How the Fed rips you off — Let me Count the ways

The Fed: It's all a con.

The Fed: It’s all a con. The Conjurer by Hieronymus Bosch.

Understanding the Federal Reserve’s Shell Game

From Mises Daily by Dan Sanchez

The Federal Reserve is a key component of the American Transfer State. Under the guise of “macroeconomic management,” it redistributes vast amounts of wealth on an ongoing basis through inflation. The victims of these transfers are ordinary Americans. The beneficiaries are the government and its elite cronies.

The Fed masks the nature of this surreptitious taxation and corporate welfare by performing a simple shell game that is just complicated enough to confound the general public.

First, let’s imagine the government performing this kind of inflationary transfer without the shell game.

Imagine Uncle Sam sitting at a desk, representing the Federal government. His right hand is the Treasury. It has the government’s main bank account, represented by a ledger on the desk. Uncle Sam also has revenue collecting powers, represented by a gun resting on the desk, which he uses to extort taxes from the public. Whenever he confiscates money, the cash balances of the public decline, and Uncle Sam’s ledger increases by the same amount.

Now let’s say Uncle Sam wants to raise $200 million for current expenditures: bureaucrat salaries, weapons purchases, welfare payments, etc. The problem is, the public has a limited tolerance for overt taxation. So, at a certain point, if Uncle Sam simply gestures to his gun again to levy the funds, he might face a tax revolt.

So let’s say instead of using his taxing power, Uncle Sam uses his fiat money power: his ability, based on the government’s monopoly control over the money supply, to inflate (defined here as monetary expansion). As the God of the Bible could say “let there be light” (in Latin, fiat lux) and it was so, the modern omnipotent State can say “let there be money” (fiat money or fiat pecunia) and it is so. With his right hand, Uncle Sam adds $200 million to his Treasury bank balance by simply writing it on his ledger. Voilà, he now has $200 million, simply because he says so. He can then transfer the new money to his workers, contractors, and dependents.

It would seem the public wasn’t taxed at all. Uncle Sam’s balance increased, but the cash balances of the populace did not diminish. So no skin off the backs of the people, right? Does anybody lose when the government gains in this magical way? When you think about it, somebody must lose. After all, it’s not really magic.

The true wealth of society  —  what actually sustains human life and makes it more comfortable and delightful  —  is the stuff we buy with money; not money itself. It’s the food, clothing, housing, smartphones, mountain bikes, and other consumers’ goods. It’s also the farmland, factories, robots, raw materials, labor and other producers’ goods used to make those consumers’ goods. I covered this point in detail in a lecture I gave which is on YouTube, and in my essay based on that talk, “How Inflation Drinks Your Milkshake.”

Creating new money does not create any additional stuff to go around. So if creating money got the government more stuff, that means others sharing the same world of scarcity must have less stuff. It’s a zero-sum game; a win-lose situation. If the government wins something through inflation, somebody has to lose. So who loses? . . .(more)

Economic Collapse — All the World’s a Stage and Someone Is Writing the Script

Economic Collapse — All the world's a stage and someone is writing the script

Economic Collapse — All the world’s a stage and you are being played.

Economic collapse: The Globalist elite work hard at creating reality, a vision of how you see the world. They are in the business of managing expectations, and hope you will act accordingly, that is, that you will go with the flow to reach their desired results. None are more obviously in that business, the business of deception, than George Soros and the Federal Reserve.

Take for instance this: the latest from George Soros as reported in Forbes by Antoine Gara:

Hedge Fund Billionaire George Soros: ‘Donald Trump Is Doing The Work Of ISIS’

economic collapse

Image Credits: Copyright World Economic Forum. swiss-image.ch/Photo by Sebastian Derungs, Wikimedia Commons

On Thursday evening at the World Economic Forum in Davos, Soros used a 45-minute interview with Bloomberg TV’s Francine Lacqua to create an explosion of headlines on both the political and economic front. “Donald Trump is doing the work of ISIS,” Soros said, citing the anti-immigrant vitriol that’s been a hallmark of the Trump campaign as he’s risen in Republican primary polls. He levied a similar critique against candidates such as Ted Cruz, and said Hillary Clinton would win the general election in a landslide.

* * *

Thursday, Soros gave a dire perspective on the current market environment. He was unsparing in his critique of Janet Yellen and her peers at the Federal Reserve, who made a “mistake” when raising interest rates in December. “By the time they acted, the window of opportunity closed,” Soros said of the Fed’s hike, which he argued should have happened a year ago. “Quantitative easing works, but it has a diminishing return,” Soros said.

Europe is one part of the world where central bank stimulus remains potent, according to Soros. . . . (more)

George Soros is of course the guy who financed the Ferguson riots and #BlackLivesMatter to the tune of a reported $33 million. So much for Soros; now on to the Central banks.


From Of Two Minds by Charles Hugh Smith:

Central Banks Are Out of TricksEccles_Building_south_side

Once the power to manage expectations has been lost, the central bank bag of tricks is empty.

No one knows precisely how and when the global unraveling will impact their corner of the planet, but we do know one thing with absolute certainty: central banks are out of tricks.

Like all good conjurers, the major central banks will claim that their magical powers to inflate asset valuations and inspire the animal spirits of risk, borrowing and spending are unimpaired, but this time the audience knows the truth: their magic is threadbare and their trick-bag is empty.

Obfuscation and doublespeak are primary components of central bank magic. The magic is largely semantic: if the Federal Reserve claims it can restore the economy and the stock market with reverse repos and other financial legerdemain, the corporate media is always ready to repeat this dubious claim until it is accepted as self-evident.

The central bank magic is fundamentally a mind-trick of managing expectations. If the Fed (or other central bank) announces a quantitative easing or market-goosing program, punters buy assets anticipating the success . . . (more)


But don’t worry be happy because CNN assures us that the economy is in great shape. From The Daily Sheeple by Mac Slavo:

CNN Reassures Investors: “Don’t Panic… America’s Economy Is Still In Good Shape”

Forget for a moment that U.S. stock markets have seen their worst start to a new year since the Great Depression or that some $2.5 trillion in wealth has been evaporated in less than two weeks.

CNN says it’s hardly the time to panic:

Time to panic? Hardly.

There are plenty of reasons to relax, especially if you are a U.S investor. Here are the top two:

1. America’s economy is still in good shape.

2. Staying in stocks pays off. Since World War II, investors who remained in stocks for at least 15 years made money

Right now, the U.S. economy is growing. It’s not rock star growth, but 2% to 2.5% a year is good, and the Fed is being very cautious.

More importantly, businesses are still hiring. Over 2.3 million jobs were added last year (the latest data on hiring comes out Friday and it’s widely expected to show more jobs added).

Pay no attention to the fact that last week not a single cargo ship was transporting raw materials in the South China Sea, the first time in history that it has happened. The economy is is great shape and this is not proof that global commerce has literally stopped.

Worry not that Walmart, Macy’s and scores of other retailers had an abysmal holiday season and are now set to lay off tens of thousands . . . (more)

But if your worried about another round of Tarp, don’t be because this time it will be different, as in bail-ins:

Top U.S. banks have pledged customers’ deposits as collateral for derivative gambling debts (see here)

The Digital Currency Scam You May Never Have Heard Of.

Digital Currency Scam. Credits: by Benjamin.doe, Wikimedia Commons

By now, probably everyone has heard of Bitcoin. But are digital currencies safe; is there such a thing as a digital currency scam? Yes there is, and the biggest scam out there is the one being run courtesy of your own government.

From Sovereign Man by Simon Black:

Have you heard of this digital currency that’s a total scam?

It was back in May 2010 that the very first ‘real world’ Bitcoin transaction was conducted: 10,000 bitcoins traded for two Papa John’s pizzas.

Today that transaction would be worth nearly $4 million, probably making those the most expensive pizzas in the history of the world.

But back then it was considered revolutionary to trade a ‘digital’ currency, something that few people really understood at the time, for a real product.

People are still skeptical of digital currency. But the concept itself is not so esoteric.

As Jim Rickards reminded me some time ago, MOST currencies are digital, even the US dollar.

The Federal Reserve’s estimate of US dollar money supply is $12.1 trillion; yet only about 10% of that is physical cash in circulation.

The rest—more than $10 trillion—is simply a series of entries in banks’ core system databases.

In other words, the money in your savings account isn’t piled up inside your bank’s vault. Far from it.

Your savings doesn’t really exist. It’s all just digits in an electronic account ledger.

* * *

In the late 1960s, the IMF took this idea to the next level when they created their own digital currency for the exclusive use of governments and central banks.

They’re called Special Drawing Rights (SDR, or XDR).

And even though the IMF’s balance sheet totals nearly 300 billion SDR (around $211 billion USD), not a single SDR exists in physical form.

100% of the SDR money supply is digital. Just like Bitcoin, it exists in computer databases, making it the digital equivalent of a 500-year old accounting system.

* * *

The SDR in particular is a total scam; the entire reason it was created was because the system didn’t have enough real savings.

So they ‘solved’ the problem by creating a new digital currency that allowed them to easily conjure more money out of thin air.

But the even bigger risk is the commercial banks, which control your account balances. They keep all the records and ledgers, they hold all the keys.

This means that the ‘money’ in your savings account isn’t really yours. You don’t actually have any savings.

What you really have is a claim on your bank’s savings. Your account is just an entry in the liability column of their digital ledger.

When you make a deposit, you’re trading your money for a banker’s promise to repay you.

And there are countless regulations giving them the authority to break that promise. . . .

Read the whole article.

Middle Class Destroying the Economy – Oligarchs Claim

What crashed the economy and is keeping it in a ditch? Was it derivatives and the monetizing of everything with the General Agreement on Trade in Services as mentioned towards the end of a previous post or the never ending QE. No, according to the WSJ, It’s the middle class destroying the economy by not upholding their end of the bargain by not shopping enough, or so the Oligarchs claim.

From Washington’s Blog:

Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing.

The ultimate mouthpiece for the banking cabal, Jon Hilsenrath, who does the bidding of the Federal Reserve at the Rupert Murdoch owned Wall Street Journal, wrote an arrogant, condescending, putrid diatribe, directed at the middle class victims of Wall Street banker criminality and Federal Reserve acquiescence to the vested corporate interests that run this country. Here are the more disgusting portions of his denunciation of the formerly middle class working people of America.

We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you.

We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite counter-tops.

You should feel lucky you’re not a Greek consumer.

Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates.

We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.

Please let us know the problem.

The Wall Street Journal was swamped with thousands of angry responses from irate real people living in the real world, not the elite, QE enriched, oligarchs living in Manhattan penthouses, mansions on the Hamptons, or luxury condos in Washington, D.C. Hilsenrath presumes to know how the average American has been impacted by the criminal actions of sycophantic Ivy League educated central bankers and their avaricious Wall Street owners.

He thinks millions of Americans losing their jobs and their homes due to the largest control fraud in financial history is fodder for a tongue in cheek harangue, blaming the victims for the crime. Hilsenrath reveals he is nothing but a Fed flunky who is fed whatever message they want the plebs to hear. His job is to obscure, obfuscate, spread disinformation, and launch Fed trial balloons to see whether the ignorant masses are still asleep. The Fed and their owners can’t understand why their propaganda hasn’t convinced the peasantry to follow orders. . . .”

Read the rest of the article . . .

A stale message that apparently still holds true — buy stuff you don’t need with money you don’t have