The Entire Fiat Money System is Bankrupt

[Publisher's Note: This article was published in the Global Research E-Newsletter on November 2nd 2013.]

Demise of the Global US Fiat Dollar Reserve Currency

It’s been a while since I last wrote an article on the on-going financial crisis. I don’t write for the sake of writing, as others do because they have to do so, on account of their subscribers who pay hefty subscription fees and demand their money’s worth.

Major issues or trends do not change on a daily or even monthly basis. A trend may take a few years to run its course and unless there is a major factor that may affect the trend, there is hardly any need to comment any further on the trend or outcomes.

The events unraveling post Bernanke’s decision not to taper QE is most significant because it confirms our analysis that the banking crisis has not been resolved in any significant way after five years of money printing and massive asset inflation. The fiat money system has but one outcome – total collapse. It will also mean the demise of the global US dollar reserve currency.

There are no solutions at hand.

Bernanke is totally discredited and his continued tenure as Chair of the FED would only accelerate the realisation that the FED and all central banks have failed. Hence, the need to change the “leadership” at the FED, but the same policies would be followed with some cosmetic changes to hoodwink the ignorant masses. It is analogous to the transition from the second Bush presidency to that of Obama and all the theatrics of “change” propaganda. In fact, Obama is Bush 2 on steroids! Yellen will be Bernanke on steroids. Why are we so certain of this outcome at Future Fast-Forward?

Our reasons are as follows:

Prior to the Global Financial Tsunami of 2008, I had written several articles exposing the global Too Big To Fail (TBTF) banks as financial rapists and predators and they would cause untold havoc to the financial system.

Post the crisis, I had also warned that these global TBTF banks are all insolvent and the toxic assets on their balance sheets would exceed US$20 trillion at the minimum. The entire fiat money system is bankrupt. Printing toilet paper money by the trillions does not make the system solvent. It is a clear admission that the system is totally broken.

The banking Humpty-Dumpty has fallen from the wall and shattered into a thousand pieces! The confirmation for this is the fact that all central banks led by the FED have only one aim – to create massive asset inflation. How can a stock market of a bankrupt nation be at an all-time high? The FED and central banks the world over are not interested in resolving the unemployment problem because record unemployment would not collapse the fiat money system. It may trigger massive social unrest but that can be put down by a militarised police force, supported by a battle-hardened military as is happening in the US.

In the circumstances, we need to ask the US$ Trillion question – Why are all the central banks focusing on asset inflation via creation of money out of thin air?

The answer: THE FIAT MONEY SYSTEM IS THE ECONOMY, STUPID!

It used to be that the Petro-dollar was the linchpin of the global economy. However, when the derivatives market took off and became a US$800 Trillion global casino, the US$ toilet paper became the currency in global financial trading and speculation.

All the TBTF banks were leveraged to their eyeballs and the collaterals were hypothecated and re-hypothecated so many times over, it became an inverted pyramid joke.

The collaterals were bundled up into CDOs etc. rated AAA by corrupt rating agencies and traded. We need not repeat this old story. The point we are making here is that not only are the collaterals junks but they are supporting a mountain of debts in the trillions. Therefore, when collaterals are impaired the TBTF banks are in a shit-hole from which they cannot get out. The FED and other central banks have no choice but to bail out the TBTF banks if a systemic failure is to be avoided. If all the junk collaterals were to be off-loaded at once in the full glare of public scrutiny, there would be a run on all the banks. So, what was required was a stealth rescue effort. The TBTF banks were allowed to unload the junk collaterals bit by bit by the various schemes of the FED culminating in the US$85 billion a month purchases of treasury bonds and mortgages by the FED.

Additionally, newly “minted” collaterals were used to replace the junks so as to clean up the balance sheets of the TBTF banks. I have stated earlier that the minimum amount of toxic assets needed to be mopped up is US$20 trillion. After five years, the FED has just scratched the surface. It is debatable how many US$ Trillions the FED has actually pumped into the system directly and indirectly. How much and how long more can the FED continue to pump US$ toilet paper into the system without creating a massive loss of confidence in the dollar? When the balance sheet of the FED reaches US$7 Trillion or maybe US$10 Trillion? It is anybody’s guess.

For sure, there will be a point when another US$100 Billion is created on top of the stash of US$ toilet papers which will tip the scale and collapse the entire system. It is a catch-22 for the FED. If it stops creating fiat money out of thin air, the fiat money system would collapse immediately. If it continues with more money creation, it merely postpones the inevitable and more devastating end-game. This is the price we all have to pay for allowing the fiat money system to hold sway for so long.

The world was conned into accepting the biggest Ponzi scheme in the history of banking and finance – the US$ Global Reserve Currency Ponzi Scheme.

This scheme was created on a sand castle of debt, specifically US Treasury Bonds. The world does not need a Global Reserve Currency. Global trade can be conducted in any currency in accordance to the needs and resources of a country.

Why should there be a special privilege given to only one country to have its currency as the sole reserve currency for purposes of trade? It makes no sense as it is the result of US imperialist policies under the pretext of the Cold War. The con was based on the propaganda that the US$ should be the preferred currency and the US Treasury Bond is the “safest asset” to have in the event of an outbreak of war between the Western Imperialist camp and the Soviet bloc. We were told this arrangement was necessary if we are to enjoy the protection of the mighty US superpower!

Yet, when the Soviet bloc collapsed no one questioned the need to perpetuate the system.

Another spin was propagated. The US was the linchpin in the new era of globalisation as the US market was the biggest consumer / export market. Everyone was caught in this web of deceit. The US market was a market built on a mountain of debt. Adding insult to injury, the US consumers paid for the goods produced by millions breaking their backs with US$ toilet paper money!

Some so-called currency experts have asserted that no other currency can replace the US$ toilet paper as the global reserve currency because no other country has a bond market like the US bond market, dominated by the US treasury bonds.  What an idiotic statement!

If a country is not in debt, there is no need for any bonds to be issued. A bond is an I.O.U. A bond is a mere paper pledge to repay a debt.

And anyone who says and continues to perpetuate the myth that a US debt is a better debt and is more secure is an [email protected]#hole!

Why would anyone want to work and produce goods which are sold and paid in US$ toilet paper and then use the surplus US$ toilet paper to lend to the US government who repays the debt by merely printing more US$ toilet paper?

So, do you still think the world needs a US$ toilet paper money as a reserve currency?


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Publisher's Note: Now you know, spread the word!

 

Homes For Heroes

This article was first posted here on 31st May 2011.

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I believe it was Lloyd George, the early twentieth century British politician, who first coined the phrase, "Homes fit for heroes", when campaigning for re-election after the First World War.

The returning heroes and heroines of the Great War should have at the very least found a land that showed its appreciation for their sacrifices by allowing them to own their own homes for a reasonable price.

In reality things hadn't changed from a hundred years earlier, when veterans of Wellington's victorious army were within a few years reduced to selling matches on the streets in order to survive.

Now in 2011, when for the thousandth time many of our young men and women are fighting foreign wars - wars created and stoked up by the financial "elite" of the corrupt international banking system - they are coming back to be homeless in their own country.

Many, of course, don't come back alive, or return with hideous injuries that have wrecked their young lives. They have to accept pitiful financial help from the government - far less than the average "celebrity" receives in a silly libel action - to help pay for the ongoing care they'll need for the rest of their lives.

But those who do manage to return to civilian life uninjured then have to join the rest of the youth of our country in tackling the almost hopeless task of getting their own house.

The bankster-inspired recession has meant that house prices have continued to rise while wages and salaries of ordinary folk have stagnated. And house-building is at its lowest for over a hundred years.

Even in wartime we were building more houses than we are now. Only the rich can afford their own home without a lengthy struggle to save a deposit.

In fact here in Britain the average deposit required to purchase a house is approaching £30,000 (about $50,000 USD). Not so long ago that amount could have purchased outright a very comfortable, spacious house in any area other than the big cities.

And after saving such a large sum the house owner then has to mortgage himself for 30 years or more with a horrendous debt that takes the lion's share of his salary each month.

How the banksters are laughing. What fools we are for having allowed this pitiful state of affairs to have come about in what was not so long ago a mighty country and seat of a worldwide empire.

The banksters are refusing to lend enough money to would-be home buyers, in spite of having more than enough under the rules of their sick system. House builders are also suffering at the hands of the financiers in a similar way, hence the shortage of new housing.

As a result five million people here in Great Britain are on council house waiting lists, with millions more living in overcrowded, sub-standard conditions. At the same time, huge million pound properties in Central London and other cities are let out at the taxpayer's expense to foreigners who have come to Britain to live off the backs of us ordinary working folk.

In town and country, houses that would otherwise be available to our own young people are instead occupied by rich foreigners, or by other rich people as "weekend retreats", and so kept empty for much of the time.

This is the result of having an "open market" decide the price of houses, of allowing millions of inassimilable foreigners into our own breeding ground to out-breed us, and of allowing rich celebrities and banksters and all the other favoured yet useless classes who seem to be good at amassing large sums of money to own as many houses as they want, where they want.

It's also the result, let's not forget, of having been duped into accepting as "normal" a debt-based money system that makes sense only to the international financial "elite", the "hidden hand" behind modern history.

Who in their right minds, if they weren't corrupt, would accept a banking system which has resulted, as of November 2010, in a national debt burden of £2,492bn when the total amount of money in circulation is only £2,186bn, a discrepancy of some £306bn?

There's not enough money in circulation to repay all the money we supposedly owe to the banks. Not that the banksters want their debts to be repaid - they love to be the debt-masters, calling the tune, responsible to no-one but themselves, telling debtor-governments and compliant politicians what to do (and what not to do) and arranging their "super-government administrations" to shepherd us all into an Orwellian nightmare of a world government.

The banksters, through their controlled media (96 per cent or so), will mercilessly attack any man or woman strong enough to stand up to them and draw attention to their crimes.

But we need such a man - and soon. Or it will be too late.

Philip Gegan

How Real Wealth Is Created – 2

This article was first posted on 7th January 2010.

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We've looked at the first method by which real wealth is created - agriculture - in Part 1. The second method of wealth creation is mining.

Nearly everything we see when we look around us has ultimately come out of the ground. Apart from wood and its related products, this material has had to be extracted, usually by mining it.

Metals such as copper, iron ore, gold and silver, and fuels such as oil and gas weren't just lying around on the ground. They had to be located and then moved from where they were to ground level, where they could be worked on, transported to where needed, and so on.

Just having the resources there beneath the ground doesn't make a country rich. It's knowing they're there and having the means and ability to mine them that leads to wealth.

Once they are above the ground they can be processed or sold, creating real wealth for the country they're situated in. Except it's not usually the ordinary inhabitants of the country that benefit. Because mining is capital intensive, huge multinational corporations have arisen to enable the investment to be made that covers the cost of equipment and labour. Ownership of these corporations can invariably be traced back to the same shady families who own the world's banking houses.

But the point of this post is that the extraction of natural resources, and this includes water, which is becoming increasingly scarse in its drinkable form, is one of the three ways in which real wealth is created.

Miners have traditionally been looked upon by those who earn their money through non-productive activities as being beneath them. The truth is that, especially in view of the advanced technology that is now required to extract most mineral wealth, including oil and coal, many miners have to know how use this technology, and no longer simply swing a pick-axe.

Their value to society is incomparably more than that of super-rich banksters.

Philip Gegan