This blog entry was first published here on 14 November 2008.
Hardly a month after the bailout we’ve all but forgotten about it. We’ve had the distraction of the US Presidential election in the meantime and now the media is concentrating our attention on how Obama is going to get his country out of the quagmire.
But don’t let us forget that the US government pumped over $700 billion into the banking system to save it from destruction. Actually the real figure, as far as we can establish, is around $810 billion, the extra $110 billion being for “sweeteners”, i.e. bribes and other underhand payments to ensure the whole package is glossed over and not subjected to unwanted scrutiny.
That’s a lot of money, and all the media can say about it is how it’s going to have to be repaid by our children and grandchildren, and will cause taxes to rise. That’s true enough, but the interesting point is about where this money came from in the first place.
It wasn’t the US government. The government is just the intermediary, acting as a guarantor that the money will be repaid to the ultimate lenders. It’s the same with all other countries that have adopted the same “solution” to the credit crunch.
Banks are over-stretched and losing money. Eventually they can’t afford to honour their obligations to either their own creditors or each other. They have to go cap-in-hand to the government for a “bailout”. The government gives them their bailout to the tune of hundreds of billions of dollars, which it borrows from the central bank, which in turn is owned by . . . private banks!
What a conundrum! Or is it? It only makes any sense when you realise that the banks that own all the stock in the Federal Reserve are not the same banks that have been forced to plead for government cash and accept partial nationalisation, as here in the UK. Although, of course, Lehman Bros is listed as a major shareholder in the Federal Reserve. So something’s going on that the media certainly isn’t going to inform us about.
We must keep digging until we get to the bottom of it all. In the meantime, download and read the classic “Promise To Pay” by Dr R. McNair Wilson, free of charge from our home page, and . . .
Spread the word!