Comments on This is the Dead Land, this is Cactus Land: What QE3 Will Look Like

Here is how the banker's game works: 1) Get...

2011-11-03T18:00:39.767-07:00

Here is how the banker's game works:

1) Get the government to issue some currency (cash -- paper or reserves at the central bank -- reserves are government issued cash central bank deposits). Government issued cash is around 5% of the currency (money) supply. The government issued currency is put into circulation by the government simply spending it.

2) The rest (95%) of the currency is issued by the private banks. Each customer loan is a new bank deposit (i.e., new currency) and increases the currency (money) supply of the economy. Note that this newly created money (currency) is put into circulation by the borrower spending it. Most currency (about 95% America's currency supply) has been borrowed into existence and when bank customer pays the loan back that amount of currency is removed from circulation. The banking system cannot go backwards (fewer net loans) as time moves on because fewer net loans means fewer currency in circulation in the economy.

Accmulation of interest charges on outstanding loans means that the currency supply must constantly increase even if it means giving out lower quality loans. Think of it like a plane flying it must fly at some minimum speed or else the plane (the banking system) will crash (i.e., banking system collapse).

3) The bankers make dam sure that the common public does not understand how the monetary system works meaning that the private banks issue 95% of the currency. This is whole another topic how they do this.

4) The system works until real economic capacity of the economy grows and debts can be serviced and interest charges paid. Most of the time the economy oscillates between boom (growth) and bust (recession) because bust is needed to clear debts and start a new lending cycle.

5) Eventually, one of these cycles goes so deep that currency supply (and demand) falls so low that too many debts become un-serviceable. The recession becomes a depression now.

6) The bankers then have to decide how to "reset" the system. One way to reset the system is to let the depression takes its course. But of course this path is very chaotic because people lose jobs and may become violent. Once most debts are cleared lending can start again and the currency supply is replenished. Wars are a good way to get initial money (currency) into an economy after a depression to get demand going again. This is the great depression scenario.

7) Another way to "reset" the system is to get the government to print too much money and spend and destroy the currency and blame it on the government. This justifies issuance of a totally new currency (note that hyperinflation clears debts) and the lending cycle can start again. This is the Weimar scenario.

8) The banking system (as is) is setup to maximize the power and influence of the global bankers and NOT for the maximum general well being of people. By the way this is a global game. This is the only system around no matter what country you are in. The global banking cartel makes sure that no competing systems are allowed to exist (so they might be copied and global bankers will lose power).

For more details on this stuff please read the following articles in order listed below:

http://seekingalpha.com/article/209386-modern-monetary-system-there-is-another-way

http://aquinums-razor.blogspot.com/2010/07/why-is-deflation-and-depression.html

http://seekingalpha.com/article/210346-should-newly-created-money-be-a-private-or-a-public-asset

http://seekingalpha.com/article/192375-cause-of-today-s-economic-crises-too-much-thrift

http://seekingalpha.com/article/160269-a-radical-solution-for-america-s-insolvent-financial-system

http://seekingalpha.com/article/146658-great-banking-confusion-is-there-a-better-way

Mansoor H. Khan

this is the most depressing thing i've read in...

2011-09-04T16:16:47.581-07:00

this is the most depressing thing i've read in years.

here i've been feeling good that the death machine that runs the world is grinding to a halt under its own weight and complexity, and you're telling me that it will be welded back together, rebranded and continue on for another generation! i hope you're wrong.

personally, i don't see it happening. reality is giving all kinds of signs that we're operating beyond natural laws, and those can't be denied.

we shall see.

gregg

"it's winner takes all. " An approp...

2011-08-28T06:14:03.950-07:00

"it's winner takes all. "

An appropriate Oxymoron.
Winners take things.
Losers are taken from.

Ce La Vie.

Interesting that Krugman, and now Lagarde are both...

2011-08-28T04:59:57.444-07:00

Interesting that Krugman, and now Lagarde are both hitting the same points. Here is Lagarde's qoute.

“more aggressive principal reduction programs for homeowners, stronger intervention by the government housing finance agencies, or steps to help homeowners take advantage of the low interest-rate environment,” Lagarde said.

As for the PM's, Gold is the enemy of fiat money. The massive manipulation in gold and silver is a very good barometer for where things are headed. My feeling is there are only two outcomes, the QE3 as described above, or a return to hard money... it's winner takes all.

What's the probablity of this happening on the...

2011-08-27T18:56:59.643-07:00

What's the probablity of this happening on the loan restruction portion, taking into account LaGarde's recent comments about US homeowners needing assistance in order for the "recovery" to remain strong?? This would also mean the death of the PM's run.

Interesting development, the New York Times is now...

2011-08-21T23:45:38.685-07:00

Interesting development, the New York Times is now calling for principal reductions when they know full well that they are already going on. It is like calling for an intervention into Libya, Homeowners Need Help

Actually there will NOT BE QE3, as just confirmed ...

2011-08-19T10:23:08.880-07:00

Actually there will NOT BE QE3, as just confirmed by the FED board.
They will keep the interest rates flat untill 2013 but that's all .
Please get your facts straight.

Interesting, but your whole premise rides on their...

2011-08-18T14:52:51.083-07:00

Interesting, but your whole premise rides on their being a cohesive group with one aim.

I don't see things as quite as organized as you do. ; )

Robert, Thanks for the reply. There is even a s...

2011-08-15T02:13:06.006-07:00

Robert,

Thanks for the reply.

There is even a simpler way to look at it. The allocation of the future new global reserve currency to individual countries will really be about oil output allocation. Since the most scarce resource with respect to demand defines what money is. With peak oil: Money = Oil and Oil = Money.

At least this keeps the countries from having a hot war over more and more scarce oil. So may there is blessing in disguise from god in all this.

Mansoor

Hi Mansoor, very interesting question. I am convi...

2011-08-14T14:50:12.108-07:00

Hi Mansoor, very interesting question. I am convinced that Peak Oil is one of those key issues that people don't discuss because it is just too big, it shakes their worlds far to much. This piece is obviously speculative, both on the plan and the planners. But, if I had to take a stab at it, and we assume there is a "head" to the monster, than I would say that Peak Oil is baked into the equation.

They know the real numbers, and realize only with a major economic slowdown will we be able to transition away from crude without sparking a major upheaval. One would have to think that the period of transition to a new currency and world financial order would be the time to also make those very big changes, ie, world oil tax or something of the sort.

Sorry folks, I have to put on the admin control fo...

2011-08-14T14:39:09.401-07:00

Sorry folks, I have to put on the admin control for the comments as someone has forgotten to take their meds. Please, leave your comments, and I will check in as often as I can and publish them.

How does peak oil enter into this picture?

2011-08-14T09:37:30.628-07:00

How does peak oil enter into this picture?