Article 43


Saturday, December 11, 2010

An American Future


And the ten horns which thou sawest are ten kings, which have received no kingdom as yet; but receive power as kings one hour with the beast. These have one mind, and shall give their power and strength unto the beast.

And the ten horns which thou sawest upon the beast, these shall hate the whore, and shall make her desolate and naked, and shall eat her flesh, and burn her with fire.  For God hath put in their hearts to fulfil his will, and to agree, and give their kingdom unto the beast, until the words of God shall be fulfilled.
- Revelation 17:12-13, 16-17


Much has been written about whether a worldwide plan exists to control events and steer them in the direction profitable to an elite of the rich and powerful. Is this a conspiracy theory? While it is difficult to be specific about who exactly may be behind such a conspiracy, if it exists, it is at least clear that the privately-managed system of global financial capitalism gives ample opportunity for the worlds richest people to combine for their mutual benefit. Further, global financial capitalism itself is based on the monopolization of money-creation by a world banking system that is largely privately owned, even while working through the central banks of the largest and most prosperous nations. This article postulates the existence of a coordinated and longstanding matrix set up by the controllers of money to dominate the movements of history. The article focuses particularly on what seems to have been an attack that has been going on for over a century against the independence of the nations of Russia and the U.S. The article also suggests a series of monetary reforms whereby the U.S. , or any other nation, can regain its economic identity and preserve its political freedom. The article was written a short distance from the reconstructed colonial capitol building in Williamsburg , VA. On this site on May 15, 1776, the Fifth Virginia Convention voted unanimously to instruct its delegation at the Second Continental Congress in Philadelphia to enter a motion for independence. It may be time to do that again.
- Conspiracy Theory


An American Future

By Ian Welch
December 6, 2010

So, Im PEERING into my looking glass today, or rather tonight, as the snow eddies down, the first snowfall of winter, and it’s winter I see for America, and for the world.

Its clear at this point that America is only the SHELL of a democracy, and instead IS RUN by a self-perpetuating OLIGOPOLY whose only law, whose only imperative, is IT’S OWN SURVIVAL and aggrandizement, no matter what the COST to America, to American citizens, or to anyone else in the world who is not part of the western elite class.  The same is, with America switched to Europe, true of the oligopoly who run Europe.

This is not a stable situation because the ECONOMICS OF IT is NOT STABLE.  In order to BAIL THEMSELVES OUT they are enforcing austerity policies which are wreaking and will continue to wreak economic havoc in the real physical and social economies of the countries whose policies they control.  They are CONTRACTING THE FRANCHISE, the membership of the oligopoly, PUSHING more and more people out of it, even as they impoverish millions of peoples at the BOTTOM END of the economy.

THEY HAVE CREATED a two tier system of laws, where important people who commit trillions of dollars of systematic fraud are not prosecuted and where war criminals responsible for the deaths of hundreds of thousands are winked at, while SMALL PEOPLE ARE LOCKED UP for the most minor of crimes, where bankruptcy is essentially impossible for the small people, but the BIG PEOPLE SKATE and are given whatever amount of money is necessary to bail them out of any BAD DECISIONS they have made.

They have created a surveillance state where they track in real time, without warrants, the movements of citizens through cameras and by tracking credit cards, debit cards and even loyalty cards. Their servants stare at the naked bodies of everyone who wants to travel by air or grope their genitals, inflicting sexual humiliation on the public as a matter of course.

When embarassed, as with Wikileaks leaks of diplomatic communiques, their response is a deranged manhunt combined with a truly Soviet-style screaming of “I cant hear you” as they try and ban soldiers, the Library of Congress and public servants from reading information everyone has access to. This isnt just authoritarian, it isn’t just jejeune, it is delusional.  Every principal and teacher knows that if you tell people they shouldnt read something, that will make them want to read it.  If they wanted people to think they shouldn’t read these revelations, the reaction should have been muted, ho, hum, nothing there, not a deranged attempt to shut down anyone who mirrors the Wikileaks site and threats against anyone who dares read the information.

Meanwhile, in Congress, politicians of both parties, with Obama’s blessing, are set to extend tax cuts.  A few months ago the mantra was “deficits, deficits, deficits,” but now deficits don’t matter.  This isnt to argue whether they do or not, simply to note that their real ruling ideology is that governments should only spend money on rich people, and that money spent on the middle class or poor is bad.

It will also, and I guarantee this, not help the economy.  The past 30 years, and the past 10 years in particular, have been a huge experiment in tax-cutting, and for ordinary people, the result has been stagnation and now an absolute decline.  Because ordinary people do not have pricing power, either as workers for their labor (since there are plenty of people who need jobs) or as consumers (because the oligopolies who sell food, energy, telecom and so on know you must have their services) every single red cent of tax cuts which go to the middle and lower class will be taken away by CORPORATIONS and the rich.  Those corporations and rich will then use that money to either play leveraged financial games or to OFFSHORE jobs to LOW COST, low regulation domiciles.  Not only do tax cuts not do any good, they accelerate the loss of US jobs.  No, this isn’t what you’ve been told, indeed propagandized, for the last thirty years.  But how has trickle down economics worked out for you?  Are you going to believe your lying eyes, or the talking heads who tell you that tax cuts create jobs?

So the economic situation is going to get worse. That doesn’t mean there wont be cyclical ups and downs, just that the trend line is down, down, down.  And every trend line reaches its end.  My guess, at this point, is that the US has only one business cycle left before a Russian style collapse.  The rest of the world just does not need to sell you oil for lousy dollars which don’t buy the future and don’t buy anything else, either.  At this point what must be gotten from the US are a few capital goods, jetliners (well, from the US or Europe), some software,the very best military equipment and some miscellanea.  That’s it.  That’s all.

The rest can be BOUGHT from other countries.  Now, if the next tech revolution was going to happen in the US, they’d have to keep their hands in, but IT’S NOW CLEAR that, no, that ISN’T GOING TO HAPPEN either.  American producers don’t, American consumers can only do so if heavily subsidized by China, and American technology is more and more A JOKE at anything other than killing people.

The US is going to be CUT LOOSE.

The reaction to that will be war. Maybe in Iran, maybe in Korea, maybe in Saudi Arabia. Where doesn’t really matter, but its going to happen, because it’s the only card the US will have left and after Obama destroys the Democratic party by gutting Social Security, VETERANS benefits and overseeing the cutting of Medicaid, yes, President Teabag is going to get in, whether Obama is primaried or not.  And the only way to both provide stimulus and get the resources the US is going to need and no one else will soon WANT to sell to the US, is going to be war.

I have said it before, and I will say it again.  If you can get out, get out.  If you can’t get out, but you have children, get them overseas - send them on exchanges, send them to overseas relatives for a year, send them to a foreign university (they’re better and cheaper).  Get them out, even if you can’t get out.

The game isn’t over in the US, but the smart money is that the first revolution in the US isn’t going to be a revolution of the left, its going to be a nutbar revolution from the right, and it is going to be extraordinarily ugly.

In the meantime, if you have to stay, make sure you’re on good terms with your neighbors, your spouse, your friends and your family.  Figure out how to grow food wherever you are and how to reduce your dependence on anything but people you trust.  (Dont trust any corporation.) And, if you can, organize.  Organize locally, organize at the State level, organize nationally.  Understand the age of compromise is over. It is now too late to save the old system.  It’s over.  We tried, and we failed.  It is beyond reform, it is GOING TO FLAME OUT, the only question is how many people it will burn to death as it does so.


Posted by Elvis on 12/11/10 •
Section Revelations
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Velocity Of Money


The Federal Reserve and the Velocity of Money

Seeking Alpha
December 14, 2010

Two phrases were hearing constantly are the Federal Reserve Bank is printing money, and flooding the market with liquidity is non-inflationary because banks are not lending. Typically the Fed increases the money supply by purchasing treasuries, putting more cash into circulation. Conversely, the Fed reduces or tightens the money supply by selling treasuries into the market. Until recently, the majority of the FedҒs assets were treasuries so there was little friction in the Feds open market operations.

The FedҒs ability to create money by purchasing assets is only limited by its balance sheet. Its balance sheet liabilities consist of bank reserves held on deposit and deposits from the Treasury. Recently the Treasury sold a substantial amount of debt for the purpose of depositing the proceeds at the Fed. This allowed the Fed to double its balance sheet to about $2T. The Fed is using this extra leverage to buy assets or loan on collateral with risks much higher than treasuries. Even though Chairman Bernanke says the Fed is taking an appropriate haircut and the Fed can sit on assets until they mature, these toxic and semi-toxic assets will be far more difficult to sell when the Fed needs to unwind its liabilities.

Velocity refers to the rate of turnover in the money supply. When the Fed injects cash into banks by purchasing assets, it expects the banks to start lending the money. If the banks simply hoard the cash, the multiplier effect is 1. However, with higher velocity the Feds impact is much greater, both with injections and tightenings.

LetҒs look at how the multiplier effect works. All banks are required to keep a certain percentage of deposits on reserve at the Fed. This prevents an infinite multiplier. For example, if the reserve requirement is 10%, banks can lend out 90% of their deposits. Lets say the Fed injects $100 into the money supply by buying treasuries from Bank A. Bank A then lends $90 to a business that deposits it in Bank B. Bank B then lends $81 to a consumer who writes checks which are deposited in Bank C. Then Bank C lends $72.90 which is deposited in another bank. Already the FedҒs $100 injection increased the money supply by $253.90. So far the multiplier is about 2.5. The Fed is claiming that the velocity is currently very low so its moves must be more dramatic.

Now the Fed is considering issuing its own debt to further lever up its balance sheet. This would require Congressional approval since the Fed is only allowed to issue currency. Could it be that the Treasury has reached its limit (debt ceiling) in pumping up the Fed? More interestingly, what would the effect be of such Fed borrowing? It could be sterile since the Fed is taking out as much cash as it is injecting. The net effect could be that the Fed is simply moving cash from a risk adverse lender to a higher risk borrower, while assuming the credit risk itself. An example would be a money market fund indirectly buying a credit card securitization via the Fed. The likely multiplier would be 1.

When we get the economic recovery everyone is praying for, the velocity of money will increase rapidly along with the money supply. This will bring substantial inflationary pressures. The Fed will not only have to remove the excess liquidity they provided, but a large multiple of it. The difficulty will be soaking up this excess liquidity by selling assets less desirable than treasuries.



Stimulus for Dummies

By John Ballard
December 11,2010

This viral email has been circulating for several months but I just got a copy today.

Stimulus Package

In case you never figured it out

It is a slow day in the small Saskatchewan town of Pumphandle, and streets are deserted.

Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her services on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything.

No one earned anything…

However, the whole town is now out of debt and now looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how a Stimulus Package works.

This what I wrote the sender.

As crazy as this looks, it illustrates the reality of what must happen if the world is ever to be dug out of the credit hole we are in.

That $100 actually liquidated $400 in debt and is yet to be spent. It’s called the velocity of money, one of the hard to measure variables when the money supply is being assessed.

And it is exactly the thinking that makes it okay for the Fed to take bonds off the market and the government to own part of GM and AIG. All that, plus the so-called “quantitative easing” (I and II and who knows how much more...) that Bernanke has been doing.

The economic ticking bomb, of course, is that when and if the economy really heats up the velocity of money PLUS the total amount in circulation will equal inflation.

Fiscal and monetary policies are always walking the razor’s edge, and outstanding credit is a constantly changing and unpredictable quality.


Posted by Elvis on 12/11/10 •
Section General Reading
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