Photos And Charts

Nationalization of home lending, banking and lending, as well as the provision of liquidity facilities, has privatized profits to the elite few, and socialized losses, risk and debt unto the American people.
Elaine Meinel Supkis in article Fed Reserve Built America Into Giant Debtors Prison, writes: "Every day is trick or treat day for the gnonmes", that is the bankers, and provides the Keith Taylor illustration of a terrified child running from the open front door of a middle class home, where the Zombies Ben Bernake and Hank Paulson are seen standing holding a Trick or Treat holding bag, with the word Treat crossed out.

The securitization of credit default swaps and other derivatives as well as the unwinding of the yen carry trade has destroyed capitalism and investment rewards for going long the markets.
And on the Robert Pickrell article Insight The CDS Sector Is Not The Central Villain she comments: "This guy is NUTS!!!! We just saw not only a 91% loss in a derivatives swap meet, AIG is now gulping down well over $140 billion in just THREE WEEKS and not at the end of this swap of derivative failures for US taxpayer dollars! This is UNPRECEDENTED.

Back to today. On the other hand, the entire collapse of the G7 banking system is not due to derivatives. The Derivatives Beast may be eating up all the major banks in the G7 stellar complex but the real reason 'liquidity' dried up was due to the sudden unwinding of the Japanese carry trade! Pickels can't see this, of course.

The mantra hammered into the noggins of all the economists in America is very simplistic: China is undermining world trade by using cheap labor. Even though China is not the world's number on export profit center, economists focus only on sales, not profits. This plagues a lot of commentary on capitalism. I wonder why? One would imagine that everyone in the US would be hyper-focused on capital creation! But we are not.

This, not China, lies at the heart of what is going wrong. Americans have become so accustomed to going into debt ever since Nixon cut the gold peg from our now-fiat dollars that we imagine, we can skip the business about profits and simply have a churning economy based on consumerism and debt.

This is why not one of the solutions to our economic collapse are doing even the slightest good. The anxiety of the G7 central bankers is all about restarting lending. It is all about seeing if they can get more people to borrow more money. To make this an alluring prospect, they are all grinding out loans at ridiculous interest rates."

Back to Pickles: like many of the RGE analysts, he cannot really understand the role the Japanese carry trade played in the creation of global debt and global inflationary bubbles. The Derivatives Beast was created by the banking gnomes over the last 20 years as a tool with which they could lend recklessly while being protected from losses. These losses are also called 'bankruptcies.' This, in turn, are massive wealth destroyers.

Recessions aren't simply reductions in consumption. They are wealth destruction cycles. The entire excuse for having central banks is so they can prevent these periodic cycles of wealth destruction. But even the briefest look at history clearly shows that the ONLY thing the consortium of central bankers have succeeded in doing is this: They have MEGA-BUBBLES AND MEGA-BUSTS!

This is a notable failure. Many people who are critics of this system restlessly seek someone responsible. They light on various names and people. A common mistake is to blame various ethnic groups such as the Japanese or Jews or the Chinese or the Arabs. Some people even blame one of the oldest groups who have controlled much of the earth for the last 500 years: the ruling elites of Europe, the Old Nobility.

Everyone has exploited the modern system of interlocking central banks. This is because it makes people fabulously wealthy....but only during the bubbles. During the collapses, all hell literally breaks loose. And even though people assume ruling elites in Arabian lands or Merry England want chaos, this is FALSE.

Chaos can be the only outcome of central banks lowering their interest rates and expanding debt .
The chaos is supposed to happen far, far away. In Afghanistan, for example. That is a favored site for chaos between empires. But no: the chaos from bubbles bursting always comes home. When kingdoms or countries go bankrupt, revolution is not far behind. And revolutionaries are, by definition, outsiders.

Real Inflation has been rising no matter what the Austrian Economists, that is those of the Mises Institute, or various governments relate.
Mr. Pickles doesn't seem to do much history. The whole Derivatives Beast thing was an attempt by the central bankers to expand credit when the world was awash in credit. Already, one of the G7 central banks flooded the world with liquidity via 0% or slightly higher interest rates.

This unprecedented and very long duration of these interest rates in a world undergoing inflation was very deadly since Japan is the world's #2 economy. The fact that all the central banks are now plunging into the same abyss means that the Japanese carry trade will NOT resume. Instead, the whole of the top economic consuming nations on earth which are Europe and North America, will try to go on a huge consuming binge, directly lending to themselves money at infinitely cheap interest rates.

This, in turn, will fuel Asia's industrial development. This is why China supports this business. The battle between China's central bank and Japan's central bank ended several months ago. But I suspect, it will re-ignite due to some very shocking news out of Japan concerning a top Japanese general blaming China and the US for all of WWII.

Asia has embarked upon a massive shifting of production from Europe and North America to Asia. This is simple: the physical facilities of manufacturing are not so easy to move if a government is determined to keep them. The US voluntarily gave up our industries because we wanted no inflation instead of facing the facts about inflation.

Namely, we wanted money growth with no downsides. This brings us back to the Derivatives Beast: it grew in direct proportion to the banking gnomes burying inflation in interesting places. IT INFLATED TREMENDOUSLY. When inflation finally poured into commodities, the shocking truth came out. Inflation was really running at over 12% a year. This wasn't isolated inflation. This was global inflation.

Proof: even the strongest currencies with interest rates above 6% saw inflation! More proof: even Japan, with severe suppression of wages of 80% of the population, still saw inflation over 3% a year! Now, inflation seems to be receding but it is not. It is continuing to grow in the darkness. The reason we don't see it temporarily is simple: all the investors are removing their money from hedge funds and investment funds and HIDING it! And they are hiding it from the Derivatives Beast.

Anyone stupid enough to keep their money in the system is seeing it lose value faster than gold or oil is dropping. So we have lots of cash sitting idle. And it will sit idle until the Beast is done eating. And it has barely begun. The fact that all the major investment banks on earth are rapidly going bankrupt or have ceased growing, isn't due to there not being enough money. THE MONEY IS BEING HIDDEN RIGHT NOW! People are waiting to see what item can be turned into an instant bubble.

All over the web, I read spurious analysis that often starts with, 'This GLOBAL banking mess has never happened before!' This false story irritates me to death. Since the birth of banking, it has been an international/trade operation. Nay, banking was launched ONLY for international/trading purposes! And funding wars, of course. The bankers were more than happy to lend to foreign lords so they could go to wars.

But the international character of banking is the basis of banking. Banks were NOT started so people could buy property! In the Middle Ages, there were several interesting ways of gaining property: war, marriage or fealty deals with kings. And the Church gained via death bequests. And kings seized this property from the Church in various ways like Henry VIII of England. People didn't buy land.

There was another way: trading one property for another. But the preferred way remained the most ancient: sex and war. And frankly, we are never far from this. The US did this recently to Iraq. We wanted the oil so we invaded.

No, banks were mainly for traders. I have seen short histories of banking where the authors would explain that people would want to protect their gold by giving it to a banker with a safe.

But why would they do that? If they were rich enough to have gold, they were rich enough to hire guards and to hide the gold, themselves. No, the people who parked money with someone else were the traders who had to move from place to place. And they didn't park it with anyone. They had to park it with a family they could trust, one that had members across Europe and Asia. So a simple letter would effect a transfer of value from one place to another.

All paper currencies are contracts. I wrote about this in the past. If you read the language on older paper currencies, they are obviously contracts. The very first paper money issued by the new US government were covered with fine print detailing how the notes were issued, how they could be used and who was responsible for REDEEMING them! An important issue that is now hidden totally from the unsuspecting public today."

And Ms Supkis continues regarding the Congressman Louis T. McFadden, charge made about The Federal Reserve Corporation, Remarks in Congress, May 23, 1934, An Astounding Exposure, produced by The 1978 Arizona Caucus Club: "The conservative Congressman from 1934 is basically complaining that the US dollar was now being used for global trade and bills were being created overseas that eventually turned into dollars and thus, the US lost control of its own currency!

Well, this is happening today, in spades! The world mostly uses dollars and so, they create dollars via debt creation. And no one created more 'debt for export' than Japan. The Bank of Japan, not the Federal Reserve, is the real agent who is 'printing dollars'. But this is not discussed at all by much of the media.

This last week, the Federal Reserve increased the basic money supply exactly the same amount as on 9/11 as seen in the Fed's Fred Graph of M1 money stock. At 1% interest post-9/11, we saw a global equities inflation bubble. Then, when the climbing money supply leveled out, we saw a commodities inflation spurt! This was all the US dollars coming out of hiding when it could no longer be parked on top of global housing or stock markets.

Now we are at a LOWER interest rate and the same day, the Fed jumps the M1 money supply. And smart people will bet that we get a repeat of the previous 5 years. But this cannot happen unless first, enough debt disappears via bankruptcy.

In the previous downturn, that idiot, Donald Trump, went bankrupt. Then, he got even more money to waste on stupid real estate deals. When he goes bankrupt again, this will prepare the ground for him to get even more loans to do this again. Unless he gets arrested.

Right now, the central bankers are struggling to prevent the cleaning house via bankruptcies. They hope to increase lending and increase trade without first eliminating at least 50% if not 100% of the previous dollars created between 2002-2006.

The monetary base ceased growing in Asia so it is now being artificially grown here in the US. Only we didn't allow for most of the previous, Asian-manufactured debt to be cleared out via bankruptcy. Nor has the Derivatives Beast been able to munch on much more than just $3 trillion of the $66 trillion in funny money deals created by the bankers seeking ways to lend like crazy despite risks.

In all the previous years of our nation, we never, never, never saw this sort of insanity as seen in the Fred Chart of Total Borrowings of Depository Institutions, TOTBORR. The 9/11/1 borrowing binge was billed as a one-time thing due to a direct attack on Wall Street that killed many of the workers there as well as halting trade for a number of days.

But that has been utterly dwarfed by the present rescue. Was America attacked? Did Wall Street shut down? Has anything happened at all? As far I am concerned, the charts agree with me that the trigger event was in July, 2007: the day the carry trade with Japan suddenly began to unwind. This is a most singular event. It is being deliberately ignored not due to stupidity.

The actors on stage who did this to us still run things. They very definitely want the carry trade to resume. The G7 central bankers all yelled that they wanted this! It was in the news this week! They were all blatantly obvious about this. They hope to hide the mess again the old way: via lending this money to the West via Japan. Then, it doesn't show up in any charts! Except it is very inflationary."

And Ms Supkis references the John Riley, Cornerstone Investment Services article, The 4 Horseman Have Arrived Debt, Derivatives, Deficits and the Dollar relating: "Grim graphs! The debt to GDP is now nearly double what it was in the Great Depression. And that was due to the GDP being very weak! Our GDP has barely begun to decline. But it is showing signs of decline. On the other hand, when gasoline was selling above $5 a gallon, I saw nearly no one in the malls. This week, thanks to inflation temporarily receding, I see packed stores again. So we know that inflation is merely pulling back slightly before unleashing even worse effects: identical to the 1970's."

Ms Supkis sees tremendous chaos coming and relates: "And if you want to see hyper-inflation, if the price of oil hits over $500 a barrel due to revolutions and civil wars sweeping all our pets from power, we will see tremendous inflation."

Many bankers and others are running off to the Middle East to beg for investments. Or running off to Asia. But the price we pay is very high! This is a boon that has many strings attached. And these strings will strangle us. And this is all due to the fact that we ceased being profitable. We are not a capitalist society. We are in a debtor's prison.