How to Break Up with the Financial System

By DAISY LUTHER | ORGANIC PREPPER | MARCH 26, 2013

Breaking up is hard to do, especially when it is with a tracking service like a financial institution.

Sometimes you can make a clean break and other times you have to remain “just friends”.

The US government actually has a name for people who have no bank accounts – they call these folks “the unbanked”.  The FDIC defines the unbanked as “those without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another.”  Another term is “the underbanked” – “people or businesses that have poor access to mainstream financial services normally offered by retail banks. The underbanked can be characterized by a strong reliance on non-traditional forms of finance and micro-finance often associated with disadvantaged and the poor, such as check cashers, loan sharks and pawnbrokers.”

According to the government, the above scenarios are crisis situations which must be rectified for “your own good”.  There is legislation on the table in many states to set up banking facilities for the unbanked and underbanked.  The assumption is that most folks who do not deal with a bank are too poor to do so.  This could be true in many cases: high minimum balances, bad credit history, NSFs, and account fees can all preclude having a bank account for those in difficult financial straits.

However, the government has a couple more reasons to insist that everyone should have a bank account:

1.)   Ease of confiscation

We need only to look at the horrible situation in Cyprus to see how bank accounts are like all-you-can-steal-buffets for the powers that be.  A suggested theft TAX of up to 20% of the money in Cypriot bank accounts may be levied in order for the country to meet it’s staggering debts in the terms of the proposed EU bailout.  The banks of Cyprus are loaded with the money of residents and businesses of other countries that have used them as a tax haven.  The banks have been closed for several days and frantic customers are left to withdraw the maximum daily balances from ATM machines in an attempt to salvage what they can.  Many people fear the banks will never reopen their doors.

Think it can’t happen here?  I wonder if the people of Iceland, Greece, Ireland, Hungary, Argentina, Spain, and Portugal thought that too.

2.)  Surveillance

The second reason that “everyone should have access to banking services” is the digital trail that it leaves.  Every dime you receive and spend out of these accounts is part of an intricate system of surveillance.  When your money goes into a bank – any bank – Big Brother knows about it.  It’s a simple matter of compiling information via your social security number (or other federally- assigned number) to find out how much you make, how much you have, and where it comes from.  This can be used to prosecute you for tax purposes, to locate you through where your pay comes from, and to follow your personal money trail for a variety of different reasons.

It can also be used to track your spending – Big Brother can find out that you spent $2000 at a gun store, that you purchased online from a prepper supply website or that you bought some books with “questionable” content in order to paint you as a threat.

Unbanking

So, in this day and age, is it possible to get by completely without a bank account?

It’s tough.  Most work places prefer to pay through direct deposit.  Many landlords, mortgage companies and finance companies do business through direct debit.  You’re going to pay some steep fees if this is the route that you choose to go.  For some, it might be worth it, particularly if you only have a few transactions in a month.

Here are some places you can cash checks for a fee:

• Check cashing depots
• Some retailers like Walmart, 7-11, and some grocery stores (the number of these is dropping rapidly)
• Pawn shops
• The issuing bank will sometimes cash a check drawn from one of their accounts for a non-account holder
• Some prepaid credit card accounts will accept a direct deposit (in my opinion, this is nearly as unsafe as having your money in a bank account)
• Through a friend or family member’s account (also risky – for both you and the account holder)

Here are some ways you can pay bills without a bank account:

• In person, with cash, cashier’s checks, or money orders
• Through the mail, with cashier’s checks or money orders
• Online, with prepaid credit cards
• Through a kiosk using a prepaid credit card
• At a check-cashing depot or retailer

Underbanking

Your next option is underbanking.  For some people this may be the most realistic way to break up with their bank – it’s the “just friends” version.  If you have a lot of transactions that go through your account every month, it isn’t necessarily practical to get rid of your account.  Keep in mind that all of the above methods of unbanking still have a component of financial tracking.  The checks and bills still have your personal information tied to them in most cases.

When you underbank, you still have an account.  Set this up with the lowest possible fee and the lowest possible required balance.  Shop around to find the best deal.  Consider a credit union or community bank instead of one of the big mega-banks.  They are slightly safer, emphasis on slightly.

Your paychecks from work can be directly deposited, which will make your employer happy.  Employers rarely want to do something outside the norm, and if everyone else gets their pay directly deposited, writing a check for you will make you stand out – the opposite of what you want to do.  As well, any other checks you receive, like refunds, tax returns, etc., can be processed through this account.

The goal here is to keep as little money as possible in this account.  Banks are no longer the safest place to keep your money, and the .00001% of interest you will accrue is just not worthwhile.

Immediately upon payday:

• Pay all your bills online or through a kiosk out of this account – rent, utilities, credit card payments (hopefully you don’t have those)
• Buy necessities like groceries if you need to reduce the amount in the account for withdrawal purposes
• Calculate the amount of payments that will be coming out of your account between now and your next pay (rent/mortgage, car payment, insurance)
• Remove all money except that required for impending debits and your minimum balance.  Get it in cash.

Avoid Financial Surveillance

The government wants everyone to have a bank account for another reason besides quick accessibility for the purpose of thievery.  Big Brother wants to know what you earn, what you spend, and where you spend it.  Every penny you spend could one day be used against you, as more and more things become illegal in the police state that is taking over the western world.

Use your bank account as little as possible if you’ve chosen to underbank:

• Buy stuff with cash
• Skip registering your belongings by serial number for warranty purposes
• For heaven’s sakes, don’t get one of those “customer loyalty” cards that track every purchase you make and provide you with “rewards” or “points”
• Buy from places that don’t track you, like yard sales, Craigslist, farmer’s markets, roadside stands, your brother’s friend’s sister’s boyfriend
• Work for cash: this is another suggestion that won’t work for everybody, but if you can do some odd jobs for cash, even if you make slightly less money doing so, this is money that can’t be tracked.

Think about how your purchases tell a story about you that you might rather keep to yourself.  Are you buying lots of farm equipment, soil amendments and seeds?  Are you buying ammo every week?  Are you stocking away large quantities of food or medical supplies?  Have you recently purchased 2,347 books on different guerrilla warfare tactics?  OPSEC is more than just keeping your mouth shut about your prepperly ways.

Ditch the Dollar

Although you require some fiat currency to function in today’s society, as well as some in an emergency fund,  consider using other forms of currency whenever possible.  The following suggestions won’t work for everyone, but some folks may be able to ditch the dollar in the following ways:

• Engage in the barter system: trade goods and services with like-minded people.
• Keep precious metals like gold and silver in a fireproof safe for your “savings account”
• Immediately convert  fiat currency into tangible goods: food, ammo, home defense items, tools, etc.
• Work towards self-sufficiency – if you buy less, you can earn less: grow your food, repair your own home or vehicle, do things manually instead of using expensive equipment, lessen your dependency on the grid
• Simplify – this goes hand in hand with self sufficiency: find your entertainment from library books and online resources, skip eating out, take a walk instead of joining a gym – the less you feel you need, the less money you will have to earn.

The decision to unbank or underbank is unique to every individual.  The further away you can get from “the system” the more privacy and security you will have.  The suggestions above are not meant to be comprehensive – they’re meant to get you thinking about how you can disengage.  As always, your suggestions in the comments can greatly benefit others!

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The fiscal crisis in the United States is near, and it won’t be pretty

By LUIS MIRANDA | THE REAL AGENDA | MARCH 5, 2013

When one hears talks about the collapse of the dollar, it is hard to picture how a currency that is the base of all global transactions can simply disappear. An important point to understand is that such a collapse does not occur at once. It takes a while to happen because that is how it has been arranged. What most people are clueless about is that, not only is the death of the dollar possible, but that it has already started.

Since the dollar became the world’s currency by design, the American currency has lost a great deal of value. According to the U.S. Bureau of Labor and Statistics, one dollar today is worth only about 5% of what the green back was worth back in 1913. More recent signs of the loss of relevance the dollar has had in the global economy is the fact that major commercial power houses –American commercial partners and foes– have officially adopted new ways to conduct commercial transactions. For example, China and Russia are now using their own currencies to deal with the purchase and sale of products. Another case is that of India and Japan. They have also resourced to their own currencies to carry out trade.

The dollar has not only lost value, but also credibility. The origin of the lack of trust on what once was the base currency on which every single product and service was priced –including gold– is the United States’ thirst for debt as a ‘development’ model. Today more than ever before, the American government depends on the issuance of debt as a way to keep up with its spending. For that reason, the country’s central bank, the Federal Reserve, has come up with all kinds of circus moves to slow down an outcome that seems imminent: the complete collapse of the U.S. dollar currency.

The influence of the Fed in the way the U.S. manages its debt to GDP ratio stems from the country’s inability to make payments on the cash it has borrowed from the Fed itself, as well as China and other foreign investors who own much of the American debt. The path chosen by the Fed to temporarily deal with the American inability to make payments on its debt –which continues to grow out of control with every passing day– is to make large purchases of government bonds and to use quantitative easing –the pumping of unlimited amounts of electronic money– in an attempt to make everyone feel good about the state of the economy.

The Fed’s intention is to make clear to the world that the U.S. has meaningful ways to prevent a default, because since all important transactions are carried out in dollars and the dollar is the world’s currency, the private central bank can issue fake money for as long as it wants. The obvious consequence of indefinitely pumping cash into the economy is hyperinflation, which has not happened because banks were ordered not to put the money they were given out into the market in the form of loans.

It seems that the Fed has everything figured out and that the collapse of the dollar will not come as soon as some economists have predicted, but the reality is very different. According to a study conducted by four prominent economists, it is almost crunch time for the Fed and the U.S. government. Right now, the least of the problems for the central bank and the American government is not lack of credibility, but a strong change of a fiscal crisis. The report was prepared by David Greenlaw, Managing Director and Chief U.S. Fixed Income Economist at Morgan Stanley; James D. Hamilton, Professor of Economics at University of California at San Diego and Research Associate of the National Bureau of Economic Research; Peter Hooper, Managing Director and Chief Economist, Deutsche Bank Securities Inc; and Frederic S. Mishkin, Alfred Lerner Professor of Banking and Financial Institutions, a Graduate of the School of Business at Columbia University and former Chairman of the Federal Reserve Bank.

What these four men found, is that the actions of the Federal Reserve caused massive inflation to a level where the dollar’s purchasing power has gone down in free fall . As the very same Federal Reserve policy books say, the goal is to devalue the currency by at least another 30 percent. The 89-page report states that reductions in fiscal revenues and excessive increase in government spending, the close relationship between sovereign debt and the levels of interests to be paid on the debt, a significant relation between debt loans and borrowing costs and the direct effects of the fiscal crises on monetary policy have been combined to render a single outcome: massive losses for countries and institutions such as the U.S. Federal Reserve that will exceed available capital.

What this means is that, if things continue business as usual, even the Fed will become unable to sustain the current fiscal crisis. According to the report, the Fed may enter unknown territory where the amount of debt created will exceed its capital holdings. What will happen when the Fed gets to its limit and can no longer maintain the current debt-based system? According to the authors, the more a country’s debt is held by foreigners the greater the political incentives for the government to default on that debt. This is what has been seen in developing countries. The day of reckoning for the Fed may come as early as 2016. If better fiscal and monetary policies are adopted, the disaster could be put off until 2018.

It is then necessary to remember who are the United States’ investors. As of December of 2012, the Federal Reserve System, which is a branch of the international banking cartel came up as first. In second place is China, with $1202.9 billion. After China, other countries like Japan, Brazil, Switzerland and Russia appear in third, fourth and fifth places. With the U.S. debt reaching and passing 100% of its GDP and the government borrowing and printing money as if it were going out of fashion, the only possible outcome is what we have seen in modern cases of fiscal irresponsibility.

Countries get in debt up to their eye balls to fulfill the promises made at home during by irresponsible politicians during political campaigns. Since the government does not have any money to actually pay for the expenses it creates, it is only ‘normal’ to get in debt to be able to meet demands for more social programs and to pay interests on old debt. But since the governments do not borrow locally, they subject their country, (i.e. the people) to having to work all their lives to make payments on the debt generated on the debt it has gotten into. The ability of a government to make debt payments is finite. Cases in point Argentina in 199o, Greece in 2008 to 2012, Portugal and Spain in 2013 and the looming fiscal crisis the United States will have to face in the near future.

The supposed programs to help nations pay their debt is nothing more than an attempt to slow the collapse of the global economy and the that assures foreign debt holders they will have enough time to loot the countries for all they have gotten. That is the ultimate form of payment used by the international banking cartel uses to recover their so-called investments. Different from Argentina, Greece, Portugal and Spain, it is hard to see how the Americans will allow the bankers to suck every drop of blood for not paying its debt, which is why negotiations have been held to find the least painful way to phase the dollar out. Although the bankers want every single penny back, they prefer to get it in the most peaceful way possible as supposed to having to face street protests as it has happened in Egypt, Libya, Syria, Argentina, Spain and Portugal.

In conclusion, the current system of debt creation as the base for development has reached the end of its life cycle. The consequences to come should the United States continue to print or issue fake money to pay its debt instead of cutting down spending and making big international corporations liable for evading the payment of corporate taxes, will make it impossible for the U.S. government to pay its debt and for the Fed to issue fake money to sustain the current system. The only reason the U.S. has not collapsed as a debtor nation is due to the demand for U.S. Treasuries at home and abroad, which has been maintained due to the dollar’s status as the world currency. That status however, is a subjective and ephimerous concept. The moment more nations decide to trade with their own currencies, or to set up sound monetary systems such as the one Muammar Gaddafi intended to create in Libya –the gold dinar–, the more credibility and trust the dollar will lose. Lack of trust and the impossibility to meet fiscal obligations will end up destroying the dollar.

As the authors put it simply, high debt leads to higher interest rates and higher debt. The high levels of debt reach a tipping point –fiscal crisis– in which the interest rate shoots up. In the case of the U.S. it has many of the possible triggers of that shoot up in interest rates and the only thing that is holding them from going through the roof is an imaginary belief that the U.S. is still that powerful economic entity that it appeared to be many years ago.

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Will the United States follow the same path as the USSR?

By MAC SLAVO | SHTFPlan.com | OCTOBER 2, 2012

In the following video commentary Russian General Konstantin P. Petrov (Ret.) asks some interesting questions and includes his own thoughts (perhaps the non-official Russian position) about a variety of topics that include the end of US dollar hegemony, the orchestration of the 9-11 attacks to engage America in a mid-east war, the puppeteers behind the politicians and the coming premeditated collapse of the United States of America as we know it.

While here in the United States we remain enclosed in a propaganda bubble controlled by western multi-billion dollar media conglomerates, business interests and political alliances, there can be no doubt that other schools of thought exist throughout the world. What may seem like reality to our populace is perhaps nothing more than illusion.

The United States does not exist in a vacuum. As such, we simply cannot ignore the assessments, outlook and opinions of foreign leadership as they pertain to the global implications of current events.

How did they ruin the USSR? They called the Soviet Union a ‘prison for people’ and an ‘evil empire’.

The same thing is being done to the United States.

…

We also intervened in Afghanistan and do you remember how that ended? It’s the same thing with the United States, and the American can’t do anything there. Now the entire muslim world hates the United States.

And when the global mafia dumps the dollar the entire world will think that the Americans deserved this. But this won’t benefit people in our country, especially those who’ve been saving up dollars.

…

There’s another thing that we should take into account.

In the United States lives 5% of the world’s population, but Americans consume 50% of the world’s energy resources. The global mafia sees this as a problem.

…Some of our people who fled to the US, and now live there on welfare, live better there unemployed than they would have lived in Russia even if they were employed.

The slave masters think that this situation in the US is unacceptable because even the slaves live relatively well there. so the United States is doomed too in this sense.

…

Even if you’re the head of a mighty state and you don’t understand global politics and don’t understand the methods of global politics you’re still a hostage of the global mafia. The leadership of the USSR and the leadership of the USA carried out internal and external politics, but the global mafia carries out global politics.

The USSR collapsed and the same fate has been prepared for the USA.

Do away with Reserve Currencies and Centralized Financial Control

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 13, 2012

For way too many years, the United States has enjoyed an unfair advantage with respect to the rest of the world: most international commerce is conducted in US dollars. Both friends and foes of the US have had to purchase raw materials, parts, finished products, pay tariffs and exchange rates in dollars because the world saw the American currency as a strongly positioned instrument that was backed by the economic and military might of the United States.

The result of having a reserve currency, both for the US and for the rest of the world is clear: Americans have enjoyed decades of bounty because almost anything that is necessary to live is paid for and purchased in US dollars. From crude oil to food staples, countries and companies use the US dollar to complete most commercial transactions. But the bounty for Americans was not the only consequence — or goal, depending how you see it. Because the US dollar was the reserve currency of the world, its value was kept artificially high. People, companies and other countries bought US dollars to use them in their daily activities such as traveling expenses, for example.

The value of the currency, especially a fiat one like the US dollar is artificial because after the central bank decides to print money beyond what a country produces — GDP — in order to run a debt-based economy, it is just a matter of time before the wheels of the truck come off. In the case of the United States, three and a quarter of the four wheels have already fallen off. The US currency has been hyper-inflated in a controlled manner since the creation of the Federal Reserve System, which is the same system of centralized power used in almost every single nation in the world; no matter if it’s a developed, developing or underdeveloped country.

Today, the value of the dollar, the Euro, the Peso or the Real do not represent the capacity of a country to produce, innovate and sell goods in local, regional or international markets through bilateral or multilateral agreements. The value of currencies is set by banking institutions and then freely manipulated by artificially-managed markets, not real capitalism or free markets.

The kind of “commercial contract” that helped the US to sets its currency as the “world reserve currency” and that provided the unfair advantage against its business partners and competitors is now reaching its end. The rise of China as one of the largest producers of finished products — through questionable standards to say the least — along with the economically weaker position of the United States in the world stage, has prompted nations to seek alternative forms of completing commercial transactions that do not use US dollars. United States competitors, especially those who lend money to the country, realized that the United States will most likely default on its debt or will simply pay with a devalued currency which will not be worth much, so they’ve decided to use their own currencies instead of the US dollar.

For example, China and Russia have closed several agreements to realize commercial transactions in their own currency as supposed to using dollars. The Chinese and the Russians, it seems, learned that by using the Yuan and the Ruble, they are not only valuing their currencies, but are also avoiding to pay the “dollar tax”, or the cost of having to buy and sell in US dollars, which had kept them in a competitive disadvantage against their commercial and military foe.

The devaluation of the dollar due to banking manipulation conducted by the Federal Reserve or the weakening of the currency in international markets — is bad news for the US and the American people, because it means that if the dollar fails to keep its status as the reserve currency, everything will be more expensive for them: raw materials, food, energy, interest rates, etc. But worse than all of that is that the demand for US dollars in the world will significantly decrease, which in itself will turn the dollar into a less attractive way to pay for and sell goods and services.

The loss in value of the American currency will also worsen another problem: the US debt. The US has been for a long time the best debtor nation in the world, for its lenders thought that since the country had the world’s reserve currency would guarantee that their loans would be paid in full. But now, reality shows otherwise. The fall of the US dollar from the pedestal of “world reserve currency” will also make it more expensive for the US to pay its current debt as well as the debt it will incur into in the coming years and decades. The weaker the dollar is, the more expensive it becomes for the US to pay its debts. This scenario is now seen in Spain, Greece, Italy and Portugal, who have handed their sovereignty to foreign banking institutions in exchange for “financial rescues”.

Although common wisdom would suggest that US indebtedness with China would be the worst possible situation while the dollar declines, there is actually a worse scenario and it does not involve China. The US main lender is not China anymore, but the Federal Reserve Banking System, a private institution that represents the interests of an international banking consortium located abroad, not in the United States.

The banking mafia will continue to willingly lend to the US because all debt created by the Federal Reserve in the name of the United States and its people will always have a way to be paid. The United States, just as many other countries in the world do, mortgage the lives of present and future people by taxing them to death in order to pay interests on the ever exploding debt. This ‘trust’ that the banking institutions have in the United States and other nations can only be broken if the US dollar fails as the world reserve currency. That is why the European bankers have created parallel fiat currencies such as the Euro, which they also intend to collapse in order to establish a sort of electronic untraceable form of currency.

At the same time and while it is still possible, wealthy individuals who have made their fortunes through deceitful practices, such as George Soros, as well as governments have begun a race to get rid of their dollar reserves — a fact that also weakens the US currency — and invest in gold, rare metals, silver and other valuable instruments. The divestment of funds from US dollars to other currencies or valuable metals or materials threatens to accelerate the fall of the once strong world reserve currency.

The decline of the US dollar has emboldened countries like China to seriously consider letting its currency fluctuate freely in the open market. This practice is set to begin at some point in 2015 and will continue until 2017, the Chinese have said. Do the Chinese feel that by 2015 the dollar will be weak enough that it won’t be able to directly compete with the Yuan? Perhaps. But in a financial world where almost everything is fake, there is no reason to believe that the American government or the banking institutions that it represents will not come up with a way to slow down or stop the collapse of its currency. Many financial experts expect the opposite, though. Some of them even believe that the collapse of the dollar will happen some time between the Winter of 2012 and the Spring of 2013.

If there is one thing the world has learned is that independent nation-states that establish commercial agreements in a bilateral or multilateral fashion are better off that those which are prisoners of a common currency with a centralized financial power system. The only reason why the world is dominated by common currencies and so-called unions is because those schemes facilitate monopolies and control, which is what the international banking mafia wants. The Euro is a clear example of how monopoly works perfectly well when a group of oligarchs intends to artificially create economies to later collapse them so that they can consolidate power. It works beautifully. For the rest of us, let’s do away with reserve currencies that provide unfair advantages as well as centralized power that only renders benefits for the Anglo-Saxon power elite.

Banker-Controlled System is Fraudulent and the Cause of the Crisis

By LUIS MIRANDA | THE REAL AGENDA | JUNE 1, 2012

It took almost 100 years for the globalists in control of the financial and banking systems to realize that their fraudulent debt-based scheme can no longer be utilized to exploit the people and the resources of the planet. Back in 1913, rubber barons and the global novelty decided that they were going to control the issuance and flow of money with a system that would perpetually maintain all nations of the world in debt with the supranational financial institutions founded by international private banking entities. These entities would create the money out of thin air, lend it to their slave, dependent nations for a juicy profit while ensuring that future generations would have to work all of their lives to pay them interests on the never ending debt.

Today, most main stream media omitted the annual Bilderberg meeting in Virginia, United States, but did make time to promote the fact that the same banking organizations that brought the global economy to a halt, are finally convinced that their model does not work anymore. It is important to understand that when they say it does not work, it implicitly means that they can’t keep on defrauding the world with it. What the main stream dinosaur media is not telling the people is that the current global mafia intends to implement a new system under which they will remain in control, but with more power and more enslavement. Both the heads of the International Monetary Fund and European Central Bank have said that it is time to end the remaining nation-states and give way for a world financial organization that will dictate economic, environmental and financial policies, which will be indeed under the control of the same monopoly men.

Mario Draghi, president of the European Central Bank, labeled the current system imposed by central bankers themselves as “unsustainable” and once again blamed the governments of the nations that did not accept the bankers’ directives as responsible for the dire global economic and financial crisis. He said leaders have been slow to respond to the sovereign debt crisis, which was also manufactured by international banking institutions. “The configuration we had for 10 years, which was considered sustainable, has been shown now to be unsustainable unless further steps are undertaken,” said Draghi. He forgets to mention the fact that it was the bankers that created and sold derivatives and credit default swaps as the newest and trendiest forms of investment to later run away with the people’s money in the form of pension funds, retirement accounts, social security savings and so on. Another important detail left out by Draghi is that the globalization of the economy has served as a perfect platform to gain even more control.

After creating the problem, the bankers presented their rescue and austerity programs as a “solution” to kick start the economy, but as it turns out, it was all about the consolidation of indebted nations such as Iceland, Greece, and the new ones to come soon such as Spain, Portugal, France, the United States and Germany. Austerity came in the form of cuts to the entitlement programs upon which millions of people depend in those countries, and the rescues of international banks in the form of financial bailouts. As things stand today, the bankers were helped and the people were dumped. But trillions of dollars in financial rescue packages were not enough for the bankers. They wanted more. They wanted total control. Since their rescue programs did not render total control now they bankers are shifting to plan B, which includes the complete acquisition of other nation-states through a perpetual state of war that justifies their theft of natural resources and the centralization of all human activity.

After creating and selling the problem through continuous threats that warned about the complete collapse of the global financial system — a situation they sought and provoked — should governments choose not to bail the banks out, globalists like Herman Van Rompuy, Jean Claude Trichet and José Manuel Barroso tried to create panic so politicians would adopt the so-called austerity measures and illegally carried out the rescue of banks that were too large to go bankrupt. After bankers bet on toxic financial products which they knew would not stand a simple smell test, they ran away with 97 percent of investors’ money by risking people’s money in transactions that involved as little as 2 or 3 percent of their own cash.

Suddenly, the banks and their institutions are no longer capable of supporting the sand castles built over pillars of overconfidence, greed, hubris and financial degeneration. “Can the E.C.B. fill the vacuum left by lack of euro area governance?” he asked. “The answer is no.” Of course not. A new system is needed that allows the banks to operate with even less accountability and more liberty to continue taking risks by mortgaging the future of the working classes all around the world. Just as in the recent past, the bankers are warning that inaction, debt liquidation or more effective regulations would mean a generalized contagion of banks and economies which would happen more easily and rapidly due to the interconnectedness of the global economy. Banks are seeking complete deregulation and self governance, as supposed to accountability to governments. But it was precisely lack of regulation, malinvestment and self governance what allowed the bankers to do what they did, submit the world into a deep black hole of debt from which there is no way out.

The elimination of the Glass-Steagall Act of 1933, which had successfully curbed the bankers’ hunger for risky business, triggered a chain of events that is still ongoing. Banks in need of rescues because supposedly are too big to fail, governments without cash to meet their obligations, pension funds whose coffers are empty, run-away financial corruption, toxic and artificial investment products, insane leveraging, you name it. “It was the largest transfer of money from the working classes to the richest people in human history,” says Russ Roberts, the host of Econtalk. “It was bad for Democracy and for Capitalism.” The solution, according to the bankers however, is to create an insurance fund, which will be paid for by taxpayers from around the world, to assure banks there will always be a rescue plan ready to pull them out of their risky investments. That will not only effectively create the financial incentive to further centralized economic power, but will also eliminate the natural free-market accountability process, the barrier not to bet more than you can possibly pay. A global financial fund will prompt bankers to risk even more, because they can count on a working class that will provide the fruit of their labor to bail them out whenever they need.

Allan Greenspan, the head of the Federal Reserve Bank in 2008 said in Congressional hearings that he did not know what had happened, that he thought the bankers were able to regulate themselves. He said he believed the banks had the ability to assess their own risk. And they did. That is why for every 100 dollars that banks malinvested, only three dollars or so were from their own money. The rest was money from governments, pension funds, savings accounts and so on. Greenspan was the man sitting on the golden chair of the Federal Reserve when the largest banking deregulation process took place under previous administrations, and he knew exactly the potential that such deregulation would create for financial institutions to run unchecked with zero need for accountability. Now that their system has been uncovered as fraudulent, the bankers are using more colorful analogies to describe the supposed threats that would emerge should governments decide not to surrender their sovereignty completely. The latest of those is that the debt crisis is a ‘time bomb’. Bankers do not want to buy government debt back and so they are labeling that proposal as the trigger that will detonate the ‘time bomb’.

The initiative to make banks buy the debt back, would not be a solution to the sovereign debt crisis, though. In fact, it would actually perpetuate the debt-based system, because governments would be able to create more debt, which will result in a deeper crisis, as they will be unable to make bond payments. The banks will then be left holding the bag, an outcome usually reserved for the working classes. The ideal scenario would be that banks were forced to buy back the current debt, which they created in the first place, and governments adopted sane fiscal and monetary policies without creating more money out of thin air. Of course, the banks will not allow that to happen, because it will reduce their control over the financial system. Independent, debt-free governments that adopt responsible fiscal and monetary policies would eliminate the need for the current debt-based system, and therefore erase the control the bankers have amassed up until now. The liquidation of debt by letting banks and other institutions fail and go bankrupt would allow the world economic system to begin fresh and operate on a clean, disinfected environment, where artificially created economies would not exist anymore and countries would run their businesses based on existence of resources, production capacity, real gross domestic product, the balance of sales and purchases, bilateral and multilateral commercial negotiations and so on.

“The crisis we’re now in was caused by people taking excessively risky bets with other people’s money,” says Roberts. He adds that a good question to ask is why did people allow the banks to take such high leveraged bets with their money. It was like a poker game where the banks only risked about 3 percent of their own money, while investors took the fall with 96 or 97 percent of their money. But instead of being punished for taking those risks, the banks were rewarded by receiving bailouts. Although the mathematical calculations used by banks to assess market risk and asset value are considered to be fraudulent, they are still used to evaluate investment opportunities. But when those opportunities were shown to be just risky bets, based on fraudulent calculations, the banks were told it was fine, because governments had come to their rescue. They were allowed to sell liabilities as assets making people take very high risks in exchange for a promise to get a miniscule return, if any at all. “I think they believed the government would bail them out in the case of a downturn,” asserts Roberts. As he sees it, the markets are now governed by crony capitalists, and the crony part must be taken out before things can go back to real Capitalism.

Capitalism is a profit and loss system. The prospect of good returns is an incentive to take risk, and the losses are calls for prudence. When the incentive to be prudent is eliminated because there is a government, entity or Fund that will bail out a bank or a whole system, it destroys the financial system, and that is what happened in 2008. Governments, at the behest of the powerful banking cartel covered the risks taken by banking institutions and by doing so eliminated the need for prudence and responsibility.