Thursday, April 21, 2011

Global Research: The end of The American Empire!


They nailed this years ago and it is just a small part of the lie we are living today! I believe that banking institutions are more dangerous to our liberties than standing armies. (Thomas Jefferson, US President; 1743 - 1826) We already said this many times! America is dying. It is self-destructing and bringing the rest of the world down with it. Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something 'real' can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air. The banking industry renamed insurance betting guarantees as 'credit default swaps' and risky gambling wagers were called 'derivatives'. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2009 it was a quadrillion-dollar (that's $1,000 trillion) industry that few could understand.

Propped up by false hope, America is now falling like a house of cards. It all began in the early part of the 20th century. In 1907 J.P. Morgan, a private New York banker, published a rumour that a competing unnamed large bank was about to fail. It was a false charge but customers nonetheless raced to their banks to withdraw their money, in case it was their bank. As they pulled out their funds the banks lost their cash deposits and were forced to call in their loans. People now therefore had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organization. Effectively, it was a coup by elite bankers in order to control the industry.

When signed into law in 1913, the Federal Reserve would loan and supply the nation's money, but with interest. The more money it was able to print, the more 'income' for itself it generated. By its very nature the Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation however, inflation had to be kept in check. The Federal Reserve then doubled America's money supply within five years, and in 1920 it called in a mass percentage of loans. Over five thousand banks collapsed overnight. One year later the Federal Reserve again increased the money supply by 62%, but in 1929 it again called the loans back in, en masse. This time, the crash of 1929 caused over sixteen thousand banks to fail and an 89% plunge on the stock market. The private and well-protected banks within the Federal Reserve system were able to snap up the failed banks at pennies on the dollar.

The nation fell into the Great Depression and in April 1933 President Roosevelt issued an executive order that confiscated all gold bullion from the public. Those who refused to turn in their gold would be imprisoned for ten years, and by the end of the year the gold standard was abolished. What had been redeemable for gold became paper 'legal tender', and gold could no longer be exchanged for cash as it had once been. Later, in 1971, President Nixon removed the dollar from the gold standard altogether, therefore no longer trading at the internationally fixed price of $35. The US dollar was now worth whatever the US decided it was worth because it was 'as good as gold'. It had no standard of measure, and became the universal currency. Treasury bills (short-term notes) and bonds (long-term notes) replaced gold as value, promissory notes of the US government and paid for by the taxpayer. Additionally, because gold was exempt from currency reporting requirements it could not be traced, unlike the fiduciary (i.e. that based upon trust) monetary systems of the West. That was not in America's best interest.

After the Great Depression private banks remained afraid to make home loans, so Roosevelt created Fannie Mae. A state supported mortgage bank, it provided federal funding to finance home mortgages for affordable housing. In 1968 President Johnson privatised Fannie Mae, and in 1970, Freddie Mac was created to compete with Fannie Mae. Both of them bought mortgages from banks and other lenders, and sold them onto new investors.

During the 1990s, advertisers went into overdrive, marketing an ever more luxurious lifestyle, all made available with cheap easy credit. Second mortgages became commonplace, and home equity loans were used to pay credit card bills. The more Americans bought, the more they fell into debt. But as long as they had a house their false sense of security remained: their home was their equity, it would always go up in value, and they could always remortgage at lower rates if needed. The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up. It was, everyone believed, a win-win situation. Greenspan's rock-bottom interest rates let anyone afford a home. Minimum wage service workers with aspirations to buy a half million-dollar house were able to secure 100% loans, the mortgage lenders fully aware that they would not be able to keep up the payments. After 9/11, George Bush told the nation to spend, and during a time of war, that's what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an 'orgy of excess'.

After 9/11, George Bush told the nation to spend, and during a time of war, that's what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an 'orgy of excess'. It was flagrant overspending during a time of war. At no time in history has a nation gone into conflict without sacrifice, cutbacks, tax increases, and economic conservation.

Tanya Cariina Hsu is a political researcher and analyst focusing on Saudi Arabian and US relations. One of the contributors to recent written testimony on the Kingdom of Saudi Arabia for the US Congressional Senate Judiciary Committee on behalf of FOCA (Friends of Charities Association) in its Hearing on Capitol Hill in Washington D.C., her analysis has been published and critically acclaimed throughout the US, Europe and the Middle East. The first to break the barrier against public discussion of the Israeli influence upon US foreign policy decision making, in Capitol Hill's "A Clean Break" Symposium in Washington D.C. in 2004, as the Institute for Research: Middle East Policy (IRmep) Director of Development and Senior Research Analyst, Ms. Hsu remains an International Fellow with the Institute. This is Right on please read in its entirety

James Joiner
Gardner, Ma
http://anaverageamericanpatriot.blogspot.com

6 comments:

S.W. Anderson said...

"Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation however, inflation had to be kept in check."

This is an interesting analysis, but suffers from some internal inconsistencies, the above being a big one. To double the money supply in a few short years and out of all proportion to productivity increases is by definition to create extreme inflation. Furthermore, it seems to ignore the fact that in those days the dollar's value was anchored to the price of gold, which was a function of world supply and demand.

I think what you're getting at is the ability of banks generally to leverage money by lending against only a percentage of their asset holdings. There's no question that in the late 1920s, the U.S. economy was over leveraged and there was too much private debt and speculative investment, much as was true in the leadup to the housing bubble bursting in 2007.

Have you read Kevin Phillips' excellent book, Bad Money? It covers this in great breadth and depth.

S.W. Anderson said...

"The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up."

Some might have believed that, but I'm convinced a bunch of those well-dressed crooks knew better and didn't care. They realized they were too big to fail and that government/taxpayers would have to bail them out, just as happened in the wake of the savings and loan debacle. The financial industry crooks were right.

As for infinitely cutting interest rates, if you look back at where things were in 2007 and 2008, there wasn't anywhere near enough cutting that could be done. Interest rates were already near or at historic lows. The financial industry crooks had to know that, too.

Ranch Chimp said...

This is an excellent in depth read here AP, and I ceratinly appreciate it too! Really enjoyed this piece in particular and the detail's of it, and hope to showcase it in a posting as well soon!

an average patriot said...

S W this is exactly what China accuses us of doing: This is an interesting analysis, but suffers from some internal inconsistencies, the above being a big one.

To double the money supply in a few short years and out of all proportion to productivity increases is by definition to create extreme inflation. We know they keep printing money. I have been very curious as to how until know they were able to control inflation.

We are in for some serious shit here! I believe the Billionaire Koch brothers who are the $millions behind breaking the unions and Obama's health care to be behind raising the price of gas.

Guarantee gas will be $7 then $10. Anyway they know that and the economy will make Obama a one termer and that is all they care about not us and the country.

an average patriot said...

S W they have been lying and controlling things for years it only got much worse under Bush.

That is why we were going crazy and it is only getting worse under Obama as R's try to make him thus us and "our" America fail.

Of course everyone is lying now only we are totally out of control and failing rapidly.

an average patriot said...

Have fun RC, the more the merrier. I have found that Global Research does some controversial but good work.