Posts Tagged ‘banking’

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Sovereign Debt Jubilee, Japanese-Style

Japan has found a way to write off nearly half its national debt without creating inflation. We could do that too.

Let’s face it. There is no way the US government is ever going to pay back a $20 trillion federal debt. The taxpayers will just continue to pay interest on it, year after year.

A lot of interest.

If the Federal Reserve raises the fed funds rate to 3.5% and sells its federal securities into the market, as it is proposing to do, by 2026 the projected tab will be $830 billion annually. That’s nearly $1 trillion owed by the taxpayers every year, just for interest.

Personal income taxes are at record highs, ringing in at $550 billion in the first four months of fiscal year 2017, or $1.6 trillion annually. But even at those high levels, handing over $830 billion to bondholders will wipe out over half the annual personal income tax take. Yet what is the alternative?

Japan seems to have found one. While the US government is busy driving up its “sovereign” debt and the interest owed on it, Japan has been canceling its debt at the rate of $720 billion (¥80tn) per year. How? By selling the debt to its own central bank, which returns the interest to the government. While most central banks have ended their quantitative easing programs and are planning to sell their federal securities, the Bank of Japan continues to aggressively buy its government’s debt. An interest-free debt owed to oneself that is rolled over from year to year is effectively void – a debt “jubilee.” As noted by fund manager Eric Lonergan in a February 2017 article:

The Bank of Japan is in the process of owning most of the outstanding government debt of Japan (it currently owns around 40%). BoJ holdings are part of the consolidated government balance sheet. So its holdings are in fact the accounting equivalent of a debt cancellation. If I buy back my own mortgage, I don’t have a mortgage.

If the Federal Reserve followed the same policy and bought 40% of the US national debt, the Fed would be holding $8 trillion in federal securities, three times its current holdings from its quantitative easing programs.

Eight trillion dollars in money created on a computer screen! Monetarists would be aghast. Surely that would trigger runaway hyperinflation!

But if Japan’s experience is any indication, it wouldn’t. Japan has a record low inflation rate of .02 percent. That’s not 2 percent, the Fed’s target inflation rate, but 1/100th of 2 percent – almost zero. Japan also has an unemployment rate that is at a 22-year low of 2.8%, and the yen was up nearly 6% for the year against the dollar as of April 2017.

Selling the government’s debt to its own central bank has not succeeded in driving up Japanese prices, even though that was the BoJ’s expressed intent. Meanwhile, the economy is doing well. In a February 2017 article in Mother Jones titled “The Enduring Mystery of Japan’s Economy,” Kevin Drum notes that over the past two decades, Japan’s gross domestic product per capita has grown steadily and is up by 20 percent. He writes:

It’s true that Japan has suffered through two decades of low growth . . . . [But] despite its persistently low inflation, Japan’s economy is doing fine. Their GDP per working-age adult is actually higher than ours. So why are they growing so much more slowly than we are? It’s just simple demographics . . . Japan is aging fast. Its working-age population peaked in 1997 and has been declining ever since. Fewer workers means a lower GDP even if those workers are as productive as anyone in the world.

Joseph Stiglitz, former chief economist for the World Bank, concurs. In a June 2013 article titled “Japan Is a Model, Not a Cautionary Tale,” he wrote:

Along many dimensions — greater income equality, longer life expectancy, lower unemployment, greater investments in children’s education and health, and even greater productivity relative to the size of the labor force — Japan has done better than the United States.

That is not to say that all is idyllic in Japan. Forty percent of Japanese workers lack secure full-time employment, adequate pensions and health insurance. But the point underscored here is that large-scale digital money-printing by the central bank used to buy back the government’s debt has not inflated prices, the alleged concern preventing other countries from doing it. Quantitative easing simply does not inflate the circulating money supply. In Japan, as in the US, QE is just an asset swap that occurs in the reserve accounts of banks. Government securities are swapped for reserves, which cannot be spent or lent into the consumer economy but can only be lent to other banks or used to buy more government securities.

The Bank of Japan is under heavy pressure to join the other central banks and start tightening the money supply, reversing the “accommodations” made after the 2008 banking crisis. But it is holding firm and is forging ahead with its bond-buying program. Reporting on the Bank of Japan’s policy meeting on June 15, 2017, The Financial Times stated that BoJ Governor Kuroda “refused to be drawn on an exit strategy from easy monetary policy, despite growing pressure from politicians, markets and the local media to set one out. He said the BoJ was still far from its 2 per cent inflation goal and the circumstances of a future exit were too uncertain.”

Rather than unwinding their securities purchases, the other central banks might do well to take a lesson from Japan and cancel their own governments’ debts. We have entered a new century and a new millennium. Ancient civilizations celebrated a changing of the guard with widespread debt cancellation. It is time for a twenty-first century jubilee from the crippling debts of governments, which could then work on generating some debt relief for their citizens.

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Ellen Brown is an attorney, founder of the Public Banking Institute, a Senior Fellow of the Democracy Collaborative, and author of twelve books including Web of Debt and The Public Bank Solution. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com. <https://ellenbrown.com/&gt;.

300+ blog articles are posted at EllenBrown.com.

300+ blog articles are posted at EllenBrown.com.

 

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The crimes of the empire are real, predictable, and with precedents.

 

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The guidelines clarify that financial institutions may accept accounts from marijuana-related businesses that, in essence, are otherwise on the right side of the law—meaning they adhere to local statutes and Justice Department priorities (like not selling to minors.)

Feds offer banking rules for legal-pot industry

 

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Save the world from the banksters…

 

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“It’s a total puppet show!”

Moore postures himself as an eternal independent, despite his actual record say, around 2004.  Still, he calls out the “duopoly” and the crimes of Democrats as well, even back in Vietnam.  Pretty good interview though, and Moore’s works on the health care and Wall Street crime sprees are valuable and needed.  Moore also talks about the death threats and assaults, post Fahrenheit 9/11 and whether or not he would do it again.  An important filmmaker no matter your opinion of him…

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“It is the cause of most of the world’s hunger, poverty, misery and disease.”

-Bill Still (Official Website)

by Scott Baker

Last night I watched Bill Still’s newest film “Jekyll Island.” For those who’ve seen “The Money Masters,” and especially the more recent “The Secret of OZ” (2009), they won’t find too much new here, although a lot has happened in the last 4 years, and Still takes us all  the way into early 2013.  The overall point though is that the Money Masters have been controlling the money supply, creating booms and busts deliberately, for hundreds of years.  This goes beyond Georgist theory which says the Land Cycle is ultimately the cause of booms and busts – unfortunately I’ve been unable to persuade Still in my few discussions with him that there is a Land Cycle underlying the “Business Cycle” though both of us recognize the latter is a false explanation.  But in this movie, Still has presented good evidence that at least some busts like the 1871 and 1891 depressions, were deliberately induced as a way for the banking elites to gain both control of the money supply, and to possess hard assets like housing, and that this kind of action goes back to the Rothschilds, who bet correctly against France during the Napoleonic wars (also successfully countering Napoleon’s attempt to essentially create a Public Central Bank, independent of the Rothschilds).  This changes the conclusion from the inevitable Land Cycle (Henry George, Mason Gaffney, Homer Hoyt,  etc.), to the inevitable Conspiracy Cycle of the banking elites, but I am still  unconvinced at least some, or even most, of the booms and busts were not caused by money power ignorance of the Land Cycle and greed over-riding common sense.  As many of the experts in the movie attest, the average economist, with his obfuscating charts and theories, often knows less about what actually goes on than the man on the street.  Furthermore, why push your firm to the edge of bankruptcy, and sometimes over it (Lehman Brothers, AIG, Countrywide Financial), when you are so smart you can avoid it?   So then, who are the experts who saw it coming, again and again?  The Rothschilds and Rockefellers, perhaps, but this narrow band of profiteering rascals is not quite enough evidence to construct a theory of a continuous worldwide historical conspiracy.

Still shows that dreams of international monetary systems, including the failing Euro – which Monetary Reformer Stephen Zarlenga backed and which he has yet to apologize for, or explain the current failure of – would lead to further nightmares, making it even harder to achieve monetary sovereignty and escape the clutches of the trans-national banking elites.   This is the clear lesson from the Euro experiment, now unraveling.

I do wish Still had delved into Lincoln’s assassination more,  finding the connection to bankers backing John Wilkes Booth and his dozen or so co-conspirators, documented in Gerry McGeer’s book, “ The Conquest of Poverty ” but he DID tie the attempt on president Andrew Jackson’s life, after he closed the Second National Bank of the U.S., to the banking elites.   Still also documents their support of bank-friendly  William McKinley  against populist William Jennings Bryan who wanted to end the dearth of money by bringing back the bank-squashed silver certificate (Kennedy would fare even worse in the effort to re-institute  Silver Certificates , with many people believing  this effort was behind his assassination  in 1963, possibly including his then-hysterical V.P. Lyndon Johnson).

I do take issue with Still’s poorly defined explanation of fractional reserve banking.  Although he traces the history of it well – beginning from the goldsmith’s issuance of 10X the value of their gold holdings because they realized that only 1/10th of the people holding gold in their vaults ever came to collect their gold at any one time (this led to the more modern 10% fractional reserve requirement, nevertheless now obsolete) and ending with the 2008 crisis where leverage of 50X or even 300X occurred  – he fails to deal with the large number of banks, including the State Bank of North Dakota (BND), who never loan out even as much as they have on deposit (though the actual funds are not from the same source here either).  If all banks loaned just the same amount they had on deposit, or actually less in the case of regular banks like the BND and its partner small banks, which typically have loan to asset ratios of 75%, or less, we would have had a manageable crisis.  It was the massive leveragers like Bear Sterns and Lehman Brothers (40:1) and AIG (with counterparty Goldman betting at up to 300:1 leverage), which caused the panic and near collapse.  Still could have made this important distinction, but didn’t, thereby letting all banks be tarred with the same brush and losing an opportunity to link forces with the growing public banking movement (in the 2012 election, Bill Still ran for president on the Libertarian ticket and asked Public Banking Institute founder Ellen Brown to be his V.P. running mate).

I bring this up to show – unsurprisingly to many readers here, I’m sure – how long and how completely the financial elites have been screwing the ordinary citizens, and even government, which as many know – including countless experts like the Positive Money people in this new film, but, tellingly, NOT Stephen Zarlenga, who once dismissed Still as a “salesman” in conversations with me (this is the reason, perhaps, that Zarlenga is not quoted or interviewed as an expert in this film, despite his big yellow tome “ The Lost Science of Money ” appearing on so many academics’ bookshelves) could simply retake the sovereign right to “coin Money” anytime it wanted to if it wasn’t for the  massive disinformation campaign since the 1970s.   In part this is caused by the thousands of Federal Reserve Bank-aid agents, documented in the film, working in the economic realm of academia, the media, and politics.  That they sell interest rate Put Options to confused buyers when they CANNOT default on money they create autonomously, as shown in FRAUD: Federal Reserve Is Selling Put Options On Treasury Bonds To Drive Down Yields , should not surprise us either.  This  video claims this is fraud, but if so, it is Baby Fraud.  The Parent Fraud is that we are told we need to borrow what we could simply create , under Article 1, Section 8 of the constitution and as affirmed by SCOTUS in the 1884 8-1 decision in Julliard v. Greenman — also insufficiently covered in Jekyll Island .

Dollars funnel.

However, as Still’s experts point out, it is to the elites’ advantage to make us think the system is so horrendously complex that mere mortals cannot hope to understand it, and must, therefore, trust the experts.  More modern layers like Put Options and other forms of morally hazardous insurance may indeed be too complicated to understand, by anyone, but the concept of charging unsustainable interest on money issued by wealthy monopoly elites is not.   Government borrowing, as Still shows, is  both unnecessary and injurious to the Republic.  Government is not over-printing money, it is over-borrowing it.  This is the first time, I believe, that Still has identified in his movies that taxes are unnecessary, as Greenbacking – the act of government producing debt-free money – could simply fund all its needs, with inflationary over-production being handled by taxes – the Modern Monetary Theory position as well as Positive Money’s.

So, what both videos show is that the banking elites at the FRB are getting desperate, relying more and more on obscure leveraging tools to hide the fact that there is little backing the full faith and credit of the U.S. now that our productive capacity has been off-shored, or at least become far to little to support the inflated financial edifice of the derivatives mother-of-all-bubbles.  Solution: more derivatives!  This madness can only end one of two ways – either with a spectacular crash unlike anything the world has ever seen, where virtually the entire banking establishment collapses and money disappears (this nearly happened in Jackson’s time as well as during the Greenback reduction era, post Lincoln), OR with the creation of alternative money systems, most especially sovereign money produced by government.

Unlike in the past, the traditional approach to simply invading other lands and stealing their resources – and having the loser’s debts absorbed, often along with the country, into the victor’s country – won’t work much longer. Now, everyone is in debt, unless they have a public central bank like China or India etc., and America is the leading debtor nation.   No amount of invasion of Libya/Iraq/Afghanistan and possibly upcoming Syria and Iran, etc. will change that, because they are not the source of the problem, though bankers DO love such militarism, going back to the Rothschilds.

Since government is institutionally captive to the banking elites, only a popular revolt against this system will bring about the needed change – IF people are not so disenfranchised and marginalized by the non-choices offered up by the elites that they cannot effectively demand change.  That is certainly the case today, but there are cracks, as these recent movies and videos show. Are they enough?  I don’t know.  Stay tuned.

Scott Baker is a Senior Editor and Writer at Opednews, and a blogger for Huffington Post.  Scott is also President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist group.
PS:
Interview with Bill Still