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Circular Money(TM): at least that's the PG-version of what several correspondents are calling it and we'll explain later. But first a little background. Quite a few folks have expressed concern about the Fed "printing" massive amounts of dollars and putting them into the economy, which will trigger inflation. This is certainly a reasonable fear given the numbers being thrown around and the rhetoric coming out of the Treasury and the Fed. However, we do not believe that the fear is well-founded and our evidence come from the Fed itself. Consider the latest report on reserve balances.
The total balance sheet has expanded by an alarming $1 trillion or 110% in 12 months - very disturbing. But the key question would be is any of this actually printed into existence? To determine this, look at the other side of the balance sheet - the liabilities and capital. Liabilities have expanded by $1,032 billion and capital by $3 billion. Liabilities mean the the assets are funded by borrowing. Real printing would go straight to capital since it creates no offsetting liability. The minuscule increase in capital is easily accounted for by interest on the Fed's bond portfolio so we may safely conclude that little or no actual printing is taking place - much less the monstrous quantities that some would suggest. So the money is being borrowed; now let's look at the liability details to see from where the incremental money is being borrowed.
* $78 billion worth of Federal Reserve Notes has been issued - increasing the amount in circulation by 10%. This is a function of demand for cash, not Fed policy. Increasing distrust of banks naturally leads to an increased preference for cash instead of deposits.
* $32 billion of reverse repos - that is the Fed borrowing from other financial institutions using its Treasury holdings as collateral
* $917 billion of "deposits" - now a deposit is a loan so this is the Fed borrowing once again. Let's break this down further:
* $216 billion is borrowed from the US Treasury - through the general and supplemental accounts
* $699 billion is from "depositary institutions" - i.e. banks.
This last one really should get your attention. You might say "I thought the Fed was lending money to the banks!?!" and you'd be right. Then the banks are turning right around and lending that money back to the Fed. It would be as if George "lent" money to Bob and then Bob turned around and "lent" that money right back to George. If the "loans" were for $1, they each now have an asset (the loan) and a liability (obligation to repay) of $1. But that is a sham transaction, whether for $1 or $1 billion. They have both expanded their balance sheet, but how much actual lending took place there? In reality, nothing changed except a meaningless book entry and the same is true with the Fed and the banks. George and Bob could exchange "loans" of $1 billion dollars and it would be just as ineffective as what the Fed has done. This is what we have dubbed Circular Money(TM).
Originally posted by redhatty
reply to post by HunkaHunka
Do you have a credit card or a mortgage from HSBC? Do you know what HSBC stands for?
The Hongkong and Shanghai Banking Corporation
Just because they have a US office does not make them a US bank, they may appear to be, but it's all an illusion.
Look at the names of some of the Foreign banks and agencies here in the US. JP Morgan and Merrill Lynch are listed in there too.
just because the money is shuffled from one place to another before getting back to the Fed doesn't invalidate the premise
Originally posted by Iamonlyhuman
Perhaps I'm misunderstanding what you're saying. I looked up JP Morgan and Merrill Lynch and they were listed as U.S. companies NOT foreign companies. Also, what does HSBC have to do with the bailouts? I'm not aware that any of the money went to HSBC. Am I missing something? Don't get me wrong here, I am NOT an advocate of the bailouts, I think it was absolutely the wrong way to go and the point your OP is trying to make is an interesting one. My questions are of your response.
[edit on 21/2/2009 by Iamonlyhuman]
"There are thirteen families which effectively control the central
banks of the hard currency countries of the world. The hard currency
countries are those whose currency is not allowed to fluctuate as much
as the other countries' currency fluctuates. These thirteen families
have the control of the policy-making and decision-making of the
central banks of
those countries. They all practice fractional reserve banking.
Fractional reserve banking has allowed the central banks to permit the
prime banks to lend up to twenty-six units of currency for every one
unit of currency they have on deposit. The owners andcontrollers of
the prime banks are the same people who own and control the central
banks.The initial final stage of System 2000 was put into effect in
the mid-seventies. System 2000 is the global creditors unilateral
totalitarian plan for the control of the world.
The deal cut with the Saudis, the Kuwaitis, and the middle eastern
peoples was that they were to put their money in the prime banks in
America. They did not know that the prime banks were able to lend
twenty to one. All they were to receive was the interest on the money
they deposited for between ten to thirty years. They were to receive
the principal at the end of the term.
Because they had locked-in deposits from the Middle Eastern nations,
the banks were able to make loans to the Third World nations. The
banks relied on the greed of those ministers of those Third World
nations to mis-handle the money. Over the years, that manipulated
greed has caused those countries to be in the bankrupt position they
are in today.
It inly takes 5% of the total debtor nations to equal all of the
deposits of the Saudis that are in the banks. The reason for this is
the twenty-to-one ratio of fractional reserve banking. In works in
contrary reverse. It doesn't take many nations to agree to the
International Mon-etary Fund's proposal for the total volume of money
owed to equal the total volume of money on deposit from the Saudis.
Twenty debtor nations have already agreed to the International
Monetary Fund's proposal.The resultant collapse of the second group of
holding companies will
precipitate the Saudis' and Kuwaitis' liquidation of assets.
When the second group of holding companies are unable to pay the
private group of bank holding companies the money they owe them from
the credit extended to them to buy the assets and liabilities, it will
precip-itate those bank holding companies inability to pay the loans
extended to them by the prime banks to buy the foreclosed land which
was used as collateral to secure those loans. Ultimately, the prime
banks will end up with all the properties.
You will see the foreclosures on real property in America stepped up
drastically by the FDIC and FSLIC. They are using gangsteristic
tactics to achieve their objective for their masters.
Since the advent of the manipulation of the oil producing countries to
sell all their oil in U.S. dollars, the entire world trade is now
denom-inated in U.S. dollars because of the volitility of all the
other currencies. The entire trading volume of the world will be
totally and absolutely beholden to the super banks. When System 2000
is put into effect, the super banks will be the only source of "U.S.
Dollars" credit. There will be no cash."
Originally posted by DangerDeath
They may try to come up with world dictatorship, but it is never going to work.
They don't have the force to impose it. The resistance from inside will decapitate them. If Obama does that, for instance, individual states of America will rebel. It is too obvious. They will not tolerate such a loss of sovereignty. Nobody will.