THE FISCAL CLIFF IS ANOTHER DIVERSION

THE FISCAL CLIFF IS ANOTHER DIVERSION

                                  “It is well enough that people of the nation do not understand

our banking and monetary system, for if they did, I believe

  there would be a revolution before tomorrow morning.”   
Henry Ford

In my opinion, the so-called “fiscal cliff” is just another diversionary tactic to shift the main stream media and the public’s attention (not that the latter has any) away from  the real problems facing the financial system.

The fiscal cliff, whether the idiots in Washington let it happen or come to some agreement, will have little effect on the nation’s remarkable debt. It will only make a recessionary economy worse.

In any case, the fiscal cliff is irrelevant when compared to the unbelievable number of over-the-counter derivatives held by the four largest American banks, or to the bond market and dollar market asset bubbles.

Of the $230 trillion in derivative exposure, Bank of America, JP Morgan Chase, Citibank and Goldman Sachs hold 95%. These banks used to be commercial banks that took their depositors’ money and loaned it out to businesses and consumers. But the repeal of the Glass-Steagall Act and the deregulation of derivatives by the Clinton administration in cahoots with the Republican party turned honest banks into gambling casinos who bet their own money and that of their depositors on any financial instrument they could leverage. You know what happened in 2008. Today the potential for disaster is many, many times larger.

This is what the Federal Reserve is really worried about. After announcing QE 3, the printing of money to buy U.S. Treasuries and the bad assets of the big banks, the Fed quickly doubled its QE purchases. The salient point to understand is that the Federal Reserve is not printing money to ignite the economy; they are merely continuing the bail outs of the too-big-to-fail banks and the U.S. Treasury.

Because a handful of fools and corrupt public officials deregulated the financial system, the Federal Reserve is forced to print paper currency on a scale never seen before in human history. How long will it be before the U.S. bond and dollar markets implode and inflation turns ugly? When a sovereign’s currency is destroyed, the country goes down with it. Anyone who possesses a brain cell of history knows that is what happened to the Roman Empire and all the other empires ever since.

Therefore, the entire economic policy of the USA is dedicated to saving four banks. By keeping interest rates at ridiculously low  levels, the rest of us in the real economy are deprived of interest income. We, especially our senior citizens, are forced into risky markets where possible disaster waits in ambush. Merry Christmas.

December 19, 2012