CALIFORNIA’S EMPTY WALLET: TURNING CRISIS INTO OPPORTUNITY

On June 25, California Governor Arnold Schwarzenegger rejected a plan that would save the state $3 billion by cutting school spending, saying he would rather see the state issue IOUs than delay the funding problem with a piecemeal approach. The state’s total budget deficit is $24.3 billion. Meanwhile, other funding doors are slamming closed. The Obama administration has said it will not use federal stimulus money to prop up California; and Fitch Ratings, a bond rating agency, announced that it was downgrading the credit rating of the state, which already has the lowest in the nation. What to do? Perhaps California could take a lesson from the island state of Guernsey . . . .

Read more here -
http://www.webofdebt.com/articles/california_wallet.php

BIG BROTHER IN BASEL: ARE WE TRADING OUR NATIONAL SOVEREIGNTY FOR FINANCIAL STABILITY?

Buried on page 83 of the 89-page Report on Financial Regulatory Reform issued by the U.S. Administration on June 17 is a recommendation that the new Financial Stability Board strengthen and institutionalize its mandate to promote global financial stability. Financial stability is a worthy goal, but the devil is in the details. The new global Big Brother is based in the Bank for International Settlements, a controversial institution that raises red flags among the wary . . . .

Read more here -
http://www.webofdebt.com/articles/big_brother_basel.php

THE RETREAT OF THE SHADOW LENDERS: WHY DEFLATION, NOT INFLATION, IS THE ORDER OF THE DAY

While contrarians are screaming “hyperinflation!”, the money supply is actually shrinking. This is because most money today comes into existence as bank loans, and lending has shrunk substantially. That means the Fed needs to “monetize” debt just to fill the breach.

Read more here -
http://www.webofdebt.com/articles/quantitative_easing.php

Omitted attribution

Ralph Foster, author of “Fiat Paper Currency — The History and Evolution of Our Money,” points out that the quote opening my article of May 19, 2009 on the Weimar inflation came from his book. (“It was horrible. Horrible! Like lightning it struck. No one was prepared. The shelves in the grocery store were empty. You could buy nothing with your paper money.”) My source was a secondary one that omitted that attribution, so I’ll make it here with apologies. Here is an endorsement of Foster’s groundbreaking book by Ruth Hanham, Ph.D., of Harvard University:

“[Foster] states his case clearly, drawing on a wealth of primary and secondary sources, touching upon many diverse cultures, from the Chinese to the European to the North American. His professional familiarity with all types of currency and coinage grounds the book, making it refreshingly free of airy theories and complicated jargon, accessible to any intelligent reader. I highly recommend it.”
Ruth S. Arnon Hanham
Ph.D. History
Harvard University 1978

Ralph Foster’s book is available at home.pacbell.net/tfdf.

OUT OF THE ASHES OF GM: THE PHOENIX OF RENEWABLE ENERGY

Prophetically, GM named one of its now-extinct brands the Firebird. Like the fabled Firebird, GM could be reborn as something else. We now own a car company. To finance its transformation into something better, we just need to own a bank.

Read more here -
http://www.webofdebt.com/articles/gm.php

Entry for the President’s Brainstorm Page: TAKE BACK THE POWER TO CREATE MONEY FROM THE PRIVATE BANKING INDUSTRY

Today was the last day to submit entries to the President’s Open Government Brainstorm page. I submitted the one below. The website has a place to vote (”Looks Promising!” “Not So Sure.”) If you feel like voting, the link is here —

http://opengov.ideascale.com/akira/dtd/3648-4049

The Constitution states, “Congress shall have the power to coin money and regulate the value thereof.” This power has been abdicated to private bankers. Today, 99.99% of our money is created by private banks when they make loans. This includes the Federal Reserve, a private banking corporation, which orders Federal Reserve Notes to be printed, and then lends them to the U.S. government. Only coins are actually created by the government itself. Coins compose only about 1-10,000th of the M3 money supply, and Federal Reserve Notes compose about 3% of it. All of the rest is created by banks as loans, something they do by simply writing numbers into accounts.

Congress could take back the power to create the national money supply by:
(a) Nationalizing the Federal Reserve.
(b) Reviving the Reconstruction Finance Corporation, a government-owned lending facility used by Roosevelt to fund the New Deal. Rather than merely recycling borrowed money as Roosevelt did, however, the RFC could actually create credit on its books, in the same way that banks do it today, by fanning its capital base into many times that sum in loans. Assuming $300 billion is left of the TARP money approved by Congress last fall, this money could be deposited into the RFC and leveraged into $3 trillion in loans. That’s based on a 10% reserve requirement. If the money were counted as capital, at an 8% capital requirement it could be leveraged into 12.5 times the original sum. That would be enough to fund not only President Obama’s stimulus package but many other programs that are desperately short of funding now.

Many references are available which will be furnished on request. See generally www.webofdebt.com/articles.

BUT GOVERNOR, YOU CAN CREATE MONEY! JUST FORM YOUR OWN BANK.

Christmas comes early, Governor. You CAN print your own money. Fiscally solvent North Dakota is doing it . . . and so can California. Now!!! Here’s how . . . .

Read more here –
http://www.webofdebt.com/articles/but_governor.php

TIME TO GET OUT THE WHEELBARROWS? ANOTHER LOOK AT THE WEIMAR HYPERINFLATION

Worried commentators are predicting a massive hyperinflation of the sort suffered by Weimar Germany in 1923, when a wheelbarrow full of paper money could barely buy a loaf of bread. But there is something puzzling in the data. The British government is already funding more of its budget by seigniorage than Weimar Germany did at the height of its massive hyperinflation. Yet the pound is still holding its own, under circumstances said to have driven the German mark to one-trillionth of its former value. Something else besides mere money-printing to meet the government’s budget must have been responsible for collapsing the German mark, but what? And are we threatened by the same risk today?

Read more here –
http://www.webofdebt.com/articles/hyperinflation.php

THE TOWER OF BASEL: DO WE REALLY WANT THE BANK FOR INTERNATIONAL SETTLEMENTS ISSUING OUR GLOBAL CURRENCY?

Earlier this month, the G20 leaders agreed to inject $250 billion in SDRs or Special Drawing Rights into the economy. In an April 7 article titled “The G20 Moves the World a Step Closer to a Global Currency,” Ambrose Evans-Pritchard wrote that “In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.” The article is subtitled, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” Which naturally raises the question, who or what will serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity? When the world’s central bankers met last September, the Bank for International Settlements was suggested . . . .

Read more here –

http://www.webofdebt.com/articles/basel.php

Translated into Italian by Marco Giacinto on www.truciolisavonesi.it here:
http://www.truciolisavonesi.it/articoli/numero199/brown.htm – Part 1
http://www.truciolisavonesi.it/articoli/numero200/brown.htm – Part 2

REVIVE LINCOLN’S MONETARY POLICY: AN OPEN LETTER TO PRESIDENT OBAMA

Dear President Obama:

The world was transfixed on that remarkable day in January when, to poetry, song, and dance, you gazed upon Abraham Lincoln’s likeness at the Lincoln Memorial and searched for wisdom to navigate these difficult times. Indeed, you have so many things in common with that venerable President that one might imagine you were his reincarnation in different dress. You are both thin and wiry, brilliant speakers, appearing on the national stage at pivotal times. Fertile imaginations could envision you coming back dressed in that African heritage you freed, to help heal the great scar of slavery and prove once and for all the proposition that all men are created equal and can achieve great things if given a fighting chance. As Wordsworth said, however, our birth is but a sleep and a forgetting; and if that is true, you may have forgotten a more subtle form of slavery from which Lincoln tried less successfully to free his countrymen . . .

Read more here –

http://www.webofdebt.com/articles/lincoln_obama.php

THINKING POSITIVELY ABOUT MONETARY POLICY: HOW ‘QUANTITATIVE EASING’ COULD BE HARNESSED FOR THE PUBLIC GOOD

Nervous pundits are predicting the end of American life as we know it, after Fed Chairman Ben Bernanke announced on March 18 that he would be dropping yet another trillion dollars in helicopter money – up to $300 billion to buy long-term government bonds and an additional $750 billion to buy private debt, with the Term Asset-backed Securities Loan Facility (TALF) to be opened up for the sake of consumers and small businesses. The dollar immediately experienced its worst drop in 25 years, amid worries that the Fed’s intervention would spur hyperinflation.

Read more here –
http://www.webofdebt.com/articles/bernanke.php

Josh Harkinson, “How the Nation’s Only State-Owned Bank Became the Envy of Wall Street,” Mother Jones 3-27-09

The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer.

Read the rest here –  http://tiny.cc/RhE5T

Cash-starved States Need to Play the Banking Game: North Dakota Leads the Way

Forty-six of fifty states are insolvent and could be filing Chapter 9 bankruptcy proceedings in the next two years. One of the four states that is not insolvent is an unlikely candidate for the distinction – North Dakota. What does the State of North Dakota have that other states don’t? The answer seems to be: its own bank.

Read more here – http://www.webofdebt.com/articles/state_bank_option.php

If you like this idea, here is a sample letter to send to your congresspeople, prepared by Charlie Fleetham –

http://webofdebt.wordpress.com/sample-letter-to-congressmen-forming-a-state-owned-bank/

Standing Up to the Banks: Make Them Produce the Note!

This is a followup to my post of July 30, 2008, “Standing Up to the Banks: How to Challenge Your Foreclosure.”  The make-them-produce-the-note defense has made it to prime time.  This clip is from “Good Morning America!” –

http://www.youtube.com/watch?v=fx7YkiH79nw

A lobby of many people prepared to bring this defense could have some significant clout in Congress.

MONETIZE THIS! A Better Way to Fund the Stimulus Package

Funding the government’s budget shortfall has usually been left to private lenders; but those loans are drying up, and servicing them is proving expensive. Both this interest burden and the need to continually attract new lenders could be avoided by tapping into the government’s credit line at its own central bank . . . .

Read more –

http://www.webofdebt.com/articles/monetizethis.php

Mysterious Prison Buses in the Desert

Prison buses are driving around empty in the Tucson area.  Are Wackenhut and the DHS preparing for civil unrest?

Read more –

http://www.webofdebt.com/articles/wackenhut.php

HOW TO RESOLVE THE CREDIT CRISIS: GIVING CREDIT WHERE CREDIT IS DUE

Economist John Kenneth Galbraith famously said, “The process by which banks create money is so simple that the mind is repelled.”  If banks can create money, why are we suffering from a “credit crunch”? Why can’t banks create all the money they can find borrowers for? 

                                                                                                                 Read more . . .

Price fixing in the bond market by the Fed?

Interesting observation on the Yahoo! Message Board (UltraShort Lehman 20+ Trsy ProShares), December 31, 2008:

It seems as if one branch of the government (Treasury) needs money, so they auction off T-bills and T-notes. Obviously, the lower the interest rate, the better (less interest for us taxpayers to have to pay).

So now, another pseudo-branch of the government (Federal Reserve Bank – chartered by Congress in 1913) is now buying most of these T-bills and T-notes and putting them on their balance sheet. They are doing so in a scheme to keep the interest rates as low as possible. In other words, they have stepped in front of the market and now ARE the market for T-bills and notes. There are other buyers and sellers of T-notes and bills, but due to the size of the Federal Reserve, and the depth of their pockets, they are elbowing everyone else out of the market.

How is this even possible? Isn’t this price-fixing? The government is essentially selling T-bills and notes to itself in order to fix the interest rate? Shouldn’t this be illegal? This certainly seems to have more than a whiff of fraud to it, and yet our entire economic system is based on the premise of government selling debt instruments to itself? I am new to the bond market (certainly not an insider, and not someone who has “seen it all” by any means). But my reaction as an outsider looking in, is that this is a “scam”, a “scheme”, or whatever derogatory noun you would like to place upon it.

We charge Bernie Madoff for conducting a ponzi scheme. Is this “scheme” any less fraudulent than Bernie Madoff’s simply because two agencies of the Federal Government are the ones running it?

Seriously, what am I missing? I would appreciate it if someone would step forward and tell me “hey, wait a minute. You’ve missed something here (some very important fact about this arrangement) and this is why this is all legitimate.”

Thanks in advance. I am trying to understand this crazy world we live in…

Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking

Bernie Madoff showed us how it was done, but his Ponzi scheme was small compared to one that has been perpetrated for hundreds of years by the banking system itself. What distinguishes the legal scheme known as “fractional reserve” lending from the illegal schemes of Madoff and his ilk is that the bankers’ scheme is protected by government charter and backstopped with government funds. The sheer size of the bailout efforts today, however, indicates that the banking scheme has reached its mathematical limits and needs to be superseded by something more sustainable.

Read more:   http://www.webofdebt.com/articles/ponzi.php

GROUND ZERO ON WALL STREET: FED FUNDS AND TREASURY BILLS HIT 0% INTEREST

The federal funds rate and the interest on 3-month Treasury bills both just hit ZERO percent. This means banks and the government are borrowing money for free. Yet demand for the T-bills at auction was four times the available supply! Who is clamoring to buy the debt of the world’s most insolvent debtor for no return at all — and why?

Read more  –  http://www.webofdebt.com/articles/zero_percent_t-bills.php