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Rising gold prices are a cold sore on the lip of
central bankers. In the world of paper money, it’s a clear sign
something’s not right
Central bankers
are the keepers of the keys to the kingdom. The kingdom, however, is on the
edge of bankruptcy and in danger as never before. Comparisons are now being
made to the Great Depression of the 1930s. The comparisons, however, are just
that.
In some ways, the
situation is similar. In many ways, it is not. In a very fundamental way, the
conditions are much worse. The systemic strains on the global financial
system are today much more profound than even during the Great Depression.
The Great
Depression of the 1930s was unique in the history of capital markets built on
debt-based money, sic capitalism.
Until the creation of the Federal Reserve System, the US economy had been a
savings-based, not debt-based, economy. The difference between the two,
although rarely understood, is profound
The price paid
for credit-based expansion is debt. Increasing the debt-based money supply
increases the amount of debt; and, over the naturally limited life of a
debt-based economy, the constantly increasing and compounding levels of debt
will grow until the economy collapses.
Compounding debt,
the wellspring of bankers’ profits, will eventually destroy the economy
on which it lives. The time it takes to do so is dependent on the strength
and productivity of the underlying economy.
No economy,
however, no matter how strong initially, can out run the constantly
compounding debt of credit-based money—not even the United States.
THE GREAT DEPRESSION, VERSION 1.0
In 1913, the
Federal Reserve System began feeding debt-based money into the previously
savings-based US economy; and in just ten years, the newly available cheap
credit poured into the stock market and drove shares prices to historic
highs. In 1929, the stock market collapsed and the Great Depression began in
1933, only thirty years after the Federal Reserve Act was approved.
It was the vast
amounts of cheap credit from the Federal Reserve that fueled the meteoric
rise of the stock market bubble in the 1920s, a bubble so large its collapse
plunged the US and the world into the first Great Depression in the 1930s;
and, now, today, the same is again about to happen.
The amount of
debt that will soon come crashing down will make the Great Depression seem
exactly as it is, a prelude to something much larger and much more
dangerous—a possible hyperinflationary deflationary collapse that will
soon dwarf the merely deflationary collapse of the 1930s.
This time around,
the Federal Reserve and its government enablers, sic co-conspirators, have created far more
leveraged debt than existed during the historic 1920s stock market bubble.
The housing bubble of 2002-2006, created in the wake of the 2000 dot.com
bubble (remember that?) is the biggest bubble in history and again we will
relearn the lesson that the more that goes up, the more will come down.
THE GREAT DEPRESSION, VERSION 2.0
Modern economics
is a shell game, a 300 year old confidence game designed to hide the fact
that bankers’ credit replaced real money, credit created out of thin
air by private bankers and public government that leaves compounding debt,
and ultimately economic destruction, in its wake.
Recently, because
of the increasing collusion between bankers and government, the line between
private banking and public government is gone. They are now one and the
same—only the union hasn’t been publicly announced because of
anticipated opposition to the now consummated marriage.
Central bankers
are modern day confidence men who have so embedded themselves into the fabric
of everyday commerce that people are convinced they need credit in order to
survive; like Elvis Presley in his final days believed he needed prescription
pills to live.
Just as Dr.
"Nick", Elvis Presley’s pill doctor, is responsible for
killing Elvis with his over-prescription of drugs, Dr. Bernanke, the current
US credit provider, and his predecessor Dr. Greenspan will be remembered for
their fatal over-prescribing of central bank credit to the US and world
economy. Too much of a good thing is and has always been in the end, a bad
thing.
THE ILLUSORY SAFETY OF DENIAL
Americans often
tell themselves that safeguards are in place that will prevent another Great
Depression; and, as we are now on the edge of another such collapse, it would
do us well to take another look at those "safeguards" to see how
safe we actually are—or aren’t.
The daisy chain
of debt defaults set in motion by the collapse of the 1920s bubble caused 15,000
banks to fail between 1929 and 1933. So in 1933, the US government responded
by passing the Glass-Steagall Act to prevent another such collapse.
Unfortunately,
the Glass-Steagall Act was designed to deal not with the cause (debt-based Federal
Reserve bank notes fueling excessive speculation) but with the results (bank failures and
loss of savings). Nonetheless, the Glass-Steagall Act of 1933 is the
reassurance Americans believe will insure that "it won’t happen
again".
Glass-Steagall
prohibited investment banks from again acting as commercial banks. No longer
could investment banks (which make speculative bets) own commercial banks
(which accept savings deposits from customers) and thereby risk the savings
of depositors.
But in 1999
Glass-Steagall was repealed. Wikipedia’s recounting of the repeal, is
well-worth the read:
On November 12, 1999, President Bill Clinton signed
into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of
1933. One of the effects of the repeal was to allow commercial and investment
banks to consolidate. Some economists have criticized the repeal of the
Glass-Steagall Act as contributing to the 2007 subprime mortgage financial
crisis.[6][7]
…One reason banks are losing money is the
repeal nine years ago of the 1933 Glass-Steagall Act, which separated
commercial and investment banking after excessive risk- taking contributed to
the Great Depression
...The repeal enabled commercial lenders such as
Citigroup, the largest U.S. bank by assets, to underwrite and trade
instruments such as mortgage-backed securities and collateralized debt
obligations and establish so-called structured investment vehicles, or SIVs,
that bought those securities.
…Citigroup played a major part in the repeal.
Then called Citicorp, the company merged with Travelers Insurance company the
year before utilizing loopholes in Glass-Steagall the allowed for temporary
exemptions.
…the "finance, insurance and real estate
industries together are regularly the largest campaign contributors and
biggest spenders on lobbying of all business sectors [in 1999]. They laid out
more than $200 million for lobbying in 1998, according to the Center for
Responsive Politics..." These industries succeeded in their two decades
long effort to repeal the act.
In 1999,
investment banks, insurance companies, and real estate companies together
gave $200 million to US politicians in order to repeal the act specifically
designed to prevent another Great Depression; and, now the idea that investment
bankers such as US Treasury Secretary Henry Paulson fresh from Goldman Sachs
will save America’s economy is absurd—for Paulson and his cohorts
are not in Washington DC to save America, they are there to profit and save
themselves.
The $200 million
lobbying effort by investment bankers, real estate and insurance companies to
repeal Glass-Steagall prevailed but their task is not yet over. Investment
bankers via the privately owned Federal Reserve System are now about to
complete their control over the entire US financial system.
The following is
excerpted from Silver,
Gold, & The Last American Hero, JFK. Written March 2008, it
was true then, it is true today and unfortunately will be true tomorrow..
FED ASKS FOR
OVERSIGHT OF ALL FINANCIAL MARKETS
oversight n 1: synonym, overlooking, as in
government oversight
Plan Would Expand Fed's Power To Intervene In
Financial Crisis
March 29, 2008
WASHINGTON (CNN) -- The Federal
Reserve would have the power to regulate virtually the entire financial
industry under a Treasury Department proposal to be announced Monday.
The proposal is part of a sweeping overhaul of the government's
regulatory structure that Treasury Secretary Henry Paulson will propose in a
speech Monday, said Treasury Department spokeswoman Michele Davis.
"I am not suggesting that more regulation is the answer, or even
that more effective regulation can prevent the periods of financial market
stress that seem to occur every five to 10 years," Paulson will say,
according to a text of the speech obtained by The Associated Press.
According to Brookly McLaughlin, another department spokeswoman,
Paulson will propose these changes:
·
Give the Federal Reserve authority to
look at the financial status of any institution that could affect market
stability;
·
Merge the Securities and Exchange
Commission with the Commodity Futures Trading Commission;
·
Give stock exchanges more room for
self-regulation;
·
Consolidate bank supervision into one
regulator.
One of the most dramatic changes would extend the
powers of the Federal Reserve -- designed to regulate the commercial banking
industry -- to oversight of virtually the entire financial industry.
THE FOX IS IN THE
HENHOUSE
After the recent collapse of Bear Stearns, the Fed
announced that US funds will now be made available to international
investment banks. Previous to this announcement, any loaning of US funds to
investment banks was prohibited.
On March 28th, the first day the funds were
available, the Fed loaned the banks $75 billion dollars. These investment
banks, called primary-dealers, are the inner circle of the Fed’s
funding mechanism.
That these primary-dealers are in need of US support
is an indication of the rapidly disintegrating state of their balance
sheets—and the lengths the Fed will go to protect their fellow bankers
in the private sector with public money
…The bailout of the richest investment banks
in the world by US taxpayers is tantamount to a kidnap victim being forced to
defray their kidnappers’ expenses. Someday, however, these bail-outs by
the Fed will come to an end, but that end will not be pretty—for the
end of central banking will be both unprecedented and brutal.
Central banks and investment banks are two sides of
the same coin; and, now that the coin has been debased and recast with
subprime securities and other suspect forms of debt; investment banks and
their enablers, the central banks, are as vulnerable as those they once
exploited.
Their increased vulnerability will soon be triggered
by any number of events, e.g. bank insolvencies, collapsing currencies,
slowing economies, money-market failures, counter-party derivative defaults
etc., each one powerful enough to bring down a faltering house of cards built
on a foundation of rapidly shifting sand.
You need not
remember the above predictions. You will remember them soon enough when they
occur. Private bankers have controlled the US economy since 1913. Their
success has led to our present problems. Their failures will lead to our
future problems.
But the
bankers’ work is not yet complete, there are still a few coins on the
floor they inadvertently missed and their greed will cause them to bend over
to pick them up. Perhaps then they will be vulnerable to the people’s
will—which brings us to another subject, the peoples’ will.
THE LAST BUBBLE
Sometimes the
patrons of strip bars—influenced by alcohol and their own
delusions—believe the dancers truly desire them. While at the time it
is a pleasant thought (for the patrons), it is not true and does not last, at
least not long after the last bill has been stuffed into the stripper’s
G-string.
Self-delusion,
however, is not confined to strip clubs although it regularly rises and is
paid for there. Self-delusion is far more common than commonly thought as the
more widespread the delusion, the less the delusion is apparent to the
deluded.
America is unique
in many ways but in some ways it is representative of other nations and other
people. After all, its national character was forged by the many different
nationalities that comprise it; and, in that way, it is both unique and
reflective of humanity as a whole.
It appears to
Americans as well as to others that through democracy, the peoples’
will determines the nation’s destiny. However, this is no more true
than the delusion that strippers lust for whom they dance.
Delusions,
whether private as in the confines of a strip club or collective in the case
of nations, are just that, delusions. The repeal of the Glass-Steagall Act by
the Gramm-Leach-Bliley Act in 1999 is a case in point. Since 1933,
Glass-Steagall has given Americans some measure of protection. Since 1999,
however, such feelings of protection have been delusional.
The
Gramm-Leach-Bliley Act which repealed Glass-Steagall (note: Gramm, Leach, and
Bliley were all Republicans) was passed along party lines in the Senate
(Republicans for, Democrats against); but it was passed in the House of
Representatives with both Republican and Democrat support, and was signed
into law by a Democrat, President Bill Clinton.
FREE ELECTIONS MEAN NOTHING WHEN POLITICIANS ARE
FREELY BOUGHT AND SOLD
The passage of
the Gramm-Leach-Bliley Act was either an example of the "hands-across
the aisle" sentiment that sometimes causes both parties to join in supporting
a common cause; or, it was an example of the far more common
"greased-palms of politicians selling out the public good for private
gain" syndrome lubricated by $200 million in lobbyists money.
Glass-Steagall
was designed to protect America from another Great Depression, a time where
one in four had been out of work, where 60 % of banks had failed, and where
bread lines were as common as family misery. But in 1999 Glass-Steagall was
repealed by those elected to represent the peoples’ will.
The subversion of
democracy did not happen overnight or by chance. It was built into the
process itself. Alexis deToqueville in his seminal work, Democracy In America
written in the 1830s, believed that America’s version of democracy
suffered from a fatal flaw, a flaw that derived from the American character
itself.
DeToqueville
observed that Americans had two conflicting desires: (1) The desire to be
free, and (2) the desire to be led. It is America’s second desire that
has now led to the undoing of the first.
Irrespective of
America’s truly revolutionary Declaration of Independence and
extraordinary Constitution, America today has become a debased mockery of the
founding fathers’ original dream and the manifestation of
DeToqueville’s dire predictions; and, this November, Americans will
again go to the polls to choose “their masters”.
This is what
DeToqueville said of the process:
It is in vain to summon a people, who have been
rendered so dependent on the central power to choose from time to time the
representatives of that power; this rare and brief exercise of their free
choice, however important it may be, will not prevent them from gradually
losing the faculties of thinking, feeling, and acting for themselves, and
thus gradually falling below the level of humanity.
In 2008, America
is now the world’s number one jailor. Its prisons hold 25 % of the
world’s entire prison population and a 2002 Department of Justice
ruling allowed Americans to torture prisoners as long as the torturer
“in good faith” did not believe permanent harm would result
(torture being defined by the US Department of “Justice” as only
those "extreme acts" that cause pain similar in intensity to that
caused by death or organ failure).
This is stark
evidence of the devolution of the “rule of law” that has occurred
in the United States of America in recent years. Perhaps America has not yet
fallen below the level of humanity as DeToqueville predicted. As some might
and will argue, it all depends on who sets the bar.
Just recently, in
June 2008 the US Congress passed a bill submitted by President Bush that
allows the US government to spy on Americans and to indemnify those that
already have done so, i.e.AT&T and Verizon. Both presidential candidates,
John McCain and Barack Obama voted for the bill.
IF YOU ASPIRE TO THE SEAT OF POWER YOU MUST FIRST
DROP YOUR DRAWERS
I am not saying
Americans or others should not vote in elections; but, if they do, they
should be cognizant of what they expect will be accomplished. Most Americans
still hope their votes once every two or four years will correct the
direction this once great nation has taken. They will not.
Those candidates
who actually challenge the corrupt system which now masquerades as a
representative democracy have been marginalized. Ron Paul on the right and
Dennis Kucinich on the left represent the best of the two opposing political
polarities.
Ron Paul’s
bills to abolish the Federal Reserve System and Dennis Kucinich’s bills
to impeach President Bush and Vice-President Cheney for crimes against the
nation should be heard and subjected to meaningful debate. Neither will
occur. Real democracy has now been silenced in our now unreal world.
HOPE IS ON THE
HORIZON
Delusions die
hard. But like the patrons in strip clubs, only when the money is gone, does
reality return and so in 2008, America may now be on the verge of a
reawakening. With gas above $4 a gallon, its credit cards tapped, home
foreclosures rising and its telephones increasingly called by bill collectors
from India, Americans, like the patrons in the strip club, are realizing
their wallets are now empty—the money’s now gone, America’s
last bubble may be about to pop.
THE LAST FORUMS FOR LIBERTY
I want to extend
my deep thanks and gratitude to the sites that publish these writings and the
writings of others, writings that draw attention to the crisis that now
threatens the US and indeed the world. It is no coincidence that the gold and
silver focused websites have become the last forums for liberty.
The loss of our
freedoms has been accomplished by the collusion of two powerful forces,
private bankers and public government. Both those forces, however, are
counterfeit. Bankers no more represent real money than governments today
represent those they govern; and the power of both derives from the false
money that has fueled the ambitions of each.
When bankers and
government first colluded in England in 1694, they replaced gold and silver
with government counterfeit coupons and the world has not been the same
since. It is little wonder that over the years, bankers have become more and
more wealthy, governments have become more and more powerful, and we, the
citizenry, have become more and more impoverished and indebted to bankers and
enslaved to government.
It was on the
internet, on gold and silver focused websites where I first encountered the
writings of others who knew well before I of the dangers unseen by those who
could not then see. Because of them and because of the websites that posted
their writings, I have gained some understanding and insight into the
critical issues that now confront us.
Professor Antal
E. Fekete, see (www.professorfekete.com), was one of those writers. When I
first read his articles, I didn’t understand the value of a gold
standard which the professor adamantly espoused.
I didn’t
understand that the true value of a gold standard—apart from valuing
gold and silver as real money—lay in its natural bounds on the powers
of government, bounds against which governments attempt to override.
Mao Zedong once
proclaimed that political power comes out of the barrel of a gun. While that
may be true, it is only partially true; for here in the West, since 1694,
political power has increasingly come from the issuance of debt-based fiat
money from central banks, money that can corrupt all who benefit from its
false issuance e.g. politicians, academics, regulators, corporate officers,
the military, etc.
Buckminster
Fuller was fond of calling our planet, Spaceship Earth. It’s a good
name but it might do us well to note that, of late, our Spaceship Earth has
become a bit wobbly. The icecap on the North Pole has now melted, geophysical
calamities are on the rise, gold and silver have been replaced by pieces of
paper, and those who purport to speak in defense of justice, liberty and democracy
are lying through their teeth.
Welcome to 2008.
2009 comes next. 2010 comes after that.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
Information contained herein is obtained from sources believed to be reliable,
but its accuracy cannot be guaranteed. It is not intended to constitute
individual investment advice and is not designed to meet your personal
financial situation. The opinions expressed herein are those of the author and are subject to change without notice.
The information herein may become outdated and there is no obligation to
update any such information. The author,
24hGold, entities in which they have an interest, family and associates may
from time to time have positions in the securities or commodities discussed.
No part of this publication can be reproduced without the written consent of
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