Saturday, December 06, 2008

'I have a scam': the Real Cause of Impending, Utter Financial Collapse

by Len Hart, the Existentialist Cowboy

That there is gold in Ft. Knox may be a popular myth. Then again it could be just another bald-faced lie, a hoax, a callous, criminal fraud like 'supply side, trickle-down' bailout economics! I say: NO bailout for the banks, NO bailout for the fat cats and other 'capitalists' who created this mess, NO bailout that lets the GOP off the hook! No bail out for auto makers who have never listened to the public. Screw the banks and to hell with Wall St! What we need is a bailout for the people!
Gold was said to be moved --literally --from an 'asset' side to the 'debit' side of the building. The US has been running a balance of trade deficit for years. One wonders --is there any gold left to be plundered or liquidated.
Yet, today evidence is starting to accumulate that even though the gold in Fort Knox is all physically present and accounted for, the problem is that it may no longer belong to the United States. And it all comes as a consequence of the Treasury’s declared 30-Year War on Gold (which began in earnest when the gold window, allowing the redemption of dollars in gold, was closed in 1971). Since the 1960’s, the Treasury and the Federal Reserve Board have employ a range of strategies to try to minimize the role and importance of gold:PERSUASION.

The Treasury, in an effort to defend the dollar, has long "talked down" the role of gold in modern monetary systems. This disparaging of gold as a ‘barbaric relic’ is a longstanding and perfectly defensible behavior on the part of the US Treasury. COERCION- Facilitating and encouraging sales and lending of gold by other countries, gold-holders, and mines in order to maintain an atmosphere of "oversupply" of the metal goes one step further.
--Whose Gold is it at Fort Knox?
Ancient Rome, likewise, ran out of 'gold', one of a handful of 'metals' that are said to have intrinsic value. At the time, Roman 'sesterces' were only good enough to get you into the bath houses or 'free' gladiatorial contests in the Coliseum. Rome invaded Dacia because it was desperate for Dacia's gold. Likewise, Bush, upon the fraudulent pre-text of 'terrorism', invaded Afghanistan for its natural gas reserves and Iraq for its oil. Don't tell me that you believe Bush's 'fairy tales' and outright bullshit!
'Every situation is different', alright! Rich folks get their asses kissed! Poor folk get their assed KICKED! Right out of their homes!
It involves building a cheap but impregnable cinder block building in my back yard and, upon completion, I announce to the world that I have several million gold bars (or more) warehoused in it. How far do you think I would get if I went to my local Maserati dealer and offered him/her the following proposition: "you let me drive that beautiful, shiny red Maserati sport model off your lot and whenever my payment comes due, I will move 'X' amount of bullion from one end of my cinder block building to another and put your name on it?" If he/she goes for it, I might offer a similar deal to my realtor/developer: "if you let me move into that $15 million estate I will move some bars from one end of my cinder block box and put your name on it!"

I'm on a roll!

And somewhere along the way, I've accepted 'depositors' eager to get in on it. Some enterprising folk have actually propositioned me: you move a bar and put my name on it and I will give you the use of cold hard cash in the meantime. Cool! Now I'm in the banking business. Just call me 'Fed'.

I might be emboldened to approach the 'operators' who hold the mortgages on the TCB Tower in downtown Houston. I offer to take ownership of that 'paper' and, in return, I will move an agreed upon number of gold bars from one end of my cinder block building to the other and put the tag, TCB, on it! I might repeat this 'procedure' in downtown LA, Century City, Chicago, Manhattan! I like the more stately buildings like Empire State or Chrysler.

Peanuts!

I have bigger things in mind. What if I can scam ..uh...deal with those folk who hold the national debt of the US? Russia? China? India? Great Britain? After all, my cinder block building is very, very big!

Catastrophe!

My neighbors get suspicious. One of them jumps over the fence and bores a hole through my cinder block building. What the fock!! He reveals to the whole world that there is nothing in my cinder block bunker but cheap clay bricks that I have spray painted gold!

The whole house of cards collapses and the world is plunged into another 'great' depression!

Now this is all just a 'parable' --the parable of the cinder block scam! There are several lessons in every parable, even stupid ones. It is not 'gold' that backs up currency; it is confidence. Gold itself has value only as long as people want or need it. Both gold and silver have practical value as they are used in electronics applications. But what if they were not? What if the use of gold and silver for decorative or esthetic purposes was no longer fashionable? What if there was absolutely nothing that could be depended upon to back up paper currency? Ultimately, the only thing that really backs up currency of any type --even cinder block scrip --is simply: confidence. When people no longer have confidence in either the currency or the system, the system itself collapses.

Bottom line

People the world over have not just now discovered that there is not enough gold to back up US currency and/or obligations. It was Nixon who revealed the fact that the US didn't have enough money in Ft. Knox to cover its obligations. Some creditor nations had wanted to be paid in gold and the US refused. If there is any gold in Ft Know it will not prevent the collapse that is already well underway.

The amount of gold in Ft. Knox is estimated to be about $250 billion --a drop in the bucket. While even the Fed will concede that gold is 'true money' it is so only because people are willing to accept it. Goldfinger's plan to collapse the world economy would have failed. It would not have created the panic that is underway today. Rather, a world wide financial collapse is due not to the loss of gold but the complete loss of confidence in the capitalist/imperialist system.


Next episode: Why Karl Marx was right and telling the truth; George Bush is a lying sack of shit!
Who caused the great crash of 2008?

Original article, subheaded Lee Sustar analyzes the roots of the worst economic crisis since the Great Depression--and shows why Marxism offers the best way of understanding what went wrong, via Socialist Worker (US):

THERE ARE plenty of people who should be held accountable for turning an ordinary recession that began a year ago into a global catastrophe.
Sustar then goes and identifies some of the main culprits: Angelo Mozilo (Countrywide), George Bush, Henry Paulson, Phil Gramm, Robert Rubin (who comes in for particularly harsh criticism), Alan Greenspan (who is presented as the rogue who is the founder of our current economic feast). A rogues' gallery if there ever was one. It seems strange that Robert Rubin is one who our soon to be dear leader has called upon to lead us out of this mess, doesn't it.
Topping the list is former Federal Reserve Chair Alan Greenspan, who fed the bubble by keeping interest rates at rock-bottom levels, urging home buyers to take on adjustable-rate home loans and refusing to use the Fed's powers to oversee a mortgage industry rife with fraud.
The Maestro! I'm sure he wishes he would have died before this economic collapse. My guess, though, is that somehow his reputation amongst the masses won't be too tarnished. After all, it looks like we're going to continue the same basic economic policies under our soon to be dear leader as have been followed for the past 30-40 years. What fun!

While reading Sustar's listing of the bad (Bubba included), it's the bulk of the article which you may want to pay attention to. There, he looks at how Marx analyzed the Capitalist system and its failings, and offers a Marxist perspective on how things might get turned around. Now, even if you don't accept the Marxist perspective, it is worth your time so you can have another layer of knowledge as you slog your way through this economic crisis.
--All Over the Board: Who caused the great crash of 2008?
More about how the government of the United States has BETRAYED YOU:
The swindle of the system is simple. The Federal Reserve Bank hires the US Treasury to print up some money. The Federal Reserve only actually pays thetreasury for the cost of the printing, they do NOT pay $1 for each 1$ printed. But the Federal Reserve turns around and loans out that money (or credit line) to banks at full face value, those banks which have exhausted their deposits then loan that Federal Reserve fiat money to you, and you must repay it in the full dollar value (plus interest) in work product, even though the Federal Reserve printed that money for pennies, or created it out of thin air in a computer.
As the Federal Reserve overprints more money, the money supply inflates, and too much money starts chasing too few goods and services, which means prices go up. But contrary to the charade put on by the Federal Reserve, inflation doesn't just come and go due to some arcane sorcery. The Federal Reserve can halt inflation any time it wants to by simply shutting down those printing presses. It therefore follows that both inflation and recession are fully under the control of the Federal Reserve. This means the cycle of inflation and recession is an intentional one; a gigantic heartbeat that pumps paper certificates out to the working class, while pumping real wealth in to the owners of the banks.
Over time, that excess of printing has destroyed the value of that dollar you think you have. If you want to know by just how much, go out and try to purchase 371.25 grains of silver right now. Usually, the deterioration is gradual. Sometimes, it has to be obvious, such as the 1985 devaluation (done to halt the trade imbalance) which triggered the Japanese real-estate grab in this country.
Many politicians have attempted to reverse this process. John F. Kennedy issued an Executive Order 11110, requiring the Treasury Department to start printing and issuing silver certificates for the silver then remaining in the US Treasury.

Kennedy decided that by returning to the constitution, which states that only Congress shall coin and regulate money, the soaring national debt could be reduced by not paying interest to the bankers of the Federal Reserve System, who print paper money then loan it to the government at interest. This was the reason he signed Executive Order 11110 which called for the issuance of $4,292,893,815 in United States Notes through the U.S. Treasury rather than the Federal Reserve System.
          John F. Kennedy's United States Note.
That same day, Kennedy signed a bill changing the backing of one and two dollar bills from silver to gold, adding strength to the weakened U.S. currency.

Kennedy's comptroller of the currency, James J. Saxon, had been at odds with the powerful Federal Reserve Board for some time, encouraging broader investment and lending powers for banks that were not part of the Federal Reserve system. Saxon also had decided that non-Reserve banks could underwrite state and local general obligation bonds, again weakening the dominant Federal Reserve banks".
Kennedy's E.O. was never implemented following his assassination, and shortly afterwards, United States silver coins were taken out of circulation and replaced with the copper clad slugs in use today. These two events, the failure to print new silver certificates, and the substitution of worthless slugs for our silver coins, may explain why the Warren Commission included on its panel John J. McCloy, a man with no experience in crime, law enforcement, or national security, but who had been the President of the Chase Manhattan Bank.
It should be noted that the banks themselves are still using the gold standard. Accounts are still settled between major national banks by the transfer of gold bullion.

So here we are with a bank that legally counterfeits the money you borrow but expects a full value (plus interest) repayment. But what's good for the Federal Reserve is good for the government itself, and this is where we get back into that funny word "deficit spending". The government spends more money than it takes in. It has for many years now. The Federal Reserve, being the only lawful source of this fiat money, prints up the excess cash the government needs (or manufactures a credit line in a computer). This extra cash is treated as a loan, in order to keep the government overspending from further eroding the worth of the dollar in the world market. The government (meaning the taxpayers) is on the hook for the full face value, plus interest.
But there's another problem. The government is borrowing so much money that it drives the interest rates up! You pay MORE interest on your mortgage, car loan, and credit cards, because the government cannot balance its books. That extra interest you pay is therefore another hidden tax. The government, in its "generosity", gives you a tax credit on mortgage interest that is higher because of their own borrowing!
During the 80s, as exports dropped, and jobs moved from manufacturing to lower paying "service sector" jobs, the US tax base declined. In order to keep the jobless rate from rising, a massive defense program called the Strategic Defense Initiative was cranked up, but since this program produced no exportable product, it produced no taxable sales revenues, and hence the money poured into the project accelerated the government decline into debt. Because manufacturing was on the decline, fewer start-up companies were approaching the lending institutions, so the government loosened up the rules (while increasing the insurable deposit limit) to allow "investments" in more high risk ventures, most of which turned out to be frauds, or worse, money laundering operations for drug criminals. This includes Whitewater, Flowerwood, and Castle Grande. Despite shifting the S&L loss primarily onto the taxpayers (to reassure foreign investors that the taxpayers still made America a safe place to park their surplus cash) the government plunged further into debt.
In the 12 years of the Reagan/Bush(I) administrations, the United States went from being the world's largest creditor nation to the world's largest debtor. Many of those nations which had enjoyed huge trade surpluses started loaning that profit back to the United States with the stipulation that we work on our manufacturing, clean up our infrastructure, raise taxes, in short, clean up our act, so that investment in America makes sense!
However, we didn't quite do that.
There has been some shuffling around to try to conceal the real scope of the problem. Over the last several years, the Federal Government has been sending less tax money back to the states than it takes in in taxes. This means that the states have to borrow MORE money to cover their obligations. The net result is that the debt is being transferred to the states, to conceal its true size. The government will easily admit to a $3 trillion "publicly held" debt, grudgingly concede that it's "unfunded liability" brings that number to almost $7 trillion, but the real hard truth is that total government debt, state and federal, is now over $14 trillion dollars, or about 50,000 for every man, woman, and child inside the United States. Since 1960, the taxpayers have shelled out $15 trillion in interest payments alone, while the principal continues to rise.
Yet another stunt the government has pulled is to "borrow" from the various trust funds under its control. Some $2 billion has vanished from the trust accounts of Native Americans (presently suing the Departments of the Interior and Treasury), and nearly ¾ of a TRILLION dollars has been removed from your Social Security retirement trust fund and spent in the last 8 years.


If the government has to borrow your retirement money when things are supposed to be so good, under what conditions can it repay the money? Or is that government IOU in your retirement account merely a promise to either tax you a second time or stiff you on the benefits you thought you were paying for?



In the last 8 years, during what are supposed to be record setting good times, the Federal government has nearly DOUBLED its debt load. The estimated interest on the debt equals all the personal income tax paid by al Americans. Our government is so deep in debt that it cannot get out.

                    ---The United States Is In Deep Doodoo!



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