Thursday, April 7, 2011

Impeach Bernanke

An open letter to Congressman Ron Paul of Texas

Antal E. Fekete

April 6, 2011

Dear Dr. Paul:

There are serious questions about the legality of Quantitative Easing. You are among the few who are well-qualified and well-placed to get to the bottom of it.

Most people believe, and the media confirm them in that belief, that the Fed can legally create dollars ‘out of the thin air’ in any quantity, and can do with them as it pleases. This may well be the pipe dream of Dr. Bernanke who is quoted as saying that the U.S. government has given the Fed a tool, the printing press, to stop deflation — but it hardly corresponds to the truth. The Fed can create new dollars only if some stringent legal conditions are satisfied, and then, it can only dispose of them in certain ways prescribed by law.

Contrary to a statement of Dr. Bernanke, made before he became the Chairman of the Board of Governors of the Fed, he could not drop freshly printed dollars from a helicopter, no matter how many reasons for such an action he may be able to cite. Another thing the Fed is not allowed to do legally is to purchase Treasury paper from the U.S. Treasury directly. It must be purchased indirectly through open market operations. If you don’t put the Treasury paper through the test of the open market before the Fed is allowed to buy it, the presumption is that the market would reject it as worthless, or would take it only at a deep discount. The law does not allow the F.R. banks to purchase Treasury paper directly from the Treasury because that would make money creation through the F.R. banks a charade, reserve requirements a farce, and the dollar a sham.

If that were the only problem with Quantitative Easing, it would be bad enough. But there is something else that is even more ominous. The fact is that the Federal Reserve banks can purchase Treasury paper only if they pay with F.R. credit that has been legally created.

F.R. credit (F.R. notes and F.R. deposits) is legally created if it has been issued in accordance with the law. The law says that F.R. credit must be backed by collateral security at the time of issuance, usually in the form of an equivalent amount of U.S. Treasury paper. The procedure is as follows.

The F.R. bank seeking to expand credit takes its Treasury paper, owned outright and free from encumbrances, and posts it as collateral with the Federal Reserve agent who will then authorize the issuing of credit. In other words, if the F.R. banks do not have the unencumbered Treasury paper in their possession, then they cannot create additional credit legally.

There is some evidence that the F.R. banks do not have F.R. credit available to make the kind of purchases Dr. Bernanke is talking about as part of his Quantitative Easing. Nor do they have unencumbered Treasury paper in sufficient quantity that they could post with the F.R. agent for authorizing the issue of additional F.R. credit.

The point is that the process of posting collateral first, and augmenting F.R. credit afterwards must under no circumstances be reversed. What the F.R. banks cannot legally do is to buy the Treasury paper first with unauthorized F.R. credit, post the paper as collateral, and justify the illegal issuance of credit retroactively. Nor can they borrow the bond from the Treasury, post it as collateral, and pay for the bond retroactively.

This is an important limitation separating the regime of market-based irredeemable currency from the regime of fiat money involving outright monetization of government debt — the graveyard where the Continental dollar, the assignat, the mandat, the Reichsmark, and the Zimbabwe dollar (among countless others) rest.

At any rate, retroactive authorization of F.R. credit, if that’s what the Fed is up to, would be a violation of both the letter and spirit of the F.R. Act. It would mean converting the dollar into outright fiat money through the back door, bypassing Congress. It would show absolute bad faith on the part of the Chairman of the Federal Reserve Board of Governors, Dr. Ben Bernanke, who certainly knows what the law is. Such a blatant violation of the law would make him totally unfit for the powerful office he occupies. It would call for his immediate and dishonorable discharge by the President, pending Congressional investigation of the matter.

The various violations of the law of which the Fed is accused point to a concerted effort to remove the shackles the law has put on the money spigots lest crooks help themselves to the public purse. These violations are not isolated incidents. They are aiming at the corruption of the monetary order of the nation and the world. Moreover, they would ultimately figure prominently among the causes of the financial instability the world has been suffering from since 1971 and, more recently, since 2008.

Without understanding this fundamental truth, all talk about stabilizing the monetary system and reining in the runaway budget deficit is an exercise in futility.

Yours very sincerely,

Antal E. Fekete
Professor (retired)
Memorial University of Newfoundland
Tel./Fax: +36-1-325-7996

A Silver Bullet for Modern Vampires

From Michael Krieger of KAM LP

A Silver Bullet for Modern Vampires

noun \?vam-?p?(-?)r\

Definition of VAMPIRE

1: the reanimated body of a dead person believed to come from the grave at night and suck the blood of persons asleep

2 a : one who lives by preying on others

Does the above definition of vampire by Merriam Webster remind you of anything? Yes of course it does, it reminds you of the Too Big To Fail Banks. It was extremely appropriate for Matt Taibbi to refer to Goldman Sachs as the “Vampire Squid.” Just as the above definition lays out, vampires are able to come back from the dead and once they have done so they drain the life out of the living while they sleep. Need I say more? The big banks and the Federal Reserve are modern day vampires and they are feeding off what remains of the living (productive) parts of the economy while the majority of Americans are stuck in a reality tv, Prozac induced coma of endless propaganda and brainwashing. Indeed the vampires are feeding off of an American public that still by and large remains “asleep.” These are ideal hunting grounds for vampires.

The reason vampires feed on people that are asleep of course is that they attempt to attack when their victim is most vulnerable. The cover of night is when vampires are active, which is exactly why the Federal Reserve must operate in the shadows and why it fiercely fights off attempts to disclose its activities to the public. The TBTF banks and the big trading brokers that scamper off like cry babies to their sugar daddy Ben Bernanke every time they have a losing trading day must be exposed as the economic life sucking vampires and financial terrorists that they are. They must be brought out into the light of day and exposed for the unproductive, unable to compete in the free market jokers that they are. I have said it before and I will say it again. Until these entities are put out of their misery, restructured and key executives now and from the crisis are prosecuted there will be no sustainable recovery other than repeated phony boosts in aggregate demand created by printing money. More worryingly, the social fabric of the country will continue to deteriorate.

So all this vampire talk leads me to an obvious conclusion. Silver! When I was last on Max Keiser’s show the “Keiser Report” a few weeks ago we discussed the latent power in the hands of the people via their ability to buy physical bullion and take delivery. There is no more powerful and effective vehicle of political protest than taking this action as a vote against the fascist policies of the Federal Reserve and its abusive money monopoly. This is because the Federal Reserve’s power lies in its ability to create AT WILL as many fiat dollars as it pleases to further its agenda, which at this point is clearly entirely aligned toward helping the bankers and the politicians in what I call the NYC/Washington D.C. cancer center. Gold and silver are the historical and indeed the modern day competitors to fiat money, which is why they tend to be demonized so much by the mainstream media and financial press and are almost never addressed by Federal Reserve members even though they have been at the heart of global finance for millennia. Ever since our conversation, Max has launched a very powerful campaign aimed at the silver market as a way for the average citizen to fight back against the criminal banking system intent on turning the vast majority of the Western world’s population into modern day serfs. It is prescient and it will succeed.

Part of why I have liked precious metals for many years now is because I knew that this day would eventually come. That the suffering people of the world would finally have had enough and would fight back. I knew that the most effective way to fight the system would be to take physical delivery of precious metals as the surge this would cause in the price would be evidence of a total loss of confidence in fiat money, which could only then be countered by a return to some sort of hard money or revaluation of the dollar in order to reset the system, or the “ctrl alt del” print.

This campaign is not just brilliant in its potential effectiveness but its real power comes from the inclusion of as many everyday citizens as possible in the fight. You see, back in the late 1970s when the Hunt brothers and others bought up a large percentage of the world’s available silver, they were relatively easily demonized and stopped by the government.. No government no matter how thuggish is going to be able to stop millions and millions of people the world over from buying a few ounces of silver. Silver is also in much shorter overall supply than gold since pretty much all 160,000 tons of gold estimated to have been produced over the course of human existence is still around somewhere. Silver is largely consumed and its annual production is estimated at only around 600 million ounces a year. Think about this for a second. While every adult American doesn’t have the $1400 to buy an ounce of gold, they do have the $75 dollars to buy three ounces of silver. So if every adult American spent $75 on silver that is total annual global production folks. See how powerful this is?

Ah but there is more. Keiser’s campaign has been accepting videos from members of its audience that support the campaign and he has then been posting the best one’s on the website. This takes the focus away from any one particular individual and puts it in the hands of the people that are participating. This is extremely empowering just as youtube and the internet in general are extraordinarily empowering. Someone that has never reached more than ten or twenty people in their lives with their views are now reaching thousands through the internet. The establishment “filter” on news and ideas is gone. The internet is the Guttenberg printing press on steroids. Let’s not forget that the Guttenberg press was key in sparking the Renaissance. This is why I am completely convinced that the current system will collapse. It has run its course and is no longer helpful to humanity’s progress in the 21st century. The people do not want things to stay the way they are and in fact the means of ending it are very simple. Much more simple than voting at the polls for politicians that know nothing and can be bought off within a week. Vote with your money. Buy silver.

All the best from sunny (and warm) Colorado,

Ben Davies talks about Gold on CNBC

Portugal seeks bailout

As expected the Portuguese government has asked for a EU Central Bank bailout after many months of denying they needed one, just like the Greek and Irish governments did.

LISBON, April 7 (Reuters) - Portugal's financial sector can expect some relief after the caretaker government decided to seek financial aid after months of what many economists said was a refusal to acknowledge economic reality.

But Lisbon will have to agree to tough austerity targets to obtain a bailout, and how quickly a deal can be negotiated at the start of an election campaign is unclear.

Caretaker Prime Minister Jose Socrates announced he was asking for financing from the European Union on Wednesday, saying the risks to the economy had now become too great to go it alone as borrowing rates soared in recent weeks.

Following in the footsteps of Greece and Ireland, his request comes against a backdrop of political uncertainty after the government resigned on March 23 following parliament's rejection of an austerity plan.
Portuguese banks will be relieved after taking the unprecedented step on Tuesday of warning that they may no longer be able to buy government debt -- a move which likely helped force the government into seeking on

The Silver Liberation Army needs YOU

Silver at new 31 year high in New York trade