by Jim Marrs
But what is more disturbing is that this reserve fund, much like Social Security, is merely an illusion.
In 2008, the former chairman of the FDIC, William M. Isaac, wrote an article titled “The Mythical FDIC Fund,” in which he revealed the FDIC’s insolvency: “When I became Chairman of the FDIC in 1981, the FDIC’s financial statement showed a balance at the U.S. Treasury of some $11 billion…. I decided it would be a real treat to see all of that money, so I placed a call to [then] Treasury Secretary Don Regan.”
The conversation went like this:
ISAAC: Don, I’d like to come over to look at the money.
REGAN: What money?
ISAAC: You know…the $11 billion the FDIC has in the vault at Treasury.
REGAN: Uh, well you see, Bill, ah, that’s a bit of a problem.
ISAAC: I know you’re busy. I don’t need to do it right away.
REGAN: Well…it’s not a question of timing…. I don’t know quite how to put this, but we don’t have the money.
ISAAC: Right…ha ha.
REGAN: No, really. The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been spending it on missiles, school lunches, water projects, and the like. The money’s gone.
ISAAC: But it says right here on this financial statement that we have over $11 billion at the Treasury.
REGAN: In a sense, you do. You see, we owe that money to the FDIC, and we pay interest on it.
ISAAC: I know this might sound pretty far-fetched, but what would happen if we should need a few billion to handle a bank failure?
REGAN: That’s easy—we’d go right out and borrow it. You’d have the money in no time…same day service most days.
ISAAC: Let me see if I’ve got this straight. The money the banks thought they were storing up for the past half century—sort of saving it for a rainy day—is gone. If a storm begins brewing and we need the money, Treasury will have to borrow it. Is that about it?
REGAN: Yep.
ISAAC: Just one more thing, while I’ve got you. Why do we bother pretending there’s a fund?
REGAN: I’m sorry, Bill, but the President’s on the other line. I’ll have to get back to you on that.
There is no record that Regan ever got back to Isaac. “Why do we bother pretending there’s a fund?” asked Darryl Robert Schoon, economic commentator and author of How to Survive the Crisis and Prosper in the Process. “[T]he answer is obvious. Modern economics, i.e. central banking, is a shell game where bankers with the aid of governments have foisted a highly lucrative fraud on society; and, while the fraud of the FDIC fund is egregious, it is no more egregious than the fraud of the Fed or of the economy itself.”
And the fraud does not stop with the FDIC. Schoon and others believe modern banking is essentially a Ponzi scheme on a global scale, in which bankers loan nonexistent money and receive repayment of the nonexistent funds plus compounding interest in return.
“In economies based on the fraudulent issuance of money as debt, there are only predators and victims. Bankers are the predators, society is the victim (businessmen are victims who often believe they’re predators) and governments are the well-paid-off referees in the rigged game being played out in today’s capital markets,” Schoon wrote.
At the heart of this combination Ponzi scheme and shell game lies the privately owned Federal Reserve System. But you and I, dear reader, will get to that.
Chris Martenson, a businessman with a doctorate in neurotoxicology from Duke University and an MBA in finance from Cornell, wrote, “Our entire monetary system, and by extension our economy, is a Ponzi economy in the sense that it really only operates well when in expansion mode. Even a slight regression triggers massive panics and disruptions that seem wholly inconsistent with the relative change, unless one understands that expansion is more or less a requirement of our type of monetary and economic system. Without expansion, the system first labors and then destroys wealth far out of proportion to the decline itself. What fuels expansion in a debt-based money system? Why, new debt (or credit), of course! So one of the things we keep a very close eye on, as they do at the Federal Reserve, is the rate of debt creation.”
Martenson and others believe a major theme in the current credit bubble collapse is the extent to which private credit has been crumbling while the Federal Reserve has been purchasing debt and the federal government has been increasing its borrowing. “In essence, public debt purchases and new borrowing has attempted to plug the gap left by a shortfall in private debt purchases and borrowing [original emphasis]. That’s the scheme right now—the Federal Reserve is creating new money out of thin air to buy debt, while the US government is creating new debt at the most fantastic pace ever seen. The attempt here is to keep aggregate debt growing fast enough to prevent the system from completely seizing up,” explained Martenson.
Martenson, who said he continually seeks to accept or reject his own hypotheses based on the evidence at hand, explained that the Federal Reserve has been monetizing far more U.S. government debt than has openly been revealed by allowing foreign central banks to swap their agency debt for Treasury debt. “This is not a sign of strength and reveals a pattern of trading temporary relief for future difficulties,” Martenson wrote. “When the full scope of this program is more widely recognized, more pressure will fall upon the dollar, as more and more private investors shun the dollar and all dollar-denominated instruments as stores of value and wealth. This will further burden the efforts of the various central banks around the world as they endeavor to meet the vast borrowing desires of the US government. One possible result of the abandonment of these efforts is a wholesale flight out of the dollar and into other assets. To US residents, this will be experienced as rapidly rising import costs and increasing costs for all internationally-traded basic commodities, especially food items. For the rest of the world, the results will range from discomforting to disastrous, depending on their degree of dollar linkage…. The shell game that the Fed is currently playing does not change the basic equation: Money is being printed out of thin air so that it can be used to buy US government debt.” It has been long understood that creating more money leads to inflation since the more currency in circulation, the less it’s worth, especially paper money that has no intrinsic value.
As to the government buying private debt, a crude example of what has happened goes like this:
Tom has a mortgage on a very nice house. He has a good job and his credit is good. Dick lives in a run-down home badly in need of serious repairs and has been in and out of jobs so he has a low credit score. Yet, due to government pressure on the lending industry to provide housing to all, Dick has a mortgage on his home. Through a scheme called “bundling,” Tom’s mortgage and a few others like his are combined with Dick’s mortgage and many others like his. By sleight of hand, this combined package of mortgages is given an A-1 rating and the package is sold to venture capital firms as a good investment. With these investment packages growing in number, the economy booms. But when the housing bubble breaks, the investment firms, many of the largest filled with globalists, turn to the government for relief with the argument that if they go bankrupt, the whole national economy will suffer. The government then pays these firms for their investment at full value, even though many of the houses are sub-standard (subprime) and not worth full value. The government pays with taxpayer money, then orders more money printed to cover the shortfall. The investment firms are also paid with the condition that their money comes in the form of government bonds, which means even more paper is spread around, causing further inflation and devaluation. It is robbery on a grand scale, with the strapped taxpayer taking the hit while the middlemen financiers continue to make a profit. To add insult to injury, many of these financiers are banks and investment houses outside the United States, which means U.S. taxpayers are paying back foreign investors for making bad investments.
HOW IT ALL BEGAN
OUR NATION’S ECONOMIC DECAY did not start with the Obama administration or even with the George W. Bush regime; rather, it began decades earlier in the early twentieth century with the founding of a privately owned banking syndicate known as the Federal Reserve System, a government-sanctioned cartel of private banks that was created in a conspiratorial manner and is under heavy criticism to this day, even being blamed for the current financial woes.
Joan Veon, a businesswoman and international reporter who has covered more than a hundred global conferences on financial and trade matters, wrote that the recent bailouts were simply the latest moves by the globalists to solidify their control over the United States. “The bailout of Freddie and Fannie provided us with the latest excitement in the diabolical saga of the raping, robbing, and pillaging of America. Interestingly enough, it took place 13 months after the beginning of the credit crunch…it was planned and managed destruction in order to accomplish the final transfer of America’s financial sovereignty,” she noted.
Former secretary of housing Catherine Austin Fitts agreed, stating that in the attempt to build a global American-run military empire, trillions of dollars have been shifted out of the United States by both legal and illegal means to reinvest in Asia and emerging markets through taxpayer bailout money coupled with Fed loans to foreign banks. In doing so, she said we have left economic sovereignty behind. “Finally, the expense and corruption of empire resulted in bailouts of $12–14 trillion, delivering a new financial war chest to the people leading the financial engineering [the globalists]. Now we have exploding unemployment, an exploding federal deficit, an Inspector General for the TARP [Troubled Asset Relief Program] bailout program predicting that the ultimate bailout cost could rise to $23.7 trillion…,” said Fitts.
With this lost money came lost jobs. Unemployment figures are usually a good gauge of the nation’s economy. In mid-2009, unemployment was officially 9.4 percent. If for some reason this number seems low, one must note that that these numbers do not include “those who would like a job but have stopped looking—so-called discouraged workers—and those who are working fewer hours than they want,” said Dennis Lockhart, president and CEO of the Federal Reserve Bank in Atlanta. With these numbers included, the unemployment rate would move from the official 9.4 percent to 16 percent. As 2010 progressed, so did the unemployment figures, which began to match the numbers of the Great Depression.
Yet unlike the 1930s, money was still available; and money is the lifeblood of a zombie nation. The trappings of wealth and bankers’ lifestyles are often admired by outsiders with a fervency bordering on religious, yet only those who live these lifestyles understand the inner workings of the money cult. And they work hard to keep these inner workings secret.
Consider the 1966 essay “Gold and Economic Freedom” by Alan Greenspan, who from 1987 to 2006 was chairman of the Fed. Greenspan wrote, “Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” In other words, spending paper money you don’t have runs up debt that, with interest due, earns much more than the original debt, especially if it is not repaid promptly. This is the “hidden confiscation of wealth.” Paper money can be devalued, but a gold piece will always retain some value and is therefore a good hedge against both inflation and devaluation, which is why the globalists seeking a strong central authority (statists) are generally opposed to a gold standard, because it robs them of the means of robbing the public through high interest rates, service charges, late payments, and monetary exchanges.
Following a talk by Greenspan at the Economic Club of New York in 1993, Dr. Lawrence Parks, the executive director of the Foundation for the Advancement of Monetary Education (FAME), approached the Fed chairman and asked if he still agreed with his 1966 conclusions on deficit spending and gold. “Absolutely,” Greenspan responded. Parks then asked why Greenspan did not speak out about his knowledge and the response was, “Some of my colleagues at the institution I represent [the Fed] do not agree with me.”
Whether Greenspan was fibbing or he was mistaken about his colleagues, the Fed actually shared Greenspan’s opinion on gold—they just didn’t want the public to know. The nonprofit Gold Anti-Trust Action Committee Inc. (GATA) was organized in 1999 to oppose the illegal collusion over the price and supply of gold and related financial securities. According to the committee, in 2009, the Federal Reserve System disclosed to Congress that it had made gold swap arrangements with foreign banks, but it does not want the public to know about them. This disclosure directly contradicted the Fed’s earlier denials of making gold swaps to GATA back in 2001. A GATA news release also suggested that the Fed was indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally,
Earlier in 2009, GATA sought information on current gold swaps, a practice denied by Alan Greenspan, then Fed chairman, back in 1995. But this question was rebuffed by the Fed, which claimed this information was exempt from Freedom of Information Act requests. GATA appealed to the Fed’s board. But in a September 2009 letter to GATA’s lawyer, Federal Reserve Board member Kevin M. Warsh upheld the denial of information by stating, “In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.”
GATA claimed the letter was not the first admission of the Fed making gold swaps but that “it comes at a sensitive time in the currency and gold markets.” According to a GATA news release, “The U.S. dollar is showing unprecedented weakness, the gold price is showing unprecedented strength, Western European central banks appear to be withdrawing from gold sales and leasing, and the International Monetary Fund is being pressed to take the lead in the gold price suppression scheme by selling gold from its own supposed reserves in the guise of providing financial support for poor nations.”
It is now expected that a lawsuit will be filed in federal court to appeal the Fed’s denial of GATA’s freedom-of-information request concerning gold swaps. Those people stocking up on gold for safekeeping might keep in mind that gold and silver—in fact, just about anything considered a financial asset—may be seized by federal authorities in wartime or any officially declared “emergency.” Those who hoard gold against the possible devaluation or collapse of the dollar might remember that during the Great Depression, the hoarding and use of gold as a medium of exchange was outlawed.
According to the GATA website, government confiscation of gold has never been a serious or imminent threat, but in any “emergency,” this could swiftly change. “While the U.S. Government in 1933 did demand the exchange of circulating government-issued coins for paper money (proceeding to devalue the paper money after the gold was surrendered), that gold then was a huge part of the country’s money supply, and amid the national economic collapse at that time the government could make a plausible complaint against ‘hoarding.’ There are no such circumstances today, gold no longer being in general circulation as currency…. But of course lately the arrogance and imperiousness of the U.S. government have far exceeded even the paranoia of precious metals investors. Certainly capital controls may be imposed in the United States in the next currency crisis, and it’s not far from capital controls to even more brutal interventions in the economy.”
Such concern intensified with a 2005 letter to GATA in which the former chief counsel for the Treasury Department’s Office of Foreign Assets Control, Sean M. Thornton, explained the scope of the government�
��s power in making financial seizures. “It took GATA six months and a little prodding to get answers from the Treasury, but the Treasury’s reply, when it came, was remarkably comprehensive and candid.
“The government’s authority to interfere with the ownership of gold, silver, and mining shares arises…from the Trading with the Enemy Act, which became law in 1917 during World War I and applies during declared wars, and from 1977’s International Emergency Economic Powers Act, which can be applied without declared wars.
“While the Trading with the Enemy Act authorizes the government to interfere with the ownership of gold and silver particularly, it also applies to all forms of currency and all securities. So the Treasury official stressed that it could be applied not just to shares of gold and silver mining companies but to the shares of all companies in which there is a foreign ownership interest. Further, there is no requirement in the law that the targets of the government’s interference must have some connection to the declared enemies of the United States, or, really, some connection to foreign ownership. Anything that can be construed as a financial instrument, no matter how innocently it has been used, is subject to seizure under the Trading with the Enemy Act and the International Emergency Economic Powers Act.”
USURY
“USURY” IS A TERM that has all but disappeared from our language. Once, “usury” was defined as any interest charged for a loan, but modern dictionaries softened this definition to merely “excessive” interest. The Texas Constitution once defined “usury” as any interest in excess of 6 percent. This ceiling was increased over the years until the whole concept was deleted.