Lesson not Learned: The Fed Floods the Market with Fiat Money

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 14, 2012

Quantitative Easing is no longer an option for the private Federal Reserve and neither for the US. QE1 and QE2 did not avoid the fall of the United States, so QE3 did not make sense. Instead, Ben Bernanke has implanted a new fiat money manufacturing scheme I’d like to call Unlimited Easing.

In the same fashion that the European Central Bank is now able to buy unlimited amounts of debt from bankrupt countries like Spain, the Fed has given itself the prerogative to buy unlimited amounts of mortgage loans in an attempt to artificially lower interest rates and ‘stabilize’ the crashing home loan market. The $64 million question is how much will this unlimited easing help to rescue the mortgage market? Not much according to Ben Bernanke himself, who has said the move is not a panacea.

As some US media reported, the Fed once again pulled the trigger, but only to shoot the country on the other foot; an action that will certainly result in more difficult times for Americans. The U.S. Federal Reserve announced the ‘liquidity boost’ to help the economy and that such injection of fiat money will continue, which according to Ben Bernanke, shows the Fed’s commitment to help with the recovery. Double speak? Mind games?

At the end of their two-day meeting, the Fed said in a statement that it intended to “launch a program to buy mortgage-backed securities valued at $40 billion a month” and that the program would not have a limit in the amount spent or a deadline to conclude.

The organization led by Ben Bernanke said that if you add the “Operation Twist”, a program to swap short term bonds for long term ones, to the new scheme to buy mortgage backed securities, the Fed will be buying about $85 billion a month. Also, the U.S. central bank said it will keep interest rates at exceptionally low levels between 0% and 0.25%, until “at least mid-2015”, instead of the end of 2014 as announced in January of this year.

The Fed said that “highly accommodative monetary policy will remain appropriate for a considerable time until the economy strengthens.”

The chairman of the U.S. Federal Reserve (Fed), has defended the new measures adopted Thursday by the institution, while economists question the validity of a program that not even Bernanke sees as a real solution to the real problem. The chairman of the Fed insisted in his speech that his actions are not the “panacea” and “do not cure all ills” now affecting the economy.

In the press conference following the meeting of the Federal Open Market Committee (FOMC) of the Fed, Bernanke said that monetary policy alone — especially the wrong kind — will not solve all problems by itself, so politicians have to do their part. He also, emphasized that the Fed can not be rushed when leaving a highly accommodative monetary policy and pledged to hold such policy until the recovery is sustainable and allows for job creation.

However, he added that no set of policies can be extended until the objectives of his mandate are achieved. Those supposed goals include a significant improvement in employment, manufacturing and consumer spending. There is no need to say that under the current policies and the new ones the Fed has adopted, none of the goals will be ever accomplished. In fact, it is quite the opposite. The continuous unrestricted pumping of fake money into the economy will only prolong the disease.

Bernanke acknowledged that the situation in the labor market is still assessed as concerning, and stressed that the current level of economic recovery is not good enough to have the unemployment rate fall.

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.

Bankers Play the Fear Card on Economic Outlook

by Tyler Durden
ZeroHedge.com
September 6, 2011

Any time a major bank releases a report saying a given course of action is too costly, too prohibitive, too blonde, or simply too impossible, it is nearly guaranteed that that is precisely the course of action about to be undertaken. Which is why all non-euro skeptics are advised to shield their eyes and look away from the just released report by UBS (of surging 3 Month USD Libor rate fame) titled “Euro Break Up – The Consequences.”

UBS conveniently sets up the straw man as follows: “Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.” So far so good. Yet where it gets scary is when UBS quantifies the actual opportunity cost to one or more countries leaving the Euro. Notably Germany. “Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade.

If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. ” It also would mean the end of UBS, but we digress. Where it gets even more scary is when UBS, like many other banks to come, succumbs to the Mutual Assured Destruction trope made so popular by ole’ Hank Paulson : “The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless).

It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.” So you see: save the euro for the children, so we can avoid all out war (and UBS can continue to exist). The scariest thing, however, by far, is that for this report to have been issued, it means that Germany is now actively considering dumping the euro.

Read Full Article…

Russian President: New World Order with new Global Currency

By Luis R. Miranda
The Real Agenda
June 19, 2010

As many other puppet presidents have done it before, Russia’s Dmitri Medvedev is taking his opportunity to call for a new world

Russian President, Dmitri Medvedev

order and to push the Russian currency up, as the new reserve paper.  “What had seemed untouchable has collapsed. The bubbles that created the illusion of flourishing economies have burst,” said the Russian president in St Petersburg.  As he opened Russia’s annual economic forum, Medvedev said the times when western corporations dominated the economy had ended and the new interest in Russia was a sign that the world was changing.

“For Russia this situation is a challenge and an opportunity.  And we should use it to build a modern, flourishing and strong Russia … which will be a co-founder of the new world economic order.” he added.  Talking in front of many businessmen from around the world, the Russia leader followed the steps of other governments and presidents as well as of non-governmental institutions.  In the past, George H.W. Bush, Tony Blair, Gordon Brown, Mahmoud Ahmadinejad and Barack Obama, among others, have called for the formation of a new world order.  In fact, all those leaders have cited the creation of a centralized global entity as the only way to cure the many illnesses the world suffers from today.

Together with governments, there are supranational institutions such as the World Bank, the International Monetary Fund, the European Central Bank and their respective leaders, who have echoed the same calls for the creation of a new global order.  This order would have the power, will amass the resources of the planet and will decide how to use them.  The plan also includes the creation of a single monetary policy to which all countries will have to submit to.  The adherence to such policy will enable the countries to receive loans and aid packages that will make them more dependent on the foreign centralized organization, and less dependent on their own Constitutions and laws.  In fact, in the world seen through the eyes of people like Medvedev and the other power men, there is no need for nationality, sovereignty or identity.

Russia has already taken significant steps to aid the lifeline of the new world order -which has existed for many years now-.  The country will introduce a policy of zero taxation on capital gains which will indeed allow the free flow of monies in and out of, much like it happens in corrupt countries where this policy aides and enables money laundering through the banking system.  This would transform Russia into the new United States when it comes to moving large amounts of money coming from all places -drug trade, arms trade, slave trade- to circulate and make its way across the world.  Of course Medvedev did not present it like that.  Instead, he said his policy would allow companies working on long-term investments.  Russia, he said, “was improving the legal system to offer better protection for businesses against the long arm of bureaucracy.”  In other words, crime, of the kind recently experienced through Wall Street banks around the world will have a safe heaven in Russia.  What Mr. Medvedev’s words mean is that all the policies that allowed the bankers to suck countries dry of their resources will also exist in the world order he dreams about, where Russia is the new leader and he’s the new Al Capone.  Limits to bureaucracy means zero regulation or a perfect environment for the corporations to run their shady Ponzi schemes.

The Russian president also talked about something that would make any corporate businessman smile, even in the rainiest day.  Russia has completed the process of simplifying migration procedures, so that workers can go in the country; or better, Russia just like China will allow corporations to pay some of the lowest wages to its citizens in exchange for long working days with no benefits and no rights.  Again, it’s clear he did not present it this way.  He said Russia had changed to attract “highly-qualified specialists” from the financial and technology sectors.  “The state should not tear down the apples from the tree of economics,” he said.

Medvedev complemented his speech on a new world order by forcefully attacking the dollar and claiming that it was time for a new reserve currency.  “Only three, five years ago it seemed like a fantasy” to create a new reserve currency. Now we are seriously discussing it.”  He does not seem to be alone in that ride.  It seems China is up to the challenge as well.  In the meantime, Bank of Israel Governor Stanley Fischer added his voice to the Russian’s, but from a very different point of view, one that is rarely heard.  He said: “New reserve currencies don’t emerge by fiat. They emerge as countries change.”  A fiat currency is paper or electronic  money that is not backed up by a nation’s industry or production, but by an inflated system of blind trust on what a piece of paper says it is worth.

Apparently, both Russia and China think it is time for the East to drive the world and its markets.  “We really live at a unique time, and we should use it to build a modern, prosperous and strong Russia, a Russia that will be a co-founder of the new world economic order,” he said.  The problem with Medvedev’s vision is that his plan will not work, at least not for as long as he wants.  Although he intends to build something new, better and different, he plans on using the same old policies that brought us to the disaster he so clearly criticizes.  He wants prosperity, a modern economy and a strong Russia, but he wants zero regulation, a centralized dictatorial government and no sovereignty.  Maybe he forgets that Capitalism, the real Capitalism, was born from free independent nations that based their development on the use of their resources to produce quality goods that benefited the world.  Instead, he wants a global economy filled with cheap, slave-made products that need to be changed every few months.  He wants the best workers, but will follow the same old low-paying policies that maintains Asia’s and Latin America’s people in a continuous feudal model of development.

“If the world depended completely on the dollar, the situation would have been more difficult,” Medvedev reminded the audience.  So why does he want a single global currency, then?