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Author Topic: The Biggest Pyramid Scheme Ever Devised!  (Read 11461 times)
bitrebel
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July 07, 2011, 06:29:16 AM
 #101

http://www.businessweek.com/investing/insights/blog/archives/2008/12/ponzi_nation.html

Ponzi Nation
Posted by: Matthew Goldstein on December 14, 2008

Wall Street trader Bernard Madoff allegedly defrauds the rich and famous out of tens of billions of dollars. Minnesota businessman Tom Petters allegedly fleeces hedge funds out of $3.5 billion. And socialite New York lawyer Marc Dreier may have duped some hedge funds into giving him hundreds of millions of dollars for an apparently bogus real estate scheme.

All of these scams are big and all appear to be some kind of Ponzi scheme, designed to take in money from new investors to pay-off earlier investors. A Ponzi scheme is one of the oldest financial frauds around. And many are referring to the Madoff caper as the biggest Wall Street fraud ever.

But derivatives consultant Janet Tavakoli may be onto something. In a note to her clients, she says the biggest Ponzi scheme of all may be the one that brought the world financial markets to its knees. And that’s the scheme that united Wall Street bankers with mortgage lenders in a bid to funnel more and more money into the market for supbrime homes loans. She says the packaging of iffy home loans into securitized bonds that could be sold to insitutional investors—many of them relying on borrowed money—was a system born to fail.

“The largest Ponzi scheme in the history of the capital markets is the relationship between failed mortgage lenders and investment banks that securitized the risky overpriced loans and sold these packages to other investors—a Ponzi scheme by every definition applied to Madoff,” says Tavakoli. “These and other related deeds led to the largest global credit meltdown in the history of the world.”

About a year ago, BusinessWeek made a similar point in an article about the two Bear Stearns hedge funds that collapsed in June 2007 and helped spark the credit crisis. The story focused on a novel type of collateralized debt obligation that the managers of the Bear funds used to tap funding from money-market funds. The CDOs which were widely copied on Wall Street helped fuel the market for these esoteric securities, along with the underlying housing boom.

In that article, BusinessWeek likened the new market that the Bear funds helped inspire a pyramid scheme. Or, as Tavakoli says, a Ponzi scheme.

One of the hallmarks of a Ponzi scheme is an investment vehicle that generates consistent, steady returns. That’s what discourages investors from pulling too much money out of the fund—the event that ulimately causes a Ponzi scheme to collapse. One reason so many wealthy people showered money on Madoff is that his fund generated predictable returns—rain or shine.

The Bear funds similiarly generated steady and stable returns before the bottom fell out of the subprime mortgage market. In the final months before the Bear funds collapses, Ralph Cioffi and Matthew Tannin scrambled to find new investor money and other sources of funding. This past summer, federal prosecutors charged Cioffi and Tannin with deceiving investors about the health of the funds and actively discouraging investors from pulling their money out.

Cioffi and Tannin were the first Wall Street executives charged in the financial meltdown. Now you can add Madoff’s name to that list and more are sure to follow. One thing the credit crunch is unearthing are lots of long running scams. Just as money has dried up for legitimate businesses, there’s no money to keep the Ponzi machine going.

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Karl
December 14, 2008 2:06 PM

Maybe the biggest Ponzi Scheme in the world is simply the United States of America!!!! Look at our stock market, as an example! One year ago today the Dow closed at 13,340. It's now at about 8,650, but that's with OVER $200 BILLION that the FED injected into the Banking System earlier this year BEFORE the $700 BILLION was even a reality!!!! Now, the $700 BILLION grows another $100 BILLION to equal $800 BILLION! And don't forget about China's $500 BILLION that they have/HAD in Treasury bonds! Is it still there? Did they take it out? What about China's other $1 TRILLION that they had invested in the USA, besides the $500 BILLION in Treasury bonds? Did they take it out of the USA? Perhaps the entire U.S. economy is, and HAS BEEN, the biggest PONZI SCHEME in the WORLD? We'll soon find out when '4th QUARTER RESULTS' are posted in January! That's when the TRUTH should all come out!!! Go Harvard!!!!! Go BusinessWeek!!!!! P.S. If investors go to "cash-in" their stocks, 401K's, IRA's......in January & it's NOT there, then the U.S. economy WAS nothing but a PONZI SCHEME, correct? I hope I'm wrong & all is well in the USA, but I'd hate to have money invested in the stock market right now. 90% of all those 401k's & IRA's are invested in the stock market!!!! Say a PRAYER that all is well. Happy Holidays!
Vince
December 14, 2008 2:30 PM

Yes Karl, the us economy is a ponzi scheme. It's also refered to as the Capatlist, boom and bust theory. Some people get rich, most are left eventualy to defend for themselves. Then the process starts all over again, after you have a recession or depression like we are now entering.
Chuck Gaffney
December 14, 2008 2:40 PM

Let's not forget to add Social Security and College Tuition to the list of Ponzi schemes
Carl P
December 14, 2008 2:45 PM

....And many are referring to the Madoff caper as the biggest Wall Street fraud ever.

Are you sure?

One could argue the CDS driven financial crisis resulting in the $1 trillion government bailout, is a bigger Ponzi scheme. Taxpayers (new investors) are funding the exit of old investors - except Goldman Sachs - they are doing just fine.

Anybody out there still want to privatize Social Security?

Its not a Masonic, Illuminati or Skull and Bones conspiracy, lets not be silly. As my father's Godfather would say; Its just business.
Michael
December 14, 2008 2:51 PM

One thing that should be done to prevent these ponzi schemes is to enable individual investors to buy and sell stocks directly; and to declare most of these "investment funds" illegal.
c
December 14, 2008 2:57 PM

us dollar = ponzi scheme no doubt about it.

dollar bills = just worth their recyclable value in my opinion. poj
Ace
December 14, 2008 3:45 PM

The Mark Mitchell article posted here is a hack conspiracy drivel SPAM shtick ran by a group in Utah funded by a rich loon.

Mark is a paid "reporter" lapdog for the wild eyed "Worst CEO Ever" nominee Patrick Byrne of Overstock.com

Tread lightly at that link, they have a bad habit of cyberstalkng folks.
Ching Fu
December 14, 2008 3:58 PM

I agree with Kari that the whole USA is a ponzi scheme. It's surprising that the US institutions and government has managed to 'censor' these info away from the public. Since 1970s when USA stopped backing the US Dollar with gold, they started the biggest ponzi scheme ever - printing money without limit by forcing oil to be traded in US dollar. Getting countries of the world to invest in the US by both carrots and sticks. Who are the investors? Countries like Japan, China, Singapore, etc who invest in US Treasury bills who will one day find them to be worthless. In 2006 the Fed decided to stop revealing M3 data abt the economy - I assume they are printing even more dollars now! The US dollar is not backed by gold. It is backed by the US military hence you have Iraq and possibly Iran as they have all threatened to trade oil in other currencies. But how long can you go on defending the dollar this way? It is a matter of time. Right now the United States is already bankrupt. Its investors (Japan, China, etc) are in a catch 22 situation cos if they decide to pull out their Treasure bills, the value will plummet like no tomorrow and the whole world, including their own economies, will be in a mess. NO ONE HAS A CLUE WHAT TO DO.

Now do you agree that that is the biggest ponzi scheme ever?

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July 07, 2011, 06:34:42 AM
 #102

http://www.onlinemoneytip.com/make-money-news/11-trillion-dollar-ponzi-scheme/

The $ 11 Trillion Ponzi Scheme
January 10th, 2009

Recently the world was hit by another major financial bubble, the $50 billion loss of investors money by Madoff’s Ponzi scheme. And everybody was amazed by the enormous amount of money that was inolved, and lost. Now I’d like to tell you about a $11 Trillion Ponzi Scheme.

By the way, a Ponzi scheme, being a socalled pyramid scheme, is defined by the wiki as:

    A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. The term, “Ponzi scheme,” is used primarily in the United States, while other English-speaking countries do not distinguish colloquially between this scheme and other pyramid schemes.

Now usually those investors are attracted by a high percentage of return. But here I’d like to focus on the main part of the definition: ‘returns … paid by subsequent investors rather than from profit’. With Madoff’s fraud an amazing 50 billion dollars puffed away in thin air.

Well, I’d like to tell you about a Ponzi scheme where almost 11 Trillion dollars will evaporate very, very soon. And the ultimate crook that is capable of such an outrageous, mindblowing, world destroying amount of throwaway money is called … (drumroll) … the United States of America!

Believe me, this isn’t a linkbait article, this is about information that you usually do not read about in regular media. Firstly let me point out that the debt of the USA is rising at an enormous ratio, especially the last few (do I hear Bush?) years. Although that may still sound familiar.

Here is a link to the Wiki article about the US national debt. But you’d better look at the graphs on this page, where you can see what happened since 2002: the debt has risen from 6 trillion to almost 11 trillion dollars (01082009). The actual, current amount can be seen at the national debt clock site.

Owners of the US National Debt

In the graph above you can see who owns which portion of the US national debt. There are a lot of small owners, 22.7% are foreign (international) owners and over 40% is owned by the Federal Reserve. Of course a debt should be backed up by reserves and or by profits. But the US have no ‘profits’. Almost every year there is a deficit, which means spending exceeds revenue. And so the US debt grows.

But hey, what about the Federal Reserve, I hear you say? The Federal Reserve is a banking system, with twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the US Treasury. Now the US Treasury has assets (securities) in worth of 835 billion dollars. But. Over 80% of those securities are owned by foreign investors, i.e. that’s loaned money (bonds etc.). Those investors get a yearly return paid by the interest.

You see how my analogy of the 11 Trillion Ponzi Scheme fits into all of this? Eleven trillion dollars of US national debt are backed by 167 billion (835 – 80%) of direct securities. And no profits. And an ever growing ‘army’ of investors. The US needs to lend (print?) more and more money to pay those foreign investors their interest. And to pay the 60% of investors that own the US national debt their interest. And what would happen when those (foreign) investors want their full investment back? The total collapse of the US and the US dollar!

So why is the dollar still such a relatively strong currency? Well, the main reason is because crude oil is paid in US dollars. The whole world is backing up the dollar, because the whole world lives on crude oil. For their cars, for plastics, for paint and for a whole range of products made out of crude oil. And this is part of the technical details of the US Ponzi Scheme, which you can read about in this interesting article and this very interesting video about how this came to be.

Be amazed!

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July 07, 2011, 06:36:42 AM
 #103

http://presscore.ca/nbg/index.php?entry=entry100925-174453

The United States was destined to fail under the Federal Reserve’s pyramid scheme.

Sep 25, 2010

The $1 forgery called the Federal Reserve Note - Above the pyramid ANNUIT COEPTIS: the latin phrase means “our enterprise”, our “conspiracy” or “our pact”. The bottom of the pyramid MDCCLXXVI. This is Roman numerals for the date 1776. It allegedly commemorates the founding of the Illuminati (plural of Latin illuminatus, “enlightened”) by Adam Weishaupt on May 1st, 1776. Below this is the phrase NOVUS ORDUS SECLORUM - means “New Order of the Ages”. The official interpretation is that the imprint of a pyramid represents strength and durability. It’s incomplete because so is the work of building the nation. The eye in the triangle is the all-seeing eye of providence.

A pyramid scheme is a non-sustainable business model that involves promising participants payment primarily for enrolling other people into the scheme, rather than from any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.

Look at the back of any US Federal Note. Yes I didn’t say US Dollar because the US Dollar doesn’t exist. On the back, in clear view of everyone is a pyramid. The US currency was set up to fail by the bankers of the Federal Reserve Banks. They clearly and arrogantly state their true intent for the United States. They have modeled the US government finances after a pyramid scheme.

A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula which is used for profit. The Federal Reserve prints worthless Federal Reserve Notes and sells them to the US government, with interest. The Federal Reserve prints fake US dollars. That is to say that they print fake copies of a non existent US dollar and they swamp the word US dollar with Federal Reserve Note in order to assume credibility. Interest on a $0.00 value is always $0.00 yet through their elaborate and very illegal pyramid scheme they always make money on interest charges on a service and product that has absolutely no value.

The essential idea is that a “con artist” the Federal Reserve makes only one payment. To start earning, the Federal Reserve has to recruit others like him who will also make one payment each. The Federal Reserve gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, the Federal Reserve gets a cut. They are thus promised exponential benefits as the “business” expands.

Such “businesses” seldom involve sales of real products or services to which a monetary value might be easily attached. In a pyramid scheme the “payment” itself may be a non-cash valuable. The Federal Reserve Note has $0.00 value and the service provided by the Federal Reserve Banks are illegal which makes their printing service a $0.00 value. In return for the fake and worthless illegal forgery the United States government gives the Federal Reserve Banks the peoples’ real value assets like property and precious metals like gold and silver. To enhance credibility, most such scams are well equipped with fake referrals, testimonials, and information. The United States Federal Reserve Act is such a credibility. The Act illegally gives credibility to the worthless Federal Reserve Note by declaring it legal tender for “all” trade. The Act made the United States government willing accomplices in this pyramid scheme.

The flaw is that there is no end benefit. The money simply travels up the chain. Only the originator (sometimes called the “pharaoh”) and a very few at the top levels of the pyramid make significant amounts of money. The amounts dwindle steeply down the pyramid slopes. Individuals at the bottom of the pyramid (those who subscribed to the plan, but were not able to recruit any followers themselves) end up with a deficit. This is also clearly shown on the back of the worthless forgery called the Federal Reserve Note. In the worthless forgery of the US dollar the top of the pyramid is separated intentionally from the rest of the pyramid. Only the Federal Reserve Banks make any money and they are represented by the top of the pyramid - referred to as the capstone. The capstone is not joined with the Pyramid. This is suppose to mean that the plan is not complete. Some believe that only when a New World Order is established upon all nations and a world leader is enthroned will the plan be complete. George HW Bush specifically referred to the New World Order in a speech before a Joint Session of the Congress on the Persian Gulf Crisis and the Federal Budget Deficit on September 11, 1990. “A new partnership of nations has begun, and we stand today at a unique and extraordinary moment. The crisis in the Persian Gulf, as grave as it is, also offers a rare opportunity to move toward an historic period of cooperation. Out of these troubled times, our fifth objective—a new world order—can emerge;”

The Federal Reserve controlled banking system is the main pyramid scheme and the original pyramid scheme in the United States. Obama started a new pyramid scheme called the Heath Care Reform Bill. The con artist, Barack Hussein Obama, started the scheme by committing the US taxpayers to paying into the scheme with $940 billion over ten years. The $940 billion bill issued to the US taxpayers was suppose to reduce the deficit by $143 billion over the next decade ( a decade is ten years). Do you see the fraud here? Obama is saying to the American people that if they want $143 billion to pay off a debt they will pay 650% in interest or $940 billion. And you though your local bank or credit union charged too much interest on your mortgage and car loans. Which would you agree to; 7% interest on a mortgage for a house that you will eventually own or 650% interest for something that can never be paid out in full or owned. The deficit reduction is and will always be $0.00. The deficit was automatically added another $940 billion with the strokes of a pen by Barack Hussein Obama. Obama defrauded $940 billion from the US taxpayers.

To ensure the pyramid scheme succeeds Obama is forcing every single American to pay into his pyramid scheme. Under the health care pyramid scheme, by 2014 most Americans would be required to have health insurance or pay a fine. Employers are forced to provide coverage to their workers, or pay a fine of $2,000 per worker. Obama had no intention on fixing the health care problem - the out of control price gouging from the pharmaceutical industry and corporate controlled health care industry. Obama doesn’t care about the health of nation. Obama and his co-conspirators in Congress only care about the health of their secret off shore bank accounts.

Obama, Congress and the Federal Reserve bankers have robbed the people. The Federal Reserve Note pyramid scheme has now collapsed. The scheme’s debt got too big and the United States government cannot raise enough money from new taxpayers to pay the debt owed to earlier taxpayers, and as a result millions of Americans have lost their jobs, their homes and their hard earned money.

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July 07, 2011, 06:40:08 AM
 #104

http://one-simple-idea.com/M3MoneySupply.htm

M3 Money Supply: The Great PONZI Scheme (The Fiat-Funny-Money-System)

Have you ever played the game of Monopoly ?
Imagine that one player can print all the money they want.
Before long, that one player will own everything, and everyone else is broke or in debt.

The nation is swimming in debt:  about $57 Trillion nation-wide debt (as of the end of year 2007) has never been worse (ever), including as a percentage of the GDP ($13.86 Trillion in year 2007).
The government and Federal Reserve (a quasi-government controlled / privately owned bank system) are printing fiat-funny-money (7please watch the 47 minute video) out of thin air, and then try to lend it to everyone possible, flooding the mail with credit-card applications to everyone (and their pets and children too, literally).   Some people will fail to repay their loans and the banks then confiscate real assets, turning paper money printed out of thin air into real assets.  The value of the money erodes year after year.  A U.S. Dollar from year 1950 is now worth less than 11 cents.  Ever heard of compound interest?  It's the same for inflation.  At only 4.5% inflation, $100 becomes $81.75 in only 5 years.   Inflation is another contributing factor to falling median incomes and the shift of most wealth distribution to a mere 1% of the total U.S. population (with 40% of all wealth in the nation; up from 20% in 1976).
 

     
YEAR    MONTH    M3 MONEY     Per Year
           ($Billions)    
1950    12    $135.00    
1959    12    $299.70    $299.70
1960    12    $315.20    $15.50
1961    12    $340.80    $25.60
1962    12    $371.30    $30.50
1963    12    $405.90    $34.60
1964    12    $442.40    $36.50
1965    12    $482.10    $39.70
1966    12    $505.40    $23.30
1967    12    $557.90    $52.50
1968    12    $607.20    $49.30
1969    12    $615.90    $8.70
1970    12    $677.10    $61.20
1971    12    $776.00    $98.90
1972    12    $885.90    $109.90
1973    12    $985.00    $99.10
1974    12    $1,069.90    $84.90
1975    12    $1,170.20    $100.30
1976    12    $1,309.90    $139.70
1977    12    $1,470.40    $160.50
1978    12    $1,644.50    $174.10
1979    12    $1,808.70    $164.20
1980    12    $1,995.50    $186.80
1981    12    $2,254.50    $259.00
1982    12    $2,460.60    $206.10
1983    12    $2,697.40    $236.80
1984    12    $2,990.60    $293.20
1985    12    $3,208.10    $217.50
1986    12    $3,499.10    $291.00
1987    12    $3,686.50    $187.40
1988    12    $3,928.80    $242.30
1989    12    $4,077.10    $148.30
1990    12    $4,154.70    $77.60
1991    12    $4,210.30    $55.60
1992    12    $4,222.60    $12.30
1993    12    $4,285.60    $63.00
1994    12    $4,369.80    $84.20
1995    12    $4,636.30    $266.50
1996    12    $4,985.50    $349.20
1997    12    $5,460.90    $475.40
1998    12    $6,051.90    $591.00
1999    12    $6,551.50    $499.60
2000    12    $7,117.60    $566.10
2001    12    $8,035.40    $917.80
2002    12    $8,568.00    $532.60
2003    12    $8,872.30    $304.30
2004    12    $9,433.00    $560.70
2005    12    $10,154.00    $721.00
           
YEAR    MONTH    M3 MONEY     Per Month
               
2006    (JAN)  1    $10,242.80    $88.80
2006    (FEB)  2    $10,298.70    $55.90
Look at year 2001/2002 (above).   M3 Money supply increased by $917 billion in only 1 year !
Between year 1950 and 2005, M3 Money Supply increased from $135 billion to $10.15 trillion.

That's a factor of 75.2 ! 

But, the nation did not become 75.2 times wealthier in 55 years.
The population grew from 152 million in 1950 to 298 million in year 2005.
That still does not explain the increase of the M3 Money Supply by a factor of 75.2 .
What happened was a whole lot of new money was printed since 1950.

Our money system is a PYRAMID scheme, and all PYRAMID schemes collapse, eventually.

Here's how it works (they don't teach this in any public schools).
The Federal Reserve loans money (with interest) to member banks (which charge more interest).
Up to 90% of each new bank loan is money created out of thin air.
But it gets worse.
For each dollar re-deposited into the fractional (9:1 ratio) bank system (a closed loop monopoly bank system), 9 times more new money can be created out of thin air.
Depending on the size of each loan, that PYRAMID scheme can continue until 90 times more money has been created out of thin air.  However, the bank is required to have 10% of their loans in reserves.

For example, let's say the bank has $1111.11 in reserves.
That means the bank can make a loan of 9 times that initial $1111.11, which is $10,000.00 .
90% of each subsequent deposit can then be used for another loan of money created out of thin air . . .

    (001) 90% of that $10,000.00 can be loaned again, to create a new loan of $9,000.00
    (002) 90% of that $9,000.00 can be loaned again, to create a new loan of $8,100.00
    (003) 90% of that $8,100.00 can be loaned again, to create a new loan of $7,290.00
    :               :               :                :                  :                          :
    (088) 90% of that $1.16 can be loaned again, to create a new loan of $1.045
    (089) 90% of that $1.045 can be loaned again, to create a new loan of $0.94
    :               :               :                :                  :                          :
    (131) 90% of that $0.013 can be loaned again, to create a new loan of $0.011
    (132) 90% of that $0.011 can be loaned again, to create a new loan of $0.01
    _______________________
    TOTAL SUM = $99,888.89 (of money created out of thin air from initial $1111.11 in reserves).

Thus, from the initial $1111.11 in the bank reserve, $98,888.89 (98.89% of $100,000.00) of more new money could be created out of thin air.
 
But it still gets worse, because a LOAN = PRINCIPAL + INTEREST.
But the bank creates only the PRINCIPAL for each new loan.
So, where does the INTEREST come from?
One of several things must happen:

    create more new money to delay the collapse of the PYRAMID (such as the recent government $152 Billion economic stimulus package in FEB-2008). However, this creates more inflation.
    those with money must spend more money to allow more new money to be created out of thin air.
    increase productivity.
    increase products and/or natural resources (e.g. oil, steel, etc.) to sell to other nations to bring money back.
    the wealthy share their wealth (not likely to any significant extent).
    increase taxes on the wealthy (however, if the wealthy are taxed too much, they might up and move their wealth and businesses to another country).
    increase productivity via increased population.
    increase productivity via illegal immigration (cheap labor).
    reduce taxes to encourage more spending.
    reduce interest rates to encourage more spending (but this creates more debt).
    the government prints up more new money and gives it back to people to stimulate more spending (such as the $152 Billion proposed in FEB-2008).
    foreclosures.
    plunder pensions and other systems (e.g. Social Security surpluses).
    the PYRAMID finally collapses when there is finally too much debt and inflation to delay the inevitable collapse.

It is a PYRAMID scheme, and all pyramid schemes eventually collapse.
As time goes on, this problem can only get bigger and bigger.
The only thing stopping the collapse of this pyramid is a short time-lag by creating more debt and printing more money.
But that time-lag is shrinking every day, as the ability to repay debt becomes more difficult.
Debt will grow larger and larger.
The time it takes to finally collapse fools people.
Printing more money to delay the collapse will make inflation get worse and worse.
It could take decades or centuries, but the inevitable collapse is a mathematical certainty.
Eventually, the debt and inflation will become impossible to deal with.
We will not be able to create more debt to create more money.
We will not be able to spend our way out of the collapse.
We will not be able to print (money) our way out of the collapse (due to inflation).
We will not be able to immigrate our way out of the collapse.
We will not be able to procreate our way out of the collapse.
We will not be able to increase productivity enough to avoid the collapse.
We will not be able to tax (or un-tax) our way out of the collapse.
Look at our current situation and results of this PYRAMID scheme:

    $20 Trillion nation-wide personal debt,
    $10.7 Trillion National Debt (as of Dec-2008),
    plundered pensions (PBGC pensions are $450 Billion in the hole),
    rising foreclosures,
    rising bankruptcies,
    rising unemployment,
    pressure to raise taxes for those that have money (i.e. the wealthy),
    pressures to increase illegal immigration to increase productivity and growth (cheap labor),
    stock market and real-estate bubbles and volatility,
    the M3 Money Supply $135 Billion in year 1950 to $10.15 Trillion by year 2005.
    inflation; a 1950 U.S. Dollar is now worth less than 11 cents,
    the pressure to spend and borrow (i.e. numerous credit card applications in the daily mail),
    bank fees (i.e. to increase reserves for more loans; the banks receive the interest),
    the U.S. Dollar falling against all major international currencies,
    and now, the recently proposed $152 Billion economic stimulus package (proposed FEB-2008) with more created out of thin air, will increase the time-lag to prevent the collapse of the PYRAMID scheme, but it is only a short-term solution and will make things worse, long-term.

For anyone who thinks it is bad now, they haven't seen anything yet.
But this is not taught in public schools (see 47 minute video), and probably not in any universities either.
All of the above are the many manifestations of unchecked greed, and there will eventually be painful consequences for most people when the PYRAMID scheme finally collapses, as all PYRAMID schemes always do.
 
The SOLUTION - Reform the Monetary System:

    The federal government controls the monetary system.  It shall create the money it needs, interest free.  It shall control the money-supply.
     
    The federal government shall prohibit usury (interest) by government and member banks (under-cutting anyone else who lends money with interest).  If a lot of interest is bad (i.e. usury is immoral), how can a little interest be good? If inflation is bad, how is a little inflation good?
     
    This creates a stable money supply with the flexibility for small fluctuations.  If inflation is too high, some money in circulation can be removed. If there is deflation, or the population increases, the government can create and spend some money.  If they do a bad job of it, the voters know exactly who to hold accountable. Currently, the Federal Reserve is a quasi-government controlled / privately owned bank, and the voters have little (if any) control over it.  Why would people borrow from a bank (with interest) when they can borrow from the government, interest free?  Thus, there would be little (if any) usury.  Usury, predatory lending, and other manifestations of unchecked greed and the other numerous negative side effects would be greatly reduced.  If properly managed, without profit and usury as a motive, the U.S. currency would become superior to any other world currency.
     
    Theoretically, if managed responsibly, with the central bank in control of the monetary policy (instead of a quasi-government controlled/privately owned bank system), there may be no need for any tax system.  That is, inflation and deflation would affect everyone's money an equal percentage.  Of course, such a vast change in the monetary and tax systems would require new ways of thinking about money, interest, borrowing, taxation, and monetary policy, and there are many (e.g. politicians and bankers; a.k.a. puppets and puppeteers) that will resist such changes.  Since this way of funding the federal government is unlikely any time soon, the least we can do now is to greatly simplify the current, ridiculously complex and regressive tax system (e.g. make it fairer flat 17% income tax on all types of income above the poverty level).
       

The nation is facing many pressing problems, now culminating simultaneously. 
But irresponsible incumbent politicians within government are ignoring the voters and our many pressing problems as they grow in number and severity. 
One major problem is a dishonest fiat-funny-money-system (please watch the 47 minute video).
Education is required.
No  reforms are  possible  until  there  is,  first,  a  fundamental  change  in  government:

RECOMMENDATION:

    Stop  Repeat  Offenders.

    Stop  Re-electing  Irresponsible  Incumbent  Politicians.

    If in doubt, Vote 'em Out !

Notable Notes and Quotes:

    "U.S.A.'s balance of payments deficits is so strong and irreversible, that we must accept that at some future date there will be a run against the U.S. Dollar. Probably the kind of disorderly run that precipitates a global financial crisis." - Dr. Paul A. Samuelson, Nobel Prize Winner in Economics, year 2005.

    "The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the tax payers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government's greatest creative opportunity. - Abraham Lincoln, assassinated President of the U.S.

    "Whoever controls the volume of money in our country is absolute master of all industry and commerce . . . and when you realize that the entire system is very easily controlled one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." - James A. Garfield, assassinated President of the U.S.

    "The process by which banks create money is so simple that the mind is repelled." - John Kenneth Galbraith, Economist

    "Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile . . . Once a nation parts with control of its credit, it matters not who makes the nation's laws . . . Usury once in control will wreck any nation." - William Lyon MacKenzie King, former Prime Minister of Canada (who also succeeded in nationalizing the Bank of Canada).

    "We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries." - David Rockefeller, in an address to the Trilateral Commission meeting, 1991.

    "Only small secrets need to be protected. The big ones are kept secret by public incredulity." - Marshall McLuhan, media "guru"

    In 1913, the struggle for a better monetary system was lost when President Woodrow Wilson signed the Federal Reserve Act, giving the privately owned international banking cartel the power to create the United States money. Later, Woodrow Wilson stated: "I am a most unhappy man. I have unwittingly ruined my country. 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. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. - Woodrow Wilson, President of the U.S. 1913-1921.

    "Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when the speak in condemnation of it." - Woodrow Wilson, President of the U.S. 1913-1921.

    "Fiat money is the cause of inflation, and the amount which people lose in purchasing power is exactly the amount which was taken from them and transferred to their governments by this process." (G. Edward Griffin, "The Creature from Jekyll Island")

    "A fiat monetary system allows power and influence to fall into the hands of those who control the creation of new money, and to those who get to use the money or credit early in its circulation. The insidious and eventual cost falls on unidentified victims who are usually oblivious to the cause of their plight. This system of legalized plunder (though not constitutional) allows one group to benefit at the expense of another. An actual transfer of wealth goes from the poor and the middle class to those in privileged financial positions." (Congressman Ron Paul (R-TX), "Paper Money and Tyranny")

    "When the President signs this bill [converting to a fiat-money system], the invisible government of the monetary power will be legalized . . . the worst legislative crime of the ages is perpetrated by this banking and currency bill." (Charles A. Lindbergh, Sr. 1913)

    "Whoever controls the volume of money in any country is absolute master of all industry and commerce." (Paul Warburg, drafter of the Federal Reserve Act)

    "Permit me to issue and control the money of a nation and I care not who makes its laws."  (Mayer Amschel Rothschild)

    "Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly." (Fifth plank of the Communist Manifesto, 1848)

    "Ideologically, [sound money] belongs in same class with political constitutions and bills of rights." In the name of civil liberty and civilization itself, the Fed should be abolished. (Ludwig von Mises).

    Senator, Warren G. Harding, who was elected to the Presidency in 1920, said in a 1921 Congressional inquiry that the Reserve was a private banking monopoly. He said: "The Federal Reserve Bank is an institution owned by the stockholding member banks. The Government has not a dollar's worth of stock in it." His term was cut short in 1923 when he mysteriously died, leading to rumors that he was poisoned. This claim was never substantiated because his wife would not allow an autopsy.

    In 1993, Senator Bob Kerrey  promised to support President Bill Clinton's Budget Plan, if Clinton would appoint a Committee to study the condition of the American economy. The President established a 32-member bipartisan committee and in August, 1994, they issued their report. According to the committee's findings, by the year 2012, unless drastic changes are made, we won't even be able to pay the interest on the national debt. Knowing this, the federal government has allowed the trend to continue, almost as if they're trying to run our economy into the ground. It seems obvious that the destruction of the American economy will eventually be a result of trying to keep people in deep debt, and financially enslaved.

    In a letter to Edward M. House (President Woodrow Wilson's closest aide), dated November 23, 1933, Franklin D. Roosevelt said: "The real truth of the matter is, and you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson."

    "I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." (Thomas Jefferson)

    "Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." (Daniel Webster)

    "All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation." (John Adams)

    "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." (Lord John Maynard Keynes (1883-1946), renowned British economist).


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July 07, 2011, 06:46:21 AM
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http://www.globalresearch.ca/index.php?context=va&aid=11600

The Wall Street Ponzi Scheme called Fractional Reserve Banking
Borrowing from Peter to Pay Paul

by Ellen Brown

Global Research, January 3, 2009
webofdebt.com

Cartoon in the New Yorker: A gun-toting man with large dark glasses, large hat pulled down, stands in front of a bank teller, who is reading a demand note. It says, “Give me all the money in my account.”



Bernie Madoff showed us how it was done: you induce many investors to invest their money, promising steady above-market returns; and you deliver – at least on paper. When your clients check their accounts, they see that their investments have indeed increased by the promised amount. Anyone who opts to pull out of the game is paid promptly and in full. You can afford to pay because most players stay in, and new players are constantly coming in to replace those who drop out. The players who drop out are simply paid with the money coming in from new recruits. The scheme works until the market turns and many players want their money back at once. Then it’s game over: you have to admit that you don’t have the funds, and you are probably looking at jail time.

A Ponzi scheme is a form of pyramid scheme in which earlier investors are paid with the money of later investors rather than from real profits. The perpetuation of the scheme requires an ever-increasing flow of money from investors in order to keep it going. Charles Ponzi was an engaging Boston ex-convict who defrauded investors out of $6 million in the 1920s by promising them a 400 percent return on redeemed postal reply coupons. When he finally could not pay, the scam earned him ten years in jail; and Bernie Madoff is likely to wind up there as well.

Most people are not involved in illegal Ponzi schemes, but we do keep our money in accounts that are tallied on computer screens rather than in stacks of coins or paper bills. How do we know that when we demand our money from our bank or broker that the funds will be there? The fact that banks are subject to “runs” (recall Northern Rock, Indymac and Washington Mutual) suggests that all may not be as it seems on our online screens. Banks themselves are involved in a sort of Ponzi scheme, one that has been perpetuated for hundreds of years. What distinguishes the legal scheme known as “fractional reserve” lending from the illegal schemes of Bernie Madoff and his ilk is that the bankers’ scheme is protected by government charter and backstopped with government funds. At last count, the Federal Reserve and the U.S. Treasury had committed $8.5 trillion to bailing out the banks from their follies.1 By comparison, M2, the largest measure of the money supply now reported by the Federal Reserve, was just under $8 trillion in December 2008.2 The sheer size of the bailout efforts indicates that the banking scheme has reached its mathematical limits and needs to be superseded by something more sustainable.
Penetrating the Bankers’ Ponzi Scheme

What fractional reserve lending is and how it works is summed up in Wikipedia as follows:

    “Fractional-reserve banking is the banking practice in which banks keep only a fraction of their deposits in reserve (as cash and other liquid assets) with the choice of lending out the remainder, while maintaining the simultaneous obligation to redeem all deposits immediately upon demand. This practice is universal in modern banking. . . .The nature of fractional-reserve banking is that there is only a fraction of cash reserves available at the bank needed to repay all of the demand deposits and banknotes issued. . . . When Fractional-reserve banking works, it works because:

    “1. Over any typical period of time, redemption demands are largely or wholly offset by new deposits or issues of notes. The bank thus needs only to satisfy the excess amount of redemptions.
    “2. Only a minority of people will actually choose to withdraw their demand deposits or present their notes for payment at any given time.
    “3. People usually keep their funds in the bank for a prolonged period of time.
    “4. There are usually enough cash reserves in the bank to handle net redemptions.

    “If the net redemption demands are unusually large, the bank will run low on reserves and will be forced to raise new funds from additional borrowings (e.g. by borrowing from the money market or using lines of credit held with other banks), and/or sell assets, to avoid running out of reserves and defaulting on its obligations. If creditors are afraid that the bank is running out of cash, they have an incentive to redeem their deposits as soon as possible, triggering a bank run.”

Like in other Ponzi schemes, bank runs result because the bank does not actually have the funds necessary to meet all its obligations. Peter’s money has been lent to Paul, with the interest income going to the bank.

As Elgin Groseclose, Director of the Institute for International Monetary Research, wryly observed in 1934:

    “A warehouseman, taking goods deposited with him and devoting them to his own profit, either by use or by loan to another, is guilty of a tort, a conversion of goods for which he is liable in civil, if not in criminal, law. By a casuistry which is now elevated into an economic principle, but which has no defenders outside the realm of banking, a warehouseman who deals in money is subject to a diviner law: the banker is free to use for his private interest and profit the money left in trust. . . . He may even go further. He may create fictitious deposits on his books, which shall rank equally and ratably with actual deposits in any division of assets in case of liquidation.”3

How did the perpetrators of this scheme come to acquire government protection for what might otherwise have landed them in jail? A short history of the evolution of modern-day banking may be instructive.

The Evolution of a Government-Sanctioned Ponzi Scheme

What came to be known as fractional reserve lending dates back to the seventeenth century, when trade was conducted primarily in gold and silver coins. How it evolved was described by the Chicago Federal Reserve in a revealing booklet called “Modern Money Mechanics” like this:

    “It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.

    “Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.

    “Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could ‘spend’ by writing checks, thereby ‘printing’ their own money.”

If a landlord had rented the same house to five people at one time and pocketed the money, he would quickly have been jailed for fraud. But the bankers had devised a system in which they traded, not things of value, but paper receipts for them. It was called “fractional reserve” lending because the gold held in reserve was a mere fraction of the banknotes it supported. The scheme worked as long as only a few people came for their gold at one time; but investors would periodically get suspicious and all demand their gold back at once. There would then be a run on the bank and it would have to close its doors. This cycle of booms and busts went on throughout the nineteenth century, culminating in a particularly bad bank panic in 1907. The public became convinced that the country needed a central banking system to stop future panics, overcoming strong congressional opposition to any bill allowing the nation’s money to be issued by a private central bank controlled by Wall Street. The Federal Reserve Act creating such a “bankers’ bank” was passed in 1913. Robert Owens, a co-author of the Act, later testified before Congress that the banking industry had conspired to create a series of financial panics in order to rouse the people to demand “reforms” that served the interests of the financiers.4

Despite this powerful official backstop, however, the greatest bank run in history occurred only twenty years later, in 1933. President Roosevelt then took the dollar off the gold standard domestically, and Federal Reserve officials resolved to prevent further bank runs after that by flooding the banking system with “liquidity” (money created as debt to banks) whenever the banking Ponzi scheme came up short.

“Too Big to Fail”: The Government Provides the Ultimate Backstop

When these steps too proved insufficient to keep the banking scheme going, the government itself stepped up to the plate, providing bailout money directly from the taxpayers. The concept that some banks were “too big to fail” came in at the end of the 1980s, when the Savings and Loans collapsed and Citibank lost 50 percent of its share price. Negotiations were conducted behind closed doors, and “too big to fail” became standard policy. Bank risk was effectively nationalized: banks were now protected by the government from loss regardless of risk-taking or bad management.

There are limits, however, to the amount of support even the government’s deep pocket can provide. In the past two decades, the bankers’ lending scheme has been kept going by an even more speculative scheme known as “derivatives.” This is a complex subject that has been explored in other articles, but the bottom line is that more dollars are now owed in the derivatives casino than exist on the planet. (See Ellen Brown, “It’s the Derivatives, Stupid!” and “Credit Default Swaps: Derivative Disaster Du Jour,” www.webofdebt.com/articles.) 

Attempting to fill the derivatives black hole with taxpayer money must inevitably be at the expense of other essential programs, such as Social Security and Medicare. Interestingly, Social Security and Medicare themselves are in some sense Ponzi schemes, since earlier retirees collect their benefits from the contributions of later workers. These programs, too, may soon be facing bankruptcy, in this case because their mathematical models failed to account for a huge wave of Baby Boomers who would linger longer than previous generations and demand expensive drugs and care through their senior years, and because the fund money has have been drawn on by the government for other purposes. The question here is, should the government be backstopping private banks that have mismanaged their investment portfolios at the expense of workers contractually entitled to a decent retirement from a fund they have paid into all their working lives? The answer, of course, is no; but there may be a way that the government could do both. If it were to nationalize the banking system completely – if the government were to assume not just the banks’ losses but their profits, oversight and control – it might have the funds both to maintain Social Security and Medicare and to provide a sustainable credit mechanism for the whole economy.

Replacing Private with Public Credit

Readily available credit has made America “the land of opportunity” ever since the days of the American colonists. What has transformed this credit system into a Ponzi scheme that must continually be propped up with bailout money is that the credit power has been turned over to private parties who always require more money back than they create in the first place. Benjamin Franklin reportedly explained this defect in the eighteenth century. When the directors of the Bank of England asked what was responsible for the booming economy of the young colonies, Franklin explained that the colonial governments issued their own money, which they both lent and spent into the economy:

    “In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one. You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury.”

In an article titled “A Monetary System for the New Millennium,” Canadian money reform advocate Roger Langrick explains his concept in contemporary terms. He begins by illustrating the mathematical impossibility inherent in a system of bank-created money lent at interest:

    “magine the first bank which prints and lends out $100. For its efforts it asks for the borrower to return $110 in one year; that is it asks for 10% interest. Unwittingly, or maybe wittingly, the bank has created a mathematically impossible situation. The only way in which the borrower can return 110 of the bank’s notes is if the bank prints, and lends, $10 more at 10% interest . . . . The result of creating 100 and demanding 110 in return, is that the collective borrowers of a nation are forever chasing a phantom which can never be caught; the mythical $10 that were never created. The debt in fact is unrepayable. Each time $100 is created for the nation, the nation’s overall indebtedness to the system is increased by $110. The only solution at present is increased borrowing to cover the principal plus the interest of what has been borrowed.”

The better solution, says Langrick, is to allow the government to issue enough new debt-free dollars to cover the interest charges not created by the banks as loans:
“Instead of taxes, government would be empowered to create money for its own expenses up to the balance of the debt shortfall. Thus, if the banking industry created $100 in a year, the government would create $10 which it would use for its own expenses. Abraham Lincoln used this successfully when he created $500 million of ‘greenbacks’ to fight the Civil War.”

National Credit from a Truly National Banking System

In Langrick’s example, a private banking industry pockets the interest, which must be replaced every year by a 10 percent issue of new Greenbacks; but there is another possibility. The loans could be advanced by the government itself. The interest would then return to the government and could be spent back into the economy in a circular flow, without the need to continually issue more money to cover the interest shortfall.

The fractional reserve Ponzi scheme is bankrupt, and the banks engaged in it, rather than being bailed out by its victims, need to be put into a bankruptcy reorganization under the FDIC. The FDIC then has the recognized option of wiping their books clean and taking the banks’ stock in return for getting them up and running again. This would make them truly “national” banks, which could dispense “the full faith and credit of the United States” as a public utility. A truly national banking system could revive the economy with the sort of money only governments can issue – debt-free legal tender. The money would be debt-free to the government, while for the private sector, it would be freely available for borrowing at a modest interest by qualified applicants. A government-owned bank would not need to rob from Peter to advance credit to Paul. “Credit” is just an accounting tool – an advance against future profits, or the “monetization” (turning into cash) of the borrower’s promise to repay. As British commentator Ron Morrison observed in a provocative 2004 article titled “Keynes Without Debt”:

    “[Today] bank credit supplies virtually all our everyday means of exchange, and this brings into sharp focus the simple fact that modern money is no longer constrained by outmoded intrinsic values. It is pure fiat [enforced by law] and simply a glorified accounting system. . . . Modern monetary reform is about displacing the current economic paradigm of ‘what can be afforded’ with ‘what we have the capacity to undertake.’”5

The objection to government-issued money has always been that it would be inflationary, but today some “reflating” of the economy could be a good thing. Just in the last year, more than $7 trillion in purchasing power has disappeared from the money supply, including wealth destruction in real estate, stocks, mutual fund shares, life insurance and pension fund reserves.6 Money is evaporating because old loans are defaulting and new loans are not being made to replace them.
Fortunately, as Martin Wolf noted in the December 16 Financial Times, “Curing deflation is child’s play in a ‘fiat money’ – a man-made money – system.” The central banks just need to get money flowing into the economy again. Among other ways they could do this, says Wolf, is that “they might finance the government on any scale they think necessary.”7

Rather than throwing money at a failed private banking system, public credit could be redirected into infrastructure and other projects that would get the wheels of production turning again. The Ponzi scheme in which debt is just shuffled around, borrowing from one player to pay another without actually producing anything of real value, could be replaced by a system in which the national credit card became an engine for true productivity and growth. Increased “demand” (money) would come from earned wages and salaries that would increase “supply” (goods and services) rather than merely servicing a perpetually increasing debt. When supply keeps up with demand, the money supply can be increased without inflating prices. In this way the paradigm of “what we can afford” could indeed be superseded by “what we have the capacity to undertake.”

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.

Notes

1. Kathleen Pender, “Government Bailout Hits $8.5 Trillion,” San Francisco Chronicle (November 26, 2008).
2. “Federal Reserve Statistical Release H.6, Money Stock Measures,” www.federalreserve.gov (December 18, 2008).
3. Robert de Fremery, “Arguments Are Fallacious for World Central Bank,” The Commercial and Financial Chronicle (September 26, 1963), citing E. Groseclose, Money: The Human Conflict, pages 178-79.4. Robert Owen, The Federal Reserve Act (1919); “Who Was Philander Knox?”, www.worldnewsstand.net/history/PhilanderKnox.htm. (1999).   
5. Ron Morrison, “Keynes Without Debt,” www.prosperityuk.com/prosperity/articles/keynes.html (April 2004).
6. Martin Weiss, “Biggest Sea Change of Our Lifetime,” Money and Markets (December 22, 2008).
7. Martin Wolf, “‘Helicopter Ben’ Confronts the Challenge of a Lifetime,” Financial Times (December 16, 2008).

Ellen Brown is a frequent contributor to Global Research.  Global Research Articles by Ellen Brown

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July 07, 2011, 07:11:26 AM
 #106

It's much easier for bankers and con artists and agents to argue with a lone person or two on a forum, but try arguing with a half dozen articles that all say the same thing from a half dozen different perspectives, from a range of years, gathered from across the internet.

There are a couple simple laws of the universe and when you begin to work with them, in harmony, the universe works much smoother.

e=mc2
US dollar decline = Bitcoin gain

The dollar is the hot potato. You don't want to be the last one holding it.






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July 07, 2011, 12:27:52 PM
 #107

It's much easier for bankers and con artists and agents to argue with a lone person or two on a forum, but try arguing with a half dozen articles that all say the same thing from a half dozen different perspectives, from a range of years, gathered from across the internet.
Likewise, it's much easier for credulous fanatics to cite half a dozen articles from conspiracy-theorist web sites than to argue against hundreds of articles, books, speeches, etc. saying something else from hundreds of different perspectives, over a range of decades, gathered from real life. And it's much more comforting to tell yourself everyone who disagrees with you is uneducated, trolling, or an enemy agent than to face the possibility that you're wrong.
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July 07, 2011, 02:02:02 PM
 #108

It's much easier for bankers and con artists and agents to argue with a lone person or two on a forum, but try arguing with a half dozen articles that all say the same thing from a half dozen different perspectives, from a range of years, gathered from across the internet.
Likewise, it's much easier for credulous fanatics to cite half a dozen articles from conspiracy-theorist web sites than to argue against hundreds of articles, books, speeches, etc. saying something else from hundreds of different perspectives, over a range of decades, gathered from real life. And it's much more comforting to tell yourself everyone who disagrees with you is uneducated, trolling, or an enemy agent than to face the possibility that you're wrong.

2 major stock crashes, one huge ongoing housing crash, gold and silver surging and being the #1 investment during the last 11 yrs suggests that he's on to something.  oh i forgot to mention the wealth disparity being the highest since 1929.  you know what happened after that...
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July 07, 2011, 02:07:03 PM
 #109

Why are people stupid -> http://www.washingtonpost.com/wp-dyn/content/article/2010/01/11/AR2010011103892.html

Firstly it says the federal reserve has earned money. There is no "earn" involved at all. It says the federal reserve has made money for the US treasury. The federal reserve makes most money from the Us treasury in the first place, no? The printed money is not considered an asset. It plays no role in profits down on paper. The interest on the bonds are considered profit. The treasury pays interest on the bonds... just to get it back later after paying off the running costs of federal reserve (Including nice salaries I bet)?

The media thinks this is "protecting tax payers"? How?

It's strange because with it's bond buying scheme using new money, it's just giving the US government time. Extending debt with new money. I guess the interest is there to pay for the costs of the federal reserves and any excess is just returned.

Someone has said on here the federal reserve has been relaxed with loan repayments, has it allowed the US treasury to not repay all of the new money?

If the new money is just repaid and relent constantly wouldn't the federal reserves balance sheet show a lot more money?

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July 07, 2011, 02:20:57 PM
 #110


Firstly it says the federal reserve has earned money. There is no "earn" involved at all. It says the federal reserve has made money for the US treasury. The federal reserve makes most money from the Us treasury in the first place, no? The printed money is not considered an asset. It plays no role in profits down on paper. The interest on the bonds are considered profit. The treasury pays interest on the bonds... just to get it back later after paying off the running costs of federal reserve (Including nice salaries I bet)?


nice, i never thought of it this way even tho i knew this fact.  now i learn something from you.

if you back out 30000 ft and take an overall look, how can the Fed "earn" money to pay interest?  its impossible!  they just sit at their desks and move money around, nothing productive.  the interest they return to the US Treasury is pittance anyway and more symbolic.  

US taxpayers, OTOH, have to use their sweat equity to pay off the massive debt owed to the banksters.

if you need more evidence, look at Greece.  the banksters sharks are demanding the sale of islands like Santorini to keep their game going even tho US and Greek citizens bailed their asses out of the mess they created in 2008.  its sickening.
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July 07, 2011, 02:45:58 PM
 #111

It's much easier for bankers and con artists and agents to argue with a lone person or two on a forum, but try arguing with a half dozen articles that all say the same thing from a half dozen different perspectives, from a range of years, gathered from across the internet.
Likewise, it's much easier for credulous fanatics to cite half a dozen articles from conspiracy-theorist web sites than to argue against hundreds of articles, books, speeches, etc. saying something else from hundreds of different perspectives, over a range of decades, gathered from real life. And it's much more comforting to tell yourself everyone who disagrees with you is uneducated, trolling, or an enemy agent than to face the possibility that you're wrong.
You are a typical prototype victim of state propaganda that randomly assigns the label 'fanatic' on a lot of people in order to be sanctioned by the greater public to invade their countries. And now, once you've adopted that label, you are applying it to your own countrymen, serving again not your own interests, but that of the same people that blinded you in the first place.

'Real life' has shown how the economy goes bust time and again due to the manipulations of the bankers and for their profits only.
You fail to see and/or accept that you're lied to through a large state-and-commerce-run propaganda machine.
And now that you don't (want to) know your history, you're doomed to repeat it.
Nothing new under the sun.
Sleep well.
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July 07, 2011, 02:50:46 PM
 #112


You are a typical prototype victim of state propaganda that randomly assigns the label 'fanatic' on a lot of people in order to be sanctioned by the greater public to invade their countries. And now, once you've adopted that label, you are applying it to your own countrymen, serving again not your own interests, but that of the same people that blinded you in the first place.


how do you know he's a victim?  for all i know, he's a bankster/perpetrator.  we've got those guys crawling around here trolling routinely now, IMO.
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July 07, 2011, 03:29:52 PM
 #113

nice, i never thought of it this way even tho i knew this fact.  now i learn something from you.

Good to know I brought some ideas to you.

Before this thread I did already know the federal reserve bought out government bonds with new money and such. It's just the details really and some comments confused me but mainly as a misunderstanding. For example it appeared to me at first people where suggesting the federal reserves profits were given out to private owners but this was only a misunderstanding I think.

On here -> http://www.federalreserve.gov/releases/h41/current/h41.htm

It says "Federal Reserve notes outstanding". What does that mean? Is this notes yet to be produced or something?

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July 07, 2011, 03:31:36 PM
 #114

nice, i never thought of it this way even tho i knew this fact.  now i learn something from you.

Good to know I brought some ideas to you.

Before this thread I did already know the federal reserve bought out government bonds with new money and such. It's just the details really and some comments confused me but mainly as a misunderstanding. For example it appeared to me at first people where suggesting the federal reserves profits were given out to private owners but this was only a misunderstanding I think.

On here -> http://www.federalreserve.gov/releases/h41/current/h41.htm

It says "Federal Reserve notes outstanding". What does that mean? Is this notes yet to be produced or something?

thats the actual cash/currency floating around the world.
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July 07, 2011, 03:39:55 PM
 #115

http://www.research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=EXCRESNS&s[1][range]=5yrs

this is where all our bailout money is going...

didn't the banks say they needed all this bailout money so that they could continue lending?  bastards....
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July 07, 2011, 03:42:05 PM
 #116

http://www.research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=EXCRESNS&s[1][range]=5yrs

this is where all our bailout money is going...

didn't the banks say they needed all this bailout money so that they could continue lending?  bastards....

and to add salt to the wound, f*ck wad Berspankme is paying interest on these excess reserves out of our pockets so the banks are assured a return.  this encourages even less lending!  these are all NEVER SEEN BEFORE maneuvers to guarantee bank bonuses and looting.
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July 07, 2011, 03:47:05 PM
 #117

thats the actual cash/currency floating around the world.

And the rest is deposits, so the amount of notes is $2,885,778,000,000? To the nearest million. Almost 3 trillion federal reserve dollars.

But there is also the legacy (Shall I call them?) dollars still around, no? US Money supply is shown to be about 9 trillion dollars. Apparently that's the full figue (M2).

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July 07, 2011, 04:06:10 PM
 #118

thats the actual cash/currency floating around the world.

And the rest is deposits, so the amount of notes is $2,885,778,000,000? To the nearest million. Almost 3 trillion federal reserve dollars.

But there is also the legacy (Shall I call them?) dollars still around, no? US Money supply is shown to be about 9 trillion dollars. Apparently that's the full figue (M2).

NO.  the deposits are cash held in the accts of the banks, aka, excess reserves as in the graph i put up.

this is bailout money GIVEN to the banks in exchange for all the crap loans they lent out pre 2007 that went bad.  instead of forcing them to eat it and go BK to clean out these bad actors, Berspankme said NO, "my buddies can't be allowed to go BK".  we'll just dump this shit onto the American taxpayer.
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July 07, 2011, 04:19:08 PM
 #119

What happens to the rest of the federal reserve notes?

They aren't all liabilities then?

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July 07, 2011, 04:21:45 PM
 #120

985,788 is the total FRN's in circulation.
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