Self-test

  1. What is the best way to invest savings?
    There is no simple answer to this question, but there are guidelines.
    1. All financial advisors have a conflict of interest when managing your savings. You are responsible for knowing how to manage your wealth.
    2. Understand banking and fractional reserve lending.
    3. Understand government and banking.
    4. Understand money.
    5. Understand the doubling interval.
    6. Understand wealth preservation versus making money with investments.
    7. Understand long term trends (cycles) and adapting.

  2. Describe financial advisors conflict of interest.

  3. Describe Fractional Reserve Lending and how it can be thought of as counterfeit currency.
    A bank's balance sheet is upside down from other businesses. In a banker's world cash is a liability while loans are assets. Thus, when a bank lists its assets they are, in fact, the amount of its outstanding loans.
    When a loan is made, numbers are entered into the loan account and added to the bank's assets. To be clear, there is no effort on the bank's part other than typing digits at a keyboard which creates 'money' in the customer's account.
    Of course, the expected outcome is that the loan principle plus interest will be repaid. In this event the principle goes to money heaven (i.e., is destroyed) by subtracting the principle payment from the bank's balance sheet asset column.
    Banks also have a position called the loan/loss officer and it that person's job to monitor incoming loan payments to ensure the bank maintains its loan/reserve ratio. The loan/reserve ratio is the ratio of loans to vault cash or other liquid liabilities (somewhere between 2-15% cash). Based upon daily loan payments, the loan/loss officer then adjusts the amount of new loans that can be made.
    If all or some of a loan is not paid, the bank employs a loan-loss account to pay for these defaulted payments. The account is filled from bank profits and is usually 1-2% of the bank's assets.
    If the bank suffers gross loan defaults, it becomes bankrupt. The FDIC steps in and uses taxpayers money to settle the worst of the bad loans and sell the bank at a discount. At this point, one could consider using taxpayer money to settle loans as counterfeiting. As for typical loans, one could say the loan is counterfeit, but only for the loan duration. More precisely, the banker, without effort, takes wealth from future earnings.
    Loan Loss Accounting

  4. Describe the relationship between government and banking.

  5. Describe the doubling interval.

  6. Contrast barter, currency, debt, and money.
    1. Barter is the exchange of goods/services.
    2. Currency is legal tender meaning that it is unlawful to refuse currency when it is used to pay debt and taxes.
      Currency is usually an abstraction of money and so its value is based on the confidence in the issuer of currency.
    3. Debt is the future payment of currency to the debt holder.
    4. Money is a store of value, permanent, non-traceable, portable, divisible, fungible, and consistent.
    • Money must possess intrinsic value, which is why paper or crypto-currencies are not money.
    • Money must be durable and permanent, which is why corn/cotton/wheat does not replace money.
    • Money must be convenient, which is why copper does not replace money.
    • Money must be divisible, which is why art work does not replace money.
    • Money must be fungible and thus have a wide degree of acceptance, which is why crypto-currencies do not replace money.
    • Money must be consistent, which is why real estate (which depends on location) does not replace money.
    • Money must be relatively rare and limited in the quantity, which is why iron or copper does not replace money.
    Specie (gold/silver coin) is the ideal form of money.
    JP Morgan, one of the most powerful bankers said: "Gold is money. Everything else is credit."

  7. Contrast properties of possible currencies.
                             Intrinsic            Non-traceable
                               Value   Permanent  Counter-Party  Portable  Divisible  Fungible Consistent
    Specie (gold/silver coin)   YES       YES          YES         YES       YES        YES       YES
    Oil                         Yes       Yes          Yes         No        Yes        Yes       No
    Corn/cotton/wheat           Yes       No           Yes         No        Yes        Yes       No
    Land                        Yes       Yes          No          No        Yes        No        No
    Gold certificate            Yes       No           No          Yes       No         Yes       Yes
    Dollar bills                No        No           No          Yes       Yes        Yes       Yes
    Debt                        No        No           No          Yes       Yes        Yes       Yes
    Tally sticks                No        No           No          Yes       Yes        Yes       Yes
    

  8. Contrast price of gold/silver versus its value.
    In any transaction the seller has an asking price versus the potential buyer offering a bid or value reply. The buyer would not make bid unless the good or service had value. Value is seen as a constant or long-term relationship with the cost to produce/provide a good/service. Price is seen as more volatile than value where a low price reflects pressure or stress on the seller and a high price is the result of the seller enhancing value through presentation such as a clean car or showcased home.

    Precious metals are at historic low prices while their value has remained constant. For example, the historic price of an ounce of silver would be 10 days of hard labor which, in today's dollars, is ~$1,000. Moreover, since the 1950s, vast supplies of silver have been consumed leaving a fraction (1/50th) in the market as jewelry, art, industrial, and investment silver. Gold, on the other hand, is not consumed, but it has been anonymously reused (re-hypothecated) over the decades as collateral on trillions of dollars of debt, making its theoretical price resolution as high as ~$50,000/Oz.

    Thus, (overly?) cautious people who believe that our complex global society could fail, purchase and hold physical gold/silver.
    http://en.wikipedia.org/wiki/Value_(economics)

  9. Explain how the value of currency versus the value of gold is upside down from how we normally think.
    In an ideal world, governments control currency transparently thereby engendering trust in the currency as a measure of value. But from the earliest civilizations through today the opposite has held. Governments always overspend on public works and war. Rather than levy taxes to pay for the overspending, the supply of currency expands to pay for public works and war. Expanding the currency supply acts as a stealth tax. A tax based upon citizens inability to recall year-to-year price changes, and when price hikes are noticed, the merchant is blamed by government officials which, in turn, impose "price controls". Currency expansion is also a regressive tax robbing purchasing power from the poor, who can least afford it. Furthermore, when the government spends new currency, it reaps the benefit of current currency value; after the new currency has circulated and spent by an average citizen, its value has decreased. When a private entity increases the supply of currency is called counterfeiting; when government increases the currency supply, it is called fiscal policy. Earliest civilizations including Chinese Dynasties, Egyptians, Grecians, and Romans would simply create more "cash" as in China, or copper coins in early Roman times. Later, impurities (e.g., copper) would be added to gold and silver to allow the minting of more coins. Today, the Federal Reserve simply enters numbers into a computer program to create new dollars. The temptation to overspend on public works and war is so great that ALL (of the thousands of) fiat (by order) currencies created over the millennia have dropped to a value of zero within several decades.

    To appreciate the rarity of gold, one must look at the periodic table. As one moves down rows of elements in the periodic table, atoms contain more protons in their nucleus (i.e., increasing atomic weight). With each increase in the number of protons, increasing amount of energy is required create these heavier atoms. It is theorized that it would require the energy of two colliding neutron stars to assemble the 79 protons in the nucleus of gold atoms. Besides being rare, gold does not oxidize giving it the properties of permanence, divisibility, portability, the properties of money. Since governments cannot control neutron stars to expand the supply of gold, gold has had constant value throughout history when compared to volatile currencies. Warren Buffett jokes that it is silly to dig a hole to mine gold, then dig another hole to store gold and hire an armed guard to secure it, but the simple truth is that gold is a store of wealth while other financial forms of wealth are derived from gold.

    Things are upside down because we think of currency as being constant while gold changes in price. In fact, the opposite is true. If one uses gold to purchase oil, college tuition, medical services, or any other "inflationary" item, one would discover that the amount of gold required to purchase these items has changed little for more than fifty years. So the only thing that can be changing is a loss of value in the dollar.

  10. What is meant by "theoretical price resolution" of gold/silver.
    Purchase of financial assets is not an investment in wealth (money), but rather a re-allocation of currency within the financial market. Financial asset values are maintained by sellers finding additional buyers and prices are maintained by confidence in the market. Buyers take for granted equity-to-currency-to-money conversion can occur at a moments notice, but it works only if there is confidence that the market will stand-in as a proxy for wealth. And when a large number of investors attempt equity-to-currency-to-money conversion, confidence is lost.

    Issuance of debt (making loans) is predicated on future earnings which is high-risk in a contracting global economy. Debt default (deflation) began in 2008 with the Lehman Bros bankruptcy, but rather than allow losses, the majority of default has been replaced with new debt (tens of $trillions of new loans). At some point in the (near?) future $trillions of additional debt will become meaningless in a contracting global economy. It is axiomatic that the approximate 1000 trillion dollars of global debt that has not and cannot be re-paid will not be paid.

    As debt default mounts and new debt crosses an hereto unknown threshold, a loss of confidence in equity (stocks) and currency, will engender waves of panic as holders of financial assets attempt to convert to real assets. It would be a sellers-only market. The conversion of equity-to-currency-to-money would be further constrained by the vast amount of financial assets compared to limited amounts of currency. In such a crisis people would horde cash, banks would go on 'holiday', and there would be the possibility of currency re-issue (red dollars), subsequent inflation (red dollars only worth a fraction of green dollars), or even a period of hyperinflation before settling in for a long economic depression. Finally, such a shock would cause a rapid and terminal collapse in the global supply-chain. To summarize in simpler terms, the global Western financial markets are a Ponzi scheme, meaning that the system depends on the confidence of new participants either though new buyers, new immigrants, new countries, new resources, more economic growth, more inexpensive energy, or a combination of these.

    Under these circumstances the price of gold/silver would be reduced to hours-of-labor rather an amount of unknown value in currency. Using history as a guide, then a troy ounce of gold would buy 150 days of labor and a troy ounce of silver would buy 10 days of labor. By the way, historically a day's labor is 12 hours not eight.
    Chris Duane - Honest Work For Honest Silver Pay
    The Treasure of the Sierra Madre - Value-of-silver speech
    A Brief 2000-Year History Of Silver Prices
    A Study in Global Systemic Collapse

  11. Describe wealth preservation versus making money with investments

  12. Describe long term trends (cycles) and how to adapt.

Liquidation of Government Debt

As covered in the IMF working paper Liquidation of Government Debt, the use of a combination of shearing and fencing have up to five common characteristics: 1)inflation; 2)governmental control of interest rates to guarantee negative real rates of return; 3)the funding of government debt by financial institutions; 4)capital controls; and 5)discouraging (or even outlawing in some cases) precious metals investment.

Capitalism versus Creditism

  • In traditional capitalism, economic growth is driven by savings and subsequent investment of savings from a micro-level.

  • In creditism, economic growth driven by expansion of credit (debt) and controlled by central banks and governments from a macro-level. Since the world's currencies are no longer backed by gold/silver, today's currencies are credit (debt) issued by governments; thus, loans, letters-of-credit, securities, and currencies are various forms of the same thing - debt.

  • The essentially unlimited issuance of debt has produced unprecedented world-wide prosperity in the last 40 years. For example, US public/private debt expanded from $1 trillion in 1964 to $57 trillion in 2013, an increase by a factor of 50.

  • This vast amount of world-wide credit has never been seen before; however, the liquidation of Lehman Bros. in 2008 revealed a systemic inability to repay debt, which continues through today (see first figure below). Given the relatively paltry Nominal Gross Domestic Product (NGDP) and 'check book' money supply, how can the debt be paid? Here are three possibilities:

    1. Foreclosure - Collateral collection on non-paying debt would cascade from individuals, to small businesses, to corporations, to banks, to governments world-wide. The subsequent selling-induced deflation would lead to a never-seen-before world-wide severe depression that would require decades of recovery, or possibly collapse society for centuries.

    2. Maintain Status Quo - As they have since 2008, governments can continue to create more debt (currency) to replace non-payment of debt. Thus, the world's population becomes poorer as more and more currency is created to replace bad debt. Out of necessity, governments must obfuscate the amount of increased debt and resulting reduced purchasing power of currency, which is why statistical gymnastics have been introduced into the Consumer Price Index (CPI). And when factoring an average nine percent (9%) year-to-year inflation rate over the last decade, one can see the nominal stock market gains would, in fact, lead to a loss in real income (see second figure below).

      If the US were to expand its debt to the same extent that Japan has, then public on-book debt would grow from the current $17 trillion to $42.5 trillion. In other words, if this path is followed, we can obtain a general idea of our future by observing Japan.

    3. Government Takeover - Currency creation is controlled by private bankers which would never forgive outstanding debt, but it is possible for government to forgive debt. As a last ditch effort it is possible for government to take control of currency creation, thereby remove, currency creation from private bankers and direct productive use of credit from spending on consumption and war to spending on energy, technology, and infrastructure.

    Which alternative do you think is most likely? My bet is on door number 2. Our society will follow the road to impoverishment until...

Central Banks are Buying S&P Futures" - Nov 2014
Forget Orwell and Rand, We've Gone to Full On Plato - Nov 2014

Symbiotic relationships among energy, the economy, and perception of wealth

Our debt-based financial system is a result of the possibility of future growth allowed through essentially-free energy and, therefore, is dependent upon growth. Said another way, forms of wealth that include Fractional Reserve Lending, equities, corporate bonds, letters of credit, infrastructure project funding, and debt-based currency (Federal Reserve Notes) all depend upon future growth to pay back the debt.

The financial system is maintained with negative-feedback loops; but, the system is also extremely complex and unable to assess true risk as demonstrated in the London Whale blowup. However, once the system breaks through its outer limits, reverse positive-feedback loops take control. One example is panic stock selling, but in today's economy the most likely outcome would be a lack of trust and panic withdraw of credit as occurred in 2008.

Turning our attention to energy, we see our modern societies have become dependent on nearly-free energy. We need an Energy Returned On Energy Invested (EROI) factor of at least 8:1 to maintain current living standards. But an EROI of 14:1 is required to support such things as good education, health care, and the arts.

The bad news is that our EROI is on the cusp of dropping exponentially and as EROI continues to drop (Arctic, deep sea, tar-sand and shale-oil, have an average EROI of 5:1), economic growth will slow with far reaching and devastating reversal of global prosperity in an unequal fashion.

Once one accepts that growth will slow or even cease, all of the current common sense assumptions about financial investing, such as the assumption of making money from money, cease to be true.

Funding the needed $trillions to develop 5-3:1 EROI oil infrastructure in a low-to-zero growth world economy would be almost impossible. This simple realization would create a positive-feedback loop of bankruptcies that would destabilize and crash the world's financial system.

Again, wealth is based upon future growth, so the wealth that disappears in a financial crash is stocks, endowment funds, pension funds, insurance companies portfolios, the ability of governments to borrow, and the ability of governments to tax.

Today's wealth is no more than a perception of future growth. When that perception shifts negatively, as a result excessive risk (losses) in financial markets, an unexpected decrease in EROI, or an understanding of climate change, the world's civilization may reset itself back to the 1850s.
Roger Boyd Video - Financial System on Life Support - July 2014
Roger Boyd Book - Energy and the Financial System: What Every Economist, Financial Analyst, and Investor Needs to Know – February 28, 2014
Similar to the topic of Nate Hagens: Twenty (Important) Concepts I Wasn't Taught in Business School - Part I

Links


85 richest now have as much money as poorest 3.5 billion
20 Things I wish I knew when I was 20 years old
Governments use monetary inflation to secretly confiscate wealth from their citizens and not one man in a million is able to diagnose
G. Edward Griffin - The Capitalist Conspiracy
Hillary Clinton accepts CFR influence
50 mega-corporations control our lives
The One Percent Jamie Johnson Documentary - 2012 Sales: 67.3 Billion`
Four Horsemen - Feature Documentary - Official Version
Shadow Banking estimated to be $100 trillion+ in 2012
US Mint, HSBC, and JP Morgan cooperation in silver pricing
Stalling growth of international banking reserves foreshadows world financial collapse
Banking Secret "End-Game" Memo
Making the World Safe for Banksters: Syria in the Cross-hairs
Take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and, finishing off, Iran
Take Your Money Out of the Bank
Who Says Gold Is Money?
The Shadow Bank Kiting Machine
Prof. Jeffrey Sachs presentation on April 17, 2013
Commodities Price Smash 15Apr2013 - Who, What, How and Why? - Theodore Butler

Mike Maloney - Hidden Secrets of Money Series
  1. 26Feb13 - Currency Versus Money
  2. 13Aug13 - Seven Stages of Empire
  3. 24Sep13 - Dollar Crisis to Golden Opportunity
  4. 15Oct13 - The Biggest Scam in the History of Mankind (Debt Ceiling Truth)
  5. 26Nov13 - Silver and Gold: When Money is Corrupted
  6. 19Jan15 - Global Shockwaves To Come From Swiss Currency Bombshell
  7. Everything You Know About Money is Wrong

Gold for Oil - an Explanitory Device for the Current Financial Crisis

Details of this story are lengthly and contain plausible conjecture (see links below); nevertheless, its ability to integrate otherwise incongruous events is appealing. This is the condensed version.

Since paper currency had little value to Bedouin desert nomads, Saudi Arabia has historically requested to be paid (fully or partly) with gold in exchange for oil. Before entering World War II, America was paid in gold for war goods and subsequently held vast amounts after the war. So it was not considered a big deal to provide $35/Oz gold for oil from the 1940s until early 1970s. In 1971 however, the general lack of gold caused Nixon to close the "gold window", that is, the dollar was removed as a stand-in for gold. Since major Western currencies (including Japan's) were tied to the dollar, that meant that all Western currencies have been floating since 1971. The USA subsequently entered into an agreement with the Saudi government which stated that in exchange for cheap oil, there would be implicit military protection provided by the USA and gold, albeit a smaller amount, would be provided with dollars in exchange for oil.

From ~1957 through 1971, we emptied our gold reserves from more than 20,000 tonnes down to just 9,000 tonnes, but there was also great optimism about mining technology. So agreements were established that provided the Saudi government with third-party gold while third-parties were guaranteed physical gold from future mine production. Gold prices rose over the ensuing decades, but in 1979, the price of gold went from ~$300/Oz to ~$700/Oz within a year and settled back into $300 range until the turn of the century. Gold mining production also jumped from the 1970s through 2000 roughly doubling the amount of world-wide gold that existed before 1970.

Decades later, in 1997, the London Bullion Market Association (LBMA) for the first time released its bullion trading activity and it shook the trading markets to see a high volume of gold traded daily. From 1997 through 2011 the price of gold rose until it reached $1,800 per ounce as the markets traded more and more gold.

Meanwhile, Western governments continued to engender (create through fractional reserve lending and outright printing) more and more paper currency over the decades. For example, the USA M3 dollar currency supply doubled five times since the 1970s (see table below) and US public/private debt expanded from $1 trillion in 1964 to $57 trillion in 2013, an increase by a factor of 50. All things being equal, as the amount of paper currency continued to increase the price of gold should also have increased in a similar fashion each time the amount of currency doubled. Even though the supply of gold has doubled since 1970, if one simply compares the ratio of dollars/debt to gold in 1970 and again in 2013, a comparable gold price would be ~$55,000/Oz. But the price of gold has not increase because it is in the interest of the US and other Western governments to suppress the price of precious metals to continue the illusion of sound money as the Western population become poorer and poorer at ~5%/year.

Nevertheless, price inflation is not the core problem. A financial collapse can be triggered simply by the lack of gold! Gold payments to Arab countries for oil continued from the 1970s and mining supply helped to keep pace with the need for gold until Asian demand entered the picture over the last decade. Western governments are now caught between a rock and hard place. They have to continue to suppress the price of gold, yet poor currency value means that miners are losing money producing gold at spot prices, and worse yet, there are fewer and fewer viable mines with less and less gold content driving up production cost and reducing yield.

As a result of record world-wide physical gold demand, physical gold shortage indicators are appearing. Banks are refusing to provide customers with their allocated gold; when gold is provided it is not the same gold that was stored (wrong serial numbers); gold reserves at the COMEX and LBMA have dropped to historic low levels; Bank of England shipped tons of gold from its vault in late 2013; and there are rumors that Saudi gold stock is used to supply Asian demand until future mine production can replace it. In fact, the consequences of collapse are so terrible that it would not be a surprise to learn that Arab gold stocks have been re-cycled to purchase Arab oil.

So all that is required for a financial crisis is for someone, somewhere, to request enough physical gold that others will not backstop the request and the system collapses. Why would someone request enough physical gold to trigger a collapse? Because gold's spot price is ~$1,300/Oz but its true value is ~$55,000/Oz. It is in everyone's interest to keep the system going, but at what point will the risk be too great to backstop a request for physical gold?

  1. Oil, God, and Gold: The Story of Aramco and the Saudi Kings
  2. US Mints Gold Disks for Oil Payments to Saudi Arabia
  3. US Mint Gold Disks for Oil Payments to Saudi Arabia
  4. FOFOA - Think like a Giant - Part Three
  5. Trail Head - Walking the Gold Trail Using the "Thoughts!" of ANOTHER
  6. The Long and Winding Road - Walking the Gold Trail Using the "Thoughts!" of ANOTHER
  7. The Scenic Overview - Walking the Gold Trail Using the "Thoughts!" of ANOTHER
  8. Page One - Foundational Gold Trail Commentary
  9. Page Two - Foundational Gold Trail Commentary
  10. Page Three - Foundational Gold Trail Commentary
  11. Page Four - Foundational Gold Trail Commentary
  12. Commodities Firm Gunvor Said to Exit Gold Trading After Year, No Gold - 11 Dec 14

High economic risk - how government intervention has destroyed savings, pricing, and the world's western economy
James Turk's Outlook for Gold for 2013 to 2015
James Turk - Everyone should have a precious metals portfolio
Were Explosives the Source of the Seismic Signals Emitted from New York on September 11, 2001?
Scientific 9/11 Analysis - Richard Gage - 9/11 Revisited Conference 2012
46% did not vote - 27% Obama - 26% Romney - 2% Other
Dark Age Of Money
Weakness Begets More Weakness
You are debasing more than our currency
The Food Stamp Nation
Five Stages of Collapse
State Nullification of Federal Law

Grant Williams Videos
  1. 16Feb12 - Simplicity: Part 1
  2. 16Feb12 - Simplicity: Part 2
  3. 19Oct12 - How I Learned to Stop Trading and Love the Farm
  4. 20Oct12 - Extraordinary Popular Delusions and the Madness of Markets - The Gold Bubble
  5. 29Mar13 - Risk - It is Not Just a Board Game
  6. 24May13 - Disconnect Between Financial Markets and Mathematical Reality
  7. 25Nov13 - ASFA 2013 Presentation - Step Aside and into Cash

WE ARE LEGION: The Story of the Hacktivists
We are all "dumb@$$#$" now!QE3
$100 billion withdrawn from equity mutual funds in 2012
Mysterious Algorithm Was 4% of Trading Activity Last Week
Trillion Dollar Private Equity Industry That Owns Everything
Investors Need To Realize The Machines Have Taken Over
Nanex ~ The Rise of the HFT Machines
HFT Market Events and Phenomena
The Banker's Guide to Owning the World
Intro to Hubble Telescope and its Wide Field Camera 3
Hubble's Deepest Image yet as of 8th of December 2009
Hubble Reveals Even More Galaxies September 2012
911 Anniversary
World Trade Center collapse compilation
Architects & Engineers for 9/11 Truth
The Challenge to Our Schools, Educators, and Parents
Computer Science Grad Leaves the USA
14% of Americans (46 million) are on Food Stamps (EBT) which make up 25%-40% of revenue at select Wal-Mart stores
JPMorgan's food-stamp debit cards made $5.47 billion
5,900% (oil subsidies) to 77,500% (pharmaceuticals) return on investment in lobbying
Small investors pull trillions out of stock market over last two years
Memorandum of Law: The Money Issue

The Exchange Stabilization Fund Statute The ESF and Its History
What I have been afraid to blog about: The ESF and Its History_Part 1
What I have been afraid to blog about: The ESF and Its History_Part 2
What I have been afraid to blog about: The ESF and Its History_Part 3
What I have been afraid to blog about: The ESF and Its History_Part 4
What I have been afraid to blog about: The ESF and Its History_Part 5
Chris Powell
CIA Entertainment Industry Liaison Office In one hearing I attended in US District Court in Boston, an assistant US attorney got up, speaking on behalf of the US government, and he said that the US government under the Exchange Stabilization Fund Statute, the Gold Reserve Act of 1934, had precisely the power to interfere with the pricing of gold that the lawsuit complained of -- that is, a US government lawyer declared in open court, in 2001, that rigging the gold market as government policy is totally authorized by law.
How the ESF created the LIBOR crisis Acting for the U.S. Treasury was the Exchange Stabilization Fund [ESF] - a clandestine division of the U.S. Treasury which is beyond oversight/supervision by Congress and U.S. Law. The trades the ESF engaged in were "brokered" by the N.Y. Federal Reserve [Timothy Geithner] and specifically targeted to J.P. Morgan Chase to "compel" them to purchase TRILLIONS in short dated U.S. Government T-bills [maturities of 1 yr. and less].
Dr Udo Ulfkotte, journalistUdo Ulfkotte Hired by CIA to promote USA and denigrate Russia over 25 year period.
Denver Census Staffer Admits Data Falsification ... she provided details of wrongdoing by three different survey takers... that hundreds of interviews that go into the Labor Department's unemployment rate and inflation surveys would miraculously be completed just hours before deadline.
Stonewalled: My Fight for Truth Against the Forces of Obstruction, Intimidation, and Harassment in Obama's Washington The story of the Obama administration's efforts to monitor journalists, intimidate and harass opposition groups, and spy on private citizens.

The Fourth Turning THE FOURTH AMERICAN REVOLUTION by Jim Quinn 19th January 2011
YOU AIN'T SEEN NOTHING YET - PART ONE
YOU AIN'T SEEN NOTHING YET - PART TWO
YOU AIN'T SEEN NOTHING YET - PART THREE
BAD MOON RISING
http://en.wikipedia.org/wiki/Strauss-Howe_generational_theory
Fourth Turning by William Strauss
Fourth Turning by William Strauss --> Fourth Turning by William Strauss
http://www.timepage.org/types.html
http://www.timepage.org/era.html
http://www.safehaven.com/article/14670/into-the-fourth-turning
Summary of the Fourth Turning Theory
Leah Lynn Plante was arrested and placed in solitary confinement for remaining silent during a grand jury
Tatiana Moroz - Make A Youtube Video
Millennial Generation Speaks
Millennial Generation CUNY Students Confront War Criminal David Petraeus
Tough Mudder Tri-State 2010
Will a Prophet Assume Command?
Millennials: We Suck and We're Sorry
Millennial Carey Wedler says: There's NO EXCUSE for apathy!
Millennial Dissident Dad

Money As Debt-Full Length Documentary
Money As Debt II: promises unleashed
Banker left speechless by Irish journalist
$15 Trillion Bond Fraud to Prop up the U.S. Dollar?
Goldman Secret Greece Loan
How Goldman Sachs Helped Mask Greece's Debt
Who Loaned Greece the Money?
Senior US bankers told Greece will default on Friday, March 23rd
Visualize US Debt
Credit Default Swap
USA Debt versus Gross Domestic Product
The Historical Case For $960 Silver
Is It Too Late To Buy Gold and Silver?
Ellen Brown - Occupy LA Teach-In
Kyle Bass - How Greece is triggering lack of confidence leading to higher interest which leads to world-wide debt collapse
Bill Black - At OWS - Arresting Banksters
Bill Black - Occupy LA Teach-In
US History exposes the 1%'s crimes then and now 1 of 6
US History exposes the 1%'s crimes then and now 2a of 6
US History exposes the 1%'s crimes then and now 2b of 6
US History exposes the 1%'s crimes then and now 3 of 6
US History exposes the 1%'s crimes then and now 4 of 6
US History exposes the 1%'s crimes then and now 5 of 6
US History exposes the 1%'s crimes then and now 6 of 6
occupywallst.org/
Martin Armstrong Banks use AAA "assets" to invest in the 24-hour cash repurchase agreement (repo) market where large sums of currency are borrowed for 24 hours. The 24-hour repo market is strictly cash with the exception that AAA rated securities can replace cash. However, when a fraudulent "AAA" sovereign debt fund misses a payment and it is currently in a repo agreement, the bank has to find real cash to cover the investment in 24 hours or less. And all the mega-banks use fraudulent securities in the repo market.
About 50% of broker assets are funded through repo borrowing. There is a 24-hour cash repurchase agreement (repo) market where billions of dollars are borrowed for 24 hour time slices. Many, if not most, brokers use over-night repo borrowing to hold long-term assets; and much of this borrowing can be kept off-book. Analysis has shown that repo financing of assets (equity or credit) is substantially greater than that of cash held on the balance sheet, meaning that, if day-to-day repo borrowing conditions were to shift via a credit freeze, monetary crisis, or jump in interest rates, brokers would be forced to sell a sizeable volume of potentially illiquid paper (equity or credit) into a down market.
The Gentleman's Guide To Forum Spies (spooks, feds, etc.)
The Student Loan Racket
Harry Markopoulos - Bank of New York Mellon multi-pronged campaign of deception
The Day America Died
Secret U.S. panel can put Americans on "kill list"
Chris Hedges - Occupy Wall Street is the Hope of America/
Chris Hedges: "This one could take them all down"
Chris Hedges: "Unfettered rise of the corporate class"
Head of Unicredit Securities Predicts Imminent Eurozone and Global Finance Crash
Trader Tells Truth - Collapse Coming
Ginii Coefficient
When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy
The Financial War Against Iceland
Head of ECB Jean Claude Trichet Meltdown
European Leaders Know The Euro Is Doomed
9-11 Truth Roster of Politicians, Scientists, Engineers, and other Professionals
Jim Sinclair interviewed by James Turk
Greenspan: US Can Pay Any Debt It Has Because It Can Print Money To Pay It
Firm gives $1 million to pro-Romney group, then dissolves
Failed Currencies
The Fed Audit
Michael Hudson - Save the Gambling Bankers
Senator Sanders - Fed gave secret loans to private international banks
500 Million Debt-Serfs: The European Union Is a Neo-Feudal Kleptocracy
Mainstream Media: Presstitutes for the Rich and Powerful
Lecture Notes for MacroEcon - How Banks Create Money
Nassim Taleb on Living with Black Swans
Chris Martenson at InnoTown Innovation Conference 2010
Are You an Exploited Debt-Serf?
Deep Captured Academics
Deep Captured Academics - Part 2
The Hope That Flows From History By CHRISTINA D. ROMER
1 of 4 Meltdown - The Secret History of the Global Financial Collapse
2 of 4 Meltdown - The Secret History of the Global Financial Collapse
3 of 4 Meltdown - The Secret History of the Global Financial Collapse
4 of 4 Meltdown - The Secret History of the Global Financial Collapse
Inside Job

That Which is Seen and That Which is Not Seen by Frederic Bastiat, 1850
Jack Daniels Explains The Deficit
Fox News Caught In Ron Paul Dirty Tricks
CRTC To Allow Misleading News, Just In Time For Fox News North To Launch
Class Stratification
National Debt in Federal Reserve Notes
National Debt in Gold
Debt Ceiling 1
Debt Ceiling 2
Debt Ceiling 3
Public Private Wages Graph
Public Private Wages Article
HSBC sheds 30,000 jobs, posts $11.5 billion profit on first half of 2011

Arithmetic, Population and Energy by Al Bartlett
Days of Abundant Resources and Falling Prices Are Over Forever

Damon Vrabel Money Lecture 1
Debunking Money #1 - Money, Myth, and Machiavelli
  1. As a whole, the economics profession does not discuss these key facts:
    1. PUBLIC legal tender currency is created as loans by PRIVATE individuals and held on PRIVATE balance sheets.
    2. Legal tender Federal Reserve Note (FRN) fiat currency is debt.
    3. The economics profession separates theory as "positive economics," to signify theory without value judgments, versus "normative economics" which contain value judgments. Positive economic theory is exalted far above normative leading to the claim that economics should not, and does not, make ethical/moral judgments since economics is pure "science." But economics is no more science than computer science. They do not observe and experiment with a "natural science," rather economic science and computer science are a man-made (artificial) endeavors that mandate ethical/moral judgment.
      Economic Theory for Scientists and Engineers
    4. Economics deals with financial power. Financial power is politics. Politics deals with social relations involving authority or power by force.
      Understanding politics
    5. The economy is predicated on abundant, inexpensive, energy and constant weather patterns, both of which are changing and will continue to change.

  2. PUBLIC Federal Reserve Note (FRN) debt currency comes into existence as a PRIVATE loan and recorded as an asset on a banking cartel balance sheet. Loans are a liability to people, businesses, and governments.

  3. Money is economic and social power. Those with more assets than liabilities are more powerful than those with less assets and more liabilities. A "T" balance sheet shows assets to the left hand side and liabilities on the right hand side. A bank's T balance sheet shows currency as an asset on the left hand side while people, corporations, and governments T balance sheets owe debt that is shown as a liability on the right hand side.
         Banks           People         Corporations      Governments
    ___+_______-___   ___+_______-___  ___+_______-___  ___+_______-___
     Asset | Liabil    Asset | Liabil   Asset | Liabil   Asset | Liabil
    ---------------   ---------------  ---------------  ---------------
     Loans | Deposit  Deposit| Loans   Deposit| Loans   Deposit| Loans
    
    And even if people, corporations, and governments have cash deposits, it only represents someone else's debt. FRN currency is a debt instrument!

    All things being equal, having currency as an asset means a bank's power comes from its ability to selectively allocate new currency.

  4. When issuing a loan, the bank creates the currency through an accounting entry and since that loan has to be paid back with interest, it means that as total debt expands so does the supply of currency, but not enough to pay interest on the debt.

    The reverse is also true. When paying installments on a loan, the interest portion goes to the bank's gross profits while the principle portion of the payment is "destroyed," "evaporated," or "disappears" by deducting the payment amount from the bank's asset column [1]. In this way currency is conserved by subtracting it from the asset ledger where it was recorded when the loan was originated. Thus, paying off debt reduces the currency supply. The less debt there is, the less currency there is. The irony of cutting the national debt is that it means less currency in circulation.

    If a loan is not paid, then the bank must use its profits to pay the loan principle. Banks tend not to lend during a recession (credit crunch) because they fear default on the loans and the currency supply declines, with a decline in currency-supply aggregate demand declines, which makes the recession worse.

    Since interest on debt is not included in the loan, there is a requirement for "economic growth" (or artificial or man-made scarcity) to pay interest on debt. Followed to its logical conclusion, total debt plus interest eventually consumes the proceeds of all future labor.

  5. The legal tender FRN fractional reserve debt system is similar to a casino where one must purchase tokens to gamble. (Much like one must purchase Federal Reserve Notes with labor or gold coins to purchase retail items.) The gambler is playing against the house who sets the odds of winning (interest rates). So a lucky few do win, but the average player looses, and the house always takes its percentage (through inflation).

    When FRN currency is created as debt, it benefits the extremely small group - the capital holders who live off the labor of others through interest payments. From a systems viewpoint, debt-based currency cannot be stored since it always vulnerable to loss of confidence. Also, more currency must be created to keep the system going.

  6. The lack of intrinsic value of FRN currency (unlike gold and silver coin specie) means the true value of FRN currency is based upon the popular consensus of "value." A loss of confidence in the currency and the currency degenerate from a symbol of wealth to what they are physically - pieces of paper.

  7. Two most basic groups in the world are capital holders, who control banking, and the rest of us. Since capital holders (wealth) controls banks, they control society with selective loans, corporate owership, and contributions to a life-long political class. Coordinated banking can create abundance with high volume, low interest loans and create artificial (man-made) scarcity with few, high-interest loans.

  8. Debt is based upon compound interest rates. For example a 20% interest rate will equal the loan principle in five years or 20% per year. A 10% interest rate will equal the loan principle in 10 years or 10% per year. Yet, the economy only grows at 0-3% per year requiring 23.33 years to double in size. Thus overall, an economy based on debt can never grow fast enough to repay interest on its debt creating interest-induced scarcity. Earlier civilizations understood this mathematically and intuitively which why debt jubilees were common practice until ~500 years ago when goldsmiths and fractional reserve lending became prevalent [2].

  9. Capital holders represent the world of power and money and are supported by MBAs, JDs, economists, politicians, and corporate executives are all drawn into the capital machine.
References:
1. Loan Loss Accounting
2. Exponential Interest Rates versus Linear Economic Growth
3. Monetary Policy Tools

Damon Vrabel Money Lecture 2
Debunking Money #2 - Orwell and the Animal Farm
  1. People, states, and Federal government work for money which is debt to private capital holders.

  2. Banks control people by extending and retracting credit. Extending credit creates an asset bubble and retracting credit to create a depression.

  3. The Federal Reserve is a private banking cabal of primary-dealer banks makes up the north and west of the world [1]:

    1. BNP Paribas Securities Corp.
    2. Barclays Capital Inc.
    3. Cantor Fitzgerald & Co.
    4. Citigroup Global Markets Inc.
    5. Credit Suisse Securities (USA) LLC
    6. Daiwa Capital Markets America Inc.
    7. Deutsche Bank Securities Inc.
    8. Goldman, Sachs & Co.
    9. HSBC Securities (USA) Inc.
    10. Jefferies & Company, Inc.
    11. J.P. Morgan Securities LLC
    12. MF Global Inc.
      Declared bankruptcy 31-Oct-2011. Required to modify its capital treatment of repurchase transactions to maturity that were collateralized with AAA rated European sovereign debt (pdf).
      See Martin Armstrong above.
    13. Merrill Lynch, Pierce, Fenner & Smith Incorporated
    14. Mizuho Securities USA Inc.
    15. Morgan Stanley & Co. LLC
    16. Nomura Securities International, Inc.
    17. RBC Capital Markets, LLC
    18. RBS Securities Inc.
    19. SG Americas Securities, LLC
    20. UBS Securities LLC.

  4. Federal Reserve issues bonds to government.

  5. These capital holders farm the industrial world's effort with interest payments and fees which funnel up to a relatively few at the top of the financial industry hierarchy.

  6. Allocation of capital (loans) is not benign or fair. It goes first the those who help keep the status quo, high technology industry, Hollywood, military, and war industry.

  7. The "global economy" is really one economy controlled by these massive capital holders.

  8. An exception is public banking such as the State Bank of North Dakota [2,3,4].

References:
1. http://www.newyorkfed.org/markets/pridealers_current.html
2. http://publicbankinginstitute.org/
3. http://publicbanking.wordpress.com/
4. The Public Bank Solution: From Austerity to Prosperity

Damon Vrabel Money Lecture 3
Debunking Money #3a - Corporate PR, Financial Power, and Evaluating Some Popular "Solution"
Debunking Money #3b - Financial Power and the question "End the Fed"?

  1. Corporations expand to overcome competition. Besides profits, corporations use assets to expand economic territory and wage financial war against competitors.

  2. Banks stake out and expand financial territory where they act as feudal lords. Examples: Chase Bank and IMF taking over Argentina. Again in 2008 Chase took over Seattle when it merged Washington Mutual. JP Morgan takes over Bear Sterns.

  3. The reality is at odds with the academic view of "profit stability" in business.

  4. JP Morgan has ~$93 trillion in derivatives (22 times the USA budget and five times the size of the USA economy and twice the size of the world's economy), but only has a $380 million cash value. This creates a huge power base and it's just one of the primary dealer banks.

    Besides the above "sell-side" banks, there are even larger "buy-side" hedge funds and various foundations that belong to the capital-holder machine.

    One global economy aside, it is not smooth running capital machine. There is ruthless competition among members of the capital-holder machine, but the competition is constrained by a of hierarchy larger and larger capital pools combined with the common goal of farming little people and governments.

    E-mails Suggest Bear Stearns Cheated Clients Out of Billions

    Bear Stearns sold out to JP Morgan over CDS liability

  5. Apple Inc. holds $76.4 billion in reserves from its world-wide sales while the United States government reported $73.7 billion. If Apple chose to become a bank, it would immediately have a minimum of $760 billion for initial lending and a maximum of $760,000 billion fractional reserves!

  6. Much like parental control of children with allowances, capital holders control governments. The common perception is that governments are the most powerful entities when, in fact, it is the capital holders that control many governments. This is how Goldman Sachs sold Greece politicians into debt only to return 10 years later demanding Greece public property. Same for Ireland and Argentina.

  7. "End the Fed" movement is superficial at best since the Fed is a funnel for the cabal of international capital.

Damon Vrabel Money Lecture 4 & 5
Debunking Money #4 - 20th Century - Where We've Been
Debunking Money #5 - 21st Century - Where We're Headed

  1. The world's economic activity is not random, but grows up around the geographical location of the capital machine.

  2. Capital holder machine is a group of business people who can implement like-minded strategic world-wide coordinated plans. These are people far above the pay grade of Congressmen, the President, or a wage servants like Lloyd Blankfein, the top operating officer at Goldman Sachs, or James Dimon, chairman, president and chief executive officer of JPMorgan Chase, who are, by definition, controlled by the ownership class that controls the money in the system. Anyone that earns a wage and receives an IRS W2 at the end of the year means he and his firm are not in charge. The hierarchy goes something like this:
    1. Multi-generational dark capital pools residing in LLCs
    2. Private Equity partnership such as Cerberus with $24 billion in assets
    3. Foundations in the U.S. control over $628 billion
    4. Hedge funds with portfolios of 27$ billion
    5. The World Bank
    6. International Monetary Fund (IMF)
    7. Bank for International Settlements (BIS)
    8. Global central banks such as:
    9. Senior-capital funded banks
    10. multi-national corporations

    International Banks have shares in Federal Reserve and Fed has shares in BIS
    Central Banks Control BIS, but there is also Private Stock Holders

    Examples:

    1. JP Morgan Asset Management
    2. FTI Consulting
    3. Blackrock asset management of $8.6 billion
    4. Blackstone Group financial services portfolio of $3 billion
    5. Smith Breeden Associates assets $31.5 billion in assets under management
    6. Shell Trading processes $200 billion per year in hydrocarbons
    7. Franklin Resources $1.7 billion
    8. KNG Financial Products
    9. Wachovia Sales & Trading
    10. Goldman Sachs Sales & Trading
    11. Goldman Sachs Risk Management
    12. Butler Financial
    13. Fidelity Investments
    14. Northern Trust
    15. Newmont Mining
    16. Janus Capital
    17. RCG Capital
    18. Yale Capital Management.

    Structure of the capital machine from: The Network of Global Corporate Control

    Transnational corporations (43,000) form a giant bow-tie structure of cross-ownership and, thus, a large portion of control is centered in a small tightly-knit core (147) of financial institutions and can be seen as an economic super-entity.

    Despite the relatively few central corporations, they hold collectively a large fraction of the total network control. Nearly 40% of the control over the economic value of most of the 43,000 world's transnational corporations. Control is held, via a web of inter-ownership, by 147 transnational corporations, which has almost full control among themselves (Orbis 2007 database). A super-majority of the 147 corporations (75%) are financial intermediaries.

    physorg.com

    The top 50 of the 147 superconnected companies in 2007
    1. Barclays plc
    2. Capital Group Companies Inc
    3. FMR Corporation
    4. AXA
    5. State Street Corporation
    6. JP Morgan Chase and Co
    7. Legal and General Group plc
    8. Vanguard Group Inc
    9. UBS AG
    10. Merrill Lynch and Co Inc
    11. Wellington Management Co LLP
    12. Deutsche Bank AG 
    13. Franklin Resources Inc
    14. Credit Suisse Group
    15. Walton Enterprises LLC
    16. Bank of New York Mellon Corp
    17. Natixis
    18. Goldman Sachs Group Inc
    19. T Rowe Price Group Inc
    20. Legg Mason Inc
    21. Morgan Stanley
    22. Mitsubishi UFJ Financial Group Inc
    23. Northern Trust Corporation
    24. Société Générale
    25. Bank of America Corporation
    26. Lloyds TSB Group plc
    27. Invesco plc
    28. Allianz SE 29. TIAA
    30. Old Mutual Public Limited Company
    31. Aviva plc
    32. Schroders plc
    33. Dodge and Cox
    34. Lehman Brothers Holdings Inc (2007)
    35. Sun Life Financial Inc
    36. Standard Life plc
    37. CNCE
    38. Nomura Holdings Inc
    39. The Depository Trust Company
    40. Massachusetts Mutual Life Insurance
    41. ING Groep NV
    42. Brandes Investment Partners LP
    43. Unicredito Italiano SPA
    44. Deposit Insurance Corporation of Japan
    45. Vereniging Aegon
    46. BNP Paribas
    47. Affiliated Managers Group Inc 
    48. Resona Holdings Inc 
    49. Capital Group International Inc 
    50. China Petrochemical Group Company
    

    The capitalist network that runs the world

    Four Companies That Control the 147 Companies That Own Everything

  3. The capital machine members meet at:
    1. Davos - http://en.wikipedia.org/wiki/World_economic_forum
    2. Bilderberg - http://en.wikipedia.org/wiki/Bilderberg_Group
    3. Bohemian Grove - http://en.wikipedia.org/wiki/Bohemian_Grove
    4. Tri-Lateral Commission - http://en.wikipedia.org/wiki/Tri-lateral_commission
    5. Council on Foreign Relations - http://en.wikipedia.org/wiki/Council_on_Foreign_Relations

    Participants see a common mind set rather than a "machine."

  4. Historical world growth results from location of the capital machine. Control is top down monetary debt called "capitalism" but is evolving to fascism. It controls Russia and Asia through communism.

  5. Ideas of "free markets" and sovereignty is an illusion. China, a communist/fascist government that owns the means of production for the US is a "free market"?

  6. Capital moves into new territory first by breaking down country sovereignty by establishing Uniform Commercial Code (UCC) which provides the "game board" for corporations to move into the country.

  7. The legal system has been deep captured to increase the power of UCC through case law as opposed to legislation. The US Supreme Court ruled that corporation, like individuals, have freedom of speech and can donate to political campaigns.

  8. Corporation controlled politics has allowed the International Uniform Commercial Code to trump the Rule of Law. Contract law is now supreme.

  9. Capital is moving to Asia (China) and will equalize with the West in 40 years.

    Former president of the world bank, James Wolfensohn, describes capital flows from the West, in the past, to the East in the future

Examples:
Bayer threatens to quit Germany over nuclear shutdown

Food Prices Strongest Correlator with Social Unrest

Economic Forum - World Needs 100 trillion additional Credit!

Exposing the Transnational Capitalist Class

Identifying the Institutions of Control

The Influence of Individuals and Family Dynasties

Banking on Influence with JPMorgan Chase

Banking on Influence With Goldman Sachs

Banking on Influence With Bank of America

Banking on Influence with Citigroup

Damon Vrabel - Lesson 1 - Revisiting American History - Financial Empire
Damon Vrabel - Lesson 2 - Revisiting Economics 101 - Debt
Damon Vrabel - Lesson 3 - Revisiting Civics 101 - Ownership
Damon Vrabel - Lesson 4a - The Culture of Empire
Damon Vrabel - Lesson 4b - The Culture of Empire
Damon Vrabel - Lesson 4c - The Culture of Empire
Damon Vrabel - Lesson 4d - The Culture of Empire
Damon Vrabel - Lesson 5a - The Emerging Global Empire
Damon Vrabel - Lesson 5b - The Emerging Global Empire
Damon Vrabel - Lesson 6a - Brightening the Future
Damon Vrabel - Lesson 6b - Brightening the Future
Damon Vrabel - Lesson 6c - Brightening the Future


America will lose its sovereignty
  1. USA debt will continue to be downgraded from AAA. These are the people who control the government.
  2. Since 2001 there has been a war between speculators profiting with cheap money and savers loosing money with interest rates below inflation rates. In the past speculators have been winning, but savers would like to see a USA default so that interest rates will go back up.
  3. The IMF is dictating terms in Europe and Washington. Washington politicians have ceded control to the international bankers.
  4. Dollar is over-valued by 50%-60%. Let it deflate. Similar to what Iceland did two years ago.
  5. A depression (like Iceland's) would be painful but only for two-three years. More importantly, Americans would keep their sovereignty.
  6. If America continues to use debt to solve debt, we will end up like Ireland & Greece with other countries dictating terms, taking public lands and pensions as payment in kind.
  7. Do you want to be poor for a while, sovereign, and free, or a vassal state of bankers?
  8. We are not half-way through the current great economic recession. As the dollar devalues, expect $10-$12 gas.
  9. Gold and silver prices are telling us that fiat money system is collapsing.
  10. The economy has reached debt saturation. More debt cannot be repaid.

JP Morgan is Foreclosing on the US Treasury
JP Morgan Chase v Treasury

Along The Watchtower
financial research, analysis and visualization

Generational Problems

The Growth Thingy

Albert Bartlett's Biography
Bartlett's hour long lecture
Detailed explanation on the doubling interval
Growth rate
Growth rate
The cost of oil recovery and delivery
Finite Oil
A gray tsunami is sweeping the planet

Productivity and Cheap Energy


Historic productivity enhancement from Roman times to the present...Slave labor
The most significant invention of the 20th century
One barrel of oil to make 1.9 tires
One barrel of oil to make 3.4 yards of concrete
6.8 barrels of oil to make one ton of nitrogen to fertilize 11.5 acres or one barrel of oil per 1.7 acres per planting.
Most plastics are made from oil
3.45 barrels of oil to make an average car.
Saudi oil reserves overstated by %40
We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse.

The Money Creation Thingy

http://www.rayservers.com/images/ModernMoneyMechanics.pdf
http://www.pdf-freedownload.com/pdf-folder/the-creature-from-jekyll-island-pdf.php

The Need for Money Creation

http://www.webofdebt.com/
http://www.publicbanksolution.com/

Deep Capture of Government

Michael Greenberger, the former Dir. of the Commodity Futures Trading Commission (1997-99), explained that it was the financial industry lobbyists who donated millions to Phil Gramm over his 24-year congressional career and drafted the 285-page bill called the Commodity Futures Modernization Act. They used Phil Gramm as a vehicle since he was then the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

On December 13, 2000 the Supreme Court had issued its decision on Bush vs. Gore. Two days later, December 15th, President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown over a massive 11,000-page, $384-billion, Omnibus Spending Bill. It was the perfect moment for Gramm to slip in his 285-page measure sponsored by Senator Richard Lugar (R-Ind.), who was the chairman of the agriculture committee. They had tried to get the measure passed earlier and it had been considered dead. But committee chairmen have the right to submit bills directly to Congress without committee approval so the bill was never debated in committees or submitted to the House or Senate for a vote.

Phil Gramm stood up on the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert could have followed what Gramm was saying. The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission (CFTC) got into the business of regulating newfangled financial products called credit default swaps - and would thus "protect financial institutions from over regulation" and "position our financial services industries to be world leaders into the new century."

It worked! Just prior to the Christmas holiday, the act found its way into the The Consolidated Appropriations Act for FY2001 (Labor, Health and Human Services, and Education Appropriations Bill) (H.R. 4577). The Senate version passed by it "Unanimous Consent." President Clinton signed it into Public Law (106-554) on December 21, 2000. and the rest is history.

The new Commodity Futures Trading Act allowed banks to speculate in the market by increasing reserve ratios from 9-12:1 to 30-40:1 meaning that for every dollar of physical cash, they could create up to forty dollars of "loan cash" to use for what turned out to be high-risk investments.

Earlier in his career Phil Gramm sponsored the Gramm-Leach-Bliley Financial Services Modernization Act which, in turn, repealed the Glass-Steagall Act and allowed traditional depository institutions (banks) to speculate in financial markets just as they used to do before the Great Depression.

In an interview, Sandy Weill (CEO Citigroup) said that they spent $200 million in lobbying fees to Congress over a two year period to have Glass-Steagall overturned. Afterward, the Travelers Insurance merger with Citigroup was completed. Add the transfer of regulatory control to Wall Street and it led to systemic ruin for the nation, but mega-bank conglomerate profits were made. The official plunder start date was 1996 with the Irrational Exuberance speech by Fed Chairman Greenspan in which he said they would give up managing monetary aggregate growth to the shadow banking system which was creating money through asset-backed securities and credit derivatives. Instead, the Fed would manage the CPI; but at the time the US was exporting inflation and importing Asian goods. In this way Asian meltdown was seen as beneficial to the US since it made Asian goods cheap compared the inflated dollar. After a decade of greed, the pendulum swung against the US as a result of mega-banker influence and economic self-dealing. These mega-banks have meddled to the point of killing the national economy, the banking system, and themselves. Which is why Max Keiser correctly labels the mega-bankers suicide terrorists.

http://www.npr.org/templates/story/story.php?storyId=89338743
http://en.wikipedia.org/wiki/Phil_Gramm
http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000
http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley
http://thomas.loc.gov/home/omni2000/
http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html
http://www.deepcapture.com/the-story-of-deep-capture-by-mark-mitchell/
http://dshort.com/charts/index.html?/2011/Federal-debt-2012-rolling-estimates-extrapolation

Un-controlled Money Creation

The Gramm-Leach-Bliley Financial Services Modernization Act and the Commodity Futures Modernization Act created a shadow banking system between 2000 and 2008 that created over $500 trillion in credit (that's more than 12 times the World's GDB). These shadow banks collapsed in 2008 but they applied for and were awarded the status of "real" banks and subsequently provided with $700 billion in funds from Congress.

Regardless, nothing has changed from 2008. One mega-bank, JP Morgan & Chase has about $90 trillion of Credit and Interest rate default swap risk listed as assets, but with only a cash value of $380 million.

http://www.tavakolistructuredfinance.com/index.html
http://www.tavakolistructuredfinance.com/press.html

Three 'Flations

There are not enough people to pay back debt created by the former shadow banking industry. For the last two years, more and more millions of people continue to default on debt. From the top of the heap at the Federal Reserve, it appears to the Board of Governors and Ben Bernanke as *deflation* with more debt defaults than money creation, so trillions are pumped into the system (For example, the $2 trillion in new public debt created since 2008 matches all of the debt created since the beginning of the country).

From the view of the mega-banks buying back the Treasuries, life is good. They make $millions in fees and they see *price inflation*, but no problem since a 10% per annum increase in food is nothing compared to their income.

From the view of salaried employees, it *stagflation* since the government has been understating price inflation for decades while real price inflation has been doubling every seven or so years.

Year M3 money  YtY   BLS   Cost       M3
     supply     %    1980   of     Doubling
       in      Inc   CPI   Living  Interval
    $trillions             Infla 
1959 $00.299               Adjust
1960 $00.315 05.35%        (COLA)
1961 $00.341 08.25%
1962 $00.371 08.80%
1963 $00.406 09.43%
1964 $00.422 03.94%
1965 $00.482 14.22%
1966 $00.505 04.77%
1967 $00.558 10.50%
1968 $00.607 08.78%                   9 Years
1969 $00.616 01.48%          5.0
1970 $00.677 09.90% 05.84%   5.6
1971 $00.776 14.62% 04.29%   4.5
1972 $00.886 14.18% 03.27%   4.8
1973 $00.985 11.17% 06.18%   6.1
1974 $01.069 08.53% 11.05%   5.5
1975 $01.170 09.45% 09.14%   7.3/5.1  7 Years
1976 $01.310 11.97% 05.74%   5.4
1977 $01.470 12.21% 06.50%   4.8/4.3
1978 $01.645 11.90% 07.63%   4.9/2.4
1979 $01.809 09.97% 11.25%   6.9/3.9
1980 $01.996 10.34% 13.55%   7.7/6.0
1981 $02.255 12.98% 10.33%   4.4
1982 $02.461 09.14% 06.13%   8.7      7 Years
1983 $02.697 09.59% 03.83%   3.3
1984 $02.991 10.90% 05.30%   3.9  Gimmicked
1985 $03.208 07.26% 04.58%   3.5     CPI
1986 $03.499 09.07% 02.92%   0.0   Begins
1987 $03.687 05.37% 04.99%   1.3
1988 $03.929 06.56% 05.94%   4.2
1989 $04.077 03.77% 06.71%   4.0
1990 $04.155 01.91% 07.69%   5.7
1991 $04.210 01.32% 06.53%   5.4
1992 $04.223 00.31% 05.33%   3.7
1993 $04.286 01.49% 05.42%   3.0
1994 $04.370 01.96% 05.98%   2.6
1995 $04.636 06.09% 06.52%   2.8
1996 $04.986 07.55% 07.74%   2.6     14 Years
1997 $05.461 09.53% 08.03%   2.9
1998 $06.052 10.82% 07.79%   2.1
1999 $06.552 08.26% 08.47%   1.3
2000 $07.117 08.62% 09.74%   2.5
2001 $08.035 12.90% 09.12%   3.5
2002 $08.568 06.63% 07.85%   2.6
2003 $08.872 03.55% 08.55%   1.4      7 Years
2004 $09.433 06.32% 09.09%   2.1
2005 $10.154 07.64% 10.05%   2.7
2006 $11.206 10.36% 10.18%   4.1
2007 $12.917 15.27% 10.51%   3.3
2008 $14.395 11.44% 09.26%   2.3
2009 $14.432 01.00% 08.51%   5.8
2010 $13.990 -3.00% 07.50%   0.0 (estimated)
2011 $14.550 04.00% 11.00%   0.0 (estimated)
2012 $15.132 04.00% 09.50%   2.6 (estimated)
2013 $15.873 04.00% 09.00%   1.7 (estimated)
2014 $16.349 03.00% 08.00%       (estimated)

Definitions of M3, MZM, M2, M1, & M0
http://en.wikipedia.org/wiki/Money_supply
M3 and non-M2 components since 1959
http://www.federalreserve.gov/releases/h6/hist/h6hista.txt
http://www.shadowstats.com/alternate_data

Concentration of Wealth and Hot Money

1% of the population owns about 40% of all assets. This "hot" money is always looking for the *lowest risk* and highest return on investment. Thus, hot money is jumping from US Treasuries as the Fed issues and buys more and more of its debt diluting the value of the dollar.

But there is just one problem, there is no safe sink for hot money to flow into (God forbid anyone would invest in domestic manufacturing and actually hire someone to work). So it goes into tangibles and spikes commodity prices. Wheat, for example, is about to double in price and has led to the subsistence revolts we are seeing in Tunisia and Egypt.

http://www.webofdebt.com/articles/
The Egyptian Tinderbox: How Banks and Investors are Starving The Third World
http://www.webofdebt.com/articles/egyptian_tinderbox.php

Currency Collapse

The Western wealthy elites have boxed themselves into a corner with too much bad debt and no safe harbor for cash on hand. Therefore, hot money will continue to migrate into tangibles to track inflation, but also creating a tipping point where everyone will drain savings and or speculate in tangibles.

Need for Finance Transparency

http://publicbanking.wordpress.com/

Virtual Currencies

One of the basic problems we face today is too much debt, both private and public. Deregulation over the last decade has led to a world-wide debt burden of hundreds of trillions of dollars. No one knows the exact amount, but it could be as high as a $quadrillion dollars, more debt than the world can reasonably be expected to pay pack. Meanwhile, the Federal Reserve continues to create more and more debt-based money - hundreds of billions per month and $1 trillion per year in the last two years and on into the future.

For to understand this mechanism in more detail, see this Federal Reserve Report. Oh, and the seemingly hard reserve values mention have been lifted and are now set at the discretion of the Federal Reserve.

http://www.rayservers.com/images/ModernMoneyMechanics.pdf But it's just macroeconomics, right? This is not germane to computer science? Well then consider Facebook's Zynga virtual dollars which are are sub-culture now, but moving into position to transform the global economy as more and more hundreds-of-thousands of people join in. As bad as the Federal Reserve banking and fiat currencies are – *Zynga's virtual currencies are thousand times worse than the Federal Reserve.*

The key element in computer generated virtual currency is that there is no ratio of paper-to-real value as there is with the conventional fiat currency described above. No fraction. Just demand. The more you want the more you get. Whatever you need to play games or participate in virtual worlds. The trap, of course, is that virtual currency is created with no effort while the virtual currency consumer must exert real labor to obtain it.

And just like it is with easy credit, most of this global army of game addicts or immersion addicts will be sucked into easy-to-obtain virtual debt and will need to "click" their way out of debt (generating views that Zynga can sell to advertisers to sell ads against). It will be a casino-based click-prison. Just like banks have done, as the supply of virtual currency is expanded and then contracted, players will be reduced to subsistence clicking.

Is this an exaggeration? Zynga has been selling $500 "buy-ins" or "pump-ups" to give users virtual dollars and status in these games. Now there are hundreds of thousands and soon to be millions of people buying virtual currency for virtual status or to pay off virtual debts.

To confirm that virtual money is now real money, a court in England has ruled that *virtual currencies are the same as real property.*

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

An individual hacked into the social gaming giant Zynga. He transferred 400 billion virtual poker chips to his account and proceeded to sell them on the black market. (Yes, there's a black market in virtual Zynga poker chips.) In total, they were worth about $12 million USD.

Zynga caught the guy selling their chips. He pled guilty and will probably serve a long sentence in jail (he was on probation from an earlier hacking-related offense).

More to the point, there was a debate in the British court where he was tried as to *whether the hacking actually constituted theft, since virtual poker chips are virtual, and Zynga can just create as many as it wants without cost.*

The court answered by saying that, *virtual goods can be treated like property* and adding poker chips to your account amounts to theft.

http://www.businessinsider.com/zynga-hacked-12-million-stolen-2011-2

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Facebook, Twitter, HuffPost, Linux, Wikipedia, and many others are all examples of voluntary collectivism. Some call it altruism. Some call it "open-source," but it is the same thing, a form of self-organizing collectivism that takes advantage of group knowledge. This has been around since the beginning of life on Earth. It was formalized in the 1500s and called science or the scientific method. It this exact collectivism that led Issac Newton to say "...If I have seen a little further it is by standing on the shoulders of Giants." http://en.wikipedia.org/wiki/Standing_on_the_shoulders_of_giants

The boom of the Internet since 1994 has made the above cyber examples possible. Nevertheless, banks have tried to figured out how to introduce an interest bearing virtual currency along with fractional reserve banking into the economy of the Internet.

It now appears that they have succeeded. Zynga will become a pernicious banking force that will destroy collectivism in the Internet economy just as the Federal Reserve has destroyed the pre-Internet economy with low interest rates and the unbearable burden of debt. Zynga will load up millions of users with interest-bearing virtual currency that will transform the Web from voluntary collectivism (nature) to forced collectivism (a type of casino in cyber space). Zynga is the enabling currency provider driving Farmville and Cityville that will eventually corrupt the self-organizing collectivism seen today on the Internet.

As computing environments create more and more immersion, I think we have a responsibility as computer science professionals to comment on this emerging monopoly on human effort.

News 2011

Egypt's Dilemma
Probable Future Economic Outcomes
Zerohedge - Tracking The Gold "Conspiracy"
GATA - Tracking The Gold "Conspiracy"

Economic Indicators