Comments on Market Skeptics: *****Fed Planning 15-Fold Increase In US Monetary ...

Well, it's november now and nothing has happened. ...

2009-11-20T11:49:27.789-08:00

Well, it's november now and nothing has happened. Have anything to say about that?

Tim Martin - Private Gold Mining Company - Investm...

2009-07-25T16:55:35.794-07:00

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anon said: The best book to gain such an understa...

2009-04-17T22:04:00.000-07:00

anon said:

The best book to gain such an understanding is... treatise "Money. Bank Credit and Economic Cycles" by Jesus Huerta de Soto.

And an even better book to understand where the machinations that de Soto discusses originated, you should read a copy of "The Protocols of the Elders of Zion".

Forgery? Who knows. One thing is for sure though, that was one hell of a prescient forger, when you compare what he said will be made to happen with what has actually happened over these 100 years since the book was written!

The links in TerraHertz's comment above were disto...

2009-04-15T14:51:00.000-07:00

The links in TerraHertz's comment above were distorting web page.

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TerraHertz said...
Thanks for the de Soto reference, anon. Here are some more 'fractional reserve' resources:

If you want the best and clearest analysis of the fraudulent and destructive system known as fractional reserve banking, read the book by the Austrian School's free market economist, Murray Rothbard: "The Mystery of Banking." It's posted free on-line.
http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

http://www.cyberclass.net/turmel/bankmath.htm
LETS Engineering Mathematics
by John C. Turmel, B. Eng.

http://www.augustreview.com/news_commentary/ global_banking/the_twilight_of_irredeemable_debt_2008050890/
The Twilight of Irredeemable Debt
By Professor Antal E. Fekete
May 2, 2008

http://econpapers.repec.org/paper/wpawuwpma/0203005.htm
Fractional Reserve Banking as Economic Parasitism: A Scientific, Mathematical & Historical Expose, Critique, and Manifesto
Vladimir Z. Nuri
Abstract: This paper looks at the history of money and its modern form from a scientific and mathematical point of view. The approach here is to emphasize simplicity. A straightforward model and algebraic formula for a large economy analogous to the ideal gas law of thermodynamics is proposed. It may be something like a new 'F=ma' rule of the emerging econophysics field. Some implications of the equation are outlined, derived, and proved. The phenomena of counterfeiting, inflation and deflation are analyzed for interrelations. Analogies of the economy to an ecosystem or energy system are advanced. The fundamental legitimacy of 'expansion of the money supply' in particular is re-examined and challenged. From the hypotheses a major (admittedly radical) conclusion is that the modern international 'fractional reserve banking system' is actually equivalent to 'legalized economic parasitism by private bankers.' This is the case because, contrary to conventional wisdom, the proceeds of inflation are not actually spendable by the state. Also possible are forms of 'economic warfare' based on the principles. Alternative systems are proposed to remediate this catastrophic flaw.
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plus just a few 'banking' links:
http://www.globalresearch.ca/index.php?context= viewArticle&code=BRO20080315&articleId=8349
Today We're All Irish: Debt Serfdom Comes to America
This form of "debt slavery" or "debt peonage" was not just an accidental development of history. It was a deliberately-planned alternative to the slave arrangement in which owners were responsible for the feeding and care of a dependent population, and it is still with us today. Although European financiers were in favor of an American Civil War that would return the United States to its colonial status, they admitted privately that they were not necessarily interested in preserving slavery. They preferred "the European plan": capital could exploit labor by controlling the money supply, while letting the laborers feed themselves. In July 1862, this ploy was revealed in a notorious document called the Hazard Circular, which was circulated by British banking interests among their American banking counterparts. It said:
"Slavery is likely to be abolished by the war power and chattel slavery destroyed. This, I and my European friends are glad of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages. This can be done by controlling the money. The great debt that capitalists will see to it is made out of the war, must be used as a means to control the volume of money. To accomplish this, the bonds [government debt to the bankers] must be used as a banking basis. . . . It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that."
Posted Mar 16, 2008 10:06 AM PST

"Something about society over the last 100+ years ...

2009-04-03T21:53:00.000-07:00

"Something about society over the last 100+ years seems to have bred out the capacity for noble dedication to the betterment of humankind - at least among our rulers."

It's called fractional-reserve banking of a debt-based currency. People have to grasp the inherent fraudulent nature of this style of banking and money creation The best book to gain such an understanding is the scholarly (and unfortunately dense) treatise "Money. Bank Credit and Economic Cycles" by Jesus Huerta de Soto.

If you can wade through it it is well worth your while.

Very interesting article. However there's a small ...

2009-04-03T19:56:00.000-07:00

Very interesting article. However there's a small problem with attempting to make predictions in the current situation. Considering:

The validity of a fiat currency system depends on the Rule of Law, since paper money and digits in bank accounts have no intrinsic value. Survival of a fiat currency system depends on the faith of the people that the money has value. Which in turn derives from the maintenance of the deception of lawfullness in the creation of the money (ref FED - a private unconstitutional monopoly on money creation), and thus confidence that the money will not be destroyed though greed and illegality on the part of the creators of the money.

The public deception of the origin of fiat money is breaking down. The true mechanism is being blatently exposed by the creation of Trillions to order, for the 'bailouts'.

The Rule of Law is breaking down. This should be clear even to MSM-fed minds, while those following the more extremist net news sources (eg C Story, Casper, S, etc) will recognise that the breakdown is effectively total and rooted in complete amorality at the highest levels of government.

The entire structure of social and economic governance, starting with the global financial elites, on down through national governments, regulators and most corporate boards, is run by people who's sole interest is their own enrichment. Regardless of the cost to others. Something about society over the last 100+ years seems to have bred out the capacity for noble dedication to the betterment of humankind - at least among our rulers.

Looking at the history of the legislative changes in the last decade that allowed the explosion of unregulated, insanely complex, and inherently unstable financial instruments that are now blowing up, one forms an impression that the chain of events was planned, deliberately to produce the results we are now seeing. An economic collapse following the removal of credit? Where have we heard that before?
"Economic crises have been produced by us for the goyim by no other means than the withdrawal of money from circulation." - Protocols of Guess Who.

All the present economic 'virtual paper world' dramas are being played out in the context of an interacting system of real world physical crisis - the resources vs population crisis, the environmental degradation crisis, the energy crisis, the contagious disease crisis, the political/ideological corruption crisis, etc.
It would be fair to say that the financial crisis is really a kind of distraction from the real problems - if you will allow calling impending mass starvation and death a 'distraction'. Another possible metaphor would be a controlled demolition - what positive benefits are there to 'bringing down the house' a few years early, and who gains those benefits?

It is apparent that the world's elites are in a state of extreme panic and fear at whatever it is their pet think-tanks have forecast for the near future. Their individual behaviour recently could be characterised as a desperate struggle to maximise assets for personal survival (ie money, in stupendous amounts), and bugger everyone else. At the government levels of preparation, we see measures to impose martial law, disarm civilians, coopting of state militias, fabrication of 'necessary external enemies', pacify with mood altering drugs, construct huge FEMA detention camps, and so on.

The global mainstream media is totally under the editorial control of factions of those same elites. The message being played to the masses is carefully tuned to distract, numb, and minimise public awareness that the ship is doomed, going down fast, and there aren't enough lifeboats. There also isn't any conceivable chance of educating the majority of people in the true reality, ever, let alone in time. Not least since the elites also destroyed the education systems, resulting in most people simply not possessing the critical mental facilities, attention span, and determination to seek out truth that are a basic requirement for such an understanding. Thus we can forget about any sensible mass public response to the situation.

There will eventually be mass public responses, but they will likely be knee jerk, ill-informed, destructive mob actions. Involving lists of names of the obvious elites. Maybe that's what has the elites so spooked. If so, if you were in their position, what would you be planning to do about that, preemptively? Forgetting about 'morality', as one does when attempting to avoid ending up hanging by the neck from a lamp post.

When large, massively complicated engineered systems break out of 'routine' operation, and enter into modes in which many never-before-experienced highly amplified paths of positive feedback come into effect, the system's behaviour is guaranteed to be highly non-linear, and non-compliant with the predictive models previously in use. This is another way of viewing the present blobal economic crisis. A truckload of new, powerful positive feedback mechanisms have been hacked onto an already unmanagably complicated system in the last decade. To tweak the system into 'stability' for as long as possible (or until it was intended to let it blow up), hidden control channels (aka market rigging) were also added. Now the whole thing has gone into chaotic breakdown, big surprise to everyone - except to some insiders who just happened to profit mightily from the 'unforseen' events.

In summary, though it may be true that some age-old economic fundamentals still apply, I wouldn't bet on any economic predictions based on past models or even common sense. What we have now is a highly chaotic runaway self-destruct mode, combined with a breakdown of the Rule of Law, exacerbated by an underlying resource/energy crunch, PLUS the objectives of the elites being quite possibly very different from what we might assume.

Buy physical gold or silver. Dump your US$ in favo...

2009-03-31T23:40:00.000-07:00

Buy physical gold or silver. Dump your US$ in favour of precious metals. After all they are still denominated in US$ but for how much longer???

When the FED writes a check backed by nothing to b...

2009-03-31T11:54:00.000-07:00

When the FED writes a check backed by nothing to buy a Treasury Bill, or any asset under the sun for that matter, the check is deposited in the payee's account at a commercial bank in the Federal Reserve system, and no money ever has to actually be printed. Most of the money supply is in the form these checkable deposit accounts, rather than Federal Reserve Notes (dollar bills) or coins.

I was at a coin show in Baltimore this past weeken...

2009-03-31T08:05:00.000-07:00

I was at a coin show in Baltimore this past weekend and the Engraving branch of the Treasury was there. THey said there was no order from the Fed to increase the supply of printed currency. It is $6.9 billion (of which 43% is dollar bills) and will be for Sept. 09. Where is increase in orinted money coming from--bc those who make it know nothing of this increase.

hi eric.. interesting commentary and in response i...

2009-03-30T04:03:00.000-07:00

hi eric.. interesting commentary and in response i think i will go long on June gold spread trade for a bit of gambling fun ;-) (i hear this form of trading which we have here in south africa, is not allowed in the US?).
nevertheless, i think U$ devaluation is moot as various countries will play arbitrage buying up loans in dollars, earning higher int rates and closing out when the dollar drops.. but as traders know, when there is "certainty" of something happening (USD drop) an efficient market will quickly iron out any apparent creases? - in my limited insight, but i see there are some smart types here that could perhaps correct my view?

The use of the word "buying" in describing the act...

2009-03-29T18:47:00.000-07:00

The use of the word "buying" in describing the activities of the FED is ascribing too much integrity to an inherently fraudulent fractional-reserve banking system. When I buy something I have already offered my productivity in order to get purchasing power. When the FED buys something it writes a check that is not backed by previous productivity, it creates purchasing power ex nihilo----and this is exactly the empowerment that eventually undermines a nation and misallocates resources. It politicizes our money and makes us vie for access to the medium of exchange, turning Americans against Americans as the puppetmasters sit back and laugh.

Is the following idea possible?Assume the FED is n...

2009-03-29T18:15:00.000-07:00

Is the following idea possible?

Assume the FED is not run by TOTAL idiots. What would they be up to?

For me, buying up long-term treasuries looks like replacing the current crisis with a future or prolonged one: buying up the treasuries could drive asset prices up and let the FED sell its sub-prime stuff for a good price (not in real terms, of course). So they would effectively gain some time.

BTW: what happens if treasury buyers drop their treasuries? Where will these US Dollars end up if they don't buy US assets? In the chinese foreign reserves?

In a fractional-reserve banking system managing a ...

2009-03-25T21:11:00.000-07:00

In a fractional-reserve banking system managing a debt-based currency created solely by the citizenry going further into debt, despite their awful balance sheets, ANYTHING can happen, but one thing is certain to happen---the top ten percenters of those who manage the money (not the producers whose wealth contributes to our well-being) will continue to collect 80-90% of the interest. If the people are happy with that scenario, then the money "experts" can continue their ad hoc patches of an inherently-flawed system and the financial papers of record can continue encouraging re-arranging deck chairs on the Titanic.

Eric, can you please comment on the concept of ass...

2009-03-25T18:27:00.000-07:00

Eric, can you please comment on the concept of asset deflation occuring at the same time as monetray inflation? I am thinking real estate could still drop much further because of rising interest rates while gold climbs. Possible? Also, what would happen to share prices in that environment? Thanks in advance for your reply.

Eric deCarbonnel, I see where the $3,818 number ca...

2009-03-23T17:32:00.000-07:00

Eric deCarbonnel, I see where the $3,818 number came from in the article. But where is the research that shows that the Fed is increasing the money supply 15 fold?
I followed the only link that pointed to the Federal reserve website and did a Find on the page for 2009 and found nothing. I'm not arguing that they aren't going to increase the money supply, only that I want to see the 2009 US projection and this article doesn't show that source.

The number is unimportant in the sense that the ve...

2009-03-23T16:36:00.000-07:00

The number is unimportant in the sense that the very method of money creation is flawed and the experts run around re-arranging deck chairs on the Titanic instead of addressing this flawed identity. Fractional-reserve banking systems managing a debt-based money system eventually run out of steam----nobody can go further into debt,neither individuals nor enterprises, and the ongoing payments on existing loans continue to extinguish existing money, and the whole of society gets punished as credit goes tight, all so that the top 10% can collect interest on the loans which were made originally without both partners to the contract offering consideration.It's is screwed up royally.

Inflation is here! Healthcare up 30% in a year, oi...

2009-03-23T13:26:00.000-07:00

Inflation is here! Healthcare up 30% in a year, oil and energy up 50%, housing up 50% over 4 years.

Where has everyone been? In Bush-economic land?

Inflation hasn't kept pace with wages except for the George Bush's constituents - the elite / entitled class.

And with extra tax entitlements to the elite class, the democracy has lost more revenue. This caused the current financial crisis.

If wages were up 100% over the past 4 years, every home payment would be made, credit worthiness would be up.

If Banks were disallowed from causing those behind in 1 payment to support 20% interest rate hikes, there would be credit worthiness. This lopsided benefit to the elite class and their interests, did not result in trickle down benefits, its become a torrent of debt, not benefits.

To turn the ship around, real inflation must be met with wage increases of real inflation + 4%, with careful price controls and tax policy to push prices for key commodities - food, housing, healthcare, energy in the right direction - stable and predictable.

90% tax on short term gains for example.

We live in a democracy, it's time the country behaved with respect for population. The elite class, a small group that has enjoyed specialized laws that only benefit them has broken our democracy and those need to be held to account.

Wages rise, price controls, appropriate tax and the faith restored to Americans that working hard and producing will earn direct rewards, and not some scheme of 'trickle down' thievery. Even if that means working directly for the government, since big business cannot be trusted any longer.

christian said... seriously misleadingeven though ...

2009-03-23T12:36:00.000-07:00

christian said...
seriously misleading

even though i enjoyed the article after paragraph 2

the 15 fold increase is not from currency in circulation (which stands at 839.9 billion still) it is a result of excess reserves going thru the roof

Excess reserves can be withdrawn by banks at any time and so are essentially the same as "currency in circulation".

As to the article being "seriously misleading", I disagree. If the monetary base is being expanded 15-fold, with little possibility of ever reversing this process, then it is simply a matter of time before the dollar lose 93% of its value.

gee what a co-incidence that excess reserves go up the same time that the fed decides to pay intrest on excess reserves held at the fed

I didn't address the issue of the velocity of money or fed paying intrest on excess reserves because this article was already overloaded with enough info.

Paying intrest on excess reserves creates a ticking time bomb. Right now the fed is only paying .25% interest. However once interest rates starts to rise, it will start getting very costly for the fed to keep making these interest payments. In fact, since it is planning to buy treasuries at 3%, once interest rates rise to around 4 to 5 percent, the fed will no longer be able to keep paying interests on reserves without printing money. Finally, the instant the fed backs away from paying interest, the money will start flowing out and excess reserves will become "currency in circulation".

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Francis said...
Inflation is a monetary event.
Nothing to do with supply and demand.
There's more USD around, there will be more inflation.
PERIOD.

To economists, Inflation is a monetary event, and it is just like you described.

To the average joe, Inflation means rising prices, and supply/demand is a factor.

The academic VS common definition of inflation is responcible for an enormous amount of misunderstanding...

Anonymous said... I can't find the $3,818 billion ...

2009-03-23T12:08:00.000-07:00

Anonymous said...
I can't find the $3,818 billion 2009 projection anywhere online. Where did that number come from? The rest of the article hinges on that one number.

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion

4,500 billion = 4.5 trillion

3,818 billion = 4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)

I can't find the $3,818 billion 2009 projection an...

2009-03-23T11:48:00.000-07:00

I can't find the $3,818 billion 2009 projection anywhere online. Where did that number come from? The rest of the article hinges on that one number.

The "monetary base" is not a base for the expansio...

2009-03-23T10:17:00.000-07:00

The "monetary base" is not a base for the expansion of the money supply. Legal reserves are that base. And in the U.S. legal reserves aren't binding.

Wow. Honestly...I see Z.O.G.'s point and I think i...

2009-03-23T09:59:00.000-07:00

Wow. Honestly...I see Z.O.G.'s point and I think it's relevant. I think this is more about the clan mentality than success.

you have to take into consideration also the massi...

2009-03-23T09:55:00.000-07:00

you have to take into consideration also the massive amount of leveraging that took place over the last 10 years which essentially increased the money supply without increasing the FED's measured money supply. This is what caused the massive inflation of the last 10 years. Now that the banks won't be able to leverage 30 to 1 this might offset the increase in the FED's balance sheet. The dollar will still devalue relative to other currencies, causing prices to rise because commodities are dollar denominated and if the dollar declines relative to other currencies this will cause inflation locally.

http://Seansrant.com

Excellent analysis Eric. As for Karl Denninger, t...

2009-03-23T07:37:00.000-07:00

Excellent analysis Eric. As for Karl Denninger, the man is a ranting fool. Before the Fed announced its plan, Denninger said the dollar would fall 80% if we started monetizing debt (this was just a few days ago). Now he has changed his mind and thinks it will be deflationary. His S&P 500 targets change week to week as well - I have seen him it move between 200 to 1000 over the past couple months. His blog is pure hyperbole, based on whatever he is pissed off at at the moment.

Inflation is a monetary event.Nothing to do with s...

2009-03-23T02:25:00.000-07:00

Inflation is a monetary event.
Nothing to do with supply and demand.
There's more USD around, there will be more inflation.
PERIOD.