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Web of Debt
“We can’t solve problems by using the same kind of thinking we used when we created them.”
– Albert Einstein
Forty-six of fifty states are now reported to be so insolvent that they could be filing Chapter 9 bankruptcy proceedings within the next two years.1 Of the four that are not in that category, one is the isolated farming state of North Dakota. What does it have that other states don’t? The answer seems to be: its own bank. In fact, North Dakota has the only state-owned bank in the nation. It has avoided the credit freeze caused by the derivative schemes of the Wall Street bankers by creating its own credit, leading the nation in establishing state economic sovereignty.
North Dakota is an unlikely candidate for the distinction. As Michigan management consultant Charles Fleetham observed last month in an article distributed to his local media:
“North Dakota is a sparsely populated state of less than 700,000, known for cold weather, isolated farmers and a hit movie – Fargo. Yet, for some reason it defies the real estate cliché of location, location, location. Since 2000, the state’s GNP has grown 56%, personal income has grown 43%, and wages have grown 34%. This year the state has a budget surplus of $1.2 billion!”
The secret of its success seems to be the state-owned Bank of North Dakota, which was established by the state legislature in 1919 specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions.
A License to Create Money
Still, you may ask, how does that solve the solvency problem? Isn’t the state limited to spending only the money it has? The answer is no. Certified, card-carrying bankers are allowed to do something nobody else can do: they can create “credit” with accounting entries on their books.
The “End the Fed” Protests are the (Secret) Road to World Government
April 16, 2009
The mass media is hijacking the patriot and Truth movements by (1) attempting to take over the debates about the issues that the patriot groups have been discussing for decades by suddenly, all-at-once blasting them into the mass media in a twisted, vacuous, and manipulated way, and (2) by taking over the anti-Fed “revolution,” also by spotlighting it vacuously in the corporatist mass media. But we know that if the New World Order wants to hijack the patriot and Truth movements, they won’t just do it from these angles, and instead they (A) will attack it from many angles, and more importantly, they (B) will use their attack to, additionally, set up their Brave New World. This article is about (B), and what I want to suggest is that the New World Order is deliberately false-flag-attacking the Fed in order to ultimately destroy it, leaving the perception of a void in the financial world, wherein they will fill that void with THEIR choice of a new banking and money system: global currency, global bank, global governance/government. More specifically, here’s what I theorize is commencing:
1. The New World Order is using the corporatist mass media to co-opt the real anti-Fed revolt (originally started by WeAreChange), in order to blend it with a fake anti-Fed revolt that they are setting up, in order to incite a broad anti-Fed revolution among the US citizenry, which should hit high gear later this year, if not by summer.
2. The New World Order will use what I just stated in 1, and the pre-planned and staged problems with the increasingly weakening banks and US dollar (which will ultimately collapse fully), in order to modify or abolish the Fed and the current money system.
3. And the New World Order will present a specific solution to this pre-planned scenario I just stated in 2 in order to replace the current banking and money system with, they will tell us, a ‘better’ system: a world banking and money system.
by Paul Craig Roberts
April 15, 2009
This April 15 is the 94th year that Americans have had to file an income tax. For most Americans, the day is a non-event. The federal and state governments have already collected the taxes due by withholding from each paycheck over the course of the calendar year. Most Americans never saw the money and have no real idea that they earned it.
Some Americans have their incomes over-withheld as a form of forced savings. They look forward to tax time as it means they will receive a refund check from the government that they can use for a summer vacation, a big screen TV, a new appliance, or a down payment on a new car.
Few Americans realize that over the last 94 years they have been enserfed and have no more rights to their own labor than medieval serfs or 19th-century slaves.
The 16th Amendment to the Constitution was ratified because the income tax was only for the rich. Some states ratified the amendment because no one in the state had an income high enough to be subject to the tax.
According to the US Department of the Treasury’s history of the income tax, less than one percent of the US population was subject to the income tax. A progressive structure was applied to this less than one percent of rich Americans, with rates ranging from 1 percent to 7 percent on incomes over $500,000, a great sum of money in those days.
In the first year of the income tax, the world’s richest person, John D. Rockefeller, paid $2 million in income tax, almost 3 percent of the total income tax collected.
People were happy. They had finally gotten the rich.
And themselves as well. Exemptions were reduced and tax rates were raised in rapid succession in 1916, 1917, and 1918. Within five years the tax rates ranged from 6 percent to 77 percent, and people whose incomes were initially exempt now paid tax at more than double the initial top rate that had applied to John D. Rockefeller.
In “free” America today, despite the Kennedy, Reagan, and Bush tax rate reductions, ordinary Americans have no more claim to their own labor than a medieval serf. Most are content, however, with handing over 30 percent of their income as long as they can hope to tax the rich at 50 percent, the tax rate on 19th-century slaves.
March 25, 2009
By Paul Craig Roberts
At his March 24 press conference President Obama demonstrated that he is capable of understanding issues as presented to him by his advisers and able to pass on the explanations to the press. The question is whether Obama’s advisers understand the issues.
Obama’s advisers are focused on rescuing banks and the insurance company, AIG. They perceive the problems as solvency and paralyzing uncertainly or fear. Financial institutions, unsure of their own and other institutions solvency, hoard cash and refuse to lend. Credit is needed to get the economy moving, and the Federal Reserve and Treasury are doing their best to inject liquidity and to remove troubled assets from the banks’ books.
This perception of the problem and the “remedies” being applied, might be causing a greater problem for which there is no solution. Obama’s approach, and that of the previous administration, requires massive monetization of debt by the Federal Reserve and massive new debt issues by the Treasury.
The unaddressed question remains: Is the US dollar’s status as world reserve currency threatened by the massive debt monetization and multi-year, multi-trillion dollar issuance of new Treasuries?
The United States has become an import-dependent country. The US is dependent on imports for energy, manufactured goods including clothes and shoes, and advanced technology products. If the US dollar loses its reserve currency status, the US will not be able to pay for its imports. The ensuing crisis would dwarf the current one.
Obama’s advisers believe that the US can monetize debt and issue new debt endlessly, because America’s capital markets are the deepest and most liquid. The dollar is strong, Obama said at his press conference.
But already cracks and strains are appearing. The day after Obama’s press conference, an auction of UK bonds, known as gilts, failed when bids fell short of the supply offered and interest rates rose. This is a bad sign for Prime Minister Gordon Brown’s plan to market an unprecedented amount of new debt during the current fiscal year.
Legislation to Establish Internment Camps on US Military Bases
Global Research, March 18, 2009
The Economic and Social Crisis
The financial meltdown has unleash-ed a latent and emergent social crisis across the United States.
What is at stake is the fraudulent confiscation of lifelong savings and pension funds, the appropriation of tax revenues to finance the trillion dollar “bank bailouts,” which ultimately serve to line the pockets of the richest people in America.
This economic crisis is in large part the result of financial manipulation and outright fraud to the detriment of entire populations, to a renewed wave of corporate bankruptcies, mass unemployment and poverty.
The criminalization of the global financial system, characterized by a “Shadow Banking” network has resulted in the centralization of bank power and an unprecedented concentration of private wealth.
Obama’s “economic stimulus” package and budget proposals contribute to a further process of concentration and centralization of bank power, the cumulative effects of which will eventually result in large scale corporate bankruptcies and a new wave of foreclosures, not to mention fiscal collapse and the downfall of social programs.
The cumulative decline of real economic activity backlashes on employment and wages, which in turn leads to a collapse in purchasing power. The proposed “solution” under the Obama administration contributes to exacerbating rather than alleviating social inequalities and the process of wealth concentration.
By Paul Craig Roberts
March 30, 2009
Obama and his public relations team have made it appear that his trillion dollars in higher taxes will fall only on “the rich.” Obama stresses that his tax increase is only for the richest 5 percent of Americans while the other 95 percent receive a tax cut.
The fact of the matter is that the income differences within the top
5% are far wider than the differences between the lower tax brackets and the “rich” American in the 96th percentile.
For Obama, being “rich” begins with $250,000 in annual income, the bottom rung of the top 5 percent. Compare this “rich” income to that of, for example, Hank Paulson, President George W. Bush’s Treasury Secretary when he was the head of Goldman Sachs.
In 2005 Paulson was paid $38.3 million in salary, stock and options. That is 153 times the annual income of the “rich” $250,000 person.
Despite his massive income, Paulson himself was not among the super rich of that year, when a dozen hedge fund operators made $1,000 million. The hedge fund honchos incomes were 26 times greater than Paulson’s and 4,000 times greater than the “rich” man’s or family’s $250,000.
For most Americans, a $250,000 income would be a godsend, but envy can make us blind. A $250,000 income is not one that will support a rich lifestyle. Moreover, many people prefer lesser incomes to the years of education, long work hours and stress of personal liability that are associated with many $250,000 incomes. In truth, those with $250,000 gross incomes have more in common with those at the lower end of the income distribution than with the rich. A $250,000 income is ten times greater than a $25,000 income, not hundreds or thousands of times greater. On an after-tax basis, the difference shrinks to about 6 times.
Zhou did not mention the dollar by name but said the financial crisis had shown the need for reform.
The head of the Chinese central bank has called for a new global currency controlled by the International Monetary Fund (IMF), saying such a move would give governments particularly in the developing world the ability to manage their economies more efficiently.
In an online essay Zhou Xiaochuan, governor of the People’s Bank of China, said the global financial crisis had exposed the danger of relying on one nation’s currency for international payments.
The essay, released on the bank’s website late on Monday, did not mention the US dollar by name, but the vast majority of international finance is carried out in dollars.
The comments come ahead of a major meeting of leaders from the Group of 20 major economies in London which will focus on measures to alleviate the global economic crisis.
“This will significantly reduce the risks of a future crisis and enhance crisis management capability”
Zhou Xiaochuan, governor of the People’s Bank of China.
During the meeting, beginning on April 2, China is expected to call for developing economies to have a bigger say in global finance and step up pressure for changes to a system dominated by the US dollar and Western governments. The unusual step of publishing Zhou’s essay in both Chinese and English versions is seen as indicating his comments are aimed at an international audience ahead of the G20 meeting.
China has become increasingly assertive in economic issues and while the global financial crisis has hit Chinese export industries hard, its leaders are also viewing the crisis as a potential opportunity to increase China’s global clout.
“Reform of financial regulation and supervision should be coordinated internationally to the greatest extent possible.”
Tuesday, March 10, 2009
Federal Reserve Chairman Ben Bernanke has told an elite gathering that a new overarching financial authority should be created by the government and empowered with sweeping new regulatory responsibilities.
Bernanke also coyly indicted to the renowned globalist group that he believes a new international order could be fomented out of the crisis.
“We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,” Bernanke said in a speech to the Council on Foreign Relations.
“We should consider whether the creation of an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing.” he added.
Large firms will require “especially close” oversight in the future, Bernanke noted, adding that regulators need the authority to seize such firms.
“Some of the policies I propose can be implemented and developed under the existing authorities of financial regulators, indeed we are in the process now of doing just that. But in other cases, Congressional action will be necessary to create the requisite authorities and responsibilities.” Bernanke said.
Madam Speaker, I rise to introduce the Federal Reserve Transparency Act. Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation.
Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of the Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of the Fed and its lack of transparency.
Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.