Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Central Banks Seek Excuses to Plunder Treasuries and Enrich the Banking Cartel

Politics / Central Banks Mar 28, 2011 - 04:38 AM GMT

By: Barry_M_Ferguson

Politics

Best Financial Markets Analysis ArticleDumb and Dumber and Dumberer
Jim Carrey starred in the movie ‘Dumb and Dumber’ in 1994. The movie told the story of the two stupidest humans on earth - Lloyd Christmas and Harry Dunne. They were ‘dumb’ and ‘dumber’. But, even this over the top portrayal of these two stupid characters could not have possibly equal the stupidity of the real characters that run our world today. They can only be described as ‘dumberer’. Even worse, our ‘leaders’ must think of the rest of us as ‘dumbererest’.


While I must admit that government has the general citizenry pretty well characterized (readers of articles such as this excluded), there are times when those of us who know better must speak out. It seems that every calamity in modern times gives the central banks an excuse to plunder treasuries and enrich the banking cartel. The big banks get rich and the rest of us pay for it. We willingly allow for such pilfering as long as the stock market goes up. Every move from the central banks is targeted to do just such a thing. An earthquake/ tsunami struck Japan on March11, 2011. The yen immediately appreciated and their stock market fell. The central banks of the G-7 immediately intervened to sell trillions in yen to stem the market plunge. The insanity is this. Why can’t the ‘market’ decide where the yen or the market should be priced? The people of Japan needed help. A nuclear power facility threatened to ‘melt down’. Yet, the BOJ’s could only think of supporting the stock market. The US central bank is no different. Every disaster is a license to manipulate. Central banks intervene in market price discovery. For instance, our Fed is currently busy with QE2 intervention.

The absurdity with which our government behaves, the arrogance with which they dictate, and the preposterousness of their economic imposition is an insult to any life form beyond a jelly fish. In case you don’t know, jelly fish are an organism without a brain. They also use the same orifice to feed and excrete. For reasons such as these, I tend to associate jelly fish with our rulers (government) - the Federal Reserve. Allow me to shed some light on the effects of intervention so we can decide if it is helpful. 

The latest episode of insanity directed to the dumberest occurred on Tuesday, March 22, 2011. The Federal Reserve announced that 2010 brought forth record profits. (Remember - a lot of dumb people think the Fed is a part of the US government.) No, not for us - for them! The Fed made a record $81.7 billion in 2010 ‘largely on investments made to help the economy and banks weather the 2007 - 2009 financial crisis’. As per their mandate, they turned over the bulk of the loot to the US Treasury - some $79.3 billion. (Remember - there are a lot dumber people that think the Fed does not operate as a ‘for profit’, ‘private bank’.) This adds to the $47.4 billion the Fed transferred to the Treasury in 2009. The Fed would like us to believe this is a wonderful development in that they have transferred to the Treasury a sum of $126.7 billion over the past two years. (Remember, there are a lot of dumberest people that actually think the Fed acts only in the best interests of its subjects. There are more Pelosi types running around than you would think.)

How again did the Fed earn $87.7 billion in a year? They are, of course, an intervening market manipulation machine. And, they are indeed a bank and banks make money by lending it. Don’t forget trading securities and derivatives is also profitable if you have all the inside information. The Fed has an advantage in that they can simply conjure money out of thin air for which to lend. Better yet, they can simply ‘create’ money on spreadsheets for which to lend. And, on all the money they steal from their subjects, uh..., I mean ‘create’, they charge interest! Could there be a better business model for pure profits? Now, think for a moment. Wouldn’t a profound financial crisis to a government present an opportunity to lend huge sums of money and impose vast power? Think a little harder. Name a company that profited more from the financial meltdown of the last decade than the Federal Reserve?

For perspective, Exxon made an estimated $30 billion for the year 2010. Yet, somehow the dumberest of the dumber society malign companies like Exxon as corporate pigs. These people think companies that make tens of billions of dollars in profits are obscene and they should be subjected to ‘windfall’ taxation. The Fed beat Exxon by a factor of 3! Do we hear any complaining? In reality, we can now say that the Federal Reserve is by earnings the largest company operating in the US. And yes, for the dumberestest people, the Fed is a ‘private corporation’ feeding on the US taxpayer. How did they make their money again? Oh yeah, the were ‘helping’ their banking friends through a crisis. Please, tell that to Lloyd Christmas! The real question is, are we now better off for all the Fed’s intervention? After all, the Fed did give the Treasury $126.7 billion in windfall earnings over the last two years. While I admit that I graduated from public schools, I decided to make like Jethro Bodine and commence to do a little ciphering.

Besides the forfeiture of capitalism, freedom, dignity, and sovereignty, how much did this $125.7 billion cost us? From the end of 2008 to the end of 2010, the national debt grew from $10.7 trillion to $14 trillion. That’s an increase of $3.3 trillion. That was the capital the Fed used to ‘help the economy and banks’ through the financial disaster that they, the Fed, helped to generate. That $3.3 trillion was borrowed at an average interest rate of 3.1% (according to the Fed). Once I cipher $3.3 trillion times 3.1% using my ‘times-its table’ (okay, I used a calculator), I come up with $102 billion in interest coupons on the extra debt. $125.7 billion minus the $102 billion nets the Treasury about $24 billion on the deal. That is, until we have to roll the debt over in another seven to ten years and then it costs the tax payers another $102 billion (or whatever the prevailing interest rates might dictate) and now the whole deal is a loser to the tune of hundreds of billions on top of the tens of trillions that the country already cannot repay. Yet, the Federal Reserve rakes in record profits from this action. The tax payers accumulate record debt. If we focus on that aspect, we miss the point of the Fed’s intent. The most important thing is that Mr. Dimon of J.P. Morgan and Mr. Moynihan of Bank of America got their $20 million dollar compensation packages. That makes me feel better, anyway!

So we are supposed to believe that the Fed has our best interest at heart. They are working hard to revive the economy and restore our portfolios. Please, we would have to be dumber than the dumberestest person on earth to believe that! Let’s look at how dumb the Fed thinks we are.

The Fed produces a report on the fiscal condition of the citizenry in the US.

From the Federal Reserve statistical release year 2010 ‘Flow of Funds Accounts of the United States’ page 118 (http://www.federalreserve.gov/releases/z1/current/z1.pdf):

‘Balance Sheet of Household and Nonprofit Organizations with Equity Detail’ - From 2008 to 2010, ‘Assets’ grew from $65.5 trillion to $70.7 trillion. Let us make note, however, that ‘Tangible assets’ fell from $24.3 trillion to $23.1 trillion. Where did the ‘Asset’ increase come from? ‘Equity shares at market value’ rose from $12.4 trillion to $18.1 trillion. ‘Net Worth’ rose from $51.3 trillion to $56.8 trillion. Net worth increases were a function of the stock market only. Real assets like real estate continued to contract. The Fed is using market manipulation to fool its audience. After all, the top 10 percent of income earners own 90% of all stocks. Mutual fund ownership is even less than 50% of the US populace. The ‘net worth’ increase is confined to stock owners and even then, to large stock owners. We can corroborate this notion with all the other analysis out today showing an ever widening gap between rich and poor. Therefore, modern economic improvement only holds true for a slim minority of already very wealthy friends of the Fed. 

What is the fiscal condition of the US government?

Same release, page 68 - ‘L.106 Federal Government’ - ‘Total financial assets’ grew from $1.268 trillion to $1.650 trillion. That roughly $400 billion dollar gain came from two areas. One, ‘Agency- and GSE-backed securities’ grew from $54 billion to $225 billion and two, ‘Consumer credit’ grew from $111 billion to $317 billion. In case you want to know, the ‘agency’ stuff is bad mortgage paper held by Fannie and Freddie (the Fed ‘transferred’ the ‘equity’ to us, the taxpayers, while they kept the ‘loan’) and ‘consumer credit’ is actually ‘student loans’ (I followed the asterisk). Yes, ‘student loans’ are actually counted as an ‘asset’. Aren’t student loan default rates pretty high?

This is information we need to know so allow me to expand my topic here. The student loan default rate reported by the government is currently 7%. Of course, since this is a government number, we know without question it is yet another bald face lie. Our government cannot utter one letter of one syllable of one word of truth if Jesus wrote it on an index card and God helped move their jaw. So, I did a little reading. According to Mark Kantrowitz of FinAid (in an article published by msn.com, 2010), there is about $730 billion in outstanding federal and private student loan debt and only 40% is actively being repaid. You can do your own ciphering on the real default rate but 7% ain’t the right answer. Don’t forget to carry the knots when you do your ‘gozendas’! Of course Sallie Mae accounts for half of this figure but we must remember, the new government regulations now give Sallie a virtual monopoly in student loans. Two last points. First, this type of debt cannot easily be washed away by bankruptcy and can therefore be carried on the books regardless of potential collectibility. That makes the assets of the government seem larger than reality. Also, one of the players in the student loan world is a company named Student Loan Corp. They are a division of - guess who? - Citigroup. Do I smell rat droppings? Yes, again, the bank makes the money to service the loan and the tax payer is on the hook for defaults. Second, with the default numbers as bad as they really are, student loans that experience a stoppage of payment after two years of commencement are no longer statistically factored. Those loan defaults are not counted. That’s why the 7% government number is so ridiculous.

Also interesting, Federal liabilities grew in 2010 by a little over $3 trillion and almost all of that was of course ‘Treasury securities’. So, the Fed wants us to believe that government assets are growing and total $1.650 trillion. Yet, the Federal Reserve now boasts of assets totaling over $2.4 trillion!

So, the Fed has assets of $2.4 trillion and no debt (everything they have is guaranteed by the taxpayers and everything they buy comes from money they ‘print’ from our Treasury) and the US government has assets of $1.6 trillion and $14 trillion in debt. Yes, it should be apparent to even the dumberest of dumb, we have been swindled. See my previous article on the Fed’s swindle: http://bmfinvest.blogspot.com/p/feds-furtive-filching.html. But there’s more.

All this manipulation and stimulation and intervention has pumped a ton of money into the big bank cartel’s hands. Uh, I mean the ‘financial system’. And yes, a lot of that money has made its way into rallying the stock market. Let’s go even dumber with the Fed. Uh, I mean, ‘deeper’.

March 22, 2011 - Dallas Federal Reserve Bank President Richard Fisher said he is “beginning to see the signs of speculative excess” in the US. He added, “ There’s a lot of liquidity sloshing around the US financial system”. I didn’t get the transcript of the entire speech but he must have also expressed his sudden realization that the Earth was not really flat! Maybe he is seeing signs that the Earth orbits the Sun! Perhaps he is also seeing signs that the invention of the wheel might be useful! We must remind ourselves that Mr. Fisher is known to be a ‘hawkish’ member of the Fed. We currently have earthquakes and tsunamis exacting severe economic damage (Japan’s HAARP-ing), riots spurred by economic disparity (Mideast and Northern Africa, parts of Asia), countries bowing to central banks for debt bailouts (the US, Greece, Ireland,...), inflation threatening the fastest growing economies (China, India, Brazil), a melting US currency, the worst new home sales for the month of February, 2011 in history (since 1963 when statistics were started), falling durable goods orders for the fourth month in a row in February (2011), military conquests everywhere, no budget in the US because the gutless Congress can neither cut spending nor sign off on another $1.5 trillion in borrowed money to add to the already $14.2 trillion debt that cannot be repaid, and economies totally supported by central bank injections. And yet, the stock market rallies on. Speculative excess? Boy, I wonder what finally opened Mr. Fisher’s eyes? Sadly, he also thinks that the economy is improving (in the face of new home sales falling to the lowest level since records began in 1963), unemployment is 8.9% (despite a 3/23/2011 IBD front page story reporting the ‘real’ number of 22% confirming that absolutely no one in the entire solar system believes the fake-o US government numbers), and that Fed-induced inflationary effects would be ‘transitory’ (as they always are until rising prices eventually collapse an economy). Dumb, dumber, dumberest, and even dumberestest.

Why do we accept so many lies? Why do we tolerate a government of mendacity? How has a country conceived by geniuses like Jefferson and Madison (framed a constitution to greatly limit the powers of the federal government), and guided by the sheer indomitable courage of Andrew Jackson (vetoed the charter of the central bank of his time) fallen so far? Why has surrender to these evils of government and central banking come so easily? Because, our country is not only inhabited by the Lloyd Christmases and Harry Dunnes of the world, but we are led by these intellectual dwarfs. Dumb and dumber and dumberest indeed!

Thank you for taking time to read this piece. Now spread the truth. Me? I’ve got stocks to buy to keep the speculative excess going!

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2011 Copyright BMF Investments, Inc. - All Rights Reserved
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in