In a Campaign for Liberty update, Congressman and Dr. Ron Paul (R-TX) discusses the impacts on monetary policy that recent events will have.  He also talks about the U.S. Dollar and the International Monetary Fund (IMF).

by Jim Willie

Debate stirs on whether the financial structure of the USEconomy is broken irreparably. Debate stirs on whether actions taken in the last year or two have put the nation on a path that can even achieve stability, let alone recovery. Debate stirs on whether a pernicious and not so secret syndicate has taken control of the USGovt financial ministries, let alone be removed. Debate stirs on whether lack of US Federal Reserve audits and disclosure of their accounting is integral to sustaining the syndicate control as well as its probable egregious fraud. Debate stirs whether the nationalizations have actually enabled adoption of wrecked assets, have concealed executive ransacking, and have buried massive counterfeit of bonds. Debate stirs whether the mountainous federal deficits, the nationalizations of essentially Black Holes, and the endless war spending make deficit reduction a distant dream. Debate stirs on whether the gargantuan accumulation of USFed reserves will spill over to produce widespread price inflation. Debate stirs on why after causing the foundation failure of the US financial structure from Wall Street and the USFed offices, these institutions not only remain in power but demand greater power.

It is my contention that the US financial structures broke without any remote potential for repair and revival in the summer of 2007. The symptoms became obvious in the summer of 2008 to the slower observers with visible shock waves bathed in crisis. The reactions from shock waves have come since the autumn months of 2008. The system has broken, but the syndicate in control wishes to keep the music going, keep the machinery turning, keep the money flowing, so that they can continue the massive rackets, bury the frauds & counterfeit, cover their tracks, process the bad paper into USGovt coffers, continue to corner the printing press operations, continue to con the USCongress into granting more funds for Goldman Sachs to dictate dispensation secretly, and to continue the endless war whose rivers of blood are matched only by rivers of redirected private contractor fraudulent payments. Nobody seeks justice and prosecution for over $1 trillion in mortgage bond fraud. Nobody seeks to remove Goldman Sachs and JPMorgan from control posts at the USDept Treasury and USFed respectively. Nobody seeks even to locate the missing $50 billion from the Iraq Reconstruction Fund, or to announce the known location of the stolen $100 billion from the Madoff Ponzi Scheme (it aint $50B and they know its exact hiding place). Foreigners have been very busy since the autumn 2008, as they dismantle the levers, knock down the pillars, block the escape routes, yank the collateral from the paper marketplaces, and otherwise thwart the US-UK schemes.

To claim that the system can be put on proper stable footing is lunatic. To expect that the nation can be recalibrated so as to return to the Good Ole Days of US global dominance and leadership is lunatic. To urge that the economic signposts, megaphones, and billboards be once again guided by policies best described as Bubbly Economic Mythology is lunatic. Yet delusional Americans actually believe the dominant ship at sea can lead as flagship, when it has taken on more water than the Titanic. Since the autumn months of 2008, marred by the Lehman Brothers failure, marred by the Fannie Mae adoption, marred by the AIG adoption, punctuated by a shameful 0% interest rate policy (ZIRP) and a green light for limitless money creation (QE), the United States has lost any semblance of leadership. Instead, its leadership has earned scorn, criticism, and disrespect. The last people on the globe to comprehend the American condition of failure, corruption, and military aggression seem to be the Americans themselves, who live within the USDome of Perception. They suffer from perhaps the worst education levels in the industrialized world, coupled with a co-opted national news media network, clouded by the grandest drugstore medication in history. Debate stirs on whether the US actually controls its own news media. The US does not cover the global Paradigm Shift underway that will change its landscape radically.

The clearest conclusions center on almost nothing put on a sustainable viable course for the nation. Amplification and widened breadth of all that failed cannot serve as the core for revival or recovery, let alone stability. Yet such policies seem the only ones our hapless bank leaders are able to execute. It is a dog returning to gobble his vomit. It is akin to managers urging their worst workers to intensify their efforts, and to join the ranks of management. These Keynesians cannot admit that the central bank franchise model has failed, not to be resurrected. In my view, the debates, the foundations, and the reactions scream two major messages. 1) The system is out of control, with the drivers ramming down the accelerator for even more of everything that failed, for a locomotive within a monetary system based upon illegitimate money. 2) The USGovt finances are heading toward a recognized failure, identified by both a banking system bankrupt seizure and a USTreasury default. The nation cannot come to grips with the bold stark notion that foreigners control our fate, from their revolt against the USDollar as a global reserve currency, from their revolt in supplying additional credit to the USGovt and USEconomy. The reaction so far to crisis has been to rely more heavily upon the Printing Pre$$, to monetize the debts, and to conceal such operations, all while permitting syndicates to operate with impunity. The revolving doors spin freely that fill job posts at the USDept Treasury, Wall Street firms, USGovt regulatory bodies, and key foundations, warranting charges of incest at best and corruption at worst. Things are out of control!

In fact, my forecast is for systemic failure. Its primary elements will be a failed US banking system (as in seizure) and a USTreasury Bond default (as in coerced restructure). Again, martial law and declaration of economic emergency will be the final solution. The prison camps will become debtor prisons and warehouses for illegals, maybe a processing plant for those who refuse virus vaccination. They are already constructed with over 200 ready for occupancy. Those in denial might become residents. They could also feature some dissidents, along with some writer analysts. Two years ago, my analysis regularly mentioned martial law and imposed order to handle the chaos from a disintegrated economy and insolvent dysfunctional banking system. Here we are in the present, when such forecasts do not sound so outrageous anymore. The Jackass has featured a string of seemingly outrageous forecasts that have come true. The US system is credit dependent, and credit will soon be cut off, in the next chapter of isolation. The Printing Pre$$ is a temporary solution, en route to a failed state. The US leaders and citizens do not learn from history. They defy history amidst delusions of omnipotent power. See the Weimar Republic, which has gone global! Even Gore Vidal expects recognition of the Untied States having adopted communism. Even the World Bank led by yet another Goldman Sachs pupil warns the Untied States not to assume the USDollar will remain the unchallenged global reserve currency.

GOLD IS RESILIENT

The true sanctuary is gold, in the face of debauchery of paper money. We see some clear first hand evidence of the ‘Beijing Put’ at work. It could provide a banking system foundation, except that the Gold Cartel and Banker Elite would have to forfeit power, maybe face poverty. Notice the quick recovery. With a slightly lower gold price, the off-take delivery of physical gold has been magnificent, much greater than a week or two ago. The Wall Street banksters are shocked to learn that demand is not isolated, but rather comes from diverse global sources. The Powerz threw all they could at gold, mentioned some half-baked story about I.M.F. gold sales (more like closure to decade old short sales), and upped the ante of illicit gold futures contract sales (without benefit of COMEX collateral). Notice the moving averages all aligned and rising. Notice the stochastix cyclical index that come down quickly to the 20 low trigger, ready to rise on a quick reload. The response breakout was very typical, seen a million times before. The breakout loses the amateurs and fast traders who miss the big picture. Like a diver off a springboard, the dive commences for a lift upward. The pullback was really miniscule. The recovery was rapid and impressive, in symmetry with the suddenness of the controlled correction. The Chinese are obviously thanking the corrupted Powerz for their paper games, loading on more acidic paper, offering the Middle Kingdom yet more gold bullion at reasonable prices. The Chinese want to maximize their accumulation of gold from the PaperBoyz, at the best price. They do not want a catapult upward in the gold price. They want a gradual controlled price. The Gold Cartel seems extremely willing to accommodate.

ABSENT A STRONG FOUNDATION

Widespread Insolvency is a major theme of the broken condition. The banks have assets and income grossly below their debts and liabilities. They must rely upon phony FASB accounting, which was the basis of the stock recovery beginning in April. They must bring fresh capital, lost as fast as it arrives. They now tell the public what their assets are worth, backwards to any market concept. The households are suffering from mortgage obligations even as housing prices continue to slide lower. With almost one third of American homeowners who hold mortgages operating with an underwater status, whereby their home loans exceed the home value, the army of consumers is more than hampered. Unlike the bankers, the households of America cannot just pound the table, engineer an absurd Stress Test, and declare they are solvent enough for equity extensions. The households line up for defaults and foreclosures instead. The smart ones demand that the bankers prove clear certified title of their property. See the Kansas MERS case that might serve as precedent to jam the gears of the bankers intending to seize homes in foreclosure. The bankers cannot prove they hold clear title. Such is the vagary of mortgage bond fraud, as it seeps to the surface.

The USGovt finances are in shambles, with $1800 billion in fiscal 2009 deficits, and easily $1300 billion to come in the next year. Take away the Printing Pre$$ from the desperate delinquent devils running the USGovt finance ministries, and national debt default would take place within 60 days. The nation does not even contemplate budget surplus, but rather justifies yawning deficits and lies using lunatic forecasts. The industrial base is also largely depleted. The Chinese Most Favored Nation granted in 1999 set the stage for shipment of much of the US factories to China. In the process, the USEconomy replaced income with debt, all in the name of ‘Low Cost Solutions’ moronically. Corporate leaders in America reacted to heavy burdens of government regulations and higher taxes, even to rugged labor unions. Maybe their relocation decisions constituted betrayal, or maybe just reaction to onerous conditions that evolved over decades.

The Albatross of falling property prices, both residential and commercial, continues to hang around the neck of the USEconomy. The full impact of the commercial property decline has yet to be felt, more in delayed reaction. A queer factor comes into play with commercial mortgages and loans. Even if the majority of payments are current, even if most tenants pay rent on time, the loans tend not to be viable for refinance and rollover. The Loan-to-Value ratios are all horrible after a broad 30% to 40% property price decline. Banks require more equity. On the residential side, the Prime Option ARMortgages are lined up for the kill. It seems that payment of less than the required interest was not a good idea after all. It seems that leaving homeowners the option to build their loan balance when property prices fell was not a good idea after all. Now they face 100% to 200% monthly loan payment increases, all in the fine print unread years back. So liquidations and foreclosures will continue to come, complete with outsized bank losses. ThePerpetuation of Loss is ensured by continued property foreclosures and liquidation. Despite all talk, the process continues. Despite the pain, the statistics continue to be mangled with a purposeful motive.

The Accounting Fraud for bank balance sheets and stock valuation runs like a cancerous streak throughout the financial sector. The best way to cover up fraud is with more fraud. The best way to cover up accounting chicanery is to have the USCongress bless it as legal, vital, and essential. Once the stock market rose for consecutive months, talk of phony accounting rules is forgotten, SINCE IT SUCCEEDED, even served as proof of recovery. What nonsense! A moral depravity has permeated not just the financial sector, but the public as well. They cry out from the corners laden with pain, but without specific targets. The end of the FASB relaxed rules is scheduled for January 1st. Let’s see if a compromised USCongress and corrupt Wall Street demand its extension. They obviously will. Furthermore, both Basel 2 and Basel 3 guidelines are ignored, since from outsiders. Ignore them at one’s own peril, as they gather as Enemies at the Gate among the USGovt creditors. Theirs might turn into an angry lynch mob. Foreign creditors are the #1 adversary to all things American right here, right now.

SUSTAINING FORCES

Numerous hidden forces sustain the current breakdown and hamper anything remotely resembling a recovery. The only thing in recovery is the banter, billboards, and propaganda. In fact, most praise of success comes from people who praise their own efforts, like USFed Chairman Bernhacky. His predecessor was also very accomplished at praising his own craft and alchemy. Sir Alan Greenspasm left the national banking system hanging over the precipice, from where it fell in a short time after passage of the mantle at his retirement. He believed his housing bubble saved America from disaster. He believed that credit derivatives offloaded risk. Little did he realize that the next disaster is always much greater than the saved previous one, when amplified credit and monetary ease are the solutions relied upon, all pure heresy. He lives now in London, and spends much time in Switzerland. These nations paid his secretive other paychecks. These nations are where his loyalty and all directives came from in my opinion. Many hidden forces will work to undermine the current efforts to instill a recovery to the USEconomy and a resuscitation of the US banking system. Bernhacky will soon realize that reliance upon the same toxin and formaldehyde to course through the increasingly cancerous bodies will produce even worse problems during the next crisis phase. It comes.

Numerous sustaining forces will contribute toward the inexorable path to systemic failure. It will begin with the relapse failure of the US banking system. Citigroup is facing real bankruptcy, whose numerous segments are underwater and growing worse. Bank of America is in a death spiral, whose CEO Ken Lewis departs amidst political and shareholder legal pressures. Wells Fargo is so dead that its true balance sheet makes a skeleton come to life, whose prime Option ARM and second mortgage exposure is monumental. Maybe Citigroup, BOA, and Wells will use USFed funds to acquire the entire US banking system and subject it to their brilliant acumen, leadership, and access to the corrupt money pits. Lock in those executive bonuses!

The hidden housing inventory will ensure that housing prices continue down for a couple more years. At best they will stabilize somewhat, but only if a monumental hidden housing inventory is permitted to accumulate. The big banks, the very same that abused mortgage bonds with leveraged instruments, own an outsized supply of foreclosed homes. What a fitting reward! They tend to release only a portion of this home supply, so as to permit some price stability as demand catches up. Lenders are reluctant to lend though, even while the foreclosure process continues. Job loss is the main driving factor, amidst household insolvency.

The Zero Interest Rate Policy is worn as a badge of shame to reflect central bank failure. It rewards savings not at all. It encourages the same speculation that produced bubbles to kill the banks and households. It encourages a Dollar Carry Trade, which ensures a pressured decline in the USDollar itself. The October Hat Trick Letter will discuss additional risks and dangerous consequences from the Dollar Carry Trade. Remember, Bernhacky assured the USCongress, the US conferences of economists, and the US people that the USFed would not resort to 0% rates. He did just that. In addition to powering with leverage the US$ exchange rate downward, this carry trade takes away a viable Exit Strategy for the USFed. Imagine Wall Street leveraged speculative machinery interrupting any potential lift in the official US interest rate! Recall that the USFed does take orders from the Wall Street syndicate. They selected him. They hired him. His job is to run the Printing Pre$$ day and night, to invent new liquidity facilities, to preach solutions to the USCongress, to shut up, and to follow orders. In the last year, the USFed has acted like it is the entire banking system. What exactly is the exit doorway to take from that strategy?

Without hesitation, one can claim that No Meaningful Reform or Restructure has occurred. The US financial and economic structures continue to suffer from precisely the same problems that resulted in systemic breakdown in the autumn months of 2008. The difference now is that the previous high volume of acidic money is exceeded with higher volumes now. USGovt debts are now much higher. Lending institutions are less prone to lend now than one or two years ago. Commercial paper used not to flow at all, and now flows but with less volume and from fewer channels and with more USFed assistance than ever before. Innovative thought is totally suppressed, if not crushed. Advocates for a reformed system without paper fiat money are dismissed. The syndicate continues to ply its trade and to control the levers. But their work is frenzied, and they are sure to lose control.

No meaningful reform comes even to the hundreds of thousands of mortgage loans that undergoHome Loan Modification. They cannot alter the loan balances, since that would require alteration of the associated mortgage loans that rely upon income stream from loan payments. This is not acceptable, since it would reveal the pervasive bond fraud, the counterfeit bonds, and the duplicate usage of home loans in multiple mortgage bonds. So solutions come to toss billion$ at the big banks, without solution, an assuredly failed Top-Down approach that appeals to Wall Street. The extort the money and hide the paths of funds. Also, on the small business front, the restructure of the Small Business lender & insurer CIT failed to produce any meaningful revitalization. Its June debt restructure agreement with bond holders failed to stick. It now seeks a $5 billion loan as debtor in possession. A million businesses would be affected if CIT folded and was liquidated. We are told of a recovery in progress. Its roots are in propaganda, crowd control, and shaping of public opinion. George Orwell would smile and smirk from his 1984 address on Cemetery Lane.

No national initiative has come to bring back US industry to the US shores. No national initiative has come to retain businesses by means of reduced taxation and reduced regulatory burdens. No national initiative has come to remove from power those responsible for Wall Street bond fraud. No national initiative has come to even force a proper accounting to Wall Street firms or Fannie Mae or AIG. No national initiative has come to conduct a true autopsy of Lehman Brothers, like to see what assets they held, what hedge funds they sponsored, what counterfeit Fannie Mae bonds they were soon to toss onto the table, and whether JPMorgan did indeed pay off private Lehman accounts with the $138 billion in slush funds. The booty was handed to them at a bankruptcy court meeting held before dawn on an September Saturday morning. No national initiative has come to force disclosure of the TARP fund distribution, or to reveal what the USFed does with its trillion$ of created money. They destroyed the USDollar, and the victims enduring the crisis from inside the USDome need to know. Without hesitation, one can claim that all attempts to shine light on the financial sector and its ivory towers have been obstructed.

Two further factors ensure the sustained crisis in the USGovt finances, with certain continued contagion to the financial sector and the tangible economy. The Endless War with its increasingly less credible banter against terrorism drains the United States of funds, saps its national spirit, cripples its soldiers, and extends risk in countless ways. The USDollar and USTreasury Bond suffer from lost foreign confidence and faith. The real threat to national security lies in the finance sector rooted in Wall Street. Almost all talk about foreign threat is a grand distraction from the internal threat, even as incredibly grand fraud is committed in the name of patriotism. The Entrenched Financial Syndicate remains in power, controls all financial policy, directs funds from the Printing Pre$$, influences the USCongress with slush contributions, controls regulatory body heads, engineers nationalizations of fraud-ridden financial firms, interferes with FBI investigations (see the GSax trading software), integrates with foreign policy, and provides segments to the US press networks. Fully 70% of US press network content comes from the USGovt and its myriad agencies with spokesmen and public relations offices.

FAILURE & DEFAULT ON THE HORIZON

Going hand in hand with the destructive 0% policy is the Hidden Monetization of USGovt Debt, clearly. The zero rate encourages new asset bubbles, like the historically unprecedented spectacular USTreasury bubble. USTBONDS MAKE THE FINAL BUBBLE. The zero rate enables new carry trades with no cost. The zero rate permits a private banker party to engage in their own corner carry trade, buying long-dated USTreasurys with free money while shorting the short-term USTBills. This acts like a money machine for bankers to restore their balance sheets. The only trouble is their balance sheets have a hemorrhage at work, with additional ongoing relentless credit portfolio losses. The accounting fraud can only mask the problem, which happens to grow worse with each passing month. With lost integrity from the 0% rate comes disdain for the monetary system generally and for the USDollar specifically, along with other major currencies locked near 0% also. INVESTORS TURN TO GOLD AND SILVER, the proven sanctuary during crisis.

While the 0% official rate creates problems much like those that erupted in a crisis, the monetization of debt issuance signals to the entire world to abandon the USDollar. The monetization assures the death of the USDollar. It is Weimar revisited, but with more military might and far more arrogance. Megalomania gone awry results in catastrophe. Monetization represents back-door devious measures to stave off the disaster of bond auction failures. Monetization is a broken promise made to creditors, who must feel betrayed. Monetization is a vast undermine to the validity, value, and very authenticity of a currency. The government debt for the custodian to the global reserve currency is being monetized, thereby creating gigantic air pockets, and funding a carry trade. The most dangerous asset bubble on the planet right now is the USTreasury. It pays 0% on short maturities. What is next? The forced USGovt worker pension contribution to USTreasurys? How about all state workers too, in their pensions? Maybe eventually all 401k and IRA and Keough pension plans as well, in their pensions? Every citizen maybe support the USTreasurys in pensions, out of patriotism, for national security? With lost integrity from the monetization patterned schemes, comes fear of a repeated Weimar hyper-inflation episode. INVESTORS TURN TO GOLD AND SILVER, the proven sanctuary during crisis.

What comes is the US bank system failure. The endless rounds of bank credit portfolio losses dictate it. The Stress Tests are soon to be discredited, less than one year after their farcical production. The leading losers will be commercial mortgages, prime Option ARMortgages, and credit card losses. Banks are not prepared, having inadequate Loan Loss Reserves, guarding their profits, denying their reserves, managing their stock prices. They deceive their share holders on continued portfolio risk. They try to shove all their garbage assets on the USFed and to Fannie Mae under the USGovt roof, amidst the shrill cries of ‘Too Big To Fail’ nonsense. A US bank system failure is coming. With lost integrity from the banking system, insolvent in its own core, supplanted in function by the USFed itself, lending so little as to force declines in the consumer credit funds, comes distrust of financial institutions generally. INVESTORS TURN TO GOLD AND SILVER, the proven sanctuary during crisis.

Copyright © 2009 Jim Willie, CB

On the Financial Services Subcommittee on Oversight and Investigations hearing of May 5, 2009, Rep. Alan Grayson asked the Federal Reserve Inspector General  simple question.  Repeatedly.

from EconomicPopulist.org

“We must break the Money Trust or the Money Trust will break us.”
- Louis D. Brandeis, 1913

When the economy appeared to be melting down last September, Wall Street bank representatives began showing up in Congress like mobsters walking into a mom-and-pop business looking for protection money.
“Nice economy ya got here.(crash!) It would be a shame if something were to happen to it.”

Mobsters and Robber Barons have a lot in common.
Neither has any respect for the law or morals, only for power. Neither can ever be satisfied with any amount of wealth. They will always need to steal more and more and more until they’ve completely bankrupted their victims.

We are now at the mercy of modern Robber Barons, and if history is any judge, it is either them or us.

Bank Wars

“The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question.”
- Woodrow Wilson, 1911

On February 28, 1913, the House of Representatives released a report with the most banal name imaginable – Committee Appointed Pursuant to House Resolutions 429 and 504 to Investigate the Concentration of Control of Money and Credit.
In spite of the long-winded and innocuous title, the testimony in the report revealed to the world an unseemly and corrupt conspiracy of Wall Street bankers that threatened the very foundations of our democracy. Despite the dangers, many of the recommendations of the Pujo Committee were ignored until after the 1929 Crash.

Arsene Pujo

As a species and a nation, we seem to be doomed to repeat our mistakes.

Dirty political battles between Washington and eastern bankers are not a new concept in America. The Bank War between President Jackson and the Second Bank of the United States is the most obvious and public of these exchanges. Nicolas Biddle, the Second Bank’s President, purposely caused the 1834 Depression, by restricting the money supply, to use as leverage against President Jackson.

^{Src: The Smoking Argus Daily, Allison Bricker}

Unfortunately for Mr. Biddle, his arrogance regarding his ability to cause an economic collapse allowed his ego to get the best of him. He continued boasting, now publicly that relief would only come if Congress renewed the bank’s charter. When Pennsylvania Governor George Wolf, a previous supporter of the central bank was made aware of the bank President’s sentiments, he immediately came out against extension or renewal of the bank’s charter.

When someone mentions trusts and trust-busting, people tend to think of John. D. Rockefeller’s Standard Oil, J. P. Morgan’s Northern Securities railroad company, and Andrew Carnegie’s U.S. Steel.
What frequently gets forgotten is the Money Trust of Wall Street. The reason that it isn’t mentioned is because it was never totally broken. Instead the decision was to regulate it via the creation of the Federal Reserve. Nicolas Biddle’s dream was finally realized.

^{Src: The Smoking Argus Daily, Allison Bricker}

Our Financial Oligarchy

“Far more dangerous than all that has happened to us in the past in the way of elimination of competition in industry is the control of credit through the domination of these groups over our banks and industries.”
- Pujo Committee

“The dominant element in our financial oligarchy is the investment banker. Associated banks, trust companies and life insurance companies are his tools…Though properly but middlemen, these bankers bestride as masters America’s business world, so that practically no large enterprise can be undertaken successfully without their participation or approval.”
- Louis D. Brandeis, 1913

What frequently gets lost in economic discussions is that the current depression is different from all other post-WWII recessions. All previous recessions were caused intentionally by the Federal Reserve.
The Fed would raise interest rates in order to choke off inflation. Once the inflation was contained they would lower interest rate. Consumer demand, which was artificially suppressed by the Fed’s high interest rates, would then be released and the economy would boom.

That didn’t happen this time.

The Fed didn’t raise interest rates to choke off inflation. There was no consumer demand that was artificially suppressed, thus there was no pent-up demand that was waiting to be released when the Fed cut rates.
What little “less bad” news that we’ve heard with home and auto sales has been almost exclusively to do with the tax rebates for first-time home buyers and the cash-for-clunkers program. Both of these programs are limited in time and scope, and both bring future demand to the present, which will leave an even bigger gap in demand once they are finished.

What happened this time was an economic collapse that emanated directly from Wall Street. It’s source was bad loans that the bankers and rating agencies pushed onto the financial markets of the world, knowing full well that it was only a matter of time before they blew up and took down the world economy.
The economy didn’t collapse because of government regulations. It didn’t collapse because the government taxed too much or spent too little.
It wasn’t because the American consumer stopped spending.

It was because the financial system knowingly overpriced a major financial asset class, and then leveraged itself against that asset class in the vain hope that the Day of Reckoning never came.

The whole financial crisis only came to light because of what amounts to a falling out amongst thieves.

War Between the Ruling Kleptocracy

“Gentlemen: You have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you.
Yours truly, Cornelius Vanderbilt.”
- 1853

It is sometimes forgotten that the 19th Century Robber Barons spent much of their time wasting resources trying to crush each other.
For example, the Erie War crippled what should have been the most profitable railroad in the nation, not to mention the cost from the corruption of the entire New York Assembly. An even more colorful battle involved the Albany and Susquehanna Railroadthat resulted in hundreds of paid goons crashing trains into each other and engaging in shooting wars.

History has proven that the unrestrained greed of an unregulated economy is neither fair, nor efficient. It also often leads to economic crisis.

Wall Street knows that you can make enormous amounts of money during an economic crisis, and no crisis is more fortunate than the failure of a leading competitor. The perfect example of that is the Panic of 1907.

John Pierpont Morgan again used rumor and innuendo to create a panic that would change the course of history. The panic of 1907 was triggered by rumors that two major banks were about to become insolvent. Later evidence pointed to the House of Morgan as the source of the rumors.

J. P. Morgan

J. P. Morgan’s false rumors created a real panic and it threatened to bring down the entire financial center. Morgan then nobly contacted his European sources and managed to borrow $100 million worth gold bullion in order to stem the panic. History remembers Morgan as saving the day, and also helping to convince the public that we needed a central bank in this country.
Morgan didn’t save the system from a crisis of his own creation out of the goodness of his heart.

Of course Morgan did not go unrewarded. Recall from our story of two weeks ago that Teddy Roosevelt, despite his antitrust proclivities, allowed Morgan to purchase the Tennessee Coal and Iron Company for about $45 million when the true value was closer to $700 million, thus expanding Morgan’s steel empire.

If this sounds somewhat familiar, it should. Recall the failure of Bear Stearns.

Bear Stearns had been unpopular with the rest of the Wall Street oligarchy since it refused to participate in the bailout of Long-Term Capital Management in 1998, despite helping to create the problem.
The most suspicious fact of the Bear Stearns failure was the massive increase in short positions on March 10 and 11, with only five days left before expiration. Some insiders knew something they shouldn’t have. John Olagues makes a strong case that it was insiders at JP Morgan Chase that were shorting Bear Stearns and helping to create a “run” on their stock, knowing full well that they would be taking over the bank with the Fed’s help.

How would people at JP Morgan Chase know that ahead of time? They were in position to make the deal.

The Fed and U.S. Treasury brokered a deal for J.P. Morgan in haste without question. Usually, such huge deals or mergers would go through committees or FTC oversight, but none of that here –a quick weekend jaunt in the park. It was not surprising that no red flags were raised about J.P. Morgan’s chairman, James Dimon holding a board seat at the Federal Reserve Bank of New York when the deal was made.

Bear Stearns was bought by JP Morgan Chase at a price of $2 a share. A week later it was raised to $10 a share. Was it shame or a guilty conscience to caused JP Morgan Chase to give back a small amount of their quick profits?
JP Morgan Chase was in a position to profit from Bear Stearns demise, and another profit from its taxpayer-funded acquisition, just like in 1907.

Later on that year, JP Morgan Chase managed to purchase Washington Mutual, a bank with $307 Billion in assets, for the price of $1.888 Billion after the FDIC seized the bank.
Back in April JP Morgan Chase offered to purchase WaMu at a far, higher price, but WaMu refused.

“You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you.”
- Treasury Secretary Paulson to WaMu CEO Kerry Killinger, August 2008

A Naked Coup

“We’re moving to an oligopolistic situation.”
- Kenneth Guenther, Independent Community Bankers of America, 1999

“The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people’s own money.”
- Louis D. Brandeis, 1913

It’s too big of a coincidence that the biggest winners on Wall Street are also the most politically connected, and no one is more connected than Goldman Sachs.

Bush’s Treasury secretary, Hank Paulson, is a former Goldman C.E.O., and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the E.U., is a former Goldman vice chairman.

Merrill Lynch C.E.O. John Thain was once Goldman’s co-president, and Wachovia chief Robert Steel was a vice chairman. Ed Liddy, the new C.E.O. of A.I.G., was Goldman’s vice chairman. World Bank president Robert Zoellick was a managing director. Even Neel Kashkari, the 35-year-old tapped to oversee the $700 billion Troubled Assets Relief Program, served at Goldman as a vice president.

And the list goes on. Robert Rubin, President Clinton’s former Treasury Secretary, was once the co-chairman of Goldman Sachs. Jon Corzine, now the governor of New Jersey, is a former Goldman Sachs CEO. A top aide of Tim Geithner is former Goldman lobbyist Mark Patterson.
It’s so obvious, so in-your-face, that one must assume that Goldman Sachs feels itself invulnerable.

By now everyone should be aware that Goldman Sachs was the biggest beneficiary of the AIG bailout, to the tune of $12.6 Billion, and will be the winners again if AIG finally goes under.
With Paulson in charge of the Treasury at the time, it appeared that Goldman Sachs was bailing out Goldman Sachs. Rich bankers were bailing out rich bankers, and working-class taxpayers were footing the bill.

America has been purchased in a leveraged buyout. For about $5.2 Billion Wall Street has purchased the complete deregulation of the the financial sector, and unprecedented political influence that even now allows them to defeat any new regulations they choose. It’s actually a very good return on investment.

“America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs.”
- Harvey Rosenfield

This corrupt collusion between financiers and government officials was spelled out in no uncertain terms in Simon Johnson’s article, The Quiet Coup. Simply put, America is following the path of petty Banana Republics.

elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Johnson goes on to say that chaos and confusion are very much in the interests of the ruling oligarchy, as it lets them take things, both legally and illegally, with impunity.
This message is echoed by Matt Taibbi in his article The Big Takeover.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

It seems hard for you and I to believe that anyone, any group, would purposely engineer an economic crisis for personal benefit. That’s because you and I aren’t consumed with ego, greed, and lust for power like the bankers on Wall Street are today. History has shown, time and time again, that this is exactly what these people do. Why should now be any different?
Goldman Sachs and JP Morgan Chase have already benefited from the crisis.

The spirits of Nicolas Biddle and John Pierpont Morgan are alive and well today in the plush offices of Wall Street.

by Chuck Baldwin’s Son: Timothy Baldwin, Esq.

Let’s be honest, America is facing the same legal, moral and ethical questions that our Founding generation did, especially regarding the issue of “Who Is Sovereign in the United States.” For our Founders, they fought, bled and died on the principles that no man or government has the right to rule over others contrary to their agreement (i.e. compact, constitution) and contrary to the principles of natural law as revealed in the Creation of God; that all men are born in nature with the power to govern themselves; and that no Sovereign government, established lawfully by the consent of we the people, can be usurped and controlled by any other entity. Thus, today in America, the question once again comes down to “Who is Sovereign in the United States?”

Today, there are 3 basic options for “Who is Sovereign in the United States”: (1) the Federal government, (2) the State governments or (3) We the People. I feel confident in stating that most contemporary Americans believe that the answer to this critical question is the Federal government–especially as it concerns any practical effect on the power of and over government. For years, Americans have been brainwashed though public education, major media networks and politicians that ALL federal laws are the “supreme law of the land” and that no state law or action to the contrary is valid, citing Article 6, paragraph 2 of the US Constitution as their “irrefutable” proof. Of course they are completely wrong: American ideology and legal fact states that sovereignty rests with “we the people.” However, the question must be more narrowly defined.

That is, does the sovereign power of we the people rest with all the people in the nation as one body, or does the power rest with the people THROUGH the respective States? The answer to this question cannot be overstated, because if the sovereign power rests with we the people collectively as one body, then the States have absolutely no power and at the ratification of the US Constitution, the States lost all powers originally granted to them by their respective sovereigns (the people of that State). To the contrary, if Sovereignty rests within or through their respective States, then the States conversely have more power than what is being admitted today by the “Centralists” of our day.

Through an honest study of the history and the context of the Articles of Confederation, the US Constitution, the Constitutional Convention and subsequent Ratification debates, the Federalist Papers, the Anti-Federalist Papers, the rulings of subsequent US Supreme Court Rulings and the writings of political philosophers and statesmen of the 1700s and 1800s, the conclusion is undeniable and clear: We the People are the Sovereigns of the States respectively and of the States United through our respective States.

Thus, the issue is not who is Sovereign, because we know that We the People are sovereign in the US and that the Sovereigns of each State have never ceded to the Federal government any power not expressly granted to it by the Compact (the US Constitution). But rather, the issue is one of JURISDICTION: in other words, who has the power to act on behalf of and in compliance with the Sovereign? The issue of jurisdiction is so important because it acknowledges that since the Sovereign has “paramount authority” in government, any powers that are granted from the Sovereign to government are to remain within that grant of authority. Put another way, the States can no more grant authority to the Federal government against the will of the Sovereign–the people–than the Executive branch of the Federal government can give to the Judiciary branch the powers that we the people granted to it alone. To deny that such a grant exists or conversely to ignore the limitations placed on the governments by the Sovereign is to suggest that tyranny is a lawful act and that it must be complied with. America’s founders would have considered such a political theory to be treasonous. Do we the people think so seriously of the matter? According to recent events, the answer to this question will likely be answered sooner than later.

As some of you may know, several states have and are passing legislation regarding the independence and sovereignty of the people of their respective states. (http://www.tenthamendmentcenter.com ) More specifically, the states of Tennessee and Montana have passed “Firearms Freedom Acts,” which have become law and which reaffirm their Sovereignty under the 10th Amendment of the US Constitution. This law states that any firearms that are made, sold and bought in that state are NOT subject to the Federal regulations of firearms, because they are inherently internal affairs, which exempt them from the commerce clause of the US Constitution.

As you would imagine, the Federal government, through its agency, the Department of Justice, did not take too kindly to Tennessee’s assertion of jurisdiction over this matter and position that the federal laws did not apply to the subject matter at hand. This federal opposition has become known through the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), whereby they informed the firearms licensees in an “open letter” in Tennessee that the recently enacted law (Firearms Freedom Act) does not apply and is void and that they (the firearms licensees) must still obey and submit to the federal laws, regardless of the State’s statute. (Seehttp://www.tfaonline.org/downloads/ATFfirearmsfreedomact.pdf )

This ATF response tells us the following about the federal government’s ideology of Sovereignty: (1) the federal government does not recognize the lawful and independent jurisdiction of the Sovereigns of Tennessee to operate their internal affairs as they deem proper and fitting; (2) the Sovereigns of Tennessee do not possess lawful jurisdiction to govern themselves through constitutional means; (3) the federal government has the power and authority to control the internal affairs of all States, as they deem fit. Bottom line, the Federal government is Sovereign. With their theory in mind, however, what commodity, what relationship, what contract, what service, or what molecule in this entire country would not be subject to their control and power?

This issue is the very same reason why the Colonists declared their independence from Great Britain in 1776 and why Great Britain declared the Colonies to be in a state of rebellion against the government. The conflict was in fact the application of their Constitution: whether it be a “living” constitution or whether it be “fundamental laws” based upon the intent and will of the people. The fact is, it was the Great-Britain-view of their constitution verses the American-view of their constitution that caused the conflict between the crown and the colonies. One historian summarizes the conflict this way:

“The contrast cannot be too strongly insisted upon. [The colonists], on the one hand, believed that the British Constitution was fixed by ‘the law of God and nature,’ and founded in the principles of law and reason so that Parliament could not alter it, but [Great Britain believed] that ‘the constitution of this country has been always in a moving state, either gaining or losing something,’ and ‘there are things even in Magna Charta which are not constitutional now’ and others which an act of Parliament might change. Between two such conceptions of the powers of government compromise was difficult to attain . . . Such differences in ideals were as important causes of a breaking-up of the empire [of Great Britain] as more concrete matters like oppressive taxation.” (Claude Halstead Van Tyne, The Causes of the War of Independence, Volume 1, [University of Michigan, Houghton Mifflin Company, 1922], 235, 237).

Indeed, the issues of taxation during the 1760s and 1770s were only fruits of the underlying issue, and that is, who is Sovereign in America. According to Great Britain, the government had the power to impose its will on the people of America despite the will of the colonies and despite the natural laws governing the compact between the English people and their government. In other words, the government believed that their constitution was “living,” giving the government power to impose its will on the people, without the people’s consent. The colonists, however, saw the matter to be a usurpation of their God-given right to be governed by their consent and in compliance with their constitution. The end result: the Sovereigns in each colony seceded from the empire of Great Britain because of Great Britain’s refusal to follow their constitution.

Do Sovereigns throughout our States United not see the significance of the issue we are facing today? Are we so blind to history that we cannot compare this scenario to the very scenarios that led to the American Revolution? Are we so ignorant as to the intents and purposes of the US Constitution? Consider that the “supreme laws of the land” were never meant to be carte blanche powers of the Federal government, but instead federal laws were expressly limited by the terms of the compact between and for the States, found in the Constitution. This concept of “supreme law of the land” was expressed by a founding father, whom many would consider to be a “centralist” in belief, Alexander Hamilton, in Federalist Paper #27:

“[T]hat the laws of the Confederacy [meaning, the United States of America--yes, even Hamilton, along with many other founders, such as George Washington, called the US Constitution a Confederacy, because they knew that the nature and character of the compact of the US Constitution did not change from the Articles of Confederation] as to the ENUMERATED and LEGITIMATE objects of its jurisdiction, will become the SUPREME LAW of the land, to the observance . . . in each State, will be bound by the sanctity of an oath. Thus the legislatures, courts, and magistrates, of the respective members, will be incorporated into the operation of the national government AS FAR AS ITS JUST AND CONSTITUTIONAL AUTHORITY EXTENDS.”

Hamilton’s legal position concerning the limited power of the federal government and the “supreme law of the land” was the consensus of the founders, the States and we the people. Nowhere in America’s founding was there the notion that the supreme laws of the land were anything contrary to the compact FOR the States. The supreme laws of the land are simply those “fundamental laws” that we the people have created and imposed upon the government to follow and uphold.

Of course, the question has been raised over the past 150 years of “who has the power to determine whether or not the Federal government has usurped their constitutional authority?” The popular answer is (wrongfully), the US Supreme Court. God forbid that the Sovereigns of each State must wait and rely on 9 federal judges to make rulings of this nature before a State would have any legal rights or justification to act in accordance with the will of their Sovereigns. Indeed, the ATF interpreted the Constitution unilaterally without the opinion of the US Supreme Court and without opinion or order denied the constitutionality of Tennessee’s Firearms Freedom Act. The Sovereigns in each state have the same power, and the historical and legal evidence is plentiful. Consider Thomas Jefferson’s position:

“[T]he States should be watchful to note every material usurpation on their rights; denounce them as they occur in the most peremptory terms; to protest against them as wrongs to which our present submission shall be considered, not as acknowledgments or precedents of right, but as a temporary yielding to the lesser evil, until their accumulation shall overweigh that of separation.” (Thomas Jefferson and John P. Foley, ed., The Jeffersonian Cyclopedia, A Comprehensive Collection of the Views of Thomas Jefferson, [New York and London: Funk & Wagnalls Co., 1900], 133)

I will not attempt to persuade the reader at this point on the fallacious position that only the US Supreme Court can make a determination of constitutional actions. However, for those who would argue that the US Supreme Court is in fact the only legal means by which a State can say “no” to the federal government, then I believe that such a person has reached the point of voluntary slavery, and such a person is dangerous to the concepts of federalism, American-sovereignty, and constitutional limits and freedom, as expressed by thousands of the most influential men in our history. And such a person has accepted only those political means of redress whereby the Sovereigns of each State drudge through the treacherous mud of tyranny and get absolutely nowhere.

What we are seeing today, and have seen for over 100 years in America, is the usurpation of the federal government over Sovereignty–we the people–and over Jurisdiction–the States. While this article cannot begin to expound in depth the true character and nature of the US Constitution, a study of history reveals that the US Constitution was an agreement between the Sovereigns of each State whereby they acceded to give up only certain parts of their sovereignty for the “more perfect union” of the people within those States. As with any sovereign people or government, accession may be limited to whatever means and ways necessary to protect the freedom of that society. This is in fact what the Colonists did in 1776 when declaring independence from Great Britain, what the States did in 1781 when ratifying the Articles of Confederation, and what the States did in 1787 when ratifying the US Constitution. It was the Sovereigns, through their respective States, who declared their natural rights under God, who secured their natural rights through independence from governments and who expressed that any act outside of their consent is tyranny.

When this recognition resounds in the hearts and minds of the people, as our Declaration of Independence states, “it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.” Do you really think after only 11 years from the signing of the Declaration of Independence that those same people who risked everything for independence from those “living-constitutionalists” in Great Britain and who believed in the principles seen in the Articles of Confederation would have completely renounced their understanding of a Confederacy and Federalism and would have resigned the same and delegated all of their powers that they fought and died to secure for each State and for their citizens? If you think so silly a notion, you severely impose injustice upon the intelligence and intentions of our founders.

However, the record is clear that the Sovereigns of each State never ceded to the federal government powers not expressly vested to it and never waived the ability to reclaim that power through their proper channels–the States–the same channels by which the US Constitution was ratified. Consider the Sovereigns’ voice in the State of Virginia in 1787:

“We the delegates of the people of Virginia . . . Do, in the name and in behalf of the people of Virginia, declare and make known, that the powers granted under the constitution, being derived from the people of the United States, may be resumed by them whensoever the same shall be perverted to their injury or oppression, and that every power not granted thereby, remains with them and at their will; that therefore no right, of any denomination, can be cancelled, abridged, restrained or modified by the congress, by the senate or house of representatives acting in any capacity, by the president or any department, or officer of the United States, EXCEPT IN THOSE INSTANCES IN WHICH POWER IS GIVEN BY THE CONSTITUTION FOR THOSE PURPOSES.” (Emphasis added.)

However, the Federal government today does not recognize the Sovereignty in the people of the respective states; it does not recognizes the respective States’ jurisdiction over all matters not expressly delegated to the federal government; and it does not seem to acknowledge State Sovereignty under the 10th amendment of the US Constitution. Given their evident intent and purposes to continually grow in power and to continually oppress and suppress the sovereignty of we the people, against our respective states, the question becomes, how will they be made to understand this? It is of course up to the Sovereigns in each state to answer this question. And we see the answers arriving through State laws such as the Firearms Freedom Act.

The time has come in America where to be free necessarily means to resist status quo and federal usurpation and to actively change the course and philosophy being shoved down our throats. There really is no middle ground any more. This is not a matter of politics anymore. This is not a matter of Republican and Democrat. This is a matter of FREEDOM, as much so as were the matters of 1775 and 1776. It is staring you in the face, daring you to make a move. May we never be guilty of causing, whether by our apathy, indifference, laziness or comfort, this nation to lose the freedoms that our founders attempted to secure with infinite pains and labors. We the people must once again reassert our Sovereignty in this country and the States must recognize and act upon their God-ordained role as Freedom protectors and tyranny resisters.

*If you appreciate this column and want to help me distribute these editorial opinions to an ever-growing audience, donations may now be made by credit card, check, or Money Order. Use this link:

http://www.chuckbaldwinlive.com/donate.php

© Chuck Baldwin