Banking Crisis Caused Entirely By Central Banks

The world underwent a huge money-printing surge ever since the US cut the gold reserve.  The floating fiat currency regime has caused increasingly bigger credit bubbles and sudden collapses due to too much debt.  The bailout of all the major derivative-operators/bankers in 2008 meant creating the biggest government credit disasters on earth.  The leading edge of this chaos is Japan.  It has by far the highest government debt to GDP of any nation on earth with the US running the biggest sovereign wealth deficit on earth.  


The premise of the central banks of the EU, US and Japan has been the idea that governments should replace capital markets whenever a credit bubble bursts.  This way, the for-profit banks can continue to lend money even though they have no real capital.  The buying of government debt is a replacement for capital.


This works only so long as the governments doing this heavily tax everyone to guarantee these government bonds handed over to bankers so they can pretend they have capital assets.  They, in turn, can do without attracting savings from the populace by offering attractive interest rates.


This is how Japan operates: savers get NOTHING for their savings.  They may as well store it all in jars buried in the backyard.  As the government replaced savers as the capital base for bankers, government debts rose dramatically as the rich refuse to be taxed and the middle to poor classes can’t possibly be taxed much further before rising up in fury.  So the government conspired with the bankers to hide the deterioration of finances with the trick of having the central bank buy up government loans.  Lawrence Goodman: Demand for U.S. Debt Is Not Limitless –


The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce…(Federal spending)


Conservatives forget that during times of crisis, government spending should go up.  Whenever conservatives in the US gain power, they double the debt as fast as possible…during good times!  Then, when Democrats take over, the conservatives demand spending stop.  This ‘wild spending in good times and cut spending in bad times’ makes things much, much worse.


There is no balance.  Balance is everything.  Just as one cannot run into brick walls, one has to display some sense of thinking of the future.  During the Bush era, we had multiple bubbles and he cut taxes on top of doubling government spending and going to war.  The predictable results happened: hyperinflation and a credit bubble from hell.


The Fed fed this frenzy from day one.  And cheerfully bought up government debts in the last three years because this is IDENTICAL to what Japan did: create a huge property/export market bubble and then collapse with the central bank taking over buying government bonds at ZIRP rates.


The wild spending southern tier of the EU is forcing Germany ape Japan and the US:  Spain caves in to market pressure and asks Europe for bank bailout.  The Spanish fear a bailout because of demands that taxes go up and workers be fired and wages and pensions go down.  This apes Japan perfectly where workers have lived more and more desperate lives as things deteriorate and everyone hopes to export to survive.


Moody’s downgrades seven German banks while David Cameron and Barack Obama urge ‘immediate plan’ over eurozone crisis.  Cameron and Obama are two clowns here: both are doing exactly the same things Spain, Italy and the other PIIGS have been doing.  So how can they call on Germany, the only responsible nation here, to ape Japan?


Here is how the genius from London is trying to fix things:  George Osborne’s latest plan: ask Britain’s savers for money 


The Chancellor has told Treasury officials to find ways to persuade savers to transfer billions of pounds held in bank accounts, building societies and investment funds to new government “growth bonds”.


The money would be invested in infrastructure projects such as toll roads, green energy and housebuilding.


Savers could be offered tax breaks, similar to those available in Individual Savings Accounts (ISAs).


Ministers are also looking at how they can use the strength of the Government to underwrite the risk to small investors. They are considering proposals, similar to those recently announced for housebuilders, for the Government to underwrite a given percentage of any potential losses by the projects. This would mean that the Government took the “first” risk with the schemes – losing its money before any investors.


HAHAHA…demanding building societies to buy government debt so the government can…build housing!  HAHAHA…with the usual spectacular results due to corruption, bribery and malfeasance and gross incompetence!  And to build TOLL roads so Brits have to pay to go from one place to another.  Great!


Then they will use taxpayer money to fund enterprises which can’t find any capital from banks!  HAHAHA…another opportunity for graft, malfeasance, incompetence and looting the Treasury.


Speaking of insane incompetence:  Azumi calls on Europe to act ‘responsibly’ to solve debt crisis ‹


Azumi said political leaders needed to act to reassure markets, which have proved increasingly volatile, with traders seemingly unimpressed by what many see as half-measures.


“I said I want them to take detailed steps in a successive fashion to make not only us but also the market feel safe,” he said.


Japan has become ever-more anxious over the effects of the debt problem in Europe, which is a key market for the exports that drive its economy.


Global financial uncertainty has also driven market players to seek refuge in the safe haven yen, sending the currency soaring and further squeezing companies that make their money abroad.


He wants to export to Europe and the US.  Japan has bankrolled EU/US debt by the trillion in order to flood both with Japanese exports.  This huge trade imbalance has been toppled in the last year due to Fukushima and now Japan has a huge trade deficit.  This, in turn, makes the yen stronger and stronger just like the dollar did when it began running huge trade deficits.


This is because trade partners hold the trade deficit currency so that trade deficits continue for its victim.  This is held in FOREX locked boxes and Japan pioneered this floating fiat currency trick and everyone is imitating Japan especially South Korea and above all, China.


Back to Britain: the situation for workers there deteriorates rapidly thanks to banking errors and government corruption:  Jobseekers ‘slept rough’ then staffed royal pageant for free – Home News – UK – The Independent


One woman from Bristol, who did not want to be named, said she was among 80 people – there were also 50 people on apprentice wages – “left stranded” in central London after travelling from Bristol overnight.


“We went under London Bridge and were told we would be camping there,”she told The Independent. She claimed they were told they would start work at 5am but by 3.30am they still had not been given somewhere other than the street to sleep. She said she was then made to change into her uniform in public before spending 14 hours on duty without access to toilet facilities.


Labour’s former deputy leader Lord Prescott has now written to Home Secretary Theresa May asking her to investigate claims made against security firm, Close Protection UK (CPUK), which was contracted to provide up to 30 unpaid stewards for the river pageant on Sunday. CPUK had bussed in the group of long-term unemployed from Bristol, Bath and Plymouth.


He said: “If the allegations are true, it is totally unacceptable that young unemployed people were… forced to sleep out in the cold overnight before stewarding a major event with no payment,” he wrote.


The Queen and her royal brood are popular with the public right now due to the marriage business.  But why are the English surprised at being treated as if they are in Victorian England?  This is, after all, what the royal garbage is all about: exploitation of the peasants who should sleep under the bridge before parading around to make the Queen look powerful!


Peasants are…dirty peasants!  The facade of being middle class is being dropped as the population is treated like so many servants.  To be pushed around, exploited, cheated and made to wear uniforms while having no power and above all, being sent out to die.  While we are ordered to go bankrupt fighting Afghani natives, we are also ordered to work for free and pay tolls, fees, taxes and so on just like in the Medieval times which the Queen and her clownish brood long to return the nation to: royals ruling over a bunch of unhappy but disarmed peasants.


In America the peasants have guns.  Right now, they have no idea what to do and are more likely to support some sort of rich royal due to…fairytale thinking.  Sad, isn’t it?sunset borger

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Filed under .money matters, Free Trade

9 responses to “Banking Crisis Caused Entirely By Central Banks

  1. Being There

    Economic collapse brought to you by the banks, for the banks and thanks to the new world order we’ll all have to pay.

  2. DeVaul

    I think some of the blame belongs to ordinary people as well:

    Despite admitting his new business was a Ponzi scheme, people invested their life savings in it in the hopes of being smarter or more cunning than the next person. Unbelievable, and sad.

    There is so much crime in Russia, they cannot be bothered with financial fraud unless it hurts a mafia kingpin — same as here.

  3. Peter

    Middle class a facade indeed.Truth is the “middle class” is one paycheck away from the street and peasantry.It’s a great myth to keep the workers slaving away until death 40hours a week 50 weeks a year year in year out or you don’t eat or have a roof over your head.
    I never realized until lately what a trap we are in.

  4. Peter

    Some suit at AIG suggested the average American(cept him and friends of course) will have to work til they’re 80.(average American lifespan is 72).
    8 years as a Zombie?

  5. Being There

    Maybe that’s why zombie films and TV shows are so popular.

  6. You report David Cameron and Barack Obama urge ‘immediate plan’ over eurozone crisis. Cameron and Obama are two clowns here: both are doing exactly the same things Spain, Italy and the other PIIGS have been doing. So how can they call on Germany, the only responsible nation here, to ape Japan?

    Yes, indeed they are calling on Germany!

    Mike Mish Shedlock writes German Chancellor Angela Merkel has worked out a deal with Spain to rescue its banks. Global equity markets and commodities, especially gold and silver, have cheered the news.

    Reuters reports Germany finalizing face-saving aid deal for Spain.

    Lending to Peter so Peter Can Lend to Paul. Got that? Germany is not willing to lend money directly to Spanish banks, but is willing to lend to the FROB so the FROB can lend to Spanish banks. Eurointelligence explains EFSF to lend directly to the FROB. Did this sleight-of-hand, shell-game proposal have any effect? Not to the bond market unless you count the small rally in yields from about 6.66% to 6.28% ahead of the news with almost no follow-through today.

    Seeking Alpha writes A European banking union.

    Despite today’s rise in world stocks, ACWI, the debt trade is history on the failure of neo liberal finance. Even though Spain’s banks are to be rescued. The ECB, and the US Federal Reserve, and the other world central banks are no longer able to provide seigniorage, that is moneyness, to stock and bond wealth. Though rescued, Banco Santander, STD, is still an insolvent bank, and Spain, EWP, is still an insolvent nation. Yes, despite today’s rise in World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, on higher world major currencies, DBV, and higher emerging currencies, CEW. there are no stable sovereigns to support democracy. Hence, out of the soon coming Financial Armageddon, that is a credit bust and global financial breakdown, foretold by John The Revelator in Revelation 13:3-4, regional governance will coalesce to replace capitalism and European Socialism.

    The PIIGS have lost their debt sovereignty, and are no longer genuine sovereigns. Angela Merkel’s and Herman van Rompuy’s New Europe is forming where sovereign bodies, and sovereign leaders will rule from Brussels and Berlin. Empire Germany is now forming a type of revived Roman Empire, which will be the first region of global governance, where the peripheral states will be clients existing in a totalitarian collective, where former citizens of sovereign nation states will be residents living in a region of economic and political governance. Spaniards cannot be Germans, yet all will be one living in debt servitude; yes bedfellows, yoked together in a global gulag of debt encumbrance.

  7. emsnews

    I predicted a new Holy Roman Empire centered on Germany several years ago, actually, over a decade ago. I often mention this. I also suggested for years that all confederations are doomed by their natures: they can’t exist for very long and thus, the EU was doomed unless it became a Holy Roman Empire again.

  8. Elaine, there’s nothing “Holy” about a gang of pedophilic, homosexual, satanic old men, which is what that bunch in Rome & Germany have become I think.

    As for the West’s current banking practices and principles; the loss of the fear of God is in direct proportion to the increase of evil and corruption.

  9. Vilhelmo

    “The buying of government debt is a replacement for capital.’

    I would add that government interest bearing debt is also a type of welfare, a risk free non-productive investment.
    The Federal Government should be prohibited from issuing interest bearing debt (with a few minor exceptions to foward the public purpose).

    But I strongly disagree that the crisis was caused by CB’s.
    Rather the Crisis was caused by massive & endemic elite fraud, specifically, Accounting Control Fraud.
    It was these frauds and the failure to police, regulate and prosecute them, that caused the housing bubble and subsequent crash.
    Instead of being jailed, the perps were bailout.
    They got away with the largest frauds in history, making them richer than rich.

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