Standing against big government and for the people!
The picture below shows $15 trillion dollars worth of $100 bills on $10 million dollar pallets stacked on top of each other over an area that is one third larger than a regulation football field. An electronics van is parked between the stack and the Statue of Liberty. A single $100 million dollar pallet rests in front of the truck’s cab. See it?
Recently, I reported that the Federal Reserve Bank (FED) secretly gave ten trillion dollars of interest-free loans to over a dozen European banks to shore up the Euro and keep them financially solvent. I later found out that the lending activities elsewhere added another six trillion in junk loans totaling $16 trillion dollars.
Here is the link to the summary of the GAO Audit Report to Congress with a link to the full report unabridged (all 250+ pages) of it:
Here is an article that claims it is $16 trillion, not $10 trillion:
Here is an article from Senator Bernie Sanders (Democrat) from Vermont that says the same thing:
Neither one likes the FED behavior for different reasons.
Some essential facts bear repeating.
1. Only the US Congress can raise the ceiling on the National Debt. The US Treasury cannot increase the national debt beyond that limit by law as defined in the US Constitution.The US Treasury has no other options than to shutdown the government until spending (including interest on the National Debt) matches revenue income..If that cannot be achieved, the US Government is in default.
2. The US Treasury has to borrow US Government obligations that it cannot cover with internal revenue. If the US Treasury cannot sell US Treasury bonds to borrow what it needs to remain financially solvent, the Federal Reserve is required by its charter to become the lender of last resort. This includes the obligation to buy US Treasury bonds needed to pay off maturing US bonds.
3. US Dollars are the property of the FED, not the US Treasury. The FED can pretty much do whatever it wants with the US dollars it creates without much oversight by any other US Government agency. The Government Accounting Office (GAO) has relatively little oversight responsibility . . . that is until now. Note that the FED allowed the GAO special audit with high reluctance and imposed limitations on its scope.
4. Anywhere between $4 to 6 trillion dollars float worldwide in transit to support international trade, dominated by petro dollars. This is the equivalent of an interest-free loan from the rest of the world so long as this money remains in circulation. This practice continues only so long as the US dollar remains the preferred reserve currency for international trade.
5. When trading partners sell more stuff to the US than the US sells to them, the difference creates a balance of payments deficit. The USA needs to either borrow through a line of credit or buy the country's home currency from someone else at LIBOR exchange rates with US dollars. The largest creditor of the US Government is the FED who holds over $6 trillion of US debt in its account. The second largest creditor is the Social Security Trust (not really trustworthy, thanks to Lyndon Johnson). Communist China is third with about $900 billion. Altogether, the United States owes obout 60 percent of the total debt of all other debtor nations combined.
6. When the FED buys bonds from the US Treasury, in excess of bond maturities, that money is spent for goods and services that are deposited in the banking system. These banks can lend up to ten times the amount of their deposit balance (or more, depending on the FED funds rate). That action inflates the currency thereby reducing its purchasing power. That is what quantitative easing is all about. It is a tax on the earnings, savings and investments of US citizens, Theoretically, the weaker US dollar encourages more exports for trading partners with stronger currencies. Actually, they do the same to their currency to maintain their market share. A currency war follows that benefits no one.
7. The FED executes a bond swap when it exchanges short-term bonds or bonds nearing maturity with new long-term bonds. This action reduces the pressure on the US Treasury to sell bonds to refund maturing bonds due to foreign debtors.
8. The US Government financials do not take into account the cost of servicing entitlements beyond the current fiscal year. Although our US government claims to use fund accounting principles, the "funds" only are allowed to invest their reserves in US government bonds. It is borrowing money from its funds to finance its national debt. Some people call that practice "creative accounting." I call it fraud. The GAO estimates the total cost of entitlements to be somewhere near $115 trillion US dollars.
Ok, what are the consequences? As my mother would say, "Well, let me tell you." It doesn't matter who wins the election. The consequences of damage already done is going to happen. If the US Government does not drastically change its fiscal policy, it will be even worse. Here is what leading economists project.
If this currency war blows up, it will make sequestration look like a walk in the park by comparison. From my perspective, the current US Government already did us in. Expect 10 percent inflation per year for at least the next three years as a result of quantitative easing and the two debt swaps alone. Add in the other stuff and we could have hyperinflation as bad as 10% PER MONTH as early as first qtr 2013.
Already, our nation is experiencing the start of a run on our currency via international trade. Food commodities such as wheat, corn, soybeans, and other grains are going through the roof. It is not just supply and demand caused by draught conditions; it is inflation of US currency resulting in higher prices for oil, food, and non-food commodities. Consider the price of bread. A 1-1/4 pound loaf of bread cost 34 cents in 1960. That same loaf cost $1.39 in 2008. Now it costs $4.25 per loaf here. For the first time since the 1960’s, more gold is leaving the US than is coming in. Economists are predicting a rise in the price of gold to reach $3,000 per ounce in early 2013. Foreign corporations are buying up US farmland, mineral rights, common stock of US corporations, and other assets of the US that economists call “Capital Stock.” Interest rates will have to rise to avoid a stampede run on our currency. When that happens, the cost to service our National Debt will suck the life out of tax revenue at all levels of government. Will wages keep up with cost of living? Only for unions with cost of living clauses in their contracts, if their members still have jobs.
Defined-benefit pension funds with built-in cost of living adjustments (COLAs) will be broke. Local and regional government with teachers union and public service union contracts and defined-benefit pensions will become insolvent trying to rebuild the corpus of the pension funds and other entitlements.
Seniors and retirees will be hard hit with the loss of the purchasing power of their life savings. Worst case, the combination of these events will create another type “W” recession that could easily result in a real unemployment rate of 50% for US citizens. The USA is faced with a battle on at least two of the following fronts:
1. Cyber warfare that attacks our infrastructure,
2. Economic warfare that debauches our currency,
3. Portable energy warfare through denial of access,
4. Military insurgency from without and within by government-sponsored terrorism of Hezbollah, Hamas, Muslim Brotherhood, and Al Qaeda, and
5. Political corruption and treason via a hostile government conversion from our representative republic bound by a confederation of States to a socialist federal republic with provincial States (Agenda 21).
Will the clueless and poorly educated voters wake up and see the danger? Will those who realize the danger get out and vote? Will our election be stolen by voter fraud? We will find out in November.