It might be the end of round 1 in the current Credit Crunch, but it’s by no means the end of the crash itself. This week there’s been a pause (so far) from last week’s tumultuous events, but I feel there’s more to come soon.

The question I’m asking relates to all the billions of pounds and dollars, borrowed by the British and US Governments to shore up the crumbling edifice of the banking system. When this money has been taken up in rescuing the current lot of collapsing banks and financial institutions, what’s going to happen when the next row of dominoes starts to go the same way?

The US rescue plan involves pumping an estimated one trillion dollars – that’s one thousand billion dollars, a figure beyond most people’s comprehension – into the economy. The British government is spending at least £200 billion (about $360 billion – over a third of the American sum) in the same way. But where is this money really coming from? We know the taxpayer will ultimately have to pay it, but where is it actually coming from now?

None of the establishment media asks this question. That’s because they don’t want people to know the true nature of the sick financial system – that the whole process is a racket, with money being created out of nothing all the time by banks under a kind of licence from the central bank (Bank of England, Federal Reserve Board, etc).

We’ve just seen a classic example of how banks lend many times the actual amount of money on their books – Merrill Lynch was “exposed” to risk that was more than thirty times its capital. That means it was lending around thirty times the actual money in its possession – the money it could lawfully lend. And that only related to the so-called “toxic debt” of dodgy home loans. It didn’t count the less risky loans on its books. So the actual ratio was probably about forty or fifty times its actual money. Where I come from this is called deception and fraud.

When this devastating fact became known it was almost inevitable that the FBI would investigate fraudulent dealings that helped lead to the current crisis. That is one good thing that has resulted from all this. But remember that the FBI is answerable to the Secretary of the Treasury, Hank Paulson, who has played an instrumental part in the crisis, in effect deciding which financial institutions are to be saved and which are to be allowed to perish. And, of course, he is a former CEO of Goldman Sachs, themselves tottering on the brink.

But for now, the billions of dollars come flooding into the markets, literally from nowhere, to save the day. Or at least to save the present day or two for the bankers and politicians embroiled in the mess. The price is to saddle this and future generations with a further mountain of debt.

What is happening is that the British and US Governments are borrowing the money from the money masters – their respective central banks, which are themselves simply creating the money out of nothing. Why don’t these respective governments themselves create the money? After all, then they wouldn’t have to pay it back, thereby relieving future generations of a colossal tax burden, if not of the burden of inflation.

Because that would mean defying the most powerful, organised and ruthless group of people in the entire history of the world. And when you’re a shifty politician with no ideology or principles and a skeleton or two in the cupboard, there’s no way you’re going to do that.

That’s all for now.

Spread the word!

The Stock Markets are rallying today (Friday, September 19th), having sunk to three-year lows. Up and down the markets go, as news of government bail-outs follows news of bank failures. Only one thing’s for sure, and that is that anything can happen.

All the leading players are happy now because a little bird has told them the US Government is set to rescue AIG Insurance and has established a new fund to cover most of the mess left by the sub-prime mortgage affair. Worldwide, central banks have pumped around £100 billion, or roughly $170 billion, into their various economies. And here in the UK the government has supposedly banned city traders from “shorting” stocks (selling them in order to buy them back later at a lower price, pocketing the difference).

Yes, those shirtsleeves on the Stock Market floor might be allowed to move billions of stock around and afford to drive around in Porches and Ferraris, but when it comes to determining the value of stock belonging to the big boys, well, a line has to be drawn.

That’s actually a minor issue. The real news is that the American and British governments are prepared to mortgage our future recklessly by borrowing billions upon billions of dollars or pounds from the “Fed” or the Bank of England to prop up the unworkable debt based financial system. And they are borrowing all this fictitious money, that will have to be repaid by future generations of tax payers, from the very people and institutions who have caused the problem in the first place.

For a simple and entertaining explanation of how the financial system works, download the brilliant book Promise To Pay, by Dr R. McNair Wilson, from our home page at www.ancientbankingsecret.com.

Philip Gegan

The last couple of days have seen not only two of the largest US financial giants go under (Lehman Brothers – now said to have a chance of a cheap buy-out from Barclays after all, and Merrill Lynch – bought for a song by Bank of America), but also signs of real panic in the financial establishment as billions are wiped off the value of leading companies, including banks.

The chickens really are coming home to roost, with a vengeance. After years of lending fictitious money fast and furiously, mostly to fuel an insane property inflation (itself used by so-called economists and politicians as evidence of a “healthy” economy), the whole sick system seems to be on the brink of collapse.

That is good news in itself, but the trouble is that it threatens to take everything else with it. Of course, if that did happen there would be a real chance of an independent inquiry into the rotten banking system and the truth about it would possibly get out somehow. There would be a high price in the meantime in terms of the social and economic misery that would have to be endured, but surely a small price to pay to rid the world of international debt-slavery.

For that reason alone it’s almost certain the power brokers at the top of the international financial system will take any steps to produce a kind of “soft landing”, which will preserve their status and at the same time eliminate a great deal of the competition in the banking system, leaving more riches and power for themselves in the future.

Hence, most failing banks are being bought up on the cheap by other banks, who have managed to avoid the worst of the losses. Take note of who those banks are, for they are the banks most likely to be directly controlled by the financial elite, who encouraged the lunatic lending spree in the first place and then pulled the rug and started what has become known as the Credit Crunch.

So in the United States Merrill Lynch is being snapped up by Barclays from the UK. And here in the UK Halifax Bank of Scotland, whose shares fell by another 40 per cent this morning alone, looks like being gobbled up by the awful Lloyds TSB, also in the UK. But Lloyds TSB is the UK’s third biggest house mortgage lender, so how do we know it will still be around in six months?

Some casualties are too big to be rescued by other big players, so governments have to step in, as in the case of American insurance giant AIG, “saved ” by a loan of a mere $85 billion that the Federal Reserve just happened to have lying around awaiting a rainy day. We’re told that the US Government stepped in to the rescue, but of course the government only borrows the money from the illegal Federal Reserve System, which creates it out of nothing and then claims the money itself and interest as a debt owed to itself. What a racket!

And here in the UK, the Bank of England, having weighed in yesterday with £5 billion to pump into the money markets, came back with another £30 billion this morning. At the same time the Bank’s Chairman is claiming that inflation will be coming down next year! Another day, another lie. Just how inflation can come down when billions of pounds are being pumped into the economy without any corresponding increase in value of the goods and services being produced, isn’t explained.

Things are getting pretty exciting. Watch this space, and don’t forget to download your free copy of Dr R. McNair Wilson’s Promise To Pay, which explains in simple and entertaining terms how the financial racket works (or doesn’t work) – available from our home page.