The following source is from a floor Statement by Senator Kent Conrad (D-ND) from 2005
Well, increasingly we are going into debt with other countries around the world. We owe Japan over $680 billion. We owe China over $240 billion. We
owe the United Kingdom over $140 billion. My favorite is the Caribbean banking centers.
We owe the Caribbean banking centers over $100 billion. I like to ask audiences back home if anyone is doing business with the Caribbean banking
centers. I have never had a hand go up. I do not know where the Caribbean banking centers get their money, but we owe them $108 billion
That's a very good question that I have been trying to find an answer to a couple of years ago.
The US has a huge deficit that enables Americans according to Western standards, the government to spend billions on wars and policing the world.
But who carries this financial burden?
The US government sells treasury securities in the form of e.g. treasury bonds. These investors loan money to the US government in exchange for a
certain return on investment.
Without these investors, the US would go bankrupt. The debts are so extreme that the US economy would collapse without foreign financing.
The biggest loaner is China, which owns US T-bonds with a value of over 1 trillion Dollars. It is self-evident that a constant depreciation of the US
Dollar results in a lower return on investment, not to talk of the consequence a collapse of the Dollar would have.
The following table shows the six foreign major treasury securities holders:
When I reviewed this table yesterday I saw one remarkable change: Brazil. For some reason they are suddenly buying US treasuries like crazy. But later
more on that.
As you can see, the US government owes more than 100 billions of US dollars to Caribbean Banking centers. The question is who owns these Caribbean
banking centers and where do they get their money from.
I found the answer in Tom Naylor's book 'Hot Money'. In 1965, a prominent bank (Chase Manhattan) was asked by the Pentagon to create a system
of offshore banking centers, in order to attract criminal captical into the Dollar, to help finance the Vietnam War. US banks wanted to make
themselves the New Switzerland, and the US government agreed not to withhold income-tax on foreign criminal holdings of treasury bills, in order to
attract money to support the Dollar.
These banking centers still exist today and are located on e.g. the Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama.
Now the question of who exactly owns these banking centers is answered, there is one question left. Where do they get their money from?
Partly from criminals such as drug and war lords, but there is a suspicion that the US loans itself money. How could they do this?
In March 2006 the Fed decided to cease e publishing M3 Money Supply data, which contains of the entire quantity of bills, coins, loans, credit and
other liquid instruments in the US economy.
The reason being that the cost to collect M3 data outweighed the benefits.
M1 Money Supply Data measures the most liquid forms of money: (the amount of currency actually in the hand of the public such as traveler checks and
M2 measures all the data of M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.
Apart from the data from M1+M2, M3 measures the big amounts such as
''large-denomination ($100,000 or more) time deposits, balances in institutional money funds, repurchase liabilities issued by depository
institutions, and Eurodollars held by U.S. residents at foreign branches of U.S. banks and at all banks in the United Kingdom and Canada."
In other words, M3 keeps track of the big money. The fact that M3 money supply data won't be published anymore means that the government can
''print'' extra money and put this into the system without any average Joe having a clue about it. If people would, (hyper)inflation would occur.
Basically, the government is creating money from air.
This money is put into the system through the Caribbean banking centers, which then buy t-bonds in exchange for Dollar loans and thus, the US
government is financing itself without damaging the value of the Dollar.
I'll get back to Brazil later as it seems that the China has made some deal with them to buy their US treasury bonds in order to weaken then US
military, but more about that later.
[edit on 19-3-2008 by Mdv2]