[agenda] transfer of power continues

This post is dedicated to Chris Dillow, Two Wolves, Fabian Tassano, The Lighthouse and CityUnslicker, worthy bloggers all.

In our concentration on the "here and now facts":

European central banks are standing ready this week to take further steps to ease the credit squeeze following the US Federal Reserve’s unexpected move on Friday to stem the turmoil in money and credit markets.

Financial markets rallied after the Fed made direct loans available to banks on favourable terms and hinted at an interest rate cut. If the move calms US nerves this week, European central bankers are likely to follow to ensure a similar effect is achieved across the Atlantic.

... the real story, the realpolitik of what's going down is lost in a fog of misdirected attention.

Economists, constrained by economic theory, focusing on macro, micro and monetarist economic strategy, interpret politics through numbers. What they say is good as far as it goes.

The politically minded non-economists concentrate on local issues for local readerships - for example Welfare or the Presidential race or on non-financial global issues, for example Terrorism. What they say is good as far as it goes.

Many are concentrating on social issues, such as the missing Madeleine.

A few are getting down to the macro issues but each has his or her own particular angle. What they say is good as far as it goes.

All of it is part of the jigsaw puzzle which is the way things are headed. However, the only issue which is concerned directly with credit squeezes, collapses, recessions, terrorism, tightening of societal restrictions and inevitable war is the Finance.

You can shout Islam and not be wrong but it is not the underlying cause of the next war. Islam is the means, the pretext.

Three years ago I knew a credit squeeze was on the cards and that there were clear economic reasons to remain in Iraq and stir the pot. I told my friend ad nauseam about it and showed him the documents which pointed to it. One of the reasons I began this blog was to highlight what was coming. I am no kook but a person who studies documents. So are you but I'm studying different documents to you. That's all.

The reason people don't see that the central banks have an agenda is simple - they don't. Not in themselves. But the financiers behind them sure as hell do:

"When the President signs this act the invisible government by the monetary power, proven to exist by the Money Trust investigation, will be legalized … The worst legislative crime of the ages is perpetrated by this banking and currency Bill." [Charles Lindburgh Senior, 1913]

"A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men." [Woodrow Wilson, 1916]

"Every effort has been made by the Fed to conceal its powers but the truth is - the Fed has usurped the Government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will." [Congressman Louis T. McFadden, 1931]

Franklin Roosevelt wrote, in a letter to Colonel House: "The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the government since the days of Andrew Jackson."

Roosevelt created fiat money by calling in gold and there is now no major western currency backed by gold reserves. It's a fiction. This is OK as long as the government retains the power to mint and issue coin and as long as the system of credit is regulated.

On April 27, 1936, hearings were held by the House Committee on Banking and Currency. The preamble of the bill - HR 9216 of the Seventy-fourth Congress, stated, "The committee had under consideration the bill (HR 92163 to restore to Congress its constitutional power to issue money and regulate the value thereof ...

Restore. As in "recover", to "get back".

Congress may issue currency but the financiers tell them when and how. Even statutory reserve deposits do not tell the whole story. The Fed is not merely a regulator of the local economy, as many people think. Their own regulations mean that:

...it is possible for them to borrow additional funds from their Federal Reserve Bank and possible for the Federal Reserve authorities on their own initiative to supply additional funds through open market purchases of securities...

Since 1991, they have been actively engaging in international markets via settlement changes and at the same time actively tweaking the U.S. economy to their own agenda. This man at Alcoa has it half right:

I think this credit squeeze is half fabricated and half fed induced. The fed worked themselves into a corner by not regulating loans, then attempting to hide real inflation, and also weakening the dollar.

It created a formula for disaster where the only option is to now lower rates, triggering an unhealthy level of inflation. at this point allowing the systems to work themselves out will cause a large reduction in consumer and investor confidence possibly leading to recession.

They didn't "work themselves into a corner". This is the central area of dispute between CityUnslicker and me over 1929 - he claims Fed incompetence and I say it was intended incompetence.

Take a look once again at the FT quote above - it has now created direct loans, creating direct indebtedness above and beyond the scope of the government to regulate against. What has been put in place is now a massive direct indebtedness to the sharks, effectively bipassing the government itself.

There are no laws preventing the calling in of these loans in any of the western democracies. People are indebted to individual banks and credit providers, who in turn, are now indebted to the central banks. Therefore the central banks have a perfectly legal right to call the tune.

We are in 1927 once again and please recall the two decades following that.

It's an old, old story with minor tweaks to make the plot more interesting. When Nicholas Biddle, the head of Bank of the United States "tightened up credit, recalled loans and generally slowed down the American economy" [David C. Whitney, The American Presidents, Guild America, New York, 1975, p75], the population was angry with the government. Andrew Jackson told the people:

"Go to Nicholas Biddle."

Until the general public understands who is really in the driving seat and which international interests the drivers are themselves serving, the pantomime called democratic process which fuels the vast majority of political and economic weblogs remains a mere sideshow, one which distracts our attention from what is really going down.

This is the road to recession, the crash and the next war and there's not a damned thing any of us can do as long as people are looking every which way but at the main culprits.