Home > Miscellaneous Musings > Central banking facilitates counterfeiting and fraud

Central banking facilitates counterfeiting and fraud

‘The Fed’s task is to perpetuate the fraud for as long as possible. To that end, it has pushed for “regulatory forbearance” so that insolvent, capital-starved banks can conceal their losses from the public. The Fed has transferred $1.7 trillion in toxic securities and non-performing loans from the banks balance sheets onto its own to preserve the illusion that “all is well” and that asset prices will eventually return to precrisis levels. What a joke. Market analyst Max Keiser explains how the Fed’s charade effects the US middle class in a recent posting titled, “America: A walking dead zombie country”:

“…The banking system works on the basis of loans used as the collateral for more loans. That means that the origination of all the fractional reserve lending that is going on is just more debt. There are no retail deposit reserves or wholesale deposit reserves, just original issue dollar based junk debt. And when you understand that debt is at the bottom of the pyramid and that there’s no equity at all, or capital as this term is usually understood, then you understand that the banks and the policy makers are continuing a programme at the behest of Wall Street to commit a Financial Holocaust to eliminate the majority in America, which is the middle-class. Wall Street banks with their CDS’s, High Frequency Trading and bogus market making are injecting the equivalent of financial Zyklon B into the American and world economy.” (“America: A walking dead zombie country”, Max Keiser, On The Edge with Max Keiser)

Repeat: “There’s no equity at all.” Zero. It’s a mug’s game run by charlatans in Brooks Brothers suits.

Securitization, derivatives trading, and repo market activity are all based on the same principle, which is, to give the financial giants the ability to generate windfall profits on microscopic morsels capital that have been leveraged into monstrous, hulking debt-balloons. The banking system is not funded on loans derived from deposits, but through the exchange of high-risk securities with shadow banks in the repo market. This is the system that crashed after Lehman Brothers collapsed in September 2008. The Fed and Treasury have committed trillions in public funds to stitch this inherently crisis-prone system back together to preserve the profit-centers of their primary constituents–the big banks and Wall Street. The very system itself is a fraud and a cheat designed to shift wealth from the middle class to under-capitalized financial predators who’ve wrapped their tentacles around the congress, the media, the courts and the White House.’

Mike Whitney.

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Categories: Miscellaneous Musings
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