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Old 05-13-2014, 03:31 PM  
Stewie Stewie is offline
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The great deceiver: The Federal Reserve

The great deceiver: The Federal Reserve


by Dr. Craig Paul Roberts



Is the Fed “tapering?” Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not since foreign holders of Treasuries are unloading them.


From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.
Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?


No, Belgium’s trade and current accounts are in deficit.


Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?


No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.


So where did the $141.2 billion come from?


There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.


In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time. (In March 2014, official QE was tapered to $55 billion per month and to $45 billion for May.)


Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?


Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week.


Another curious aspect of the sale and purchase laundered through Belgium is that the sale was not executed and cleared via the Fed’s own National Book-Entry System (NBES), which was designed to facilitate the sale and ownership transfer of securities for Fed custodial customers. Instead, the foreign owner(s) of the Treasuries removed them from the Federal Reserve’s custodial holdings and sold them through the Euroclear securities clearing system, which is based in Brussels, Belgium.


We do not know why or who. We know that there was a withdrawal, a sale, a drop in the Federal Reserve’s “Securities held in Custody for Foreign Official and International Accounts,” an inexplicable rise in Belgium’s holdings, and then the bonds reappear in the Federal Reserve’s custodial accounts.


What are the reasons for this deception by the Federal Reserve?


The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of “banks too big to fail” and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets. The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering.


A hundred billion dollar sale of US Treasuries is a big sale. If the seller was a big holder of Treasuries, the sale could signal the bond market that a big holder might be selling Treasuries in large chunks. The Fed would want to keep the fact and identity of such a seller secret in order to avoid a stampede out of Treasuries.

Such a stampede would raise interest rates, collapse US financial markets, and raise the cost of financing the US debt. To avoid the rise in interest rates, the Fed would have to accept the risk to the dollar of purchasing all the bonds. This would be a no-win situation for the Fed, because a large increase in QE would unsettle the market for US dollars.


Washington’s power ultimately rests on the dollar as world reserve currency. This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.


As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.


If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.


If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.


Its wars and hundreds of overseas military bases could not be financed.

The withdrawal from an unsustainable empire would begin. The rest of the world would see this as the silver lining in the collapse of the international monetary system brought on by the hubris and arrogance of Washington.




Dr Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal.

Last edited by Stewie; 05-13-2014 at 03:36 PM..
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Old 05-13-2014, 04:03 PM   #2
Amnorix Amnorix is offline
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Other interesting articles by Dr. Paul Craig Roberts:

“Live free or die” is the motto of the state of New Hampshire. I hope the residents are
prepared to die, because living free is not what they do. NH is merely a cog within the
Amerikan Stasi State, but I am referring to what goes on within NH itself, not the police state existence imposed by Washington.

http://www.paulcraigroberts.org/2014...craig-roberts/



Does Obama realize that he is leading the US and its puppet states to war with Russia and China, or is Obama being manipulated into this disaster by his neoconservative speech writers and government officials? World War 1 (and World War 2) was the result of the ambitions and mistakes of a very small number of people. Only one head of state was actually involved–the President of France.

http://www.paulcraigroberts.org/2014...craig-roberts/


The end could be nearer than you think

Readers:

We are having trouble today with the website. I do not know if it is problems caused by the typical incompetence of US business enterprises, including those who host websites and have offshored American jobs to foreign countries, or whether it is National Stasi Agency induced.

http://www.paulcraigroberts.org/2014...craig-roberts/



Amerikan Stasi Police State Staring Us In The Face

American sheeple stick heads in the sand, pretend to be ostriches

http://www.paulcraigroberts.org/2014/02/18/19371/
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Old 05-13-2014, 04:09 PM   #3
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There are sooo many quotes out there, right up to the present day, but I'd rather focus on these geezers from days of yor with very prescient takes...

"Every Congressman, every Senator knows precisely what causes inflation... but cant and wont support the drastic reforms to stop and repeal the Federal Reserve Act, because it would cost him his job" - Robert Heinlein.

"The Federal Reserve Banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that THIS NATION IS RUN BY THE INTERNATIONAL BANKERS" - Congressman Louis McFadden.

"The Federal Reserve Act as it stands, seems to me to open the way to a vast inflation of currency... I do not like to think that a law can be passed that will make it possible to SUBMERGE THE GOLD STANDARD IN A FLOOD OF IRREDEEMABLE CURRENCY" - Henry Cabot Lodge Sr.

There are just dozens of these kinds of quotes that echo from the ages, and what you see in all caps should hopefully ring a bell because, well, its come to pass a long time ago.

The day that act was passed we gave up our sovereignity in so many ways, the NWO started way back then... we put our national economy in an international stewpot that's being stirred and having ingredients thrown in by people who don't give a shit about you - Mr. Joe American - even IF you have what you consider to be a little bit of money.

The fed sucks, always have and always will... people like this are a big reason why Putin has went nuts, he doesn't want to be swept into their bullshit, IMO.
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Old 05-13-2014, 04:15 PM   #4
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Sounds like this guy would fit right in with this crew.
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Old 05-13-2014, 04:20 PM   #5
Easy 6 Easy 6 is offline
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Quote:
Originally Posted by DaveNull View Post
Sounds like this guy would fit right in with this crew.
Please clarify your statement.
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Old 05-13-2014, 04:55 PM   #6
Cochise Cochise is offline
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Quote:
Originally Posted by scott free View Post

The day that act was passed we gave up our sovereignity in so many ways, the NWO started way back then... we put our national economy in an international stewpot that's being stirred and having ingredients thrown in by people who don't give a shit about you - Mr. Joe American - even IF you have what you consider to be a little bit of money.

The fed sucks, always have and always will... people like this are a big reason why Putin has went nuts, he doesn't want to be swept into their bullshit, IMO.
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Old 05-13-2014, 04:59 PM   #7
cosmo20002 cosmo20002 is offline
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Quote:
Originally Posted by scott free View Post
Please clarify your statement.
He'd fit right in because he's a right-wing moron.
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Old 05-13-2014, 05:02 PM   #8
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Old 05-13-2014, 05:02 PM   #9
cosmo20002 cosmo20002 is offline
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Quote:
Originally Posted by Amnorix View Post
Readers:

We are having trouble today with the website. I do not know if it is problems caused by the typical incompetence of US business enterprises, including those who host websites and have offshored American jobs to foreign countries, or whether it is National Stasi Agency induced.

http://www.paulcraigroberts.org/2014...craig-roberts/
This one is interesting. Hates govt, hates US business.
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Old 05-13-2014, 05:18 PM   #10
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Originally Posted by Cochise View Post
Its not usually considered the right language for DC, as nasty as it can be, but **** yourself you slimey pussy.

The day I care about what someone like YOU thinks about me, that's the day I'll just give up trying in this world... you're a smarmy, smug, know it all c**ksucker and I've hated your ass since they day you slinked back here.

Have a good night, old pal.
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Old 05-13-2014, 05:34 PM   #11
cosmo20002 cosmo20002 is offline
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Originally Posted by scott free View Post
Its not usually considered the right language for DC, as nasty as it can be, but **** yourself you slimey pussy.

The day I care about what someone like YOU thinks about me, that's the day I'll just give up trying in this world... you're a smarmy, smug, know it all c**ksucker and I've hated your ass since they day you slinked back here.

Have a good night, old pal.


Right-wingers fighting...excellent...
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Old 05-13-2014, 05:36 PM   #12
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Cochise is a right winger?
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Old 05-13-2014, 05:40 PM   #13
cosmo20002 cosmo20002 is offline
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Cochise is a right winger?
He's not?
BEP would call him socialist commie fascist, so that translates to approximately "right-wing."
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Old 05-13-2014, 05:46 PM   #14
Easy 6 Easy 6 is offline
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Right-wingers fighting...excellent...
I'm Independent, trying to find the common sense between the two, stale, old sides.
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Old 05-13-2014, 05:58 PM   #15
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Originally Posted by Stewie View Post
If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.


Its wars and hundreds of overseas military bases could not be financed.

The withdrawal from an unsustainable empire would begin. The rest of the world would see this as the silver lining in the collapse of the international monetary system brought on by the hubris and arrogance of Washington.
And that, folks, is how all previous empires have ended--they went bankrupt.


I already knew that some countries were getting out of the dollar or treasuries.
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