Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Crooked Central Bank Plumbing the Depths of Depravity

Currencies / Central Banks Oct 29, 2008 - 12:11 PM GMT

By: Rob_Kirby

Currencies

Diamond Rated - Best Financial Markets Analysis ArticleFirst, for a bit of historical context, a little bit of fact-finding pertaining to Henry Paulson, complements of my friend, Jesse :

“I didn't know he was a member of the Nixon White House as his first 'real job.'

In 1970, fresh from the Masters program of the Harvard Business School , Paulson entered the Nixon administration, working first as staff assistant to the assistant secretary of defense.


In 1972-73, Paulson worked as office assistant to John Erlichman, assistant to the president for domestic affairs. Erlichman was one of the key figures involved in organizing President Richard Nixon's notorious "plumbers" unit that carried out illegal covert operations against the president's political opponents, including espionage, blackmail, and revenge. Erlichman resigned in 1973, and in 1975 he was convicted of obstruction of justice, perjury, and conspiracy, and was imprisoned for 18 months.

Utilizing his connections, Paulson went to work for Goldman Sachs in 1974. In a 2007 feature, the British newspaper the Guardian wrote, "Not only was he well connected enough to get the job [in the Nixon White House], but well connected enough to resign in the thick of the Watergate scandal without ever getting caught up in the fallout. He went straight to Goldman back home in Illinois ."

Birds of a Feather Fly Together: The Plumbers Live On in Infamy

One thing that can be said for Henry Paulson – he's no average Joe. Through the use of overt threats, the Fed / Treasury tandem has connived law makers into further compromise of the public purse to insulate bank's balance sheets while the average Jane and Joe see their personal net worth's continue to deteriorate at an alarming pace:

Congressman Brad Sherman of California's 27th congressional district told the House in a speech on Thurs evening [Oct. 2 nd ] that several fellow Congressional representatives have said they were threatened with the prospect 'Martial Law' should they vote in opposition to the $700 billion bailout.

Congressman Sherman's revelation comes after multiple claims that this threat was being ramped up to aid the now $850 billion bail out through the House this past Friday.

According to numerous Congressional testimonies, the stark panic atmosphere which has gripped both Congress and the US media was intentionally created in order to 'fast-track' a financial bailout bill. Several members of Congress were told before Monday's vote that martial law might be instigated in America if the legislation failed.

During his speaking time on Thurs, Congressman Sherman stated explicitly, "Many of us were told in private conversations, that if we didn't pass this bill on Monday, the sky would fall, the market would drop two or three thousand points, another couple thousand the second day, and a few members were even told that there would be Martial Law in America if we voted no (to the bail out bill)."

Viewers can watch his actual testimony [CSPAN broadcast] from the House floor below:

The Bail-Out Was Never Intended for Main Street

As revealed in this N.Y. Times Article Oct. 24, 2008 , we can clearly see that the Paulson Plan [bail-out] – utilizing targets helicopter money drops - was only ever intended to prop-up his Wall Street brethren – the Banks:

So When Will Banks Give Loans?

By JOE NOCERA

Published: October 24, 2008

It was Oct. 17, just four days after JPMorgan Chase's chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question. It came toward the end of an employee-only conference call that had been largely devoted to meshing certain divisions of JPMorgan with its new acquisition, Washington Mutual. …

….The JPMorgan executive who was moderating the employee conference call didn't hesitate to answer a question that was pretty politically sensitive given the events of the previous few weeks.

Given the way, that is, that Treasury Secretary Henry M. Paulson Jr. had decided to use the first installment of the $700 billion bailout money to recapitalize banks instead of buying up their toxic securities, which he had then sold to Congress and the American people as the best and fastest way to get the banks to start making loans again, and help prevent this recession from getting much, much worse.

In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who's been indiscreet enough to say it within earshot of a journalist.

It is starting to appear as if one of Treasury's key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury's version of the weapons of mass destruction. …..

Sweet Little Lies: Fed / Treasury Double-Talk or Crooks in a Colander?

With all of this money being added to the financial system, does it not strike anyone as being “odd” that none of this ‘liquidity' has filtered down to the grass-roots level?

Understanding the fallacy that “ IS ” the OTC derivatives complex begins and ends with the obscene concentration[s] that were allowed to propagate within the Fed-friendly confines of J.P. Morgan Chase – initially in the interest rate complex through unbridled growth in Interest Rate Swaps – which aided and abetted the falsification of inflation data to render interest rates ineffective as arbiters of capital and later through the proliferation of artificial, price suppressing supply through exchange traded [COMEX] precious metals futures. The true purpose of these systemic corrupting instruments is EXACTLY the reason why Sir Bubbles of Greenspan so ardently lobbied for them to remain unregulated – he bloody well knew these instruments WOULD NEVER SURVIVE the scrutiny of daylight!

Having seemingly tamed [eradicated, perhaps?] the effectiveness of interest rates [circa, early to mid nine-teen nineties] – the Federal Reserve and their globalist allies in government were now positioned to profligately reshape the world without the historic constraints of rising rates or the sounding of the historic clarion alarm bell – rising precious metals prices. To suggest that this was not planned and executed at / by the very highest levels of the U.S. leadership is to be completely ignorant of the sense of entitlement clearly exhibited through the words of such luminaries as, V.P. Richard Cheney, when he reiterated to [then] Treasury Secretary Paul O'Neill,

'Reagan proved deficits don't matter," Dick Cheney told Paul O'Neill during a Cabinet meeting. "We won the (2002) midterms. This is our due."

[ The words of the former Treasury Secretary in his book, "The Price of Loyalty." Since Cheney had been responsible for bringing the "straight shooter" O'Neill into the Bush administration, we can take O'Neill's words for the truth.]

If we look at the fundamental-defying, recent meteoric rise in the U.S. Dollar Index, we can trace its roots to systemic institutional failure brought on by the mortgage-backed-security led implosion of the OTC derivatives complex first signified by the demise of mortgage lender Indy Mac:

What folks need to understand is that the global OTC derivatives market – measured in tens or hundreds of Trillions - is virtually all U.S. Dollar denominated. Its SYSTEMIC failure – which is now occurring – requires U.S. Dollar balances to clear [settle] the trades [bets]. This has created the paradoxical global demand for U.S. Dollars – the currency of a country that is fundamentally bankrupt.

By rationing credit to hedge funds that were naturally levered and “long commodities” [institutions like J.P. Morgan routinely took the other sides of their customers commodities bets, ruining institutions like Nat. Gas player Amaranth] - and propping up the balance sheets of those who were “short commodities” – the Banks - the Federal Reserve led cabal of Central Bankers have ENGINEERED the collapse in commodities prices while creating the illusion that market commentator, Dr. Jim Willie, so aptly described as, The US Dollar Death Dance .

The engineered collapse of the commodities complex became necessary in the eyes of monetary elites because the rush for tangibles and corresponding repudiation of fiat money was becoming manic – as so CLEARLY evidenced by the emerging shortages of precious metals, gold and silver bullion.

Caught In Their Own Lies

If the Fed / Treasury wanted to ensure that banks would actually lend any of this freshly-created-out-of-thin-air money, they WOULD NOT have undertaken the dramatic round of issuance of CASH MANAGEMENT BILLS – giving banks and financial institutions the sovereign surety offered by Treasuries. In the absence of these Cash Management Bills, idle cash would have “piled up” on banks balance sheets – forcing them to behave like commercial banks are supposed to, lending to corporate customers.

Details of CASH MANAGEMENT BILL AUCTIONS [$ DRAINS] in Oct,, 2008:

* Oct. 29. 40 BLN 64 day CMB

* Oct. 22. 40 BLN 98 day CMB

* Oct. 21 . 35 BLN 225 day CMB

* Oct. 17. 30 BLN 74 day CMB

* Oct. 17. 30 BLN 94 day CMB

* Oct. 16. 35 BLN. 247 day CMB

* Oct. 16. 35 BLN. 191 day CMB

* Oct. 15. 45 BLN 63 day CMB

* Oct. 09. 30 BLN 97 day CMB

* Oct. 08. 40 BLN 63 day CMB

* Oct. 07. 30 BLN 79 day CMB

* Oct. 06. 30 BLN 72 day CMB

* Oct. 02. 45 BLN 56 day CMB

* Oct. 01. 50 BLN 42 day CMB

======================================

Total for Oct.: 515 BLN

The Fed / Treasury Game Plan

To begin wrapping our heads around what these clowns are really up to, one only needs to examine the most famous, historical “government / bank fleecing” – during the GREAT DEPRESSION – which serves as a handy guide:

…in 1933, Franklin Delano Roosevelt dealt with a monetary and banking crisis by confiscating all privately owned gold; paying for the gold at $20.67 per ounce; immediately devaluing the dollar by 40 percent; and setting the price of gold at $35.00 per ounce. At a single stroke, Roosevelt increased the government's gold assets, stabilized the monetary system and increased wholesale prices by more than 33 percent. However, he also inflicted losses of 40 percent on gold owners and stripped them of the gold that they saved to insure their financial futures.

In a world which has embraced globalism, and one where America has most assuredly already disposed of most, if not all, of its sovereign gold stocks [the real reason that the Fed / Treasury refuses to permit a proper 3 rd party audit] – another gold confiscation is apparently not in the cards. The reason: the Fed / Treasury are only too aware that the gold bullion they have squandered is now – irretrievable - in the hands of other sovereign entities. After all, the bullion banks that the bearded and bald one are now bailing out – they brokered the swindle – and know exactly where all the bones are buried!

But there's more than one way to ‘skin a cat' [or Jane and Joe Sixpack, perhaps?].

In this regard, it should surprise no-one is the fact that Sir Benjamin of Benedict Bernanke is one of the world's foremost students of the Great Depression :

Bernanke is a student of Great Depression, Red Sox

WASHINGTON (AP) — Five years ago, Ben Bernanke posed the prescient question in an op-ed in The Wall Street Journal , "What Happens When Greenspan is Gone?" …

…. In the world of economic theory and policy, Bernanke, 51, has espoused targeting inflation, stressed the importance of communication and transparency by the Fed and argued that the final say on debts and deficits lies with the president and Congress….

Mr. Transparency

When one stops to consider that the foundations of the science of ‘economics' is built upon the study of past conditions and events and looking for similarities in modern times; we can use this methodology to predict likely outcomes in the here-and-now.

Well, we've got intrinsically valuable tangibles [commodities and real estate] prices being ENGINEERED down by monetary authorities. Bank's balance sheets are being “artificially” bolstered by their partners in government to take advantage of depressed prices prior to “ REFLATION ” [likely to be signified by the cessation of issuance of Cash Management Bills?]. And heck, the most bankrupt entity on the planet – the U.S. Treasury – is even getting in on the act by purchasing mortgaged backed securities for ‘pennies on the dollar'. Just think about that: when the great reflation occurs – The U.S. Treasury might even have their pitiful “leaky” balance sheet restored and made whole once again?

It would only be history repeating itself – all at the expense of folks who acted prudently in the face profligate government / banker money creation.

You just can't make this stuff up. Sounds like a true story-book ending, eh?

Subscribers to the Kirbyanalytics News Letter are reading an additional 14 pages of conclusions, where we are headed, and an action plan portion of this article as well as other insightful proprietary economic analysis. Subscribe here .

By Rob Kirby
http://www.kirbyanalytics.com/

Rob Kirby is the editor of the Kirby Analytics Bi-weekly Online Newsletter, which provides proprietry Macroeconomic Research. Subscribers to Kirbyanalytics.com are benefiting from paid in-depth research reports, analysis and commentary on rapidly unfolding economic developments as well as recommendations on courses of action to profit from chaos. Subscribe here .

Copyright © 2008 Rob Kirby - All rights reserved.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Rob Kirby Archive

© 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

6 Critical Money Making Rules