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Ponzi Scheme: The Federal Reserve Bought Approximately 80 Percent Of U.S. Treasury Securities Issued In 2009

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The Federal Reserve Bought Approximately 80 Percent Of U.S. Treasury Securities Issued In 2009No, the headline is not a misprint.  According to CNBC, the Federal Reserve bought approximately 80 percent of the U.S. Treasury securities issued in 2009.  In other words, the Federal Reserve has been gobbling up the massive tsunami of U.S. government debt that has been created over the past year.  This is absolutely unprecedented, and it is yet another clear indication that the U.S. financial system is on the verge of a major economic collapse.

You see, the Federal Reserve is not part of the federal government.  In fact, the Federal Reserve is about as “federal” as Federal Express is.

The Federal Reserve is a private bank owned and operated for profit by a very powerful group of elite international bankers.

It is this private central bank that controls the money supply and the issuance of currency in the United States.

When the U.S. government needs to borrow more money (which happens a lot) they go over to the Federal Reserve and they ask them for some more green pieces of paper called Federal Reserve Notes.

The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds.

Now normally the Federal Reserve takes these U.S. Treasury bonds and they sell them all to other buyers.

But in 2009 there were not nearly enough buyers.

So in 2009 the Federal Reserve sold itself about 80 percent of this debt.

This is even being admitted on CNBC.  The video below is from January 8th, and at the 1:45 mark CNBC anchor Erin Burnett drops this bombshell along with a comment about how it is a Ponzi scheme….

So why is it a Ponzi scheme?

Well, basically the Federal Reserve is creating money out of nothing, loaning it to the U.S. government and then collecting interest on the loan.

That is nice work if you can get it.

But also, this intervention by the Federal Reserve is keeping interest rates on U.S. Treasury bonds artificially low.

In a true “free market” situation, the interest rates on U.S. treasuries would rise to reflect the rapidly declining economic situation in this nation.

Due to the massive explosion in the size of the U.S. government debt and due to the very weak U.S. economy, interest rates on U.S. treasuries should have shot through the roof by now.  Rational investors would normally require an increased return for the increased risk that U.S. treasuries now represent.

But that is not happening.

Instead when there are no buyers for U.S. treasuries at current interest rates, the Federal Reserve just steps in and buys up all the excess bonds that need to be purchased.

But in a normal free market situation, interest rates would rise on U.S. treasuries until they would be attractive enough for investors to buy them all.

However, that would create some huge problems.

If the U.S. government was not able to borrow all of the money it wanted to at artificially low interest rates, the results would be absolutely disastrous.

Much higher interest rates on U.S. government debt would cause the U.S. federal budget deficit to absolutely explode.  Interest rates on everything else throughout the economy would also skyrocket.  As mortgage rates climbed dramatically, the housing market would completely collapse.  The U.S. economy would be totally in flames.

But for now (and this situation cannot last forever) the Federal Reserve is keeping interest rates artificially low by lending the U.S. government as much money as it wants at extremely low interest rates.  Of course the Federal Reserve is making an insane amount of money out of the arrangement, so it is working out quite nicely for them as well.

But by essentially “printing” a flood of cheap money for the U.S. government to borrow, the Federal Reserve is ultimately going to end up destroying the value of the U.S. dollar.

Every fiat currency throughout history has always ended up losing its value, and that is exactly what is going to happen this time too.  The only way to protect the buying power of your money is to put it into something that will hold value (like gold or silver).  Your dollars are never going to be worth more than they are today.

The actions taken by the U.S. government and the Federal Reserve have guaranteed the demise of the U.S. dollar.  At this point it is unavoidable.  It is only a matter of how soon it will happen and how bad it will be as things play out.

You better get ready.

  • Mike

    Barry and Soros must be happy. The current administration is a complete FRAUD.

  • Joseph Blazewicz

    The economic collapse is a sad state of affairs.

  • slam

    The Federal Reserve is not private and is not owned for profit, but it has certain aspects that are private-like.

    • ohiodale

      The Fed is for profit. When the Fed purchases bonds they make profits on the bonds. When the Fed sells bond they sell for a profit. Look up the history of the Fed Reserve. Very powerful people control the money across the world. I am not saying its good or bad but its a fact.

  • seromaz

    itall happn’d durin dubyas residence

  • don

    All of this makes perfect sense to me. The world is after all built on illusion. What is so strange about this? And yes, all of this is a great big ponzi scheme.

    I however, don’t see the end game as bad as many do. You see what the Fed in conjunction with our government is doing. There is no way our government is going to let it all collapse all at once. And since the banking system is international in scope, everyone else’s currency is also a fraud. So if everyone is on the same playing field, nothing is really going to collapse. The whole world will simply sink together. And China? What are they going to do. They are simply going to be screwed with cheap dollars like the rest of us. 2012 is just around the corner. It is going to be a new earth folks.

    donovan moore
    financial editor

  • This is a very sad story. When will the mainstream media and politicians start asking questions about EXACTLY WHO is profiting from causing these financial dislocations. The next step should be indictment for criminal fraud.

    What we need to do is start playing the game of Gotcha! With network cameras rolling, We will coats over the heads of the banksters as they are trotted off for their mug shots. It look slike Mr Madoff will be cozy with his old country club budddies. We need to send them to Guantanamo to learn the proper way of acting in our society.

  • Michael

    I know it’s more complicated than this but isn’t a lot of the money the Government is borrowing being used through programs to bail out defunct banks- including member banks of the Fed. In some sense it’s circular. The government borrows money from the Fed and gives it back to the banks sadly including bonuses, but still). If the banks pay it back the government will be fine.

    Also yes in a fiat system the value of money almost always shrinks- inflation. What we’re seeing right now however is a fight against deflation, where the value of cash is going up, not down, as assets values like real estate tank. I don’t think they’ll get it right. I think they’re just pulling the bandaid off slowly. It might be better off just letting the banks fail and asset values slam to rock bottom, thus the next depression. Once that happened however, you could buy a sweet house for $25K with a job paying $5/ hour manufacturing something and selling it to China. That’s a fine option for us unemployed. Too bad the employed, not yet evicted people, have to make such a fuss.

  • fran

    hi guys it(s 100% that us economy is going to collapse current 2012-2013 LOL
    it is big scam !!!

  • Tom Tudo

    Enjoying the change?

    Maybe there’s still time to convince Ron Paul to take over the reigns in 2012. With a Paul administration, America would see a return to following the Constitution. That would bring hundreds of thousands of troops HOME where they belong. That would bring SANITY and fiscal conservatism to the economy and that would result in the greatest economic expansion this country has ever seen.
    Like the position America is in? Do nothing then, support the fellow in the white house now.
    Sick of being lied to? Sick and tired of losing money ? Support Ron Paul,

  • steve

    the problem is those “big” bankers never show up in person. they do their deeds thru the “big” banks and their officers.
    And what do THEY do with these obscene profits? they buy gold and silver and other hard assets.
    Stealing from the poor thru the political system.
    The worst part is some of these families are not even american (Rothschild, Warburg. english queen), yet they steal from poor americans thru the devaluation of their currency.
    A giant scam.
    The US family is…the Rockefellers.
    The one giving orders to Obama is David (Rockefeller)

  • Ian

    Don said: “And China? What are they going to do. They are simply going to be screwed with cheap dollars like the rest of us…”

    I agree; however, the US is down 12 trillion, and China loses 2 trillion. The US industrial base is decimated, China has new factories and state-of-the-art technology. Who actually wins in that scenario?

  • It’s all good, it’s the end of the financial system as we know it. What’s wrong with this? I think it’s great.

  • AK

    This administration headed by Obama and all the other idiots are a danger. I think you have to be trying to bring down the economy to do the damage they are doing. My gut is just not feeling to good about this. It is time to clean house of all the corruption.

    One issue bills should be the way to pass laws. That way the idiots making the laws might take time to read them. Plus, they can’t hide all the egregious waste and funding of their outrageous ideologies.

  • Scott

    All hard assests will prevail in time! The devaluation of dollars has only begun…

  • wheninthecourse


    • Liz

      yes they do.

  • Esther

    My people are destroyed for lack of knowledge. Hosea 4:6
    If My people who are called by My name will humble themselves, and pray and seek My face, and turn from their wicked ways, then I will hear from heaven, and will forgive their sin and heal their land. 2 Chronicles 7:14

    • Liz


      • Liz

        Amen and again I say Amen.

  • Paka

    Michael said:

    If you believe this lie, you are being duped again by those who control the statistics. Inflation is rampant RIGHT NOW – one only has to see what is happening at the grocery store, look at the electric bill, your phone bill, etc. When was the last time your insurance rates went down? The value of cash is NOT going up as evidenced by the fact that virtually everything we buy costs more every year, especially the important commodities like food. Yes, housing is going down, but that’s because it is stabilizing (artificially slowly due to the low interest rates) after a ridiculous run-up that had valuations never seen before in modern history.

    And to the previous poster, who said: “It’s all good, it’s the end of the financial system as we know it. What’s wrong with this? I think it’s great.”

    Let’s see if you still have that attitude when the **NEW** financial system gets in place. That will be one where the U.S. will lose it’s Constitutional mandate to create and control its own currency. (Of course, even now, it’s in the hands of the private bankers!) But, when there is a world wide currency being controlled by the **SAME** banking cartel that is controlling the multitude of currencies now, their work will be complete. You are welcoming the big brother state, where all transactions go through a central clearing system and everything you buy, do, eat, or contribute, everywhere you travel, all of your entertainment choices, all of your assets and debts, late payments, where you shop, where you eat, how much you save, where you invest, how much you pay on your rent/mortgage, and when and where you had your last rectal exam (along with the results) will all be tracked by a single computer controlled by the banker/controllers. This will be the nightmare of the “cashless society”. Mike, let’s see if you still hold on to your ignorant, cavalier attitude then. The final assault will be to replace the U.S. Constitution with a global constitution, stripping away the last vestiges of what was once the embodiment of “We the people…”. Wake up and smell the facism!!!!

  • TAP

    Does anyone know how much the Fed usually buys of the Treasury issue, say for the past 10 years? Without that how do we know 80% is high?

  • Robert Durant

    You guys are clueless. This is the implementation of *Monetary Policy* that regulates the supply of bank reserves. Look up, specifically, the term “Quantitative Easing” and you’ll see that there is nothing unique here. Also note that this kind of debt purchase by the Fed started in late 2007, under W, and continues to this day as part of the financial market stimulus (i.e. to keep the money supply flowing so we don’t have to resort to donkey carts in the street and bread lines).

    There’s nothing worse than an uniformed idiot with an Internet connection.

  • The problem is that their will be incredible amounts of homelessness, poverty, sickness, dispair, and hunger. This is no laughing matter. If you are not prepared both mentally and physically your going to be a casualty. See my blog at and my youtube videos at for information that will help you. Good Luck and God Bless.

  • Sam Bolivar

    @ Robert Durant:

    A word to the wise-

    One of the problems with publicly ridiculing others (like you did, calling some other posters “clueless” / “an… idiot”) is when you yourself make a clear mistake. For instance, “an uniformed idiot” —> Surely you’re not referring to people in uniform? (^^) Perhaps you meant to write, “an uninformed idiot”?

    Anyway, humility is good for the soul, right?

    You also mentioned quantitative easing, and claimed “… you’ll see that there is nothing unique here”. Well, according to the articles below, your statement is not entirely true, due to the massive degree to which Q.E. has been utilized recently by the Fed.

    www dot investingblog dot org/archives/517/checking-up-on-fed-quantitative-easing/
    July 18th, 2009
    “… Running out of Ammo

    The Federal Reserve can buy up to $750 billion of Mortgage-backed securities, however its already purchased $526.42 billion of the notes. It has even less breathing room with treasuries, having already purchased $684.03 billion with authorization to buy up to $700 billion. With so little ammunition left, the Federal Reserve will have to make landmark announcements to further impact the free markets.”


    www dot telegraph dot co dot uk/finance/breakingviewscom/4175704/Quantitative-easing-the-modern-way-to-print-money-or-a-therapy-of-last-resort.html
    Quantitative easing: the modern way to print money or a therapy of last resort?
    08 Jan 2009

    “… The Fed{‘s} … balance sheet has certainly mushroomed: it is up 18-fold in the past 4 months to $820bn. …”
    (such a massive increase would seem to register as ‘unique’, no?)

    “… Similarly, history isn’t much use in judging the therapy’s effectiveness. There has been only one significant trial – in Japan between 2001 and 2006. Excess reserves held by banks at the Bank of Japan rose from Y5 trillion to Y35 trillion, roughly 6pc of GDP.

    Scholars cannot agree whether the technique worked. …”

    (earlier in same article):

    “… Where, one might ask, does the central bank get the money to buy all these securities? The answer is that it just waves a magic wand and creates it. It doesn’t even need to turn on the printing presses. It simply increases the size of banks’ accounts at the central bank. These accounts held by ordinary banks at the central bank go by the name of “reserves”. All banks have to hold some reserves at the central bank. But when there is quantitative easing, they build up “excess reserves”. …”


    And from http :// :
    “… In practical terms, the central bank purchases financial assets (mostly short-term), including government paper and corporate bonds, from financial institutions (such as banks) using money it has created ex nihilo (out of nothing). This process is called open market operations. … However, there is a risk that banks will still refuse to lend despite the increase in their deposits, or that the policy will be too effective, leading in a worst case scenario to hyperinflation.[1]

    Quantitative easing is sometimes described as ‘printing money’, although the central bank actually creates it electronically ‘out of nothing’ by increasing the credit in its own bank account.[2]”


    So essentially the Fed practices legal counterfeiting – robbing Americans (and foreigners foolish enough to hold US dollars) in the process. Great deal for the Fed’s bankers, huh!

    Anyway, I’m no expert on the Fed, but can you support your claims? Thanks.

    Sam Bolivar
    StrivingForJustice at yahoo dot com

  • Chuck

    @ slam. The Federal Reserve is a network of 12 privately run banks which the US basically has an account with. They are extremely for profit, and the poison that will bring this country down. You need to check your facts.

  • Ixion

    I liken this economic collapse to the fall of the Roman State. Slow, steady, and long enough that nobody really noticed Rome’s absense untill it was already gone. It just progressively rotted away. Byzantium and Holy Roman Empire CALLED themselves Rome, but they werent Romans. Like past, like present…a great circle. It kinda makes me wonder, who and where will people be refering themselves as “Americans” about 300 years from now?

  • Robert

    There is away to pay off the national.See web site for the 1% solution. Has been around for 2000 years.

  • DTOM

    The founding fathers wrote a constitution that would prevent this. The problem came about when those stewards of this great documant became self-interested and passed unconstitutional laws to buy votes. The bottom line is that the constitution does not authorize the Feds to take from one individual and give to another. Frankly, our tax system in unconstitutional as well, in terms of taxing some more than others. Everyone is equal under the law…well unless you make more than the other guy.

    The constitution is dead…most are in denial of this fact. Freedom? Where? you’re born-tell the state, need school-state run, job-tell the state, purchase something-tell the state, childeren-tell the state, own real property-tell the state ( you don’t own your real estate; it’s a long term lease from the state-try not paying your property taxes), die-tell the state, try and pass your assets to your kin-tell the state, THEY OWN YOU! We already carry the mark of the beast. Render to Ceasar what belongs to Ceasar…

    What happened to the notion that we have unalienable rights endowed by our creator?

  • Lisa

    Those guys, on this video, saying that the economy is on an up-tick are idiots and I wouldn’t put a dime into investment with them. Nothing good can come from this PONZI scheme.


  • jaydeep

    this can e understood even by a layman …. well explained article… only one clarification if this holds true why the collapse is just not happening … r there more fools than smart guys in this world… i dnt think so….

  • Why in the world would our government delegate this immense power of controlling our money supply to a private bank when the constitution clearly states that this power is granted to the federal government? Our government can print our own money interest free.

  • MadeinAmerica

    Takeover is nearly complete, America. Get out and vote in November for constitutional conservative candidates on election day. This election will be the most important election in our lifetime. Do it for your children and grandchildren. If Republicans don’t gain seats in the House, it is OVER for America as we know it.

  • Misc Ellanious

    Vote for Republicans…Vote for Republocrats!!! A Republican passed the first Stimulous measure. A Democrat passed the second for the same reason.

    We need to unite and get off the division bandwagon that has been developed to divide and conquer.

    We need to start saying NO MORE!

  • Robert Layton

    Illinois Office of the Attorney General has filed fraud charges against a Cary, Illinois truck driver who allegedly lured family and friends to invest about $300,000 into commodity trading pools. Craig M. Gutowsky , was charged with seven counts by a grand jury. Illinois States Attorney charges that were posted in the Du Page County , Illinois Court. Funds that investors had deposited with Gutowsky were alleged diverted into paying gambling debts, funding Play and trade franchises, Ponzi type payments to other investors and other living expenses. Gutowsky out on workman’s comp injury from his job as a truck driver at USF Holland could be seen driving his luxury turbo charged Mercedes Benz or on the golf course in Cary, Illinois rather than at the desk assigned to Gutowsky. Craig M. Gutowsky 42, of Cary, Illinois, operated several commodity trading pools, using tCMG Trading. Craig M Gutowsky presented himself as the managing member of CMG consulting. Gutowsky alleged obtained funds under false pretenses. Craig Gutowski was charged with five counts of securities fraud and two counts of THEFT According to neighbors suburb of Cary, Illinois, Craig and Rene Gutowsky drove luxury automobiles, were in Las Vegas a couple of times a year and hosted extravagant Texas Hold Em poker parties in the couples finished basement. Gutowsky took money to trade in the Kevin G Carney fundcharging a 10% broker Fee . Gutowsky allegedly used the the money to pay earlier investors and for his own purposes.
    Renee L. Gutowsky has not yet been charged.

  • Tasha

    Won’t the weaker dollar mean that we might actually be able to export some of our products again–at a profit?

  • Nexus

    A Quantitative Easing (QE)strategy will not work and this is not just an ideological debate between one group of economists and another group – there is a lot of empirical evidence. Firstly, the Japanese tried the same with QE and they did not clean up their banking system (the US has not) and stimulated too little and too late (like the US) – it stagnated the Japanese economy for well over a decade and secondly, the IMF has produced a report (IMF Working Paper – WP/08/224 – Systemic Banking Crises – A New Database) that analysed over 120 financial events related to bank failure and the conclusion from this data is that QE has no positive effect on the real economy and little positive impact on banking operation in the longer term. Bernanke is supposed to be an expert on the Great Depression but he does not understand the dynamics. It is assumed in classical economics that markets tend to equilibrium but even classical economist Irving Fisher (too which Bernanke refers) did a volt-face and concluded that markets are not in equilibrium and a different strategy is required.

    Bernanke’s strategy will have a perverse outcome – the only impact QE will have is a provide a short benefit to financial institutions (surprise, surprise!!). Bernanke and the Fed have a peculiar and very narrow focus on Wall Street at the total expense of the real economy. The medium to long term impact will be to undermine the bond market, set of accelerating inflation and add to the overall debt liability. It will be like throwing petrol on an already burning fire. There are many domino’s ready to fall and any one could trigger a systemic failure.

    The reality is that the financial services sector/Wall Street should have been closed down and cleaned out. It is now inevitable that a systematic collapse will occur as no one was willing to take the hard medicine and constantly ‘band aiding’ as the Fed is doing will only prolong the inevitable.

  • BNash

    I see all this going down, but it has been their plan from the get-go. Our forefathers didn’t think so, but then again our forefathers were duped into believing they won a war against England, and that we have a land of our own. WRONG.. the Rothschild banking dynasty owns the Federal Reserve. It is entirely BRITISH controlled and has been the whole time. Which makes me wonder why the British would want to help a country that “defied and defeated” them? BECAUSE WE DIDN’T DEFY OR DEFEAT THEM. Hmmm… better think on that one.. and oh yes time for a conspiracy theory name… ILLUMINATI… ITS REAL GET USED TO IT.

  • PGies

    I’m worried that the price of gold is inflating into a new bubble.

  • I learned something new today about the Fed and is they pay the majority of their profits back to the Treasury.

    $77 billion in 2011.

    Is this true, or am I missing an obvious part of the puzzle?

    • Michael

      No, you are not missing anything.

      The Fed is not the one making money.

      It is those that lend money to governments that are making money.


  • Matthew

    When any Comerical Bank makes a loan, it creates the money out of thin air. When the loan is payed back, the Bank only keeps the interest, the principle, the money created out of thin air, is retired, destroyed. This makes sense because money represents labour (we hope!)and cannot exist in two places at once. Given this fact, (well I hope it is) I would now like to ask a question of you-all. If I was to buy a US Treasury Bond, I would get back the principle of my loan, plus interest; WHAT ABOUT the FED, when they buy a US Treasury Bond with money they created out of thin air, they get interest, what about the principle, is that money retired, destroyed, or do our generous benefactors get to keep it as well. Thank-you for your learned consideration of my question. Matthew down-under.

  • Joe Jurci

    I believe that banking
    institutions are more dangerous to our liberties than standing armies. If the
    American people ever allow private banks to control the issue of their
    currency, first by inflation, then by deflation, the banks and corporations
    that will grow up around [the banks] will deprive the people of all property
    until their children wake-up homeless on the continent their fathers conquered.
    The issuing power should be taken from the banks and restored to the people, to
    whom it properly belongs.

    Thomas Jefferson, (Attributed)

    3rd president of US (1743 – 1826)

  • Kyle Lee

    What can we do as Americans or as members of congress to fix this?

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