in process, especially in gold and silver prices. What is going to surprise you is that this sector change will be relentless in the flight to quality into real things. Yes, there will be wild volatility and corrections, but the upward trajectory will be maintained long beyond what people could have believed. Those owners will have nowhere else to turn. Bonds and the market will be falling along with the dollar and real estate is dead. They will continue to stay long commodities, gold and silver because there is no place else safe to go too. Unfortunately the populace will at this stage be treated to hyperinflation - the process in which people will have lost faith in the dollar and will dump it for goods and services as soon as it is received.

This is why a world meeting is necessary, such as the Smithsonian of the early 1980s, the Plaza Accord of 1985 and the Louvre Accord of 1987. Without such a meeting to realign currencies and to multilaterally default on debt there will be international financial and economic chaos. It would also lead to worldwide hyperinflation, emanating from the US. This would in all likelihood be accompanied by not only a flight to gold, silver and commodities, but also a collapse in treasury markets, particularly in the US Treasury market, which by that time could be totally owned by the Fed. That would push yields up and cause the stock market to fall.

Such events would force the public to use their currencies that they have lost faith in first by buying food and household goods before prices rose higher. Asset prices will collapse. The price of things, such as homes, buildings, cars, trucks, factories, etc. will collapse to 20% to 40% of what they were worth just a month ago. The functioning of the US and world economy would collapse. That is where bartering begins. Using gold and silver coins to complete transactions. You may not think what you are seeing could lead to all this, but it could, unless there is soon an international meeting to settle differences and patch up the existing system. No matter what happens there will be great dislocation and chaos.

Government cannot save us, only international cooperation can. One of the most important events would be a collapse in the Treasury market, accompanied with a stock market collapse. The flip side of that would be skyrocketing prices of commodities, gold and silver. There would be no other options left. Most people were too preoccupied with their lives to notice the advance of such events. America will wake up one morning to Martial law. That will be the only thing left for government to do to try to control the situation. It is not a solution, but it at least for a time will keep order. America is Humpty Dumpty. Such events have an excellent chance of occurring in 2011 and 2012, if a meeting is not held over the next six months. The key to such an accord is to revert to a gold standard for currencies worldwide at a price in excess of $6,000 an ounce; otherwise the scenario will just begin again.

It is obvious we cannot continue to do what we are doing. It is not working. We are all headed toward global deflationary depression, even the most solvent nations, because most have very little or no gold left.

You had best prepare. First for higher inflation, then hyperinflation and than deflationary depression. If you do not prepare you will be very unhappy.
 

Jae A. (322)
Sunday October 17, 2010, 11:42 pm
Wow..Now that Hans has supplied the missing details to much of the discussion to this point I am not going to ramble and shift the flow here other than to say...great job to everyone who has posted. It took all to get things to this point and now...as I've mentioned, Hans has taken us to the next level with some very hard core/raw facts as to the reality of this entire situation. We are all on the edge of this reality as we watch the money and power players at the top of the heap takes us all to the end of their games. The plus for those who have read this thread at least, will now have a better understanding, I think, as to how we got to this point, where it is likely to take us, and in general ...at least, be prepaired better than most... who will remain in dark as to all the facts mention on this one single thread, as to all our futures.

I will not turn the thread back over to others and let Mac speak for not only himself, but for myself, as he says it all so much more efficiently than I could even attempt, from here forward. Thanks again to all!
 

Mac R. (289)
Monday October 18, 2010, 12:46 am
Wow, Hans, I'm impressed! Here I thought you were debating or countering a lot of what I was saying, but with this post you completely backed up everything I was saying on the domestic front, but with far more detail and numbers than I had at my disposal. I saw this picture and have been trying to convey it, but did not have half the detail you laid out here. Is this your compendium or did someone else write this? I mean, damn, well done! Like I said, I saw the big picture, but I learned quite a lot of detail with this post, too, so now I can argue more succinctly with others and with better data this very scenario.

This puts the domestic situation into focus, now we need to get back to clarifying the world scene and how it relates to this scene. Of course some of it was covered here and some is pretty obvious because a lot of this leaves pretty clear cut choices--- only one or two options.

I admit I'm fairly pessimistic at this point. Make that, very pessimistic. As I said in an earlier post, I fear "our" guys are too arrogant and when they are at the precipice they are gutless wonders, short-sighted cowards who will slit their own throats climbing over the blade to get out. Of course, I'm talking about the big but not the biggest players. The biggest palyers are the ones who will either sit down at the meetings and assauge or gamble the entire enchilada that they can bully everyone else into continuing the charade for their own interests. But the BRIC and the rest already see that they do not HAVE to go down with us. They will certainly go down to a point with us, but they can step off and stabilize to a degree at a certain point and play amongst themselves, especially when the rest of the world jumps to their side and EVERYBODY says FU to our debt.

I have to say, our collective future here is nothing but dire, but at least I will get a certain smug satisfaction watching our WASPs players lose everything at the same time we do. The very percentage of the population I despise the most, the Bilderbergers et al and all their Rolex wearing henchmen down the line will hurt the most.

Of course, we the people, will be at the very least under martial law, and worst case scenario, in camps. Having been a player on Wall Street or a CEO of most businesses won't save them. Only the biggest boys will skate through in their enclaves like Dubai and Manhattan.

But back to China...... Do you see what I was saying about them in the context of holding our debt? It doesn't matter that they are holding so much of our debt in the big picture, not for the reasons most people think. As I said, it is WHY they buy our debt up to now that matters. Without going back into Quantitative Easing and its effect around the globe (and non-effect here for any but the traders and big banks) and all of the affected third world countries and especially China basically laundering our debt, with the others laundering our keyboard created debt to their own detriment, we can simply say that China has been doing us a two-edged-knife favor by buying our debt, keeping the entire system afloat but holding the ace for when the moment is right to chop our feet right out from under us if they want.

Of course, that is what people are screaming about, but I think it's gonna be the alternative system that they create that will do this for them, rather than calling in our debt. It IS NOT and WILL NOT be in their interests to call in our debt, even if they develop this alternative system, or maybe its better said that they won't need to call it in because we'll collapse all on our own.

I think that they are looking at our debt as basically a cost of doing business, when they have had such phenomenal growth of 12% or better for so long and we cried foul to bully them into buying our debt-- which most people arguing about this issue seem to forget. The moment they make that cost-benefit analysis that our debt has basically become irrelevant, that is the moment our system collapses, because that is also the moment everyone else says piss off, we're just going to collectively forget we owe you anything. They only buy our debt as long as it keeps everyone playing nice by playing OUR game. The closer the BRIC gets to a practical alternative to the "dollar structure", the closer we get to the rest of the world calling their US/IMF/WB created debt burden usury and deciding they don't need us anymore.

And make no mistake, they are getting there rapidly. Remember last year when Iran threatened to stop doing dollars? We went apopleptic over a country that has no output other than oil (which we aren't getting) or relative market for anything that would do us any good, a country that we've been squeezing big time and who would be dead if it weren't for China, Russia and to a smaller degree France, and yet with all that making them solidly economically irrelevant to the US, we freaked at the mere threat of them turning their back on the dollar.

Just think how panicky we'll get when a real international player does it? And the scariest thing for the US is that you can bet your bottom dollar that no one country is going to do this unilaterally. When it happens, it will most likely be a bunch at once, maybe even the BRIC and a dozen other up and comers.

I think the biggest question is not will they all sit down to a meeting and work this all out using the same US game, but will BRIC get a system in place before our end collapses? As you spelled out in your piece, these guys can't keep this charade up much longer. The illusion is simply not sustainable. One safe assumption we can make is that the biggest players on all sides DO see the overall picture, so the question becomes, are the BRIC leaders willing to continue in the old game for stability's sake or are they ready to play their own new game? And the answer to that is pretty obvious, since the goal for any player is more power and control.

They are ascendant and we are sinking, fast, of our own greed and short-sightedness. If I were a betting man, I would be betting on anything but the dollar.

Anyone got some thoughts on this?

 

Antonio Amador (60)
Monday October 18, 2010, 2:23 am
Noted. Thank you
 

patricia lasek (317)
Monday October 18, 2010, 5:26 am
What a tangled web they wove! I am still of the opinion that we never should have bailed Wall St. out of their self-created mess. It did nothing to help the fiscal disaster. They are continuing with the same practices as before. Maybe even worse. I won't even start on the SEC or the Federal Reserve.
Very insightful comments all! Thanks Mac. And thanks Caitlin for the forward.
 

Jae A. (322)
Monday October 18, 2010, 7:39 am
Pause.......correction...minor but I do want to make it clear that I meant to say .." I will NOW turn over the thread ..."....

Start......
 

Hans Mueller (591)
Monday October 18, 2010, 4:30 pm
Mac - Congratulations on an outstanding post and comments! Not an easy subject to tackle. I'm looking forward to your future posts.
 

Agnes H. (144)
Monday October 18, 2010, 7:33 pm
Noted, but as Kit said I don't quite get the grasp of it all. My problem is also that I'm still quite ill and my thought pattern isn't in what I read all the time!
 

Kit B. (276)
Monday October 18, 2010, 8:40 pm
Interesting bit of news:

Makers of steel pipes used in oil refineries and chemical plants are being harmed by imports from China, the U.S. International Trade Commission ruled today, a decision that will mean duties on $182 million of products.
The decision is the last of four that producers such as U.S. Steel Corp. and the U.S. subsidiary of France’s Vallourec SA, the world’s second-largest maker of steel tubes for oil and gas production, needed to win in order to get dumping and countervailing duties imposed on Chinese exporters.
“Without this decision, the U.S. industry would have completely lost the U.S. market,” Roger Schagrin, a lawyer at Schagrin and Associates in Washington, representing the U.S. producers, said in an interview. Even with duties, “it’s going to be a slow recovery in demand.”
 

SuS NoMail Plez P. (244)
Monday October 18, 2010, 11:52 pm
Thank You Dearly~ I'm afraid this is FAR OVER MY HEAD and will need a good nights sleep and re-read several to\imes before I can make a half way intelligent post. Kit...YOU AMAZE ME. I read your post on Saturday~ October 16 at12:51 pm and didn't have a clue what I was reading. I didn't feel so ignorant after reading Mac's next entry.
 

Mac R. (289)
Tuesday October 19, 2010, 12:27 am
That is interesting news, Kit. I'm all for a global economy, but I am flat against Nafta et al. What business here or the EU can compete with sweatshop and virtual slave labor producing goods made from raw materials raped from third world countries--- not that our corps aren't raping them too for their materials. The whole of the world is f**ked up on every level in every respect. Business and production for production's sake is killing our world and its people.

I do hope no one reads my posts on here and goes away thinking I support China or any of those countries! Just because I want to see the big US banks and the fed et al fail and eat s**t and die, does not mean I want China or any of them to triumph over us and take over, figuratively or literally. An analogy can be drawn from how I feel about the BRIC versus the fed/IMF/WB/bigUS banks et al to how I feel about Obama and the dems versus the right and teabaggers: I am pissed as hell at O and the dems for letting us down so miserably on so many fronts, but they are my dog to kick (forgive the phrase) and I try to qualify my outrage and sarcasm directed at them with the completely un-needed-to-say caveat that ANY republiscum in their place would be a thousand times worse on most things, and no matter how bad dems get, on the whole, they simply cannot out-evil the republiscum.

I like my modern toys like my pc and our automobiles, but I know too that everything needs to make a fundamental shift to sustainability. But I know that's a pipe dream, too.
 

patricia lasek (317)
Tuesday October 19, 2010, 7:26 am
Mac, your comment about the EU not being able to competein the Global market is interesting. I suggest you read this little piece on Germany posted yesterday by Linda R. Quite enlightening.

http://www.care2.com/news/member/140638189/2528184
 

Angelika R. (144)
Tuesday October 19, 2010, 8:45 am
THANKS Patricia° :) - had to do this first before I now thank Mac and the rest of the gang for this highly interesting discussion here. I enjoyed visiting this "think tank" and learn the various experts' analyses which appear to be pretty accurate-unfortunately. What I miss, however, is some slight hint to a way out of this mess or a shadow of solution, if there is any. Furthermore, have you given enough consideration to climate change? No doubt there will be more devastating disasters occuring in the next few decades leaving an impact on global economy. The question is will the subsequent economic landslide hit the BRIC or even BRICK or the US first, drawning them deeper in debts and blocking their economic growth.
 

Mac R. (289)
Tuesday October 19, 2010, 1:51 pm
Patricia, good to see you back (or at least I had not noticed you posting for a few days until last night or so). I think you read what I said wrong. I did not say the EU couldn't compete, at all. What I was saying is that neither America's nor the EU's businesses can compete on a lopsided playing field with sweatshop labor and virtually free raw materials that have been harvested off the backs of the downtrodden in thirdworld countries.

But, I read a piece the other day that broke down the actual costs of exporting our manufacturing as opposed to doing it here, and when they factored in shipping, establishment of factories and systems, etc they came up with figures that showed there would only be a slight increase in costs for making these products here, while at the same time making us stronger which in turn keeps a market to sell the products, as we are/were still the biggest consumers.

I did read the story about Germany and I commented on it there. I just wish like hell all these morons who scream about the evils of socialism would be forced to read that article and have to stop and THINK for once about what they want for themselves and their families.

Oh and Susan D, I hope you read what I said about how I feel about China. I absolutely positively agree that China is not investing in Africa for anything remotely altruistic!!! But I think that they are, in general, being slightly, a little tiny bit, less rapacious than we and the Brits were all this time, ONLY because they see these countries as emerging markets for their poducts. If a country has stabilized and is developing a meagre middle class, they can begin buying Chinese products. I have no doubt that they are at the same time stealing the materials and that the populations are seeing very little if any reward, but I haven't seen anything that tells me that china is raping them anywhere near as bad as, say, Royal Dutch Shell in Nigeria, or DeBeers in SA and elsewhere for over a century, or any other western corpse--- and I spelled it that way on purpose--- plundering those lands. (I know DeBeers is Africaan, but it's still Dutch nationalistic in thought and structure, a violently opressive corpse that has reigned terror on the populations with the full support of all the western governments.)
 

Monica D. (580)
Wednesday October 20, 2010, 8:18 pm
The computer system here denied access to the site. Not sure what the problem was.
 

Tere M. (76)
Thursday October 21, 2010, 9:28 am
Noted. Thank you Mac! Great comments everyone! Lots of learning while reading! :)
 

Jose Ovidio Perez Morel (44)
Thursday October 21, 2010, 12:55 pm
Watched, shared and forwarded................
 

ChanTlalok C. (369)
Thursday October 21, 2010, 5:49 pm
thanx Mac, a lot of Food for thought and to keep an Eye on the Future. A lot of great comments.
 

Charmaine C. (176)
Saturday October 23, 2010, 3:53 am
Very good article. As much as our bankers are raiding the currencies of other countries, they (other countries) are not as innocent as they as they would like people to believe. China is skewing the market in their favour by artificially keeping the Yuen low and creating a massive market for their trade goods and Brazil and others are doing side deals that cut out many of the current players. This may slow down speculation but it doesn't improve the lot of the working person and it doesn't help create more industry and thus more jobs. On the other hand American and British predatory bankers are going to start feeling the pinch as other countries protect their financial markets from the influx of our currencies by raising interest rates on speculations, employing currency controls or as in this article, cutting us out altogether and trading in Lira and Yuen. Tears are going to flow. It's a very complicated system and one wonders who will put a stop to predatory banking and how can it be done.
 

Mac R. (289)
Saturday October 23, 2010, 4:53 am
Wow, Charmaine, you summarized the big picture quite eloquently and concisely there, pointing out that there are no "good guys" in this game. They're ALL duplicitous in trying to game the system to their advantage..... and always, always, to OUR (the little guys) disadvantage. As a Brit customer of Jae and my restaurant in the French Quarter (back in early 80s) once grumbled bitterly at us, "When the US sneezes, we get the snot."

Crass, yes, but the sentiment can be transposed so: when govs and big corps sneeze, we the people get the snot.
 

IE Ries (237)
Monday October 25, 2010, 8:55 am

Charmaine, EXACTLY. I was *just* about to bring up all the economic antics of China in their attempt to do the very same things the article states the USA has done/is doing. The Chinese are every bit as guilty and are far more ruthless about it, especially in Africa where impoverished states are forced to overlook violence against their citizens because they need they get from Chinese corporations who rape the land, cause pollution, and beat up local workers aren't suitably "compliant" with their demands.

What it comes down to is this: the rich, within every nation, are trying to get control of as many resources as possible and now are battling each other through the global banking institutions. Oligarchy, anyone? That's what we're heading towards.
 
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