Wednesday, October 08, 2008

You Are Not Supposed To Know How The System Functions

All the money in circulation is debt...51 Trillion globally...51,000 Billion dollars globally. It's the money supply and it's all debt.

People centuries ago chose to take more than they gave...they eventually sucked all the wealth from the hands of the many into their hands...

And now rent it to all of you...

The top lives off the yield from the bottom.

The FEDERAL RESERVE monetizes assets...The US Congress authorizes the US Treasury to issue Treasury bonds.

The 700 Billion in Treasury bonds will be sold into the 51 Trillion dollar credit market for 700 Billion dollars.

The 51 Trillion dollars is what US consumers have requested the commercial banks to manufacture the past 64 years.

Commercial banks issue credit...

In a credit is used as money and it's debt.

The 51 Trillion dollar credit market is the money supply of the USA and the total debt.

The FEDERAL RESERVE monetizes assets...or converts a mortgage into cash when cash is needed...Federal Reserve Notes or their electronic equivalent...

For a short period of time..It's a loan that has to be paid back.

Ultimately a loan from the USA to the USA...

The population just has to work to service the continued existence of work...If they stop...then there will be no work...No income and most of you would starve and die of thirst...

The employers of course live off the yield from the employees.

Congress did not grant any right to regulate the value of the Dollar to the FEDERAL RESERVE.

The Congress shall have power...

...To "coin" money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures

Nothing in there about Dollars...

And the current Dollar "coin" is defined by Congress to be.

Mass: 8.100 g (0.26 troy oz)

Diameter: 26.5 mm (1.04 in)

Thickness: 2.00 mm (0.079 in)

Composition: 88.5% Cu
6% Zn
3.5% Mn
2% Ni

The value of the above is 1 Dollar.


And basically all the US government did was give the FEDERAL RESERVE the monopoly on banknotes in the USA.

And the Bureau of Engraving of the US Treasury is where they are printed.

"A business that can be traced back to August 29, 1862, to a single room in the basement of the main Treasury building where two men and four women separated and sealed by hand $1 and $2 United States Notes which had been printed by private banknote companies."

prior to that...In the so called free banking days...

"1836 State Bank Notes

With minimum regulation, a proliferation of 1,600 local state-chartered, private banks now issued paper money. State bank notes, with over 30,000 varieties of color and design, were easily counterfeited. That, along with bank failures, caused confusion and circulation problems."

Commercial banking is 600 years old and every commercial bank that has existed over the past 600 years is basically a smaller version of a central bank.

The banks have been creating money out of thin air for 6 centuries now...

Get rid of that and kiss the last 600 years goodbye.

You all have zero idea how long this has been going on or a real ability to comprehend...

The first Central bank of the USA was authorized by George Washington.

The second was authorized by James Madison.

The third called the FEDERAL RESERVE by Woodrow Wilson.

The first central bank appeared in Venice 1172...until that system inflated to maximum potential and imploded in 1345.

The current oldest central bank is the Bank of England and the FEDERAL RESERVE is just one of the branches in the 314 year old Global branch network.

Again...How treasuries...really work.

Congress authorizes the US Treasury to issue...150 Billion dollars worth of Treasuries...that are then sold into the market for 150 Billion dollars.

US consumers request commercial banks to manufacture money...In 1945 the money supply or total debt was 355 Billion dollars.

The amount of public debt or the amount of bonds the US Government issued and sold for money from the money supply was 259 billion dollars...

Back in 1945 the money supply was 355 billion dollars and the US Government had borrowed 73% of the money supply or total debt of the USA to run WW2

From 1945 to currently...US consumers have requested commercial banks to manufacture another 50,645 Billion dollars or 50.6 Trillion dollars of new money or debt...since debt is money and money is debt in a debt backed by debt system...and the money supply or total debt of the USA is currently 51 Trillion dollars.

In the same period of time...1945 to now the US Government has issued another 9.8 Trillion dollars of Treasuries and BORROWED 9.8 Trillion more of the money supply or total debt of the USA...

Or 10.1 Trillion of the 51 Trillion dollar money supply of total debt...or 19.8%

No new money was created by the US Government or the FED.

All the new money creation the past 63 years in the above example was by US consumers requesting commercial banks to advance them their future income to spend in the present.

Because the banks own what they the future income of a person in the system is credit...

The compound interest equation is demanding more and getting less...and all the yucky stuff you are seeing is the visible effects.

The collapse of the US consumer in 2006 finished the Global system.

Treasuries don't back FRN's

US consumers do...US consumers request commercial banks to manufacture new money...US treasuries don't request commercial banks to manufacture new money.

Japan's rates are like any others...they need volume...The key lending rate rose in 2006 to now from 0.1% to 0.5% due to the US consumer maxing out after 64 years.

The largest source of inflation on Earth is the US real estate market...

When banks advance future income to consumers to spend in the asset and a liability is created...lets say for 200,000 at x% interest

As consumers pay the loan of their future income back...the asset and liability shrink by the principle amount...the bank keeps the interest...that's the profit.

The consumer basically extracts the money used from the economy in which they spent the future income.

Mortgage money spends a very long time in the economy...decades...

But in 2006 when the 15 year old house sales boom in the USA caved in when US consumers hit maximum potential...that supply of massive volume...dried up.

Japanese rates were forced up due to lack of volume...


In 1944 Bretton Woods made the US dollar the global trade medium of exchange.

By default that made the US consumer/USA..the demand of the world.

and the supply of inflation.

Everyone else became the supply of US consumer demand and the demand for US Dollars and inflation.

And since then the Global system has become more and more dependant upon the US consumer...

Not less...

But there is a credit cycle that formed...where US consumers become exhausted and request commercial banks to manufacture less new money causing the flow of money into the bond markets to slow...which causes yields to rise...

Until the economy begins to slow and the US consumers become desperate and request commercial banks to manufacture more new money causing the flow of money into the bond markets to increase...which causes yields to drop.

And the FED follows along...saying they are raising or lowering...Which fools the masses into believing the FED is actually in control.

Does the FED have the power to engineer rates...Yes but far less than you all know...

Anyways after the exhaustion desperation cycle...where rates rise and then drop...consumers come out in more debt than they went in with.

The debt to income ratio kept 1960 the Household debt to income was 1978 it was the 1990's 2000 it was 2006 it was 124%

Past 100% and consumers are basically forced to request commercial banks to manufacture less and less new money.

Consumer money production topped into early 2007 then began to rapidly collapse by late 2007 and so far all of 2008.

The daily growth rate of the money supply/total debt or the amount of money/debt per day on average US consumers were requesting commercial banks to manufacture dropped from 12 Billion a day average to 6.99 Billion dollars a day average year to date 2008...or a 42% drop...the largest in 62 years.

So far year to date the US and global economy is short 1.4 Trillion dollars...

The year over year growth rates are on track to collapse by the most ever.

It's not sub prime or Wall Street corruption...the maxout of the US consumer after 64 years is the cause of the drop of the required inflation to sustain the sub primes, Wall Street, Main Street, the rest of the world.

The real estate bubble in the USA is 37 years old...the portion that is collapsing now is just a Bubble within the 37 Year old bubble...If the 37 year old bubble pops due to maxout...all the mortgages in the USA will basically implode to oblivion...about 14 Trillion dollars worth...after all is said and done it could easily cause a rapid 15% contraction in the money supply of the USA...

Perspective...the current global yucky stuff is being caused by a 42% slowing of the rate of growth of the US money supply/total debt...the 37 year old real estate bubble pops and we are talking about a contraction of the money supply from 51 Trillion to 44 Trillion or less and actual negative monetary growth rates.

China (Wait until there is not enough inflation to hide all their crap loans and corruption) India (same), Europe...the rest of the world, bye bye Dubai, will sympathetically implode along with the USA.

Up to this point...It's been Mickey Mouse...

Nothing significant has taken place...

The US consumer is toast.

period end of story...

US Consumers request commercial banks to manufacture money...PERIOD END OF STORY

They need to be willing or able...currently they are not willing or able to request the commercial banks to manufacture the "required" amount of new money to service the continued existence of the previously requested money...

Sub primes were previously requested indexes were pumped up with previously requested money...

Real estate in the USA in general and wholesale commodity prices...are all pumped up with previously requested money.

And their price is maintained with newly created money.

So far it's not too bad...the effect is only showing up as slowing of the growth rate of the money supply.

There is nothing the FED can do or the US Government etc...Ok they can somewhat slow the implosion for awhile.

The bottom supports the top...the top does not support the bottom.

The bottom powers the banks and the FED and the Government...not the other way around.


Anonymous said...

lets get to reality. Here is who is toast....

No credit history, bad credit... yes your toast. No loans to you.

Wanna sell your house, better price it cheap. Yes your toast.

This cycle will start up again after they purge the bad loans. Again its the credit default swaps that took out the big central banks and led to the credit crunch. The housing crisis was the trigger but the credit default swaps shot banking in the head.... However banking will recover just will be retarded for a while...

Anonymous said...

im confused. if 700 billion of T-bills are sold to the US government, and if those T-bills are kept at a bank, then doesn't the 10% reserve ratio rule mean this becomes 7 trillion dollars????