Warning Global Fiat Currency Financial System Collapse By Early 2011
Stock-Markets / Financial Crash
Sep 01, 2010 - 01:36 AM
Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.
Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.
That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.
Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.
Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.
So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.
This was the fairy tale.
Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.
But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.
Let me explain in simple terms step by step.
1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS.
2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities in the US$ Trillions. They were all INSOLVENT. The central banks the world over conspired and agreed not to reveal the total liabilities of the global banks as that would cause a run _disibledevent="TEXT-ALIGN: left; MARGIN: 0cm 0cm 0pt; mso-layout-grid-align: none" class=MsoNormal align=left>雷曼和AIG的倒闭暴露了这些丑陋的现实.所有全球性银行有万亿的负债.他们都已经成僵死了.全球的中央银行达成协议不披露全球性银行的总负债.否则那将导致英国北石那样的挤兑事件.
3) A devious scheme was devised by the FED, led by Bernanke to assist the global banks to unload systematically and in tranches the toxic assets so as to allow the banks to comply with RESERVE REQUIREMENTS under the fractional reserve banking system, and to continue their banking business. This is the essence of the bailout of the global banks by central bankers.
4) This devious scheme was effected by the FED’s quantitative easing (QE) – the purchase of toxic assets from the banks. The FED created “money out of thin air” and used that “money” to buy the toxic assets at face or book value from the banks, notwithstanding they were all junks and at the most, worth maybe ten cents to the dollar. Now, the FED is “loaded” with toxic assets _disibledevent="TEXT-ALIGN: left; MARGIN: 0cm 0cm 0pt; mso-layout-grid-align: none" class=MsoNormal align=left>这个丑陋的计划通过美联储的量化宽松实施,即从银行收购有毒资产.美联储凭空创造货币,然后用这些货币从银行收购那些只是在脸上或账面上标记价值的有毒资产.尽管他们全是垃圾,大部分只值10美分而已.现在,美联储收购了曾经是全球性银行的有毒资产.但是这些银行不能公布或承认这种状况.因此,这只是金融把戏而已.
5) If we are to follow simple logic, the exercise would result in the global banks flushed with cash to enable them to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. Where did the money go?
6) It went back to the FED as reserves, and since the FED bought US$ trillions worth of toxic wastes, the “money” (it was merely book entries in the Fed’s books) that these global banks had were treated as “Excess Reserves”. This is a misnomer because it gave the ILLUSION that the banks are cash-rich and under the fractional reserve system would be able to lend out trillions worth of loans. But they did not. Why?
7) Because the global banks still have US$ trillions worth of toxic wastes in their balance sheets. They are still insolvent under the fractional reserve banking laws. The public must not be aware of this as otherwise, it would trigger a massive run _disibledevent="TEXT-ALIGN: left; MARGIN: 0cm 0cm 0pt; mso-layout-grid-align: none" class=MsoNormal align=left>因为这些全球性银行在他们的资产负责表上仍然有上万亿的有毒资产.在准备金制度下他们仍是破产的.公众并没有认识到这一点,否则,他们都会跑到银行里了!
8) Bernanke, the US Treasury and the global central bankers were all praying and hoping that given time (their estimation was 12 to 18 months) the housing market would recover and asset prices would resume to the levels before the crisis. .
Let me explain: A House was sold for say US$500,000. Borrower has a mortgage of US$450,000 or more. The house is now worth US$200,000 or less. Multiply this by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole. There is no way that any of the global banks can get out of this gigantic mess. And there is also no way that the FED and the global central bankers through QE can continue to buy such toxic wastes without showing their hands and exposing the lie that these banks are solvent.
It is my estimation that they have to QE up to US$20 trillion at the minimum. The FED and no central banker would dare “create such an amount of money out of thin air” without arousing the suspicions and or panic of sovereign creditors, investors and depositors. It is as good as declaring officially that all the banks are BANKRUPT.
9) But there is no other solution in the short and middle term except another bout of quantitative easing, QE II. Given the above caveat, QE II cannot exceed the amount of the previous QE without opening the proverbial Pandora Box.
10) But it is also a given that the FED will embark _disibledevent="TEXT-ALIGN: left; MARGIN: 0cm 0cm 0pt; mso-layout-grid-align: none" class=MsoNormal align=left>但是第二季量化宽松还是被美联储打上银行准备金制度的标签.假如美联储停止收买额外的有毒资产,全球性银行将会不能满足他们的准备金要求.
11) You will also recall that the FED at the height of the crisis announced that interest will be paid _disibledevent="TEXT-ALIGN: left; MARGIN: 0cm 0cm 0pt; mso-layout-grid-align: none" class=MsoNormal align=left>你们会想起美联储在危机高峰时宣布将对全球性银行的所谓超额准备金支付利息,从而能使这些银行收获利息.因此我们有了金钱旋转木马,通过点击鼠标钱从右口袋转到了左口袋.美联储创造货币,用它们购买有毒资产,然后同样的钱别环球银行返回给美联储以得到利息.通过这种量化宽松小说,银行有了能产生利息的充足现金.不知道这些银行已经是否宣布利润创记录了?
12) The global banks get rid of some of their toxic wastes at full value and at no costs, and get paid for unloading the toxic wastes via interest payments. Additionally, some of the “monies” are used by these banks to purchase US Treasuries (which also pay interests) which in turn allows the US Treasury to continue its deficit spending. THIS IS THE BAILOUT RIP OFF of the century.
Now that you fully understand this SCAM, it is left to be seen how the FED will get away with the next round of quantitative easing – QE II.
Obviously, the FED and the other central banks are hoping that in time, asset prices will recover and resume their previous values before the crisis. This is a fantasy. QE II will fail just as QE I failed to save the banks.
The patient is in intensive care and is for all intent and purposes brain dead, although the heart is still pumping albeit faintly. The Too Big To Fail Banks cannot be rescued and must be allowed to be liquidated. It will be painful, but it is necessary before there is recovery. This is a given.
When the ball hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.
I expect that the FED and other central banks will pre-empt such a run and will do the following:
1) Disallow cash withdrawals from banks beyond a certain amount, say US$1,000 per day; 2) Disallow cash transactions up to a certain amount, say US$10,000 for certain transactions; 3) Transactions (investments) for metals (gold and silver) will be restricted; 4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II. 5) Imposition of capital controls etc.; 6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards; 7) Legislations to make it a criminal offence for any contraventions of the above.
Maintain a bank balance sufficient to enable you to comply with the above potential impositions.
Start diversifying your assets away from dollar assets. Have foreign currencies in sufficient quantities in those jurisdictions where the above anticipated impositions are least likely to be implemented.
There will be a financial tsunami (round two) the likes of which the world has never seen.
Global banks will collapse!
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