Swiss Banking Gnome Explains Art Of Paper Fiat Currency

The banker in Switzerland mainly responsible for selling off a great deal of hoarded Swiss gold decided to make a speech explaining the wonders and glory of paper fiat money.  That is, it is ‘free’, easy to create, can go to infinity and is a great way to pay off debts with practically zero effort.  He does admit, doing all of this can lead to some rather awful conclusions.  It is worth reading this speech to see clearly how the magical thinking of these financial anarchists really works.


Does the Swiss National Bank need equity?

Thomas J. JordanVice Chairman of the Governing Board

Swiss National Bank

Statistisch-Volkswirtschaftliche Gesellschaft Basel Basel, 28 September 2011ΩΩΩΩΩΩΩΩΩΩΩ


…the Swiss National Bank (SNB) itself had to report heavy losses for 2010 and the first half of 2011 due to the strength of the Swiss franc – or, more precisely, due to valuation changes on its foreign currency reserves. Consequently, it suffered a substantial reduction in its equity. At times, there was even media speculation that the SNB would soon be reporting negative equity levels. Understandably in such a situation, concerns began to be voiced in public. Might the SNB lose its capacity to act as a result of a negative equity level? And, if its equity were negative, would the SNB have to be recapitalised, or might it even have to go into administration?


This certainly is a crucial question!  At least, the FIRST HALF is crucial.  The second half is stupid.  The ‘equity’ here doesn’t matter internally.  It does matter externally.  That is, how one buys stuff from outside of Switzerland versus how one sells stuff outside Switzerland.  In other words, money held in national banks is mainly for resolving both domestic and foreign deals.  Domestically, deals can be settled in an infinite number of ways.


Externally, this can also be done but it is very problematic.  Namely, the glory of paper money is its portability and this is due to it being the representation for real goods or the fulfillment of various contractual deals.  It is easy to exchange which is why it is all about ‘exchange rates’ and other language signifying money as being representative for other things entirely different from money’s actual, theoretical and physical form.


equity provides protection for creditors. As long as a company has more assets than liabilities – i.e. positive equity – it can, in principle, meet all its obligations. If, however, a company’s liabilities exceed its assets, it can no longer meet all its obligations – there are not enough assets available for it to do so. The company is overindebted, and thus insolvent. It needs to be either restructured or wound up.


Borrowers don’t need solid, fungible goods that can be seized but BANKERS lending the money should have this!  That is, something physical and part of an economic system has to be the counterweight to any borrowing.  If the payments on a loan are not met, something has to be seized and then sold to the highest bidders or held by the bankers in perpetuity.  When a bank demands payments and a borrower can’t produce this, the items listed in the debt instruments such as a house, for example, is then seized by the bank.


The IMF is an international bank run by the colonialist powers in Europe and the US.  This bank, run by people pre-selected by the Bilderberg gang, lends money, mainly American fiat dollars printed up by the Federal Reserve out of thin air, to ‘bail them out of economic trouble’ but in reality, this money is a way of purchasing land, industries, commodity sources and the labor of the entire nation which is now in debt to the IMF.  They then have to do what the IMF tells them to do and what is ordered is a sell-off of all valuable public services and systems such as roads, bridges, ports, transport systems, communication systems such as television and phone services, government stuff like parks, land, military bases, etc.


The IMF then orders wage cuts, seizure of pensions, revaluation of everything downwards, reduction or elimination of social services, the unemployment of state and local workers and then everyone pays off the IMF, collectively.  The money to do this is ‘free’ as far as the US is concerned.  We are the basic ‘central bank’ for the world here!  We just make up money out of thin air, lend it to everyone and then the elites here get to collect all the goodies that fall into their laps from countries that can’t pay for these loans made in free funny money.


Central banks can continue to operate, even with a negative equity position:
First, a central bank cannot run into liquidity problems. Second, in the long term, it will always return to a profit-making position, with which it can build up an adequate equity base after a period of losses. I would now like to take a closer look at these aspects.


This is the decisive difference between a central bank and a private company. But how does it come about?
If a private company takes out a loan, the interest rate, term and amount of the loan are contractually defined. The times and amounts of the interest payments and the principal are set obligations. When a payment falls due, the borrower must have sufficient liquid funds at its disposal to meet the obligation. If it does not have liquid funds, it will – as I mentioned before – have to either sell shares or take out a loan.

With a central bank like the SNB, the financing works differently. First, the SNB’s borrowed capital is largely made up of banknotes in circulation and banks’ sight deposits at the SNB.5 Together, these two components form the monetary base. This cannot be compared to borrowing by conventional companies. The SNB pays no interest on these liabilities, they have no fixed term, and the ‘loan amount’ can in principle be set by the SNB.6 Thus, there are no obligations comparable to those under a loan agreement for private companies. Since, moreover, banknotes and sight deposits are legal tender, these liabilities are also not callable in the strict sense, but can only be swapped against each other – as legal payment instruments of equal value.


All central banks talk about these swaps.  The IMF tracks these swaps.  They are discussed greatly since all of these swaps depend on the floating fiat value of the US dollars created out of thin air by the Federal Reserve, to close all international deals.  Like any swap market system, the relative value of everything depends entirely and only on the people making swaps agreeing on the value of these swaps.  Supposedly, the floating fiat currency value for swaps are determined by open FX markets.  These, in turn, are SUPPOSED to not be manipulated by the central bankers but has been grossly manipulated for many years.


Indeed, this is the root cause of the present collapse of the international banking system: the open swap markets of all currencies has been totally corrupted and utterly manipulated to the point, it is now collapsing.  And the core of the collapse is due to the floating fiat currency status of the US dollar.  It has flooded the planet with trillions of trade dollars that is rapidly approaching the point of unsustainability.  The US has also flooded the planet with military dollars.  We have bases in virtually every country excluding Russia and China (two major exclusions!)  Yesterday, China, Russia pledge closer cooperation on world stage.


They just announced they will reform the UN Security Council.  And Russia is going to join the aply-named Shanghai Cooperation Organization.  This is also a military alliance.  China is the world’s #1 holder of sovereign wealth and Russia is in the top ten holders.  The US is dead bottom in this matter.  Switzerland is also a sovereign wealth nation, by the way.  So the Swiss, like the Germans, have a lot more in common with Russia and China and nothing in common with the US when it comes to international finances.


Today, Switzerland is playing catch-up to sovereign wealth nations like Japan, Russia and China.  The floating fiat currency system has ravaged their own trade with the world because their currency became relatively ‘too strong’ for exports.  They had to basically weaken their own currency so that it would cease destroying their sovereign wealth holdings via being too strong.  This is simple to understand: the weaker the currencies are in your own holdings, the less value it has in world markets.  So these foreign funds being held become increasingly worthless RELATIVE to your own currency.  The upshot that scares governments is simple: trade flows one way, into one’s own country!  Then, all industries depart!  The US has seen this happen for 50 years and is nearly bankrupt as a nation, stripped of ative ownership of nearly all resources and industries.


…the SNB is legally entitled to settle outstanding claims by creating Swiss francs ‘out of thin air’, so to speak. Thanks to this autonomy – the ‘banknote-issuing privilege’ – the SNB never suffers from a liquidity shortage. If the SNB has to repay an SNB Bill – its own debt certificate – that falls due, it simply credits the sight deposit account of the commercial bank in question. Vice versa, it can always issue securities such as SNB Bills in order to reduce liquidity in the system.


…Averaged out over the long term, central banks always make profits, which are often referred to as ‘seigniorage’. With these profits, central banks can always rebuild their equity levels after losses. The main reason for their ability to achieve profits is that central banks – unlike private companies – can normally finance their assets virtually for free, thanks to their banknote-issuing privilege.


This is true.  Very true.  Alas, there is a severe and dangerous downside to this ‘seigniorage’.  History is quite clear about this: all rulers are tempted to tamper with the value of their ‘money’.  They do this to pay mainly for wars and building ridiculous, huge palaces.  Eventually, they are tempted to make more and more money out of thin air and the more they do this, the more the money loses value.  There is no escaping this.  This is all ‘free’ so infinity is the limit when all one has to do is add zeros to the money’s value!


And countries sometimes plunge into the infinity abyss.  The US has, for a long time. The only reason the dollar has any value at all at this point is simple: all our trade partnes have sucked up all of these excess trillions of dollars and now hold them in their own accounts to protect themselves from imports!  Yes, it is to stop imports.  They use their FOREX holdings to keep their own currencies cheaper than these madly-created US dollars.  When we saw world markets crash in 2008, the Federal Reserve handed out literally $6+ trillion in free loans at ZIRP rates to international and national central banks in order to keep this sytem running for a little longer (it is doomed to collapse).


The Federal Reserve has virtually no FOREX holdings, the US has negative sovereign wealth.  Big time.  Yet, both lent the world many trillions of dollars in one fell swoop simply by emailing (basically) all other banks in distress and writing a blank check with lots of zeros.  These were backed by the value of everything in America, all the loans, all the possessions of all the people, everything.  This can be done to the Swiss people, too!  Their own central bank is desperate to weaken the value of their money.  The people enjoy a higher standard of living if their currency is strong for then they can buy anything they want and travel easily around the world.


When their currency is weakened, they can’t do this.  When the Japanese yen suddenly rose in value, after negotiations with the US back in the Reagan years (the Plaze Accords), the world was suddenly flooded with millions of Japanese tourists.  When their economy collapsed in 1992, they vanished and we now have a record number of Japanese living overseas but this is only due to Fukushima.  They are refugees, not tourists.  Japan to offer 10,000 free trips to foreigners to boost tourism industry  because of Fukushima and the strong yen, no one is visiting Japan anymore.


So, the populace enjoys life high off the hog when their currency is strong but this destroys their own economic base over time so governments move hard to weaken their currencies, mainly against the dollar though Switzerland, buried in the center of the EU and not an EU nation, has to be weaker than the euro.  So sybriatic choices must be limited for the people of the Cantons of Switzerland (it, like the EU, is a confederation) while their export markets are protected by a wall of higher prices for imports thanks to weakening the currency.


To weaken a currency, a central bank does two things: accumulates government debts instead of selling this overseas (Japan has been #1 in this area, holding more government debt in the central bank than even the US!) and printing lots and lots of money via lending it to exporters.  The US does all of this, too, except we don’t also do what Switzerland and Japan does: a culture of not buying foreign goods and a system of price controls, all totally not run by the government but via conspiracy at home, that encourages people to buy only home-produced goods.  Japan, under a very strong yen situation due to many, many factors (no one could keep up with the weakening dollar as the Fed printed trillions of it and shipped it all overseas!) has seen manufacturing exit the country at the speed of light, lately.


Soon, it will all be gone as desperate industrialists and business people relocate and they are doing this at hyperspeed due to Fukushima as well as the strong yen.  Japan will be stripped of all resources, intellectual, financial and manufacturing, if the yen stays strong and Fukushima isn’t fixed.  Editorial: Prioritization key to effective nuclear decontamination plan – The Mainichi Daily News shows the despair there.  The government struggles to find places in that geologically small and unstable country, for some places to dump literally billions of tons of contaminated land and things.  No one wants this and no one can tolerate hosting this nuclear garbage.


The inability to cope with reality is obvious: look at this picture.  They are washing off buildings in Fukushima! All this does is flush the radiation which will last 30+ years, into the ecosystem!  This is spreading it, not eliminating it.  Calling this ‘insufficient’ is a joke.  It is insane.  Back to the head of the Bank of Switzerland who sold off a lot of the gold recently, saying, it had no value (HAHAHA):


Second, let’s take a look at the current situation, which, from a monetary policy perspective, is anything but normal. The financial, economic and debt crisis inflicted shock- like disruptions on the financial markets and the global economy. Switzerland was not left unscathed. In order to fulfil its mandate under these exceptional circumstances, the SNB had to implement a broad range of monetary policy measures, sometimes on a huge scale. These began with the stabilisation of the interbank market in August 2007, followed by the provision of US dollars to the market from December 2007 onwards. Then, in October 2008, interest rates were slashed and the stabilisation fund was set up. Finally, between March 2009 and mid-2010, the SNB intervened on the foreign exchange market. This year, to counter the strength of the Swiss franc, we have massively increased the supply of liquidity to the money market, and on 6 September we set a minimum exchange rate of CHF 1.20 against the euro. This extensive use of monetary policy tools was, and remains, necessary to ensure the fulfilment of our legal mandate. In contrast to a private company or a commercial bank, the SNB’s monetary policy decision-making is always driven by motives other than profit, and will continue to be so in the future. The motives that guide the SNB are the requirements that it ensure price stability while taking due account of the development of the economy. Occasionally, the SNB is obliged to substantially lengthen its balance sheet and thereby take on risks, in order to fulfil its mandate.

So far, the extensive use of its monetary policy toolkit has enabled the SNB to weather the effects of the recent crisis relatively successfully. But these measures have taken a considerable toll on our balance sheet and our income statement.
The most significant change in the balance sheet is doubtless the massive expansion in foreign currency investments.


He is complaining about doing what China and Japan have done for a generation in China and three generations in Japan: you have to buy lots and lots of foreign currency and hold all of this in the FOREX hole in the ground so that your currency will be sufficiently weak to encourage exports and prevent imports.  Since the US prints money like mad, this is very hard to  keep up since the US is the fulcrum for all world currency valuations.  This didn’t benefit the US, it has destroyed our nation, but we enjoyed the ability to tour other countries and buy luxuries during the epic US dollar dominance years.


In extreme situations, even the emergence of a structural expenditure surplus is possible.14 Given such a condition of sustained negative seigniorage, the central bank is forced to create money in order to cover running costs.15 In doing so, however, it will lose control over monetary policy and the danger of inflation will arise.


Japan was mired for two decades in this grinding depression at home.  Few can buy foreign goods.  Wages have fallen for years and years.  The value of homes has dropped since people can’t afford to ‘move up’ in home buying since everyone’s wages are falling.  Consumer lending has collapsed.  Families are no longer being built very much so the birth rate is also collapsing.  Switzerland worries about inflation but Japan has exported its own inflation via its massive dollar holdings while not spending at home, has created a curious depression that is causing ZIRP rates to spread even as US trade dollars STILL continue to flood the world.


And we are F*cked, big time!  As I feared, even as the GOP refuses to pass even a minimal jobs bill, they did pass this job-killing bill:  Congress passes trade deals with 3 nations – Oct. 12, 2011.  We are going to increase trade with Taiwan and South Korea!  Nations running big, big trade surpluses with the US, already.  Nations that have big FOREX dollar holdings to keep their currencies weak!  It is charming for the Swiss to openly talk about manipulating currencies right when the US is yelling that only China does this.  Everyone does this!


Obama, in hock to international bankers, praised this bill saying, it will create millions of US jobs.  Every single trade liberalization bill has done exactly one thing, every time: it increased our trade deficits and destroyed US jobs.  True, export jobs are going up and up!  But INTERNAL industrial jobs and office work has vanished!  They are gone.  Many millions of jobs are gone, forever.  Far, far more jobs are lost than gained.  This is painfully obvious to anyone.  Why is Obama and Congress, why are both Republicans and Democrats lying about this?  Why does that fat gasbag, Rush, lie to his right wing buddies about this?  Why?


HAHAHA…it makes them all richer.  Richer and richer, every day, richer!  They love this.  Look at how they are fleecing the ecologist part of many nations!  They fool everyone, all schemes are designed to strip people of wealth and transfer it to global elites.


Here is an article from 2007  about how the present SNB head, Jordan, the author of the article I have been disecting here, destroyed Switzerland’s gold hoard:  Switzerland Central Bank to Sell 250 Tonnes of Gold – Precious Metals – Resource Investor


Swiss National Bank directorate member Thomas Jordan told reporters that the proceeds will be used to increase foreign currency reserves. The share of gold in Switzerland’s currency reserves has risen to 42% from 33% since mid-2005 due to the increase in gold prices, and Jordan said the sale would return the share of gold in the currency reserves to their previous level.


Matt Turner, commodities analyst with Virtual Metals, told RI it was significant that the bank said gold as a percentage of reserves had gotten too high, since many European countries have a higher share of gold reserves.


Greece has 80% of its reserves by value in gold, Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%. If these banks were to reduce their reserves to 30%, Germany would have to sell 1,802; Italy 1,341; France 1,273; Switzerland 394; Netherlands 311 and Portugal 235 tonnes.


He said today’s announcement was indeed a “big surprise,” because “everyone thought that the 1,295 tonnes they sold between 2000 and 2004 was it for a while.” This was 40% of their reserves at the time.


Many Swiss are worried about eliminating their gold hoard.  They should be worried sick.  Jordan loves the floating fiat currency regime system.  He was put in power to stop the strong Swiss mark and to make it easier to export goods.  The gold reserves made it too strong.  Germany, France, etc, all can hoard gold till the cows come home since NONE OF THIS IS ATTACHED TO THE EURO!  The euro, much more than the US dollar, totally floats!  It has no FOREX basis which is why it shot upwards so fast in value in the last 10 years compared to the dollar.


Which has killed EU exports to the US.  The EU wants a weak euro.  They can’t manipulate it except one way: print more and more and more euros via lending money to the PIIGS nations.  Except Germany has to hold all the downside to these debts and this scares the German populace BUT NOT THE BANKERS THERE!  They fear this a lot and are louder and louder, demanding a return to German Mark sovereignty.  They, not Greece, will kill the euro.


Even as the US slits its own throat, China warns of trade war ahead of U.S. currency vote.  This trade war is going to be nasty.  China has some very dangerous weapons.  One of the greatest is its debt/dollar hoard.  All it has to do is dump this mess into the lap of all world economic systems and our own system will totally and completely collapse.  The Pentagon knows this, the US elites know this, the Federal Reserve knows this.


This is why all of them are frantically preparing for WWIII.  We hope to bomb our way out of this mess.  Japan won’t exist once this is over.  Europe probably will also be uninhabitable.  So would parts of China and the US.  Maybe we will all die.  We don’t know.  We better not find out the hard way.  Massive nuclear annihilation isn’t the answer to simple trade problems.  And as this news shows  us, Chinese rocket sends French telecom satellite into space as the Chinese space program roars ahead and the US program is now totally  military and aimed nearly psychotically only on WWIII.


The US dollar is in real trouble:  Currency Forecasters Say Best Over for Dollar which predicts the euro and yen will remain very strong against the dollar…and this should increase exports and has except we no longer have much of any industrie here to make exports, it mainly increased the exportation of US commodity goods.  This is due to, despite immense pay cuts for US workers, they still are too expensive for export purposes.  This is why export jobs stink to high heaven: only if you kill wages here, can you export!




Vikram Pandit, Citigroup CEO: Occupy Wall Street’s Sentiments Are ‘Completely Understandable’ is funny since he is the cause of this distress and plans to do absolutely nothing to fix it.  The Occupy Wall Street action is causing great distress to the elites who mock it desperately but look!   They encouraged both Republicans and Democrats to increase free trade with trade rivals who run big trades surpluses with us due to cheaper labor!!!!  Congress is NOT deadlocked! The elites like Pandit and the former head of GE who was hired by Obama to be our ‘job czar’ after he offshored many jobs and dropped wages here…they are all in concert with each other and relentlessly working to destroy us.


Protesters march on billionaires’ homes  in Manhattan and this really scared them, they want to be left alone or admired, not hounded and yelled at.  They are getting scared and paid the NYC police millions of dollars extra to protect them (but NOT pay higher taxes for the cops to protect everyone, just themselves).  They will privatize the police in the end and have them set up as a looting/raping expedition that will ravage us like the military and police in Mexico attack the citizens and don’t protect them, there, either.

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Filed under .money matters, Free Trade, gold

24 responses to “Swiss Banking Gnome Explains Art Of Paper Fiat Currency

  1. Urban Roman

    “Protesters march on billionaires…”

    I am convinced that is why Acorn had to go. Remember when the Acorn guys were out there in some of the nicer suburbs of NYC, actively drawing attention to the homes of the 0.01%ers? Not too long after that, there was this “scandal” was short on substance, but long on drama and intrigue. Then Acorn found itself defunded and disbanded.

    It will be interesting to see what the response is to this. Bet it’ll be nasty, though.

  2. GWB

    “Why does that fat gasbag, Rush, lie to his right wing buddies about this? Why?”

    Just a little constructive criticism. Every time you namecall or say “right wing”, you marginalize your blog. Rush is an entertainer and holds no more political power than the same vote you and I share. And saying “right wing” is just a form of liberal projection.

    Tell me, could Rush have vetoed these trade deals? Could Obama?


    ELAINE: Neither of you are the least bit entertaining. Odd, yes. Repulsive, in the case of Rush, yes. Entertaining? Icky. 😦

  3. Urban Roman


    I have this kettle I’d like you to meet.

    And, if you don’t like it don’t read it.

  4. Claire Voyant

    Terrific post! Perfectly crystallizes the thinking of corrupt global elites and exposes the creaky machinery of their unspeakable system.

    Revolutions reach a tipping point when people wake up to systemic injustices, realize that their rulers have betrayed them, and conclude that their continued rule holds no legitimacy.

    Once that happens, the smallest act can topple the system.

    On October 5, 1789 a girl took a drum to the central markets of Paris. A few months earlier, the people had stormed the Bastille but since then their resentment had seemed to lay dormant. That drummer girl drew a crowd, mostly women, who marched to Versailles and seized the royal family. A girl with a drum was the catalyst that brought down the Bourbons.

    Are we there yet?

    Crane Brinton’s 1938 classic “Anatomy of a Revolution” provides some thoughtful clues.


    1. People from all social classes are discontented.
    2. People feel restless and held down by unacceptable conditions and dead end restrictions in society, the economy, religion, or the government.
    3. People are hopeful about the future, but are forced to accept less than they had hoped for.
    4. Growing bitterness among social classes.
    5. The social classes closest to one another are the most hostile.
    6. The scholars and thinkers give up on the way society operates, and start to talk openly about breakdown.
    7. The government does not respond to the needs of its society.
    8. The leaders of the government and the ruling class begin to divide and doubt themselves. Some join with the opposition groups.
    9. The government is unable to get enough support from any group to save itself.
    10. Government cannot organize its finances correctly and is either going bankrupt or trying to tax heavily and unjustly.

  5. Clueless

    Elaine, a very well written article that makes good sense, well thought out. I just have one problem, it has to do with bankers being the biggest, fattest liars on Earth. They lie about everything, they hide the truth and they love, love, love to window dress.

    They hire the top economists to practice confusion marketing on the proles and politicos, while they laugh at them as they rake in tons of money with their Ponzi schemes. I suspect most of them don’t even understand the system they hired the quants to create, they just control the flow. I have since stopped believing anything they say, in fact, if the say North I look South, and so on.

    Everything is machination. Who really knows how much, debt, gold, silver, etc. they actually have? And if it is even in the Central Banks. I don’t. When was the last time Fort Knox was audited?

  6. GWB

    On October 5, 1789 a girl took a drum to the central markets of Paris….

    Are we there yet? ….

    Based on the 2010 midterms, I’d say yes.

    Look… archaic revolutionary tactics may work against monarchies and dictatorships, but have little place in modern America. What are you revolting against? Democracy? The “rich”?

    Let’s have some fun here. Let’s say OWS “wins”. The 1% pack up and take their corporate jets to their favorite safe haven country. How does that change ANYTHING?

    Answer: It doesn’t. Because now there is a new 1%. Right? Now what?

    So, hopefully, you can see why Soros sponsored OWS is such a joke. And why it is deservedly getting little attention.

    If you want to revolt, do it in the voting booth.

  7. csurge

    *sigh* Welcome to my world. I hope you all enjoy your stay in Banana Republic Land. Please make sure your personal firearms are fully paid for. You’ll need them in the days ahead. Thank you, and enjoy your decent.


  8. Urban Roman

    “If you want to revolt, do it in the voting booth.”

    Did that, it didn’t work. Turns out the Dems were working for the exact same interests as the Reps. And third-party/independents are engineered out of the electoral system these days. Very few of them are able to make a dent.

    And the OWSers are not playing a game here, so there’s no “win”. If you want to regard it as a game, they have already won. They have started a discussion.

  9. How can the Yen be strong with the Japanese Crisis that could involve
    evacuating Tokyo?


    ELAINE: They are no longer putting trade dollars into their FOREX holdings. Worse, they had a trade DEFICIT for the first time! This makes their currency stronger just like our trade deficit made the dollar stronger and stronger…so long as our trade surplus allies parked the loot in their FOREX holdings.

  10. gwb

    “Did that, it didn’t work. Turns out the Dems were working for the exact same interests as the Reps”….

    So now you’re having a tantrum because you were hoodwinked and you still don’t get it.

    Because if you had been paying any (A N Y) attention to battles in Congress over the last two years you wouldn’t be saying anything so ignorant.

    “And the OWSers are not playing a game here, so there’s no “win”.”

    a.k.a. I can’t answer your question about there being the next 1%. You have me stumped.

  11. Urban Roman

    That is one of those strange dynamics that occur with currencies (all kinds, doesn’t matter what they’re based on). It’s called “deflation”.

    It happens when everybody wants to sell everything to raise cash, right f’n now… cash is a portable store of wealth, the Yen has historically been a stable currency, and literally everything else is in a state of flux.


    ELAINE: I should republish my old story about the history of the yen. It has been anything but ‘stable’.

  12. csurge

    @ Urban Roman

    Nicely said. Give the man a medal. ^_^ The media and general public are so sloooooooooow to get this movement. Most of them still have no idea how _radical_ OWS is….how OUTSIDE it is from what they’ve grown accustomed to. Those GA meetings are the perfect answer to the current system. They are the perfect form of inclusive government by and for the people.

    I mean bloody hell. I’d be shaking in my boots right now if I was a elite scumbag. This is the sort of thing most leaders the world over emphatically do not want. Like, ever.

    There’s no way onto the gravy train if the masses are actively participating in the day to day running of a country. It’s a total disaster for aristocrats, oligarchs, traitors and despots.

    I’d cry them all a river if it didn’t mean I have to pay some sort of green tax for producing too much salty water….

  13. Joseppi

    “frantically preparing for WWIII”

    Today’s post, Elaine, reads like a sophisticated crime novel with IMF mafia criminally manipulating governments around the world – Swiss cheese logic about gold and the fiat system – The sinking of Japan despite their FOREX wealth – US Free Trade policies impoverishing Americans to create allies against those that oppose US Dollar hegemony – The FED frantically bribing everyone bankrupt from too much debt with dollar swaps to keep the game going –

    Intellectually a great thrilling read, until that is you get to the realization that the ruling powers understand that the game that has made them fabulously wealthy is just about over, and it’s time to fold their hands and end the game with war.

    The war machine is the only investment the US has made in the last thirty years, and now that we are at the “end times” it’s time to launch a suicidal attack. This recent obviously fake plot hatched by US intelligent services of a stumble bum Iranian trying to murder the Saudi ambassador is sheer desperation and shameless indication of their intentions.

    Communicating the mechanics of this unfolding tragedy, like you so brilliantly do, Elaine, is our only salvation, which is in serious doubt.

  14. Paul S

    Elaine: could you speak about how Brazil and Argentina ‘flipped off’ the IMF and the way their economies have rebounded? I have always understood that those two countries ignored the IMF’s mandates for their debt problems and were quite successfull in rebuilding their economic status.

  15. emsnews

    Yes, they both did. Interesting stories involving the CIA, military coups and killing of leftists, too.

  16. Claire Voyant

    @gwb “archaic revolutionary tactics may work against monarchies and dictatorships, but have little place in modern America. What are you revolting against? Democracy? The “rich”?”

    You really don’t get it, do you?
    You read the news?
    You talk to anybody?
    Or you just listen to the wind whistling inside your head … or the sound of that fat gasbag …

    The revolt is against the corruption of politics with money.
    Once that happens, there is no democracy.
    As for the “rich” … if they buy all 3 branches of government, subvert the system, and strip off industries, jobs and natural resources, we’re all poor.

    There was nothing archaic about the Arab spring.
    Nothing archaic about the Civil Rights movement.
    This is real democracy … if our voices go unheard, it becomes revolution.
    Similar street action … coming soon to a neighborhood near you. .

  17. Christian W

    GWB: revolutions are never “archaic”, they always take place in the present.

    Tbh I struggle to believe you are genuine. You are playing intellectual pingpong with yourself within such a limited frame. You are just fishing. Why are you poking about here?

    Do you genuinely believe in change through the current ‘democratic’ (read: plutocratic) system? Even the (revolutionary) founders of the USA held that it was the right of the people to overthrow the system when it became too plutocratic, something they new from history would eventually be the case.

    What does the word ‘liberal’ mean to you? I’m just asking because I think we have vastly different concepts of what the word means. You seem to use it in a broad “Rush Limbaugh” way that I have no idea what the real code behind it is supposed to be.

    @Joseppi, Yeah, this latest “intelligence” joke is just the latest in a long line of similar pathetic operations.

  18. Urban Roman


    Well, OK, maybe “stable” was the wrong word to use. But in the ongoing currency wars, deflation is a real possibility among the outcomes. It means that, relative to other forms of investment, the given currency itself is seen as a “safe haven”. Relative to MBS, CDOs, CDO-squared, CDO-cubed, and other ridiculous financial fictions.

    The Yen is currently in severe deflation. Historically, it was the basis of a “carry trade” in which speculators would borrow Yen, with their ultralow interest rates (until recently we didn’t have 0% rates here in the US — now we do), and go “invest” in some other currency that *pays* interest. Here ya go, here’s your loan in AUD … that’ll be 10% interest, please. … … … Well, eventually you need to take your vig in AUD, and buy Yen to repatriate the carry loan.

    Now, if everybody tries to buy Yen at the same time in the FX market, the Yen naturally rises.

    There, was that a better explanation?

    Note: deflation can, and will, come to the Hew-Hess-of-Hay. Count on it. It won’t be pretty.


    ELAINE: You are correct! Yes, there is severe deflation in Japan. That is because there are fewer and fewer yen..AT HOME…to spend. The Japanese people are not taking on debt nor getting wage raises. So they hunker down, more and more.

    Worse, this is FAKE deflation. There is more and more liquidity…but much of this sits in FOREX accounts! Oh. Oh. This is most dangerous, all of these FOREX kitties are like volcanoes: itching to erupt. Then, they suddenly flow, like a lahar, all over the world’s economies.

  19. Elaine..theres a book called ‘ New reality of wall St’ by Cox [forget his first name]..He has a Chart of Japanese Stock market..
    in yr 2000 was it about where it was in 1950?

    i dont understand Int Economics, much less currencies…
    except I can see the Greenback sliding into oblivion.

  20. Urban Roman

    Oh, and then there’s this last piece I left out. I think you mentioned it.

    The Japan .gov has got itself in a spot of trouble here, they need to borrow zillions of Yen to pay for the earthquake and that nuke plant that blew up. There’s really no way to pay for the nuke plant, but it’s going to be out a lot of money anyway.

    So they’ll have to oonch up the interest rate just a tiny leetle bit to get anyone to loan them the money. Now, all those carry trade guys, when the interest rate was 0, they could just keep carrying, right? Just keep paying the 0% and getting more than 0% somewhere else. Well, now they have to pay interest on the Yen, and in about a millisecond or so, the “carry trade” isn’t such easy money any more. In fact it can be a loser. It’s how people lose their shirts in the FX markets.

    And that’s what triggers everybody trying to sell other stuff and buy Yen.


    ELAINE: I have written very extensively about the Japanese carry trade. Once I figured out what traders were referring to when they mentioned this (years ago!) I went on the warpath. It was a very bad thing and doomed to collapse.

    Well, I predicted that the day China became Japan’s #1 trade partner and then if China, as I also predicted, would force Japan to do business in yen rather than dollars, this would cause the carry trade to collapse internationally and also drive up the value of the yen. Due to the Chinese holding yen in their titanic FOREX kitty.

    Well, this happened slightly less than three years ago and this is part of the crash of the floating fiat currency free trade system. Japan is trapped: they can’t possibly hold enough US trade dollars to stop the Chinese from holding even more yen! They can’t do it anymore and are tearing their hair out, trying to figure out a way out of this Chinese trap.

    So…they basically declared war of sorts over some small islands and cheerfully, banzai!…pushed the US into confronting China for them. China, in turn, is now hammering Japan until they stop doing this.

  21. GWB

    “Tbh I struggle to believe you are genuine. You are playing intellectual pingpong with yourself within such a limited frame. You are just fishing. Why are you poking about here?”

    Actually, I’m just taking a break from frying much bigger fish. I hit a link to this site by something completely unrelated to politics. While I was here, I decided I would offer my insight, as a courtesy, and make an attempt to correct some of the very illogical thinking found in this schizophrenic rah rah group.

    But duty calls, and I have to return to my allies as we continue our fight to rid the obvious kool-aid induced insanity of the other side. It’s not easy, but our success in the 2010 midterms gives us hope (and change lol).

    This is my final post here. Peace out.


    ELAINE: In other words, he is a member of the Gnome Patrol. He has to go back into his cave because the sun is too hot.

  22. Christian W

    GWB: I’m not American, but I must say your ‘side’ are doing a hell of job running the US into the ground. Well done dude. Potential enemies of the US doesn’t even have to lift a finger, you are doing the job for them.

    The implosion of the US is, frankly, awe-inspiring but not surprising, or even shocking, seeing that there seems to be quite a few of your type around.

    Buh bye.

  23. rcaruth

    To: Claire Voyant
    The title is

  24. Paul S

    Just a quick comment on corporate welfare shill Rush Limbaugh. His program has been pulled, along with Hannity’s, from my area. I live in the range of 20th to 30th media market in the country. Limbaugh’s ratings ARE slipping. It’s only starting,imho, but I think the fat blob’s power is shriveling. Too many of his ‘ditto-heads’ have lost their jobs–and much more–to be conned by Limbaugh bluster. Reality has a way of dealing with liars like Limbaugh.

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