Dialog Between Fmr. Fed Chair Volcker and Congressman Ron Paul

Here is an interesting discussion between Congressman Ron Paul and Paul Volcker in which Dr. Paul starts by describing the blow-up of the global fiat credit bubble; he later inquires to former Federal Reserve Chairman Paul Volcker’s ideas on the reform of the international monetary system.

Among his concerns were:

• the creation of supra-national powers for international financial institutions
• moving away from the free market
• international negotiations for the replacement of the dollar system

It is interesting, that during this discussion the idea of the IMF having an increased role in the world economy was brushed off; while in recent days there is new talk of the world returning to a new standard of IMF-issued SDR’s.

Fed Planning 15-Fold Increase In US Monetary Base

Eric deCarbonnel | MarketSkeptics.com

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)

3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base
Read the rest of this entry »

Regulators at FASB Turn Corporate America into a Brothel

Two of the most corrupt professions on the planet are at work here: banking and accounting. Its funny that they should even call it “accounting” anymore; as it is meant to provide for “accountability” and the “rule of law.” Instead we are stuck with “deceivability” and the “rule of men.”

As you will soon learn, if you haven’t already; there is no reason whatsoever to hold the securities of most of the corporations today. They simply don’t have to account for the value of their assets anymore. If there is no real accountability, then there will be no confidence. If there is no confidence, then there will be no speedy recovery.

This depression will languish for years. People are getting FED-UP with these kinds of cheap, inbred bankster shenanigans; they are starting to buy real hard assets to squirrel away what they are able, to whether the coming storm.

What? You thought the recovery is around the corner. Do you honestly believe what these people who have been repeatedly wrong are telling you once again, like a broken record? The recovery, as you may picture it, is not going to happen.

People are going to have to change their habits to adapt to the new paradigm. They are going to have to cut out the waste, become more sufficient unto themselves, manage their own money with sound economic principles. They must be guided by a understanding of just how perverted the whole economic system has become, over the past couple of decades.

Accounting Brothel Opens Doors for Banker Fiesta

Jonathan Weil | Bloomberg News

March 19 (Bloomberg) — The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.” Read the rest of this entry »

They Done Us Wrong: Spending Our Way Into Greater Depression

by Michael S. Rozeff | LewRockwell.com

If you like economic depression, Obama is your man. The stock market is shouting this message loudly and clearly. The S & P 500 (measured by the security SPY) made a little high at 100.41 on November 4, 2008. The election was the next day. It has been downhill ever since. The close on March 2, 2009 was 70.60. This 30 percent decline qualifies as what used to be an ordinary bear market!

Congress and the President could not construct better measures, proposed and enacted, to deepen this depression if they tried. Congressional Democrats intend to ensconce Democrats as the majority party for the next 25 years or so. Their chosen method is wasteful pork sold as rational investment. But by gilding the nests of their chosen constituencies and supporters with huge taxpayer-funded giveaways, they will deepen and lengthen the depression.

The stock market tells us this, but it is easy for stimulus supporters to explain away the stock market’s drop in other ways. Obama supporters are likely to extol the good things that his program is doing to revive spending in the economy, and to regard the stock market as an aberrant den of gamblers and thieves who deserve their Bush-induced fate.

Very few men on the street, including my doctor, understand that spending, whether private or government, does not get rid of economic depression; and the lack of spending does not cause it. They do not fathom that government spending, borrowing, and taxing will further gash the sinking economy below the water line and send it to its watery grave. They are more inclined to believe, along with prominent economists, that government spending should be increased by trillions more. There cannot be too much of a good thing.

People automatically think that if everyone does not spend, then how can businesses keep going and hire people? How can the economy work? Then they think, if people only have money, then they can spend. If the government spending will only put that money into their hands, this will cause people to spend. It will jump start the economy, restore business confidence, and all will be well.

This story has a firm hold on the public imagination, but things don’t work that way. People in the aggregate can only earn money to spend by working productively. Money still doesn’t grow on trees.

The government doesn’t have a money tree either. Without resorting to inflation, it can only shift money around. America’s federal government is a group of Americans who are empowered to tax the rest of us and borrow from anyone in the world. This money is collected from you, me, and others. We then have less to spend. Shifting money from the left pocket to the right pocket doesn’t enhance the total amount. Read the rest of this entry »

Hard Times Among the Hyenas

source: LaRouche Political Action Committee

December 9, 2008 (LPAC)–“It’s all gone ‘poof’,” one Goldman Sachs banker told today’s Wall Street Journal. Bankers who once wrecked companies and looted pension funds are now finding themselves reduced to irrelevance. Once Masters of the Universe, they are now lucky to have a job. “Investment banking has become a phantom realm,” the Wall Street Urinal said “where everyone is busy but no one is doing anything,” where “status is conferred by a quality meeting, not a completed transaction.” The “basic reality” of their profession, the paper said, is an “excess of bankers.” If you feel tears swelling in your eyes at the plight of these poor souls, who are now faced with selling their yachts and their country homes, and cutting back in other ways, perhaps the knowledge that Wall Street played a major role in destroying the productive power of the U.S. economy, laying waste to countless American businesses and families, will help. This is a classic case of “they did it to themselves.” And, of course, to the rest of us.

Then there’s the spectacle of hyena versus hyena, which we see breaking out as the members of the pack turn on each other in self-preservation. Take the case of Carl Icahn, the notorious corporate raider, and Leon Black, head of private equity giant Apollo Management. Former allies (both got rich from the Drexel Burnham Lambert junk-bond machine, Black as a Drexel banker and Icahn as his client), they are now fighting over money. Apollo needs to reduce its debt by getting its holders to cash it in at as little as 36-cents on the dollar, while Icahn, who owns a bunch of it, calls that fraud and has filed suit.

Hyena versus hyena. Maybe they should have a quality meeting.

What MUST Be Done To Avoid Financial Destruction

by Jim Sinclair | Jim Sinclair’s Mine Set

Things are now “Out of Control.”

This international financial crisis is now out of control as the world asks if the USA has two presidents, one president or no president at all.

It would appear that Paulson is in financial control with Bernanke as his second.

I warned you by personal email long before the statement was proven totally correct that “This is it.” That was followed by “This is it, and it is now.” Many people laughed it off.

This is it, and it is now.
Now it is out of control.
Now we enter the Collapse of Confidence period.
Then we begin the Weimar Experience.

It has all hit the fan, and still the absolute majority have no clue. The OTC derivative dealers broke the system into millions of pieces of glass. This broken glass cannot be put back together.
It is heart rending to see a picture of GM autoworkers holding a prayer meeting for their retirement funds. The retirement money was never funded. It is a lost hope. This is another responsibility the government has undertaken that is going to go wild.

Those of you still in freeze frame are headed for lines around your bank. Your bank will likely be acquired by another bank that also is in deep trouble.

The US dollar, like a leaderless company, will lose its respect and therefore value.

In order of importance the following MUST be done unless you want to be one of the suffering masses that will be all too visible this winter:

1. You must have your assets held anywhere they are in true custodial-ship accounts. That type of account at a bank or broker states clearly that the assets held there are not on the balance sheet of the host financial entity. Those assets are clearly segregated in your name. This must be reviewed by counsel to be sure you have what you think you have. Don’t cheap out. All you have is depending on the validity of true custodial-ship accounts.

You cannot know all the banks are broke, however I feel ALL banks are broke because finance is an intertwined system that if visible would look like a spider’s web. Problems on the top will materialize all along the web. Therefore the singular most important step you must take is the establishment of a true custodial-ship account.

Do not assume you have this type of account unless a competent attorney reviews the account papers.

2. I am extremely concerned about those of you who persist in holding certificates for gold rather than holding the actual metal either delivered to you or held for you in a true custodial-ship type account. The scams out there in gold are plentiful. The only way to avoid these scams absolutely is to have your gold in your own possession.

Every other means of holding gold is steps away from perfection. Some will be ok, but many will not.

3. Why would anyone fail to either take paper certificates or order their financial agent to make direct registration book entry at the transfer agent? In most cases you only have until year-end to accomplish this strategy.

4. Withdraw from ETFs.

5. If you carelessly keep large assets with your broker you are as mad as a hatter. The FDIC DOES NOT have the money to guarantee all they are undertaking. Withdraw excess money constantly from any net broker. If you are so stubborn that you think you can trade to insure yourself when your funds are not making money while still getting your money that counts you are nuts. Admit to yourself you are nothing more than a gambling addict in a downward spiral.

6. Leave no gold or coins with any coin dealer.

7. If you can withdraw from your corporate retirement plan do it.

8. Withdraw from credit unions.

9. Withdraw from all money market instruments.

10. This is it.

11. It is now.

12. It is out of control NOW.

The next two months are going to be shocking, but nothing compared to what you will have to experience in 2009.

Respectfully yours,
Jim

U.S. May Enter Bankruptcy Reorganization Soon

Many say it could never happen, they say a U.S. Treasury Bill is a guaranteed investment.  The “guaranteed” money market accounts that many people have their cash stored in are often backed by Treasury securities.

If the U.S. were to choose to default on the treasury securities, large losses will be taken by many; but bankruptcy reorganization is probably the best thing, when you have such a large debt that cannot possibly be paid.

The time has come, a time which is long overdue, to recall the troops, close overseas bases and dramatically slash the size of government.  We need a fresh start and bankruptcy reorganization is the way to accomplish this.

“Banking Rescue Bill” is a Trojan Horse

The “rescue package” is a Trojan Horse folks. It is the method by which the banks are trying to convince us to allocate resources in a wasteful manner, to supposedly save society, when, in point of fact, nothing could be further from the truth.

The reason credit is drying up for “main street” as they so often put it, is because the failing banks are absorbing ever-more liquidity, while everyone else is left to fight for the crumbs. Let the bad banks fail, every last one of them, down to JP Morgan Chase.

If they can’t manage their affairs, they certainly can’t help us manage ours. They need to go and we need to move on.

The Rescue Package Will Delay Recovery

Daily Article by Frank Shostak | Posted on 9/29/2008 | mises.org

In his testimony to the Congress on September 24, Fed Chairman Bernanke urged the legislators to quickly approve the bailout of the financial sector with a package of $700 billion. Bernanke echoed Treasury Secretary Paulson’s view that the bailout expense, while hefty, is needed to remove from banks’ balance sheets the mortgage-linked assets, which are paralyzing the flow of credit.

I think it’s extraordinarily important to understand that as we have seen many previous examples in different countries and in different times that choking up of credit is like taking the lifeblood away from the economy.

Most experts came out in strong support for the package. Without the rescue package, many large institutions that are “too big to fail” could go belly up. Many believe that the consequences of all this could be very severe to the real economy.

It is true that the financial system must be rescued; it must be rescued from the institutions holding bad debt that are currently draining capital while waiting for a bailout and adding little in return. It is they that are preventing wealth-generating activities in the financial sector and the other parts of the economy from expanding real wealth.

The Essence of Economic Adjustment

Conventional thinking presents economic adjustment — also labeled as “economic recession” — as something terrible, even the end of the world. In fact, economic adjustment is not menacing or terrible; from an economic point of view, it is nothing more than a time when scarce resources are reallocated in accordance with consumers’ priorities.

Allowing the market to do the allocation always leads to better results. Even the founder of the Soviet Union, Vladimir Lenin, understood this when he introduced the market mechanism for a brief period in March 1921 to restore the supply of goods and prevent economic catastrophe. Yet for some strange reason, most experts these days cling to the view that the market cannot be trusted in difficult times like these.

If central bankers and government bureaucrats can fix things in difficult times, why not in good times too? Why not have a fully controlled economy and all the problems will be fixed forever? The collapse of the Soviet Union’s centralized system is the best testimony one can have that controls don’t work. A better way to fix economic problems is to allow entrepreneurs the freedom to allocate resources in accordance with society’s priorities.
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Write to Your Representative: Vote NO On Bailout Legislation

I urge those of you who understand what you are in for if a bailout is done to write your congressmen and tell them that you will not stand for this kind of financial absurdity.  We need to stop the bailout, allow the insolvent institutions to fail and return to sound money.

Here’s what I recently wrote to my congressmen via votenobailout.org.

It really infuriates me to see the Congress giving the White House and its Secretary of the Treasury the power to transfer the people’s money to wealthy bankers on Wall Street.

These are the same people who got us into this mess and bailing them out most certainly isn’t going to get us out.

As a citizen of the united States of America I demand that you vote No to the Bailout legislation. Read the rest of this entry »

Financial Crisis: Maybe These Fools Just Plain Deserve It

Lately I’ve heard an awful lot of local ignoramuses complaining about the state of the economy, the decline in their investments and just plain how “bad” they have it. They feel so betrayed and have a long list of people to blame and hate.

It seems they will blame anybody, but won’t take responsibility for their own role in their predicament. Its sort of comical to see them all running around scared, acting like this is all a big surprise, but one thing is for certain: if they hadn’t had their heads so far up their asses, they’d have seen this coming years ago.

I would like to tell you the story of one individual, who I have been over-hearing today, who seems particularly deserving of a wake-up call. Read the rest of this entry »