[sonus] understanding issues: part 4

In Part 4, Sonus gets down to the nitty-gritty of who is to blame for this mess. An auspicious day for America today.

Part 3 of the series can be read here.




Before going into detail concerning the almost global conspiracy on the part of Fiat currency holders to suppress the price of Gold, it is important to understand the depths of insecurity that Fiat owners exist under. Many millions, probable billions of taxpayers funds have been expended over the years, to this end. This is outright theft. It has no legal mandate.

But it does show the fundamental weakness of Fiat, particularly towards the end of its life-cycle, when administrations are increasingly forced to manipulate every damn economic read-out monitor to convince the electorate of their security.

The senior political class, the MSM, and professional economists become nothing more than bare faced liars.

Greenspan spoke honestly about the characteristics of Gold before he took the Chair of the Federal Reserve Board.

And this article speaks of the total conversion of Greenspan, from an Austrian/von Mises disciple, to a Fiat currency fool whose main tool was verbosity and deception, hidden by increasing levels of debt, off-shoring, manipulated economic statistics, excessive leverage, and manipulated markets. A totally failed economic formula.

The previous two articles show the entire change of mindset that a genuine economist must go through in order to administer the fraudulent Fiat Federal Reserve system.

They must become totally subverted.

However, it is claimed that Greenspan had a motive. It involved his ego. But can an ego really subvert years of intellectual study that had obviously convinced Greenspan of the futility, fragility, and unworkability of a Fiat financial system.

I think not.

Here is a quote:

“But Greenspan was and is a member of the “Council of Foreign Relations”. He was corrupted!!

Greenspan had written a scathing article in the Sixties which attacked the kind of policies the Federal Reserve used to manipulate the economy. That he became Chairman of an institution he so despised put him in position to radically change the financial world. So, it seemed the facts fit the case of an "inside job" on the system to drive it to a state from which it ultimately would crash and splinter to pieces, making it possible to rebuild it in a better way. A truly radical scheme, it seemed, to destroy the Phoenix and then reincarnate it in Greenspan's own image.

But, despite the fact that the anticipated scenario has been playing out on a grand scale, a simpler explanation has come to light now and it makes more sense than the one we had been postulating. The answer comes from Ian Gordon. He writes in “Longwave Analyst:

My deceased friend, Teddy Butler-Henderson, met Alan Greenspan in the 1960's. They apparently discussed the Kondratieff Cycle. According to Teddy, Alan Greenspan confided that he hoped he could be Federal Reserve Chairman at the onset of a Kondratieff winter, because he felt he could defeat winter by substantially increasing the money supply and reducing interest rates to near zero. He had his wish and effected those actions following the 2000 stock market peak.

This effectively put winter on hold but massively compounded already excessive credit to the extent that people who should never have had access to loans were willingly given them. Now the credit bubble that Alan Greenspan initiated is beginning to unwind. The process will be horrific and cannot be reversed. Incidentally, Mr. Greenspan told Teddy during that same conversation that if he failed to thwart the Kondratieff winter, it would make what followed 1929 look like a `Sunday school picnic.' This is what we have to expect.

The above was written almost two years ago. And, we now have a depression greater than that of the Thirties, which is why we call it the Greater Depression. Greenspan had a goal---to eliminate the Kondratieff Winter. But, Alan Greenspan has likely completely destroyed the fabric of the world economic system by trying to avert a Kondratieff winter. His mistake was in assuming that bankers would remain as prudent as they had been in the past, rather than being mesmerized by the new money paradigm Greenspan created.

With interest rates set to zero and money flowing in an endless cascade, all a banker had to do to earn an instant fee was to make a loan to any body warmer than room temperature regardless of income documentation, then securitise the loan to get it off the bank's books. That meant instant gratification and no long term obligation to the banker himself. Greenspan should have realized that bankers are not rational, or even intelligent, creatures. He should have seen them for what they are---lab rats who could be taught to run mazes via cheezy rewards, without any thought to the ultimate consequences of this conditioned response.

This led to the current systemic breakdown we are experiencing today.

Instead of averting a normal Kondratieff winter, Greenspan created a Kondratieff "Ice Age." We will be lucky if this depression ends before 2027. The last depression lasted from 1929-1949, so we may have that long to endure this downturn. But, if the estimate that this is going to be worse than the last one proves correct, that 2027 date may be too optimistic. Of course, in the last depression, the stock market hit bottom less than three years after the depression started and trended higher from 1932, so we won't have to wait until 2027 for the stock market to bottom.”

The author of that quote makes an interesting case, but he forgets that under Greenspan a series of bubbles were blown, and Greenspan always maintained that it was not the job of the Fed to deflate bubbles, after all it was difficult enough to diagnose bubbles before they burst, but the job was to pick up the pieces afterwards.

This main change in Greenspans methods came shortly after his “irrational exuberance” speech, in 1996, after a visit by Mr Rubin. One wonders what was said at their meeting.

After several of these bubbles it must have been obvious, despite Greenspans ego, and outside pressure, to a skilled economist and Fed banker, that serial bubbles were not the answer, and a reversion to intelligent economics would have been the policy. This obviously did not happen, in fact, Greenspan became a cheer-leader for the securitisation of debt and its sale around the globe. He had obviously been corrupted!!

Concerning the details of the developed corruption resulting from free “money”, Karl Denninger speaks his mind.

Well said, Karl.

Let me make the point a little stronger.

As Chairman of the Fed, Greenspan had oversight responsibility for the banks. They were obviously dealing in OTC derivatives of various types. These were totally opaque and unregulated. Banks, allegedly, are regulated bodies, and were thus in breach of their charter. Greenspan not only failed in oversight responsibilities, he was the cheer-leader for their advancement, globally, and as a reasonably intelligent economist would have been perfectly aware of the consequences of a completely derivative based shadow banking system, that is now imploding, and is sucking the REAL WORLD into an economic/financial black hole. J P Morgan balance sheet has $88 Trillion of derivatives, of various types. European clearing banks have a £16.3 Trillion POTENTIAL LOSS, that no-one dare own-up to. Bernanke, as new Fed chairman also has oversight responsibilities. He has also failed to fulfil those responsibilities, by not preventing banks from participating in these instruments.

WHY?

Bernanke was appointed because of his previous published papers concerning central bank actions to get out of, or avoid, a great depression. The current debacle was known, anticipated, years ago! But more, - the current debacle was PLANNED and EXECUTED years ago!

Who are the AIG counter-parties?

Karl Denninger wades in as usual with well made points.

Before the Sub-Prime broke, the XAU, as a proxy for gold miners, was systematically taken down, month after month, when the price of gold was rising rapidly, and the share prices of other non-gold miners was also rising. A completely counter intuitive move.

It was done to counter the anticipated rise in the share price of miners, in a repeat of the late 1970s, (and other actions were taken against Gold), that the upcoming financial collapse would create. Someone had prior knowledge of these events.

Intrepid Rob Kirby explains.

Who could afford to do this? Who would benefit?

Who wanted to avoid the public judgement that the Gold Price delivers on failing Fiat currencies? Logic says it is the “owners” of the Fiat system.

Early in the life of nulab, Chancellor Brown sold off a significant part of the UK gold reserves, deliberately advertising the fact globally, which served to depress the world price further. Significantly, this was round about the time of LTCM troubles, and the Eddie George comment! He currently defends the action as all simpletons do, by asserting that he would do it again, thereby confirming suspicions concerning the logic of his reasoning processes, and his devotion to the Fiat. He was “Bought” very early into his bout as Chancellor!!

Blair now works as a “consultant” for J P Morgan!

Recently Bear Stearns was “taken over” by JPM, with a subsidy from the Fed, of some $30B. During fractious negotiations, which involved the Fed, Geithner, and a few other familiar names, someone omitted to inform Bear that 24 hours later the Fed would be opening a window that would have allowed Bear, an investment bank to borrow from the Fed. Well, hoodathunkit?

Bear was assassinated, because they were long gold. Significantly long. The cancellation of Bear's long, and increased shorting took gold down significantly, another counter intuitive move at a time of financial upheaval.

Once again, Rob Kirby takes up the story.

Understand that JPM is a tool of the Fed. Here is a direct quote:

“The tag team of JP Morgan as the monster and Goldman Sachs as its harlot represent a powerful pair that is more responsible for destroying the entire US financial system than 95% of the American public has any awareness. The colossus of JP Morgan is a monster, a predator, nurtured by pond scum. It has gobbled up Chase Manhattan, Manufacturers Hanover, Chemical Bank, Bank One, and more over the past two decades. Their profound presence in keeping the US Treasury Bond yields down can never be understated. They do so by managing 85% of the credit derivatives on the planet. They distorted usury prices, as in price of borrowed money, thus aggravating the LIBOR (London Inter Bank Offered Rate) market in a very visible manner. The oblong usury prices have contributed mightily to the destruction of the US Economy itself, created bubbles, killed jobs, and wrecked savings.

The ugliest hidden activity for the JP Morgan monster is to manage the Bank of Baghdad, where they manipulate the crude oil price, where drug trafficking money is funnelled from Afghan sales, under management by the US Military aegis (guys with no uniform stripes or markings). Maybe such illicit money offsets Credit Default Swap losses, making America strong for freedom and liberty. Goldman Sachs is clearly the investment banking agent for the US Govt, given the privilege of insider trading in unspeakable proportions. They manage the Plunge Protection Team efforts to intervene in financial markets, making America strong for freedom and liberty. The new kid on the block is the FDIC. The Federal Deposit Insurance Corp is steering fresh meat into the corralled JP Morgan stockyards for slaughterhouse feeding. The label of harlot might be too kind, especially from the perspective of senior bond holders. But JP Morgan requires fresh meat (capital) periodically, thus making America strong for freedom and liberty. Never mind the fires caused after its hearty meals and flatulence.”

“The maze of unscrupulous, devious, and insidious fraudulent business units of JP Morgan is worthy of a 500-page chapter in the US financial history treatise, someday to be written. See the complete distortion of usury costs (interest rates kept low) by JPM, with such a volume of Interest Rate Swaps that was sufficient to run the Bond Vigilantes out of town. Skewed cost of money is the foundation for speculative bubbles. See the management of US Treasury Bonds by JPM on behalf of the Federal Reserve, along with the $2.2 trillion that they sold above and beyond the officially stated US Govt issuance of US Treasury Bonds. That is called counterfeit evidence, the records for which were lost in the third building at the World Trade Centre. See the management by JPM of the Bank of Baghdad. Twice as much money is missing from the Iraq Reconstruction Fund than was stolen by Bernie Madoff, up to $100 billion being estimated. And never overlook the financial tentacles that extend from Afghan operations on the contraband side, to the Bank of Baghdad as the clearing house.”

And speaking of JPM derivatives …

Recently J.P.Morgan announced profits of $5 Billion, on the trading of derivatives of $87 Trillion.

There is no justification for a commercial bank, with regulated depositors' funds insured by the government, to be speculating on a level this great. 
One also has to wonder who actually 'lost' in those derivatives bets that JP Morgan made, who the counterparties were. How many losses were taken by AIG, Bear Stearns, and Lehman? 
Who is really being bailed out here? Aren't we paying for JP Morgan's "winnings?" 
 
If they speculate and lose, who pays for that? The tax payer. 
 
What is a bank doing gambling in unregulated over-the-counter derivatives involving commodities and financial instruments worth $89 Trillion?

This figure dwarfs the GDP of the entire world. 
Getting paid by the public whether they win or lose it appears. 
 
When a single player with deep pockets and government guarantees is placing bets in markets on a scale, that is the very definition of moral hazard. 
 
Until the Obama Administration takes strong steps to bring back Glass-Steagall, and put hard limits on the banks there will be no reform and no recovery. 
 
The US is 60 ish days into the Obama Administration. There is little or no systemic reform. Just a continuation of crony capitalism under Bernanke, Summers and Geithner.

To return to the main topic, - Notice also that HSBC is the other main holder of derivatives.

And HSBC is a Market Making Member of LBMA, along with a few other familiar names.

The London Bullion Market Association sets the Gold price twice per day, and it is a completely private setting, not open to public sight.

Is the LBMA twice daily setting of the Gold price also deliberately depressed by shorting or central bank selling via Bullion Banks?

Who knows, only the LBMA.

And that is wrong!

Rob Kirby goes further in this link and examines the activities of central banks leasing arrangements. Central banks lease out bullion as a way to suppress the price, knowing that the gold will probably be sold. They would only be confident in doing that if they were confident that the gold could be re-purchased for a lesser price in the future, and returned to them. This arrangement can be lucrative for banks struggling for profitability.

I'll hand over to Rob.

“Gold price suppression is not simply a “paper game” where relentless amounts of price suppressive “futures” can be sold forever; the price suppression scheme also requires that the price riggers expend some physical gold too – to make the ponzi-esque selling of futures “believable.” The physical gold which is mobilized to accomplish this is typically sovereign gold that is “leased” from Central Banks.

Leasing is preferred to outright sales because you can only outright sell something “once” – and it is gone. By leasing, the physical gold leaves the vault to be sold in the open market but Central Banks replace the missing physical gold with an I.O.U - for accounting purposes – and claim that they still posses the same amount of physical bullion! So, by leasing gold instead of “outright sales,” Central Banks can and do double count [cheat] – a la Enron – their gold stocks!”

Yes, they do double count leased out Gold, BUT THE RULES OF THE IMF AND BIS ALLOW IT.

Strange, don't you think?

Is it designed to mislead researchers?

Hyper inflation is a CURRENCY event and moves from deflation where there is a sudden loss of confidence in the currency creating a sudden loss of value, via the exit door., as in Iceland recently.

Eric de Carbonnel is a fine blogger who we will visit shortly, however Rob picks up a problem in one of his blogs.

Interesting, ain't it?

This is a chart to look at regularly, it is the price of Gold over three days. Regularly viewing this chart shows in which market the manipulation is taking place.

Finally for Rob.

Here Eric de Carbonnel speaks about the dangers of Gold ETFs. Many hold no gold, and are secured by Gold derivatives, thus there is a counter part risk.

Note that the providers mentioned, JPM, and Barclays, are members of LBMA, as is HSBC Bank, USA, and as we have seen, JPM and HSBC also deal heavily in Gold derivatives on the short side.

Seems very risky to me. At some point the Banks will probably blow. What then?

The only Gold to hold for investment purposes, is PHYSICAL GOLD.

Take a simple example.

You live in Iceland.

You go to bed on D day, minus one, with your left hand holding 100 units of currency, and your right hand holding gold to the value of 100 units of Icelandic currency.

You wake the following morning, D day.

In your left hand your 100 units of Icelandic currency can only now purchase 20 units of yesterdays Icelandic currency imports.

Your right hand can still purchase 100 units of yesterdays Icelandic imports.
However, your right hand is now worth 5 times yesterdays Icelandic units of currency, and can purchase 5 times yesterdays value of home produced Icelandic goods.

Join the EU for safety, and you lose your only industry to foreign fishing fleets.

Pity no-one thought of owning Gold!

When, not if, devaluation comes to the UK, caused by Browns stupidity, the above scenario will play out. The degree of change will vary, the principle of devaluation, happening slowly now, remains.

GATA is an American action group that has campaigned for a decade against the obvious institutional suppression of the Gold Price. In a recent series of articles they cover the entire Gold suppression scenario, with an explanation that involves corruption at the highest levels of the US administration.

Upon appointment, Clinton was disturbed that bond holders would be rewarded by higher interest rates, which would in turn add costs to his democratic voter base. Robert Rubin advised that they should allow the leasing of Gold by the Central Banks to the Bullion Banks, who would then either use them as backing to short paper Gold, or use it for outright Gold sales. This would have the advantage of depressing the price of Gold, and, since the Bullion Banks would use the profits from shorting, or the receipts from the sale of Gold to invest in Government Bonds, it would also suppress interest rates, so benefiting the Clinton voter base.

The GATA link is here.

And here.

Certain analysts realised three years ago that the leasing and disposal of Central Bank Gold Reserves had been going on for over a decade, and the remaining Central Bank Stocks must be heavily depleted, thus creating a future scarcity of Gold, as they considered that Central Banks would be loath to sell off the remain Gold stocks, thus altering the Global supply paradigm. A future price increase in Gold was therefore anticipated.

Their report is here.

Eric de Carbonnel has been doing some more digging, and seems to have found interesting evidence that the US has no stocks of Gold remaining other than that melted down in the 1930s from confiscated bullion and coins, and is now engaged in bullion swaps with European Central banks, for US gold “in deep storage”, which is assumed to be gold not yet mined but contracted for with US miners on US soil.

Here is the link.

On the face of it, if true, this is political dynamite. National Gold Reserves are regarded as the property of the entire population. There was a loud outcry when Brown last sold part of the UK Gold reserves, in very dubious circumstances for very dubious motives, and against professional advice.

In the current”hunt the banker” atmosphere, if Brown has sold any more Gold reserves, and it can be seen that evil banks have benefited from this sale......... I seriously doubt there will be upcoming audits, just more spin. Nevertheless, the public would also ultimately blame Brown for further Gold mistakes.

(Just as an aside, it's a bit rich that Brown should be chasing and spinning on Bank executive pensions, when he is the one person most credited with the National Destruction of pension schemes by his pension-grab when first elected. And that figure now runs into many £ billions.) And also his total debasement of State Pensions by indexing them to blatantly fraudulent inflation indices.

Paul Volker, (Chair, Group of Thirty) who was responsible for beating inflation in the early eighties is on record as saying that his one regret concerning that era was that he failed to take the measures to cap the price of gold. Gold had jumped to $800/ounce at that time ($2,000 inflation adjusted now). Coincidently, it was Volkers economics that started the massive shift of wealth to the top 1% of the top 10% of the US population, and destroyed the wealth of the US Middles Class over the following years, requiring the increasing levels of credit (debt) that we now see, in an effort to maintain standards of consumption.

The global financial system is far more precarious right now, so we could say that the capping has been successful, but the intended, and unintended consequences of that act have contributed to the ultimate demise of the entire planet.

Tinkering by fools may work in the short term, but in the long term basic forces reassert themselves with a vengeance.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration.

"How long can the US government protect the dollar’s value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? Given the incompetence in Washington and on Wall Street, our best hope is that the rest of the world is even less competent and in even deeper trouble. In this event, the US dollar might survive as the least valueless of the world’s fiat currencies."

Adrian Douglas is a professional markets analyst who writes regularly, and has just completed a major TV interview for Russian Television concerning the Fiat owners suppression of the price of Gold. (I mentioned earlier the Russian Gold deposited in western banks seemed to have vanished, sold or leased away in exchange for an Fiat IOU that is about to be devalued if presented in currency terms).

He has his own website, subscription for professionals, but among the free tempters, he offers are some very interesting PDFs.

One

Two

Three

The interview on Russian TV has not yet been screened, I will try to get a link, or copy of the transcript.

Here it is - not as detailed as I thought it would be.

I find it interesting and depressing that this entire episode of fraud on a global scale goes totally unreported in the western MSM, and where the subject of monetary metals is raised, it is banal reporting matched only by the ignorance/self interest of the interviewees, yet Russian TV is prepared to film in-depth analysis. A real pity they chose not to show more!

Signs of the times!

The prices of the monetary metals, despite assertions to the contrary by the Fiat owners, are a central part of the global monetary/financial/economic system. Their manipulation by the Fiat owners, in order to also affect other system monitoring alarm bells, has played a significant role in the destabilisation of the entire global financial system.

As the Fiat system entered a more dangerous final stage, the suppression of gold and the resultant investment in bonds proved inadequate to hide the alarm bells describing the fiat collapse. Thus the growth of Derivatives, encouraged by Fed support, and its global seeding of financial destruction! 



Is California really Blue? Refreshment Break.

Halcyon Days. 
 
 


Part 5 of the series can be read here.


It says 'written by James Higham' below. Actually, it was written by Sonus but I can't reformat the author in my template.

[sonus] understanding issues: part 3

This is part 3 of the Sonus series of articles on where the economy and society is really headed and who's to blame. Sonus names names - learn about Deepcapture, the LBMA and Eddie George. See why we're effed.

Part 2 of the series can be read here.




Towards the end of a Fiat currency life-span, when debt levels are becoming difficult to repay, the tendency on the part of the authorities to cheat, to hide the facts from the voters, increases.

As the cheating persists, the studied avoidance of tough decisions is evaded by repeated bubble blowing that creates the illusion of economic well-being, but is merely an increase in private, and public Debt levels There has been no REAL increase in GDP for the previous decade, despite political spin.

This illusion becomes more and more difficult to hide, and the activities increasingly necessary to hide the reality, the State inspired corruption, and conspiracy, becomes more intense and more widespread, and endemic.

Today inflation statistics are grossly manipulated, as are unemployment statistics, as are GDP statistics, together with most global commodities. These may, or may not convince professionals concerning the state of the economy, but in concert with a supine and a “Deep Captured” MSM, it makes for comic debate on the screen, and spin and propaganda for the sheeple.

Monetary authorities on both sides of the Atlantic have manipulated the price of gold throughout the 20th century, to keep the price near to the “official price” at which currencies could be exchanged under the Gold Standard. This was nothing new.
This is an early document from 1961, discussing this subject, in vague terms.

It wasn't until the Reagan era, when market volatility increased, and the 1987 US/UK market crash occurred that the “Presidential Working Group on Financial Markets” was established.

The Working Group on Financial Markets (also known as the President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, signed on March 18th, 1988, by United States President Ronald Reagan.

The Group was established explicitly in response to events in the financial markets surrounding October 19th, 1987, (“Black Monday”) to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".

As established by Executive Order 12631, the Working Group consists of:

0. The Secretary of the Treasury or his designee (as Chairman of the Working Group);
0. The Chairman of the Board of Governors of the Federal Reserve System, or his designee;
0. The Chairman of the Securities and Exchange Commission, or his designee; and
0. The Chairman of the Commodity Futures Trading Commission, or his designee.

In other words, parts of the Executive were now free, and instructed to, manipulate “free” markets, in order to help create the illusion of financial stability. The Fiat system, and the excessive use of debt, was beginning to show signs of stress.

This could not be allowed.

The inclusion of the leaders of the SEC, and the CFTC, on the Presidential Working Group on Financial Markets goes some way to explain the current enforcement problems, where oversight bodies have been criminally negligent , and persistently “looked the other way”. However, when Legally mandated oversight criteria are overridden by Executive Order, and obvious manipulation is conducted in the name of “Public Good”, lines in the sand become blurred, staff lose moral, and “things” happen.

Safe Haven explains that the working group has recently become far more pro-active in the markets, using money from the Fed, and linking it to the cessation in the publishing by the Fed, of M3, as increases in M3 were predictive of future market manipulations.

In other words, Fed created money was being used for market manipulation. Was there a legal mandate for that?

Once fraud, however well intentioned, becomes embedded in the system, it grows and spreads, and infects the thinking of all officials in the commission of their duties.

It is cancerous.

Like all cancers, it eventually destroys the host. The financial systems credibility of the US and UK are perilously near to that point, together with the entire economies of the G7, and probably G20, right now.

This is pure Opera.

And the Whistle Blower has his day of testimony ...

And it proved to be very revealing.

Further questioning was revealing.

There followed a further examination of Mr Markopolos, but it is difficult to find complete footage of this. Here are three revealing segments:

Here.

And here.

And Here.

DEEPCAPTURE explains this phenomenon in the US context, but it is present in the UK too.
Given the hearings running in the UK currently, concerning risk levels of bank lending, and the dismissal from employment of Risk assessors, and the promotion to FSA director level of those aggressively promoting risky lending practices, it becomes increasingly obvious that “Deep Capture” also exists in the UK. Banks in the UK have clearly, in the home market, been guilty of predatory lending practices, with home loans of more than 100% of equity, levered on MANY times the borrowers earnings multiples, and occasionally involving guarantees by parents of the borrowers. Teaser rates were in evidence, with extra-ordinary roll-over fees at the end of the initial period. Clearly these debts were beyond the borrowers ability to pay, and the banks and the UK Government, and the FSA knew it.

The revolving door of UK regulation was exposed by English bloggers.

Here.

And Here.

About 9minutes 30 seconds into the testimony of Mr Markopolos, above, mention was made of the state Attorneys General. It is important to realize at this point why Mr Elliot Spitzer was assassinated politically.

On Feb 14th 2008, Elliot Spitzer, US Attorney General penned an article for the Washington Post, “Predatory Lenders Partner in Crime”, explaining Federal corruption in the support for predatory bank lending practices, and explaining that EVERY US state had joined him in seeking curtailment of these practices, but had been prevented from doing so by legal actions of the Federal Gov't. The Federal Government was complicit in the sub-prime lending that is part of today's market problems, and was active in defending the practices.

Here is a link explaining it.

These are the very debts that were sliced and diced, fraudulently given triple “A” ratings by fraudulent ratings agencies soaked in moral hazard, and sold globally.

Understand this.

Given Government and Wall Street collusion here, this is typical of actions taken in a collapsing Fiat system, to obtain momentary profitability, and attempting to push the ultimate payment collapse further into the future. There was clear intent to involve the world financial markets, and foreign nations are now realising this, and are furious.

The future that we are now experiencing was anticipated, and WAS PLANNED.
I will return to this theme later.

The US Deepcapture link explaining the concept is here, and is vividly displayed by the previous links to the Madoff revelations.

And Karl explains Deepcapture in detail.

Ted Butler, an excellent writer, and campaigner for honesty, on the precious metal Silver, a monetary metal, has been pushing the CFTC for over a decade for an investigation of the clear and visible manipulation of the Silver Price, contained in figures published by the CFTC! At times the ounces short have approached the global annual output of Silver, yet in a decade of complaints, no action has been taken. The membership of the head of the CFTC on the Presidential Working Group on Financial Markets, explains the lack of action.

Here is the archive of his articles. Read them carefully, and understand.

Also understand that the same Bullion Banks involved in Silver manipulation are also involved in the manipulation of the price of Gold.

(Nothing happens in isolation, the mining of silver is often a by-product of Zinc, or other base metal mining operations. The current economic crisis resulting in collapsing commodity prices, has caused mine closures and in the future will cause commodity shortages with industry unable to respond speedily to renewed demand. The decades long suppression of Silver prices has resulted in either premature closure, or the non opening of mining projects. Silver has many industrial uses.)

These activities are not normal shorting. These banks do not cover after a price decline, they add to their position. That alone speaks of manipulation, together with their truly massive presence!

Who would do this? Who would benefit from the Silver price suppression, year after year?

The Bullion banks involved are all Federal Reserve Primary Dealers, - the owner of the Fiat currency!!!!!! And some are also members of the LBMA!!!!!!!!!!!

The CFTC is quite aggressively looking the other way!

A clear conspiracy on the part of the Fed/National Executives of US and UK is evident here.

And they don't even deny it!

Here is a quote from Eddie George.

Eddie George and Gold 
“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore, at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.” 
Eddie George, Bank of England, September 1999.

In other words, trading houses were short, in massive values relative to their abilities. If they went down, the price of gold would spike, and more short positioned institutions would fail if they were forced to cover. They therefore got help from the Fed, and the UK.

His mention of the Abyss shows how great the long position was.

“at any price, at any cost” is significant don't you think?

What was at stake?

Eddie George was the Governor of the Bank of England, responsible for the Fiat currency of the UK, and freely admits to manipulating allegedly “free” markets for the benefit of “trading houses”.

Could the viability of the UK Fiat currency have been under threat?

The US Fed cannot intervene in these markets, it would have used the same bullion banks/primary dealers as proxies.

And we are lead to believe that the LBMA am, and pm, price setting is free from B of E, and political pressure!!

Here is a graph that clearly shows the effect of announced Gold Sales.

And in case you were wondering, these are the parties suppressing the price of Gold, every day.

On 12th February, Rob Kirby tackled the disparity in the two accepted measures used to set the global price of oil.

Rob says “Monetary authorities induced highly levered hedge funds.....[...]..... dollar hegemony was threatened”.

Actually they did it via a global, concerted, margin call on every hedge fund on their loan book. Hedgie concerted selling to meet margin calls triggered further selling. The commodity cascade began. The dollar index recovered from that point, against all logic, that said a debased currency, debased as much as the dollar had been for two decades should have crashed. Hedgies had shorted the Dollar, and gone long commodities.

After the margin calls they had to sell commodities and buy dollars, hence the dollar index increase.

Was this legal?

Certainly a clear conspiracy!

I will deal with the second part of Rob Kirbys article, relating to gold, later. 



Two cry together refreshment break.

Part 4 of the series can be read here.


It says 'written by James Higham' below. Actually, it was written by Sonus but I can't reformat the author in my template.

[sonus] understanding issues: part 2

This is part 2 of the Sonus series on why we're effed, who is responsible and whom we need to lynch. I've just read all of it to part 5 and have to say it gets even better the further you read.

Dates for posting the Sonus articles: March 16th, 18th, 20th, 23rd, 25th and 27th.

Part 1 of this series can be read here.




Let us now revisit the simple banking model in Part I

I do not want to over-complicate the varying mechanisms, between the US and UK banking systems, as that is not the issue here, merely to say that over time the State began to control the individual banks.

Banking licenses were issued, which allowed the banks to issue bank notes in their own name, (subject to limitations), and as banks failed, or merged, no new licenses were issued. Over time this resulted in a monopoly for the Bank of England. (Differing notes are still issued by banks in Scotland)

In order to control the amount of credit (debt) that could be issued under fractional reserve lending, (sometimes called “the multiplier effect” in the UK system) The Bank of England could require the clearing banks to hold varying proportions of the assets as deposits at the Bank of England. (The Chinese authorities are very active currently, using special deposits as a way of controlling their economy, via credit/debt issuance, and they seem to be avoiding the traps of pro-cyclicality quite well)
That is enough of the details to suffice.

There are several features of a modern Fiat system that must be understood in principle.

0. Modern Fiat systems have evolved efficient control mechanisms. If a 5%, or a 2%, or whatever %, rate of inflation is required, absent large extraneous events, that is what will be achieved. (remember the previous political machinations with interest rates prior to election times, and the Kudos Brown earned for making the B of E independent - allegedly)

0. All Fiat systems beyond a tipping point, have a definitive life-span, after which the “National Debt” is compounding at such a rate that it overcomes the ability of the economy to pay it. The Maths cannot be beaten.

0. During that life-span, incremental debt injected creates diminishing increases in GDP, on a £ for£ basis. Towards the end of a Fiat life-cycle, massive injections of incremental debt will create negative GDP. Once again, the maths cannot be beaten.

0. Increases in the rate of inflation in a Fiat system shorten the life-span of the system. Maths again.

Ron Paul says it well!

The above are enough rules for now, but think of their importance, and understand the implications of the above in relation to current circumstances.

The intrepid blogger Karl Denninger blogged about points 2, 3,and 4 above. He produced a graph here.

When reviewing this graph, take note that it was published BEFORE trillions of new debt was injected, albeit sterilised, by the Fed. The upcoming de-sterilisation will bend the trend line lower!

And the blog is here.

Simply put, there is too much debt in the economy. If people won't borrow, because they are up to their eyes in debt and non-profitable companies can't service any more, or can't roll existing debt over, the velocity of money decreases. You cannot inflate away from an over indebted position by injecting more debt via borrowings. Interest rates will not remain at, or near zero, for long, as bond vigilantes will strike, then even more existing debts become unserviceable as interest rates rise, and currency devaluation becomes the only option.

The dirty hidden secret of all Fiat systems is the theft of all savings via inflation. Gradually, over the years, everything is confiscated. Yet everything is so gradual, (when operating properly) that it goes un-noticed, becomes part of an unconscious acceptance, it is insidious and evil.

Once again, Ron Paul gets it.


To give an example, in 1972, I purchased a serviced building plot from a local council, obtained detailed planning consent, and built my own residence. The land cost £2,500, it was one quarter acre. Today, the land would cost more than £150,000.
The land has only marginally increased in value due to development, - it was bought with outline planning permission, - the difference is that the £ has devalued since 1972.

Difficult to believe?

Well here is a website that can be used interactively to illustrate my point.

Here is a website that looks at the prices of housing from 1890, to present, and adjusts them for inflation. It shows vividly the vast over valuation of housing currently, so let's say the land valuation could drop to £75,000, that is still a vast devaluation of the £ from the £2,500 purchase price.

Yes, it is American, but if anything the degree of historical over valuation is higher in the UK.

In the normal run of business activity, if a business were to issue receipts for non-existent goods, or sell a product that it did not own, it would be guilty of fraud, and the directors would run the risk of jail time.

This is what banks do as part of normal business activities, called fractional reserve lending, and it becomes legal because the Government issues a banking licence that says it is legal.

It is the global use of fractional reserve lending that increases overall inflation levels via increasing levels of credit (debt/money)-(although inflation levels may vary geographically) and results in the gentle theft of all savings, over time.

The dirty little secret restated, is that no Government running a fraudulent Fiat Banking system wants you to know, is that prices do not automatically increase, it is the currency that devalues in a Fiat system. NO FIAT CURRENCY HAS A FIXED VALUE AGAINST ANY GLOBAL ASSET, IT MUST DEPRECIATE OVER TIME. PERIOD. AND THE ASSET MUST APPARENTLY INCREASE IN COST. Absent fractional reserve lending and interest on debt, the normal evolution during a product life-cycle is one where the product becomes cheaper due to increasing volumes of mass production rising from public acceptance of the product selling in greater volumes, and improvements in technology, and competing companies entering the market attracted by the initial margins. For example, look at the advances in computing power, and the price decreases in the last 2 decades,- albeit an element of the price reduction is due to off-shoring/currency manipulation in the exporting countries.

The mistake that MOST thinkers make is to consider the currency as fixed and commodity prices as increasing. Such thinking is particularly useful to Fiat governments. It disguises their theft of the savings of the populace, and their reneging on their future liabilities, eg, for pensions.

A Fiat system cannot be deflationary without ultimately imploding. It struggles to exist profitably in near zero inflation (equilibrium). It can best exist in a “growth” situation, that is, where increasing levels of credit/debt are being created, - the classical western “growth model” of western economies.

Deflation is death to Fiat because the paying down of all debt, or the cancelling of all debt via bankruptcy destroys the money supply, and economic activity ceases, since credit (debt) is “money” in a Fiat system. This is part of what worries the global financial authorities in this current deflationary stage of global financial collapse.

Here is an excellent summary of the above issues.

The authorities are determined to preserve (their) the Fiat system at all costs, even at the expense of criminal moral hazard, and possibly the future viability of the country, and age-old democratic values. Although the current crop of political leaders seem oblivious to economic principles, there are increasing numbers of dissenters to their methods, who are becoming increasingly more vocal in their opposition.

It is this passion evidenced by the authorities, for the preservation of the Fiat system, which is becoming increasingly illogical, that causes inquiring minds to speculate the true motivations behind a seemingly noxious stand. 
 
 



Jamming with a Pretty Woman refreshment break.

Or as I remember clubs!

 
 
 
 

Part 3 of the series can be read here.


It says 'written by James Higham' below. Actually, it was written by Sonus but I can't reformat the author in my template.

[sonus] understanding issues: part I

This is the first of a series of five articles by Sonus [the Anon of the comments sections on this blog]. In view of the material here, I'll hold my own post '2012' over until tomorrow. This series will be linked in the sidebar in a few days. Thanks, Sonus, for the post.




The problem I have in writing an essay like this, is where to start?

Or rather....

What is the knowledge base of my readership?

If the knowledge base of my audience is inadequate, how can I explain the problem, have it recognised, and how to debate a solution?

So I find that to begin, a wider explanation of the current situation is needed.

We live in a financial system that is dominated by, or rather, called, a Fiat, financial system, which uses Fractional Reserve Lending as part of its business model.

Let's examine those terms.

A Fiat system is a false system, an un-backed system, that is, there is nothing of intrinsic value to back the promise on a Sterling note, other than the promise to pay the bearer with another sterling note, - another promise to pay the bearer. This is accepted as a medium of exchange because the Government says it is, and because the government recognises it as a legal way to pay government tax demands. It is “legal tender”. Sterling notes, indeed any currency notes in any Fiat system, are “irredeemable”, ie the promissory note can only be replaced by another promissory note. They are however accepted as a medium of exchange. The ultimate backer for any paper promise to pay the bearer with another paper promise is the issuing government, and that ultimately falls to the responsibility of the taxpayer resident in the issuing country, ie, the ability of the issuing government to tax the population of that country to be able to pay the debts that the government has already incurred.

It has not always been like this.

Prior to 1971, when president Nixon cancelled the right to exchange the US $ paper currency for gold on demand, at a fixed price, the system was not Fiat, ie it had the backing of gold.

Excessive expenditure by the Federal Government had resulted in the issuance of large amounts of paper dollars, and these were held by foreign governments. Several foreign governments, notably France, began to worry about the level of debt incurred by the US government, and demanded payment, not in paper dollars, but in gold. This created a demand for gold that would have drained the US gold reserves. The decision was taken to end the convertibility of the US dollar into gold. Henceforth US debts would only be repaid in paper dollars. The Dollar became Fiat.

The second term used was Fractional Reserve Lending.

Fractional reserve lending mainly arose as a matter of operational convenience.

Originally Gold and sometimes Silver (in certain geographical areas) were used as “monetary metals”. They were used as ingots of defined purity, or made into coins of various sizes and defined purity. As a matter of convenience and security, these were stored in premises held by people who became known as “money changers”, an ancient profession, mentioned in the Bible, in Egyptian hieroglyphs, and in Sumerian tablets.
Receipts for precious metal deposits were given by the money changers, and it became the norm over many years, for the receipt holders to use them for trading purposes, rather than the physical transfer of bullion.

Thus the modern “bank note”, or promissory note was born, - the promise to pay on demand.

Also over time, the money changers began to notice that not all owners of deposited bullion would seek to withdraw their bullion at the same time, and over many years they began to issue “loans” to borrowers, by way of debt obligations, - promissory notes they could present to a third party to obtain goods or services immediately on “credit”, and repay the debt to the money lender over time, together with an interest element.
After many years, in diverse countries, a ratio of 10% seems to have evolved, That is only 10%, on average, of depositors, would seek the return of their capital at any one time. The money changers were thus able to lend out ten times the amount of money (gold, or by this time other securities too) on deposit, as paper,without fear of insolvency.

Imagine that, the Banks, (for that is what the money changers had evolved into) were able to create 90% of their raw material, - money, - out of nothing, charge interest on 100% of their loans, and yet some currently still make monumental losses.

Look at it another way.

A bank pays interest to its depositors of (say) 3%. And that 3% is paid on effectively 10% of the loans it can create, and lend to borrowers at (say)5%.

Or, the interest it pays to deposits of £1M over a year (let's assume a static model for simplicity) at 3%, is £30,000.

Via Fraction Reserve Lending, with deposits of £1M, it is able to lend out £10M, and charge 5% interest on £10M, which is £500,000.

So £500,000 interest earned against £30,000 interest paid out. Then add in the £10M of capital repayments over time, remembering that £9M is pure profit, that the bank had created out of nothing, and you begin to understand just how profitable, or rather the extent of banking gross margins, that the banking model can deliver!

Naturally, that is a very simplistic explanation, and banking has evolved into a much more complex industry than portrayed, however, to better understand the evolution of banking, I would suggest this link .

This is a 3.5hour video, filmed in the US in the late '90s.

It is very revealing.

At this point for further details you should also acquire and read the book, - “The Creature From Jekyll Island”, written by G. Edward Griffin.

So, now you are an expert on the corruption of bankers, their centuries long endeavours to impose their debt based financial system on the US nation, copying the UK system of debt created “money”, and the unscrupulous methods employed to achieve these ends. The profitability of the debt-based financial model was their prime motivation coupled with their knowledge of the power that such a system would give them, to wield over whatever country they managed to subjugate into their system.

Not for them any notions of “national” pride or loyalty to a host nation. International branches of the same bank would arm both protagonists in any international war, and reap the rewards from both combatants. In fact the financing of wars, and subsequent reparations, were recognised very early in the games as being their most profitable activities. Naturally warring parties could not be funded, since the looser would be unable to pay, until the authorities in the warring parties were able to instigate a method of national taxation on the populace. The Napoleonic wars created the first income taxes in England, with the Rothschild Dynasty funding both parties. In many cases the providers of funds were able to choose the eventual victors, and finance flowed that would guarantee the desired outcome. This became the “National Debt”.

Now THAT is power.

However, nothing really changes: - Politicians, or minor aristocracies decide to wage war on a neighbour, convince the local population of a “common enemy” and the need to attack/defend, and suddenly the debt incurred and the interest payments become the problem of the entire population, while the banks/politicians/aristocracy, benefit!

Naturally, once “stock exchanges” were developed (initially Government bonds were the Rothschild favourite), the financiers were able to make the correct investments well before the event.

They rapidly grew very wealthy.

For thousands of years, gold, and intermittently, silver, have been regarded as monetary metals, and have been used in the manufacture of coins, - money. From the Sumerian civilisation, (which also used other commodities for monetary/barter purposes) through Egypt, Greece, Roman civilisations, their use was common. All through history currency issuing powers have sought to get more from their limited supply of precious metals, by the debasement of their coinage. This would take several forms, - reducing the precious metal content of the coin, reducing the overall weight of the coin, increasing the face value of the coin while maintaining the quality. Either way, the population viewed the act as devaluing the currency, as prices of other commodities, grains, etc were adjusted upwards by traders/importers in terms of the face value of the currency, in order to achieve the same QUANTITY of precious metal content.

This was inflation, it debased the currency of the realm, and mass protests featured strongly against this, particularly in the declining years of the Roman Empire as the practice became prevalent. Eventually, as the Roman Empire began to collapse, the quantity of money in circulation began to contract rapidly, and the entire economy of the Western Roman world fell into heavy deflation, the velocity of money also contracted heavily, and what is now known as “The Dark Ages” descended on the entire remnants of the Western Roman Empire.

This lasted for hundreds of years.

Many modern writers are drawing parallels with the current financial problems facing the West, and the US in particular. They point to an exported manufacturing base, internal price inflation, and military over-stretch, with balance of payments deficits, and a debased currency.

The populations in those days regarded monetary metals both as money, which is both a medium of exchange, and a store of value. Modern western writers seem to wish to prevaricate on these features, arguing that gold and silver may well be stores of value, but they are not money. Those writers forget history, and assume that fiat regimes dominate the world. Many current societies still use barter, still use monetary metals, and I can speak from experience that both Krugerrands and UK Sovereigns are regarded throughout the world as money, and their value is based on their gold content, priced at current prices. UK retail banks may now be totally divorced from monetary metals, and no longer buy or sell gold or silver in any form, leaving that activity to specific dealers. This is certainly not true for the majority of the remaining world.

Perhaps the most successful, though short-lived bankers of all times, were the Templars. But then again, perhaps they were/are, not that short-lived after all!

The Albigensian Crusade in Languedoc ended in 1244, but it was 62 years before King Philippe IV of France, and Pope Clement V were in a position to harass the Knights Templar for their reported vast wealth. Having murdered two Popes, Pope Boniface VIII, and his successor, Pope Benedict XI, Philippe installed his puppet Bertrand de Got, Archbishop of Bordeaux, as Pope Clement V, in 1305.

Philippe drew up his list of accusations against the Templars. Heresy was easiest, as it was known that the Templars did not hold the doctrines of the Virgin Birth, and the Crucifixion. Also known was that their diplomatic and business affairs involved dealing with Jews, Gnostics, and Muslims.

Philippes plan was to strike on Friday 13th of October, 1307, and it would be an international (as far as it could be organised) strike, involving hundreds of armed men, but principally throughout France.

In 14th Century France it was the practice for aristocratic families to have sons within the Church, as Bishops, or Abbots of allied orders. The Chaplain of the Manor of La Buzadiere was such a nobleman, and shortly before the Papal edict against the Templars was enacted, he entertained seven Templar guests at his castle, and fully informed them of Philippes plans. The Knights Templars were Gaston de la Pierre Phoebus, Guidon de Montanor, Gentilis de Foligno, Henri de Montfort, Louis de Grimoard, Pierre Yorick de Rivault, and Cesare Minvielle.

The Knights immediately departed for Paris to inform their hierarchy of the plans. Runners were despatched to spread the word. The Grand Master of the Templars was Jacques de Molay. He arranged for the Templar treasure, stored in their Chapter House in Paris, to be transferred to La Rochelle on the Brittany coast, from where it was shipped, together with as many Templars who could get there, in eighteen galleys. Most of the ships sailed to Scotland, beyond the reach of Papal inquisitors, since Scotland under King Robert the Bruce, that is the King and the entire nation, had been excommunicated by the Pope for taking up arms against the Catholic King Edward II of England. The Templars were made welcome in Scotland, with many (around 50) settling in the Mull of Kintyre region. (Interestingly, several ships sailed to the Americas, where buildings and graves can be found identifying them as Knights Templars – they had access to copies of the same maps as Christopher Columbus used in his quest, years later)

The Papal edict of Scots excommunication was eventually lifted in 1323, when Pope John XXII recognised Robert the Bruce as the true King of Scots. As a reward for Templar loyalty at the battle of Bannockburn in 1314, and in order to further hide the Templars, in 1317 Robert the Bruce hid the Templars under a new organisation, - the Order of the Elder Brethren of the Rosy Cross. The King of Scots was installed as the hereditary Sovereign Grand Master, and from that time whoever held the office of chancellery was known as the Prince, (or Count) St Germain. Gaston de la Pierre Phoebus, (one of the seven knights) had escaped to Scotland, and since the Pope held the international reins of Chivalric Orders, Gaston, as senior Knight of the Rosy Cross, arranged for a meeting with Pope John XXII at Avignon. Pope John agreed to issue a Charter, providing his nephew, Jacques de Via, became the operative Grand Master. De Via died on 6th May, 1317, and Guidon de Montanor (another of the seven Knights) was elected Grand Master. The Charter of Incorporation, signed by the Pope was duly presented to King Robert the Bruce.

The lifting of the Papal Edict in 1323 caused many historian to assume that the Knights Templar must have been disbanded in Scotland. Nothing could be further from the truth. Robert the Bruce had successfully hidden them behind the cloak of a new Chivalric order, duly Chartered by the Pope.

It was during these Templar influenced times that the Scottish Banking System evolved from the Orders financial experience in Europe and the Middle East. Scottish lands held significant Gold deposits, and the Templars were quick to commence their extraction. This wealth was one of the reasons that Plantagenet England so desired dominion over Scotland.

Today there are several active Gold Mines in Scotland.


With a Mystery Girl, a refreshment break.

Part 2 of this series can be read here.


It says 'written by James Higham below. Actually, it was written by Sonus but I can't reformat the author in my template.