Friday, January 23, 2009

Bailouts Will Never End

Congress is rushing to transfer the future wealth of our children to ultra-rich bankers. If we allow them to continue, it will never end. It will NEVER end.


Follow the money:
The privately held Federal Reserve banks print new cash to buy our government's bonds, our MONEY, future generations' promise to work for them in perpetuity. In return,we get more paper DEBT (cash) to spend on votes, at perpetual interest to the People.

The Federal Reserve banks mark up our money for private profit, and sell it to commercial banks at interest. Those bankers print even more new cash, mark it up with even more interest, and sell it to consumers to spend on home mortgages, credit card purchases, cars, etc. Bank loans account for every single penny of cash in circulation, there is no other source of currency.

The banks print with leverage. That is, they issue up to 40 dollars in loans for every 1 dollar they possess. This is called "fractional reserve banking" and our government encourages it. In fact, we pay the banks to leverage up more, using shady institutions like Fannie Mae and Freddie Mac. With the impending passage of HR 7326, congress will require the FDIC to pay banks to get consumers deeper into even more toxic mortgage debt, then assume the banks loan losses.

The problem is clear. When reckless loans go bad (shown in red) there is no way more government borrowing and spending ('stimulus' which always costs more than it provides) can counter the resulting currency implosion, especially when it is stuffed directly into the pockets of the world's richest bankers. Even if congress was spending the new cash to help citizens instead of paying the richest people on the planet, we would have to hand the Federal Reserve roughly $11T of our money just to counter each red rectangle, shown above.

Why do the banks do this to themselves??

A better question is why not? Why don't they print more?

Remember, our government has agreed to backstop the private FDIC, so the banks take no risk whatsoever. The banks are supposed to fund the FDIC, but they don't. The FDIC's total assets are short of bank deposits by about $15T dollars. By underpaying the FDIC, the banks ensure the government, that means you, will pay them an unlimited amount of money when their loans go bad, and the FDIC is, "shockingly," broke.

The solution is simple:


Use the FDIC to pay defrauded citizens, instead of ultra-rich bankers, and no one is harmed except those at fault.


  1. It is enough to drive some of us insane that actually care.

    Meanwhile the clueless sheep will worship their messiah.

  2. Amen and Amen FDR. Don't stop preaching these points, because it is one in a thousand that understands how the Federal Reserve is ripping off the American citizenry.

    I like your site - have always followed your posts on MW. Tell us about China sometime - what your impressions were. Jayhawk1

  3. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - Vladimir Lenin, as quoted by John Maynard Keynes

    It's very lonely being one in a million. I sometimes wonder if ignorance is not bliss.

  4. What do you think of this idea FDR? It would help eliminate those greedy money-grubbing bankers once and for all.

    It wouldn't be that hard to organise given the ease of circulating ideas we have with the Internet. Mind you, I'm not in the same country as you so I wouldn't be able to be a part of it.

  5. Oooops. Want to clarify the above comment - a new local currency wouldn't completely eliminate the need for bankers, but it would reduce their market share. That is, given Central Banks are monopoly issuers of currency, introducing a new local currency would provide competition in the market, thereby reducing their market share. Could help oust a few of them.

  6. "What do you think of this idea FDR? It would help eliminate those greedy money-grubbing bankers once and for all."

    It's been tried in the US. The Liberty dollar

    initiative was immediately raided by the FBI and all their gold was seized by the U.S. government--I suppose because their trading currency complied with the requirements of the U.S. Constitution.

    I have watched this story with some interest, though I don't own any Liberty Dollars. It looks like they may have been granted the ability to price their existing money during ligation, but there are few details.

    Letting them have that ounce of oxygen, now, is supportive of intentional asset price deflation in the coming years.


The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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