Greatest Transfer of Wealth in History

Charlie McGrath

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Despite Declining Deficit, Foreigners Aren’t Bailing Us Out, So the Fed Will Keep QE Going

Bud Conrad, Chief Economist
Casey Research

The basic imbalance driving our economy is the government deficit, which spun out of control as a result of the Credit Crisis of 2008/9. But the sequester, improving tax base, lower interest rate, and elimination of stimulus spending have caused the big government deficit, while still extreme, to drop to half its previously nosebleed levels.

Even so, the deficits remain well out of proportion for a sustainable future. Projections for future government expenditures, including those related to the masses of retiring baby boomers, are on track to increase exponentially. Especially given that the deficits are actually much worse than generally discussed. Honest accounting would include the growing liabilities for retirees in the current accruals, resulting in deficits running closer to $5 trillion per year.

Washington Signals Dollar Deep Concerns

Dees Illustration

Paul Craig Roberts

Over the past month there has been a statistically improbable concurrence of events that can only be explained as a conspiracy to protect the dollar from the Federal Reserve’s policy of Quantitative Easing (QE).

Quantitative Easing is the term given to the Federal Reserve’s policy of printing 1,000 billion new dollars annually in order to finance the US budget deficit by purchasing US Treasury bonds and to keep the prices high of debt-related derivatives on the “banks too big to fail” (BTBF) balance sheets by purchasing mortgage-backed derivatives. Without QE, interest rates would be much higher, and values on the banks’ balance sheets would be much lower.

Quantitative Easing has been underway since December 2008. During these 54 months, the Federal Reserve has created several trillion new dollars with which the Fed has monetized the same amount of debt.

One result of this policy is that most real US interest rates are negative. Another result is that the supply of dollars has outstripped the world’s demand for dollars.

These two results are the reason that the Federal Reserve’s policy of printing money with which to purchase Treasury bonds and mortgage backed derivatives threatens the dollar’s exchange value and, thus, the dollar’s role as world reserve currency.

10 Quotes From Financial Experts About The Effect That QE3 Will Have On Gold And Silver

Michael Snyder, Contributor

Do you want to know what QE3 is going to do to the price of gold and the price of silver? Well, you can read what the financial experts are saying below, but it doesn't take a genius to figure out what is likely to happen. During QE3, the Federal Reserve will be introducing 40 billion new dollars that have been created out of nothing into the financial system each month.

So there will be more dollars chasing roughly the same number of goods and services, and that means that more inflation is on the way. In an inflationary environment, investors tend to flock to hard assets such as gold and silver. And it is important to remember that a lot of the money from QE1 and QE2 ended up pumping up the prices of various financial assets. This included commodities such as gold and silver.

The same thing is likely to happen again with QE3. In addition, investors now have an expectation that the Fed will continue printing money for the foreseeable future and that the U.S. dollar is going to steadily decline, and that expectation will also likely give further momentum to the upward movement of gold and silver. Of course when it comes to investing, there is never a "sure thing" and as the global financial system falls apart in the coming years we are likely to see wild swings in the financial markets. So there is definitely an opportunity when it comes to gold and silver, but anyone that wants to invest in gold and silver needs to be ready for a wild ride.

What is QE3? And What It Means For The U.S. Economy

Reality Check

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The Fed Now Owns Your Foreclosed Property Under QE3 Purchase of Toxic Assets

Susanne Posel, Contributor

On ABC’s “This Week”, George Will, columnist for the propaganda news outlet Washington Post, spoke out against Ben Bernanke, Chairman of the Federal Reserve and his decision to instill QE3 which is essentially, “the government printing money.” Will pointed out that this latest move is covert “trickle-down economics” where citizens are forced to invest in equities in order to continue to prop up the economy to perpetuate the false sense of reality the American public lives under.

Last week, Bernanke announced that the Fed would purchase $40 billion per month in toxic assets called mortgage-backed securities. While this scheme will devastate the US dollar’s value by the very act of printing more money, there is a secret bailout of certain financial institutions occurring under the radar.

QE3 serves as a “regressive redistribution program” for the banksters who are enjoying a surge in their wealth under current economic conditions.

The Federal Housing Finance Administration (FHFA) recently announced that “strategic defaulters”, i.e. those homeowners who have abandoned their mortgage because they could not continue to make the monthly payments will be jailed for this “crime”.

QE3 Blowing Up the Debt Bubble

James Hall, Contributor

It begins . . . the latest downgrade of credit worthiness for the former titan reserve currency. As reality strikes, financial confidence goes negative. Forget the pump-and-dump equity markets, just how long will it be before the bondholders demand higher interest rates to cover their risk? Ben Shalom Bernanke answers this concern with intentions to keep rates near zero. Pure escapism out of the strange world of banksters’ hubris - faces the rating agencies. US Credit Rating Cut by Egan-Jones ... Again

Ratings firm Egan-Jones cut its credit rating on the U.S. government to 'AA-' from 'AA,' citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality. 

The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market.

Step back and view the big historic picture. The lesson from the Roman Empire repeats with a vengeance . . .  in the era of digital bookkeeping.

How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us

Michael Snyder, Contributor
Activist Post

The mainstream media is hailing QE3 as a great victory for the U.S. economy. On nearly every news broadcast, the "talking heads" are declaring that Ben Bernanke's decision to pump 40 billion dollars a month into our financial system is definitely going to help solve our economic problems. The money for QE3 is being created out of thin air and this round of quantitative easing is going to be "open-ended" which means that the Federal Reserve is going to keep doing it for as long as they feel like it. But is this really good for the average American on the street?

No way. 

Despite two previous rounds of quantitative easing, median household income has still fallen for four years in a row, the employment rate has not bounced back since the end of the last recession, and new home sales have remained near record lows. So what have the previous rounds of quantitative easing accomplished? 

10 Shocking Quotes About What QE3 Is Going To Do To America

Michael Snyder, Contributor

Ready or not, QE3 is here, and the long-term effects of this reckless money printing by the Federal Reserve are going to be absolutely nightmarish. The Federal Reserve is hoping that buying $40 billion worth of mortgage-backed securities per month will spur more lending and more economic activity. But that didn't happen with either QE1 or QE2. Both times the banks just sat on most of the extra money.

As I pointed out the other day, U.S. banks are already sitting on $1.6 trillion in excess reserves. So will pumping them up with more cash suddenly make them decide to start lending? Of course not. In addition, QE3 is not likely to produce many additional jobs. As I showed in a previous article, the employment level did not jump up as a result of either QE1 or QE2. So why will this time be different? 

But what did happen under both QE1 and QE2 is that a lot of the money ended up pumping up the financial markets. So once again we should see stock prices go up (at least in the short term) and commodities such as gold, silver, food and oil should also rise. But that also means that average American families will be paying more for the basic necessities that they buy on a regular basis. The most dangerous aspect of QE3, however, is what it is going to do to the U.S. dollar. 

QE Infinity: Fed Buying More Toxic Assets From Banks Will NOT Help Main Street

Dees Illustration

Eric Blair
Activist Post

Ben Bernanke and the Federal Reserve announced an open-ended bailout for the banks yesterday by a new mechanism called QE Infinity where they plan to purchase $40 billion of toxic mortgage-backed securities per month "until further notice".

Shrouded in confusing language like "unlimited stimulus" or "quantitative easing", this unprecedented move and rule change by the Fed was said to be warranted because employment remains weak even though they still maintain the false notion that "economic activity has continued to expand at a moderate pace in recent months."

As stated in the FMOC press release:

If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. 

Of course this move "to foster maximum employment and price stability" does nothing to directly help job creation, and will continue to hurt main street by inflating the price of everything purchased by dollars. Yet it will clearly reward the investor class who already own most of the dollar-based assets.

The theory is that by removing toxic assets from the bank's books they have more liquidity to offer more credit, or to purchase more government debt. Somehow this is supposed to trickle down and help improve unemployment, which real numbers show to be in the 20% range when all factors are considered.

After a combined $2.3 trillion from QE1 ($1.7T) and QE2 ($600B), plus over $16 trillion is secret bailouts to recapitalize banks with absolutely no measurable improvement in the economy, how could any thinking person believe this policy will be beneficial?
Since mortgage-based assets total a conservative $600 TRILLION, QE Infinity is nothing more than an endless giveaway to the criminal banks at the expense of struggling taxpayers. Wall Street will obviously celebrate the move and stock prices will go up, along with food and energy prices.

It is so blatantly a policy that will steal from the poor to give to the rich.  It also makes one wonder how can the government cry poor when it comes to paying for food stamps, healthcare, education, and other benefits for the needy when they have endless trillions to prop up the banksters?

Significantly, this announcement comes on the heels of a census report that shows median incomes have fallen to levels of the late 1960s and early '70s. Of course, the mainstream version is they've only fallen to 1989 levels, which is hardly any better.

ShadowStats.com

The census report showed that the middle class is struggling with a median family income of $50,054. In 2010, Michael Snyder decisively proved that it is flat impossible for a family of four to survive on this income in America, and prices for essentials have only increased over the last two years primarily because of the Fed's reckless money printing.

This policy is an absolute disgrace and represents the final looting of the American people. There will simply be nothing left to the value of the dollar, and all of the important assets will be funneled straight up to the elite banksters. 

You think you are slaves now?  Just wait.

Read other articles by Eric Blair HERE

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Keiser Report: Banks Blame the Peasants (Video)

Max Keiser

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Fed Ready to Print More Funny Money on QE3 Rumors

Dees Illustration

Kurt Nimmo
Infowars

Simon Maughn, co-head of European equities at MF Global, has told CNBC that a third round of so-called quantitative easing is in the works. The private Federal Reserve will again become the marginal buyer of bonds.

The latest effort by the Fed to finance the government’s staggering deficit will end in June.

If the private Federal Reserve owned by offshore banksters stops this lending scheme, interest rates will rise significantly which in turn will exert tremendous pressure on the American public. If interest rates surge anytime soon, millions of indebted Americans may default on their debt, thereby bankrupting the American financial institutions, as Puru Saxena, founder of Puru Saxena Wealth Management, notes.

Economic Collapse For Main Street; Record Profits For Wall Street (Charlie McGrath Video)

YouTube -- crabbydogtrix


http://www.marketwatch.com/story/qe2-was-a-bust-2011-05-21?source=patrick.net...
http://online.wsj.com/article/SB10001424052748704124504576118421859347048.html

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Is America Going Back to a Gold Standard Someday?

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Greg Hunter
USA Watchdog

America went off the gold standard in 1971 when Richard Nixon closed the “gold window.” That meant the U.S. didn’t have to pay foreigners with gold, only dollars.  President Nixon created the first world reserve currency that was officially backed by nothing.  The U.S. has gotten to print money at will until this very day, but nothing lasts forever.   Recently, Steve Forbes (President and Chief Executive Officer of Forbes and Editor-in-Chief of Forbes magazine) predicted that a return to a gold standard is likely “in the next five years.” A recent Humanevents.com story said, “Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said.” (Click here for the complete Humanevents.com story.)

Forbes is not some fringe player.  He is wealthy, well connected and knows his way around all types of media.  His thoughts are probably reflecting what other people in his sphere (meaning other wealthy and connected people) are contemplating.  And speaking of Forbes, in an article in the online publication of the same name, Forbes.com said, “. . . unless an inflationary boom is fed with more and more inflationary credit a deflationary bust we will quickly get.  And with the first signs of an ensuing bust, a massive QE III effort courtesy of deflation hawk extraordinaire Ben Bernanke is sure to follow.  In other words, if the private banks don’t inflate, a deflationary scare first than another Federal Reserve orchestrated inflationary cycle.  In the end, QE III one way or another.” (Click here for the complete Forbes.com story.)That’s just what the world wants, more money printing from the U.S. to pay its bills.  Foreigners will be increasingly shunning the dollar as the money creation continues.

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QE2 and the Fate of the U.S. Economy

Dees Illustration

Dave Galland
Casey Research

In the last few weeks, I’ve become particularly “attentive” to the intentions of Fed policy makers following the scheduled June end date for QE2.

This is no small matter; an actual shift in Fed policy – as opposed to the smoke and mirrors sort – could temporarily play havoc on equities and commodities markets alike. How could it be otherwise, when under QE2 the Fed has been writing checks to the Treasury in amounts of upwards of $100 billion a month since last November?

As a point of reference, at the end of April 2007, the monetary base of the U.S. was $822 billion. At the end of April 2011, it will be $2.5 trillion, a three-fold increase. Call it what you want, “quantitative easing,” “stimulus,” “political payola,” “madness,” but monetary inflation is the correct term. And monetary inflation on this scale invariably leads to price inflation on a similar scale.

It is this “money,” steadily ginned out of thin air, that provides the fuel to keep the spendthrifts in Washington spending and props up the wounded economy.

Another Economic 'Martial Law in the Streets' Moment Approaches

Eric Blair
Activist Post

In the fall of 2008, during the lead up to the TARP bailout of the financial industry, Treasury Secretary Henry Paulson warned members of Congress that there will be Martial Law in America should they fail to pass the multi-trillion dollar looting of the taxpayer.

Well, despite the American public being overwhelmingly against the bailout, the blackmail worked and the banks got their money. If it worked once, why not try it again?

With the economy no better off for having borrowed trillions to "stabilize" criminal financial institutions, the national debt ceiling is rapidly approaching.  As some Republicans begin to float the notion of blocking this extension of credit, the Treasury Department, Democrats in Congress, and Ben Bernanke issued apocalyptic warnings clearly showing how pathetically fragile the U.S. economy is.

These threats, reminiscent of Paulson's 2008 ransom demands, once again appear to be offering two black-and-white choices: Armageddon or more debt.  The coordinated pitch for higher debt levels is echoing the same urgency as the TARP looting, as Treasury Secretary Geithner said the government is insolvent and will run out of money in about two months' time unless Congress votes to raise the federal debt ceiling.


The AFP reported Thursday that Senate Democrats warned that the government would "shut down" if the debt ceiling was not raised.  Chuck Schumer (D-NY) explained what that would mean if a shutdown were to occur: "citizens couldn't get their checks, veterans couldn't get their benefits, military payments would stop."

Ben Bernanke doubled down on the debt-fear campaign in a rare press conference where he said, "Beyond a certain point . . . the United States would be forced into a position of defaulting on its debt. And the implications of that on our financial system, our fiscal policy and our economy would be catastrophic."

Fiscal conservatives who oppose raising the debt ceiling say it is just delaying necessary belt-tightening and massive spending cuts, and say that raising the debt ceiling further only forestalls needed austerity moves to avoid a more catastrophic collapse in the future. House Republicans presented a plan to cut $32 billion from the budget, which is laughable given the impossible-to-pay-off debt levels.

The U.S. national debt is approaching the ceiling of $14.29 trillion; unfunded liabilities like Social Security and Medicare are estimated to be around $100 trillion; and the total cost of stabilizing the financial industry is reportedly upwards of $23.7 trillion.  And these numbers say nothing of the fraudulent $600-trillion derivatives scam. No amount of tax increases, spending cuts, or economic growth will be sufficient to satisfy this equation.

The notion that America can somehow pull itself out of this mess if average citizens, who had no part in creating the national debt, would only "tighten their belts," seems preposterous.

None of the options are exactly attractive to the already over-burdened taxpayer. Indeed, the people are being given a lose-lose-lose scenario: 1) the status quo of slow economic demolition through raising the debt ceiling; 2) crippling austerity cuts and public asset looting; or, 3) catastrophic collapse.

Although the banks and their pocket-change politicians describe market conditions that would result in a collapse should the ceiling not be raised, it seems obvious that the only power capable of drastically changing economic conditions are the banks themselves.  Therefore, market conditions appear to be an increasingly insignificant part of a bigger illusion.

As if the sun would not rise if a piece of legislation was not passed, the gun-to-the-head urgency will likely result in raising the debt ceiling.  If the level of resistance comes close to the near unanimous public disgust over the TARP bill, you can bet we'll hear new warnings of "martial law in the streets" in order to keep the illusion in tact.  If for some reason collapse is unavoidable, the U.S. military is actively war gaming "large scale economic breakdown" and "civil unrest" should they choose otherwise.

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